UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): December 20,
2007
Sypris
Solutions, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-24020
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61-1321992
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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101
Bullitt Lane, Suite 450
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Louisville,
Kentucky
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40222
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(Address
of Principal
Executive
Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (502) 329-2000
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Section
7 – Regulation FD
Item
7.01 Regulation
FD Disclosure.
Attached
as Exhibit 99, and incorporated into this Item 7.01 by reference, is
presentation material containing updated financial guidance for Sypris
Solutions, Inc. (the “Company”) for 2007 and later periods.
A
conference call will take place at 9:00 a.m. eastern standard time on December
20, 2007. The Company's senior management will discuss such guidance during
the
conference call. Interested persons may listen to the conference call via
telephone by dialing 913-312-0822 before 9:00 a.m. eastern standard time, or
access it on the Internet at www.sypris.com. The online replay will be available
beginning at approximately 11:00 a.m. eastern standard time on December 20,
2007
and continuing for 30 days. The related presentation materials will be posted
to
the "News" section of the Company's web site at www.sypris.com prior to the
call. The presentation materials will be in Adobe Acrobat format. A separate
press release will not be issued.
The
information in this Form 8-K and the attached Exhibit as well as the
supplemental information referenced above is being furnished pursuant to Item
7.01 “Regulation FD Disclosure” and shall not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference
in
any filing under the Securities Act of 1933, except as shall be expressly set
forth by specific reference in such filing.
Section
9 – Financial Statements and Exhibits
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit
Number
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Description
of Exhibit
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99
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PowerPoint
presentation discussing the Company’s 2008 financial outlook and guidance
during a conference call on December 20,
2007.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Dated:
December 20, 2007
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Sypris
Solutions, Inc.
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By:
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/s/
John R. McGeeney
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John
R. McGeeney
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General
Counsel and Secretary
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2
INDEX
TO EXHIBITS
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Exhibit
Number
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Description
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99
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Registrant’s
PowerPoint presentation dated December 20, 2007.
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2008
Guidance & Market Outlook Conference Call December 20,
2007
Financial
& Market Outlook Jeffrey T. Gill President and CEO T. Scott Hatton Vice
President and Chief Financial Officer
Disclosures
Safe Harbor Disclaimer Each;forward-looking statement; herein is subject
to
serious risks and should not be relied upon, as detailed in our most recent
Form
10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently believe
that such risks also include: our ability to liquidate our unsecured claims
against, and/or equity interests in, Dana at satisfactory valuation levels;
costs and inefficiencies of restructuring our manufacturing capacity;
breakdowns, relocations or major repairs of machinery and equipment; our
inability to successfully launch new or next generation programs; impairments,
non-recoverability or write-offs of goodwill, assets or deferred costs; the
cost, efficiency and yield of our operations and capital investments, including
working capital, production schedules, cycle times, scrap rates, injuries,
wages, overtime costs, freight or expediting costs; cost and availability
of raw
materials such as steel, component parts, natural gas or utilities; volatility
of our customers; forecasts, financial conditions, market shares, product
requirements or scheduling demands; cyclical or other downturns; adverse
impacts
of new technologies or other competitive pressures which increase our costs
or
erode our margins; failure to adequately insure or to identify environmental
or
other insurable risks; inventory valuation risks including obsolescence,
shrinkage, theft, overstocking or underbilling; changes in government or
other
customer programs; reliance on major customers or suppliers, especially in
the
automotive or aerospace and defense electronics sectors; revised contract
prices
or estimates of major contract costs; dependence on, recruitment or retention
of
key employees; union negotiations; pension valuation, health care or other
benefit costs; labor relations; strikes; risks of foreign operations; currency
exchange rates; the costs and supply of debt, equity capital, or insurance;
changes in licenses, security clearances, or other legal rights to operate,
manage our work force or import and export as needed; weaknesses in internal
controls; the costs of compliance with our auditing, regulatory or contractual
obligations; regulatory actions or sanctions; disputes or litigation, involving
customer, supplier, creditor, stockholder, product liability, asbestos-related
or environmental claims including potential, pre-existing product liability
and
unknown warranty claims that were preserved in our settlement agreement with
Dana; war, terrorism or political uncertainty; unanticipated or uninsured
disasters, losses or business risks; inaccurate data about markets, customers
or
business conditions; or unknown risks and uncertainties. Non-GAAP Financial
Measures Any non-GAAP measures, and their related reconciliation to GAAP
measures, are provided and available on the company's website:
www.sypris.com
Overview
Market Outlook Conclusion 2007 Update 2008 Forecast Summary;A Session
Agenda
2007
Overview Preliminary Results: EPS expected to be $0.07 to $0.10 lower than
prior
guidance primarily due to $10 million shortfall in SIG revenue; due to report
on
February 28 Revenue down year over year Reflecting a 44% and 22% decline
in
production of heavy and mediumduty commercial vehicles, respectively, resulting
in a substantial reduction in revenue for our Industrial Group Offset by
double
digit growth from our Electronics Group that benefited from the initial launch
of a new secure program Energy and calibration businesses continued to grow
Dana
settlement resulted in a new supply agreement extending through the year
2014
and included the award of a $90 million claim to Sypris In short, it was
a very
difficult year, but included many important accomplishments that are expected
to
serve as the foundation for the continued development of the Company going
forward Overview
Market
Outlook Industrial Group; The outlook for commercial vehicle, trailer and
SUV
production in 2008 has changed materially in recent months; The forecast
for
heavy vehicle production by ACT has been reduced by 17% from its October
forecast (259,000 versus 216,000), reflecting the impact of high fuel prices,
tight credit, lower freight volumes and weak economy; The outlook from ACT
for
medium-duty vehicle production has been reduced by 13% from October (238,000
versus 206,000), reflecting the same factors; As a result, commercial vehicle
volume in 2008 is expected to be on par with 2007; Production of trailers
is
expected to decline 12% during 2008 versus 2007; Production of sport utility
vehicles and light trucks is now forecast to be down in 2008 versus 2007;
Commercial vehicle production is expected to increase 35% during 2009 (with
Class 8 up 52% and Class 5-7 up 17%); Despite the downdraft in trailer and
SUV
production in 2008, new programs and higher material pass throughs are expected
to result in 9% growth in revenue when compared to 2007
Market
Outlook Industrial Group The confirmation of Dana's restructuring plan by
the
bankruptcy court and the receipt of exit financing is positive news Exit
expected during January, with subsequent request to list on the NYSE Outstanding
Board of Directors, which provides sense of optimism Despite the lowered
expectation for top line growth in 2008, we expect continued margin recovery
throughout the year as previously discussed initiatives contribute to
income
Market
Outlook Electronics Group; Aerospace and Defense is expected to show strong
double digit growth during 2008, driven by the continued launch of new
classified programs; Demand for secure communications products continues
to
increase; Product line expansions in our Data Systems business are expected
to
lead to growth in this high value-added segment; Test; Measurement is expected
to benefit from the continued growth of calibration services and the award
of
new multi-year contracts; In summary, the outlook is positive, the result
of
which is expected to drive revenue growth for the Company in 2008 and beyond,
while margins are expected to expand with the additional volume and benefit
from
an increased concentration of product sales
Conclusion
The outlook for the economy in 2008 has been revised downward in recent months,
reflecting issues in housing, credit, energy and consumer confidence, among
other factors; At this time in 2006, ACT was forecasting a 28% increase in
production for commercial vehicles in 2008, the result of which was expected
to
make a significant contribution to the Company's top and bottom lines; Despite
the delay of this demand into 2009, we still expect to make important progress
in our Industrial Group during 2008, but the financial results will not be
as
strong as we would have otherwise expected; Our Electronics Group is expected
to
continue its double digit top line growth as margins expand, driven by the
launch of new secure programs, improved product mix and growth in calibration;
All in, the year will represent an important improvement over 2007 and serve
as
a critical building block for an order of magnitude improvement in financial
performance during 2009
2007
Update 2008 Forecast
EPS
EPS Free Cash Flow Free Cash Flow PBT down $1.5; EPS decreases 8 cents Guiding
$0.08 EPS lower due primarily to softer heavy/med duty truck volume lower
tax
benefit from domestic/int’l split Cash flow down $5 from prior guidance Lower Q4
volumes converting to lower collections Guiding $10 lower in revenue due
to
slower truck volumes Prior Guidance Current Fcst Revenue Revenue EPS EPS
Free
Cash Flow Free Cash Flow PBT down $1.5; EPS decreases 8 cents Total Year
2007
Update
October
forecasted 2008 up 22% over 2007 Current view up 1% over 2007 2009 rebounds
52%
October predicted 15% growth over 2007 Revised view flat with 2007 2009 grows
17% Class 5-8 Truck Market Forecast 11 October forecasted 2008 up 22% over
2007
Current view up 1% over 2007 2009 rebounds 52% October predicted 15% growth
over
2007 Revised view flat with 2007 2009 grows 17% Class 5-8 Truck Market Forecast
ACT North American Production/Build Forecast CLASS 5-7 - 50,000 100,000 150,000
200,000 250,000 300,000 2004 2005 2006 2007 2008 Oct ACT 2008 Dec ACT 2009
ACT
North American Production/Build Forecast CLASS 8 - 50,000 100,000 150,000
200,000 250,000 300,000 350,000 400,000 2004 2005 2006 2007 2008 Oct ACT
2008
Dec ACT 2009
0.10
Free Cash Flow Free Cash Flow 2007E 2008E ($18) - ($13) $0 ($M, except EPS)
Revenue up 10% SIG up 9% - Material price increase drives 6% growth - Truck
mkt
up 3% - Non-core business reductions & declines in trailer and light vehicle
- 5% increase in Med/Heavy Duty SEG up 11% - 15% A&D growth from secure
communications product growth - T&M growth of 5% PBT up $6M; EPS increases
18 cents SIG PBT down only $1M despite $11.1M of ’07 non-recurring settlement
gains SIG productivity of $7M driven by product shifts, restructuring efforts
SEG PBT increasing $7M from product mix, productivity, and volume Increasing
R&D 40% to support SEG NPI SG&A at 9-10% of revenue $0 cash flow excl.
claim liquidation $20M of Cash from Operating Activities Operating cash includes
$10M tax pymt in ’08 for Dana claim $20M of Capex Dana claim converting to
equity …liquidating position throughout ‘08 resulting in $70M of proceeds
Projected cash position to exceed debt by Q3 * Excludes impact of selling
Dana
claim; includes $10M tax pymt on claim $425 - $430 $460 - $480 2007E 2008E
EPS
EPS 2007E 2008E ($0.12) – ($0.10) $0.05 - $0.10 Free Cash Flow Free Cash Flow
2007E 2008E
Industrial
volumes flat, except Energy market…market upturn expected in Q4 Material price
increases resulting in higher revenue drive 6 points of sales growth – Med/Heavy
Duty up 5%; Light Duty down 3%; Trailers down 4% – Energy prices result in
continued demand for Engineered Products – up 7-8% • Restructure operations and
address portfolio profitability Restructuring efforts more measured as focus
turns to contractual commitments – Despite flat volumes, 1 pt. margin
improvement to reflect price and strategic product shifts Industrial Sales
V%
GM% Sales V% GM% Sales V% GM% • Planned growth of 15% in revenue … strong 2H
driven by NPI – Strong demand in secured communication products with next
generation of link encryption product Migrating to higher margin EMS
business…doubling Space revenue in 2008 New recorder offerings to telemetry
INTEL markets; Penetrate INTEL receiver market • Stronger execution and customer
need focus 40% increase in R&D funding for new classified communication
product and recorder offerings 5 pt. margin expansion driven by new product
commercialization & ’08 process improvements Program delays behind
us…certification expected within a month • Growth occurring across most
businesses $3M of new Calibration business…focus on new on-site solutions and
expansion into Mexico New business opportunities to expand in product testing
services; product demand strong • Driving for improved margins 2 pt. margin
expansion driven by footprint consolidation in ’07 and pricing initiatives
Continued increase in labor productivity via automation and technician training
programs A & D T & M 9% 8% 15% 15% 5% 26% TY 2008 Segment
View
Truck
Market Rebounds in 2009 Heavy Duty by 52% Med Duty by 17% Commercial Realignment
– Contract expiration / realignment opportunities Rationalize product lines,
exiting low value add products Organic growth in core products/expand customer
base Energy Market Growth Continues Multiple Levers Driving Strong Double
Digit
Growth in 2009 Multiple Levers Driving Strong Double Digit Growth in 2009
17 56
45 5 274 2007 E Mat'l Reval '09 Truck Rebound Product Rationalization Organic
Energy 2009 E Industrial Growth / Commercial Realignment
Revised
to reflect softer ’08 market & lower execution risks 4-Phased approach
covering 39 months (Q4’07 – Q4’10) Transitions SIG to CoE model Aligns with
customers’ objectives Delivers significant benefits to Sypris & customers
Savings Costs $5M $7M Benefits Begin to Accrue in 2008 Benefits Begin to
Accrue
in 2008 Industrial Group Restructuring / LEAN Meet customer requirements
Rationalization of non-core products Increase content in core products Relocate
specific operations closer to customers and in lower costs locations Improve
productivity through automation & technology
Industrial
volumes flat, except Energy market;market upturn expected in Q4; Material
price
increases resulting in higher revenue drive 6 points of sales growth; Med/Heavy
Duty up 5%; Light Duty down 3%; Trailers down 4%; Energy prices result in
continued demand for Engineered Products; up 7-8%; Restructure operations
and
address portfolio profitability; Restructuring efforts more measured as focus
turns to contractual commitments; Despite flat volumes, 1 pt. margin improvement
to reflect price and strategic product shifts Industrial Sales V% GM% Sales
V%
GM% Sales V% GM%; Planned growth of 15% in revenue; strong 2H driven by NPI;
Strong demand in secured communication products with next generation of link
encryption product; Migrating to higher margin EMS business;doubling Space
revenue in 2008; New recorder offerings to telemetry & INTEL markets;
Penetrate INTEL receiver market; Stronger execution and customer need focus;
40%
increase in R&D funding for new classified communication product and
recorder offerings; 5 pt. margin expansion driven by new product
commercialization &08 process improvements; Program delays behind
us;certification expected within a month; Growth occurring across most
businesses; $3M of new Calibration business;focus on new on-site solutions
and
expansion into Mexico; New business opportunities to expand in product testing
services; product demand strong; Driving for improved margins; 2 pt. margin
expansion driven by footprint consolidation in;07 and pricing initiatives;
Continued increase in labor productivity via automation and technician training
programs A & D T & M 9% 8% 15% 15% 5% 26% TY 2008 Segment
View
25
15 15 5 153 2007 E Secure Comm. Prods Recorder / Receiver Select EMS Test
&
Msmt 2009 E Broader Offering in Secured Communications; New generation
encryption product to launch in Q1;08; $20-25M / yr;D investment to provide
new
market; $5M-$10M / yr A&D New Products / New Markets; Receivers &
recorders for INTEL and telemetry markets; Select EMS; Space being a key
market
of interest Test Services Growth; Multi-year and On-site contracts;
International growth through customers Targeting for 20% Annual Growth During
Period Targeting for 20% Annual Growth During Period Electronics Group Growth
EPS
EPS 2007 2008E ($0.01) $0.00 Free Cash Flow Free Cash Flow 2007 2008E ($2)
($10-$12) ($M, except EPS) Revenue down 6% 12% decline in Industrial driven
by
Commercial Truck cycle 16% increase in SEG driven by growth in products and
test
services PBT up $0.4; EPS increases 1 cent SIG holds PBT flat despite volume
decline as price/prodty improvements offset SEG grows $0.4 as higher volumes
are
are partially offset by R&D investment Cash flow flat versus;07 excl tax pmt
Includes $10 tax pymt on Dana claim $6M of Cash from Operating Activities
Capex
of $7M driven by SIG $111 $102 - $107 Q1 2008 Earnings
Guidance
2008
Summary Sets Stage for Double-Digit Revenue & Profit Expansion in;09 Sets
Stage for Double-Digit Revenue & Profit Expansion in;09 Positive earnings
projected for 2008 despite softer truck demand10% revenue growth supported
by
strong;particularly in Electronics Program delays are behind Electronics;launch
of new product in January $15M of critical investments to improve profitability
and growth Revised SIG restructuring program to meet customer requirements
&
lower execution/financial risks in light of softer market Key programs driving
margin expansion across all segments: SIG programs offset non-recurring
settlement impact in;07 of 40 cents SIG shifting away from non-core
products;increasing core product sales SEG programs on track;key program
launch
& productivity initiatives drive improved profit $20M of Operating Cash
generated in 2008 (incl. $10M tax pymt) Projected cash position to exceed
debt
by Q3 (assuming liquidation of claim/equity)