Sypris Solutions, Inc. Q1 FY2023 earnings call

• Revenue grew 23.4% year-over-year and 8.7% sequentially, with Sypris Electronics up 42% YOY and Sypris Technologies up 13.7% YOY. - Orders were up 73.6% YOY, driven by 91.4% increase in Sypris Electronics and 25.7% increase in Sypris Technologies' energy products. - Backlog has increased for 11 consecutive quarters, with an average quarterly increase of 53% over the past 17 quarters. - New contract awards: Sypris Electronics won awards for DoD weapon systems and multiyear production contracts; Sypris Technologies amended supply agreement with Daimler Truck and won new program for all-terrain vehicle drivetrain components. - Market outlooks: Class 8 heavy vehicle demand flat in 2023, LNG market growing in Europe and US, defense spending positive with significant backlog in defense electronics.

For the quarter, consolidated revenue was $32.3 million, up 23.4% year-over-year and 8.7% sequentially. Sypris Electronics had revenue of $12.8 million, a 42% year-over-year increase. Sypris Technologies had revenue of $19.5 million, a 13.7% year-over-year increase. Backlog increased 121% consolidated. Sypris Electronics' backlog was $131.6 million at quarter end, up 125% from the prior year, and Sypris Technologies' energy products backlog was up 61% year-over-year.

• Revenue is expected to increase 25% to 30% year-over-year in 2023. - Gross margin is forecast to expand 150 to 200 basis points in 2023. - Cash flow from operations is expected to remain strong supported by earnings growth.

• Unfavorable foreign exchange rates impacting margins. - Steel price increases and material price adjustments affecting gross margin percentage. - Supply chain challenges, though abating, still contributing to production ramp-up costs.