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Edited Transcript of SYPR earnings conference call or presentation 13-Nov-18 2:00pm GMT

Q3 2018 Sypris Solutions Inc Earnings Call

LOUISVILLE Nov 13, 2018 (Thomson StreetEvents) -- Edited Transcript of Sypris Solutions Inc earnings conference call or presentation Tuesday, November 13, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Anthony C. Allen

Sypris Solutions, Inc. - VP & CFO

* Jeffrey T. Gill

Sypris Solutions, Inc. - Chairman, President & CEO

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Conference Call Participants

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* James Andrew Ricchiuti

Needham & Company, LLC, Research Division - Senior Analyst

* Joel Cahill

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Sypris Solutions, Inc. Conference Call. Today's call is being recorded.

And now at this time, for opening remarks and introductions, I would like to turn the call over to the President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead, sir.

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [2]

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Thank you, April, and good morning, everyone. Tony Allen and I would like to welcome you this call. The purpose of which is to review the company's financial results for the third quarter of 2018. For those of you who have access to our PowerPoint presentation this morning, please advance to Slide 2 now.

We always begin these calls with a note that some of what we might discuss here today may include projections and other forward-looking statements. No assurance can be given that these projections and statements will be achieved, and actual results could differ materially from those projected as a result of several factors. These factors included in the company's filings with the Securities and Exchange Commission. And in compliance with Regulation G, you can access our website at sypris.com to review the definitions of any non-GAAP financial measures that may be discussed during this call.

With these qualifications in mind, we'd now like to proceed with the business discussion. Please advance to Slide 3.

I will lead you to the first half of our presentation this morning, starting with an overview of the highlights for the quarter, to be followed by an update on the outlook for each of our primary markets. Tony will then provide you with a more detailed review of our financial results for the quarter as well as walk you through our financial guidance for 2018.

Now let's begin with an overview on Slide 4. The third quarter of 2018 turned out to be our own tale of 2 cities, with the thrill of strong orders across all markets being offset by a variety of supplier and production-related issues that suppressed shipments and margins, thereby interrupting, at least briefly, our quarterly trend of margin expansion. Revenue generated from our automotive and truck markets increased by 17% when compared to the prior year period, but our margin from these sales was compressed by peak utility charges, excess training costs, higher supply spends and lower productivities. Our team worked to fine tune the production model.

In our Electronics business, orders more than doubled when compared to the third quarter of 2017, yet a delinquent delivery of a few key components when combined with the later-than-expected receipt of customer approvals resulted in revenue that was 25% less than planned and margins that declined below breakeven.

In a similar fashion, orders for our energy products increased by 50% on a year-over-year basis. Our shipments were constrained due to supplier quality issues and late deliveries. Our quarterly performance was further exacerbated by our own efforts to reschedule projection to adjust to these delays, which resulted in lower productivity and increased overtime.

In short to paraphrase the great Dickens, it was the best of times, it was the most challenging of times. Yet, through it all, margins did improve on a year-over-year basis, and we did make substantial progress in resolving the variety of surprises that arose during the period.

Looking forward, we expect the growth of the company's top line for the fourth quarter to be supported by the release of shipments that were delayed during the third quarter, resulting in an 18% sequential increase in revenue for the period at the midpoint.

Furthermore, improved supplier performance and increased operational efficiencies are expected to leverage the higher levels of shipments and deliver margins in the 13% to 15% range, thereby resuming our trend line of margin expansion and a return to profitability.

Turning now to Slide 5. North American demand for heavy duty trucks continues to operate in record territory, driven by strong freight growth, tight capacity and an expanding economy. Orders of 43,000 units during the month of October marked eighth consecutive month during which orders exceeded 40,000 units. The rolling 12-month total has now reached 504,000 units, 34% higher than the previous record of 376,000 units reported during 2006.

Backlogs of most OEMs are extending out 12 months or more, while production levels appeared to have stabilized at rates that are supportable by the supply chain. Both ACT and FTR have issued a positive outlook for 2019, with FTR forecasting a further 8% increase in orders for next year. We believe that the stabilization of demand at these high volumes will prove to be very good for the industry, including suppliers like Sypris. With labor now trained and in place, new productive capacity online and with demand operating within a narrow weekly bandwidth, cost should decline materially.

We are no longer operating certain equipment during peak utility demand periods, which will have a significant impact on our future charges for electricity. We have increased the use of automation in certain of our manufacturing sales, thereby increasing output and improving quality and reliability. Much work remains, but we are looking forward to much improved results going forward.

Subsequent to quarter end, we entered into a new set of supply agreements with Sisamex, the Monterrey-based joint venture of Meritor and Grupo Quimmco. The agreements number 3 in total and cover a range of products for use in the driveline's commercial, agricultural and all-terrain vehicles. The agreement covering axle shafts and knuckles represents the renewal of an existing contract, while the addition of input shafts, transmission shafts and other products will form a new layer of business for Sypris beginning in early 2019.

The North American automotive market remains solid for Sypris, where our participation is focused just on supplying products for the Jeep Wrangler and other such iconic vehicles. As we enter 2019, we expect new program launches in the automotive, all-terrain, agricultural, off-highway and refrigeration markets to further diversify our portfolio of business and support top line growth in 2019 and beyond. And when combined with our expanding oil and natural gas business, our customer and market profiles starts to take our work that is very different from that of just a few years back.

Turning now to Slide 6. As we discussed during on our last call, demand for oil and natural gas continues to outpace domestic consumption, thereby supporting the forecast that the U.S. will become an exporter of energy within the next 4 to 5 years. The conversion of power generation used to natural gas as well as the construction of pipelines and LNG terminals to support export activities is also serving to bolster this market outlook.

Production in the Permian Basin continues to outpace current pipeline capacity, while the growth in pipeline gathering systems and the aging of existing transportation infrastructure bodes well for the future demand of the company's closures, insulated joints and other such products. Energy features have been fluctuating recently, with the price of oil rising and falling based upon a range of changing assumptions. In our view, an expanding economy will require an increase in energy consumption. Our order boards remain robust, which would seem to support this contention.

As I mentioned a moment ago, we are working to resolve a series of supply chain and production issues that resulted in lower shipments during the quarter than originally planned. We now expect these orders to be shipped during the fourth quarter, which will contribute to the sequential growth in the company's top line.

Turning to Slide 7. As we discussed during our prior call, Department of Defense spending is also on the rise, with the recent approval on the National Defense Authorization Act for Fiscal Year 2018 providing nearly $700 billion in funding for the Department of Defense. Within this budget, spending has been increased for missile defense, weapons programs and the Joint Strike Fighter, which should bode well for our business.

Even more importantly, the bill should provide for the continuity in the funding of major multi-year programs that have been disrupted in the past by continuing resolutions and other short-term budgetary issues. These positive market conditions, when combined with recent contract awards and our lower-cost profile, provides us with a solid base for optimism when looking forward.

During our last call, we mentioned that we'd made significant progress in securing the electronic components that were necessary to meet our production schedules. Several large customers have joined with us to secure long-lead items and to place firm purchase orders with vendors to make certain that we receive this material.

Unfortunately, during the most recent quarter, we ran into both spot shortages and encountered delays in the receipt of customer approvals for the launch of a new program, both of which combined to constrict shipments well below our internal forecast. We now expect these shipments to take place during the fourth quarter.

Turning now to Slide 8. As we look to the future, we expect both Sypris Technologies and Sypris Electronics to be solidly profitable reflecting the benefits of top line growth, improved mix and growing operational efficiencies. For the final quarter of 2018, we expect the company's top line to increase 18% sequentially at the midpoint of our guidance, with gross margins in the range of 13% to 15%, up from 7% for the fourth quarter of 2017, driven by the continued strength of our new bookings and the recovery of normal shipment levels to our energy and defense-related customers.

Our initial outlook for 2019 forecasts revenue growth of 20% for the year when compared to 2018, with new program launches during the second half of the year adding further momentum. From a gross margin standpoint, we expect to be in the range of 15% to 17% of revenue with both business segments registering solid profitability.

Turning now to Slide 9. Tony Allen will lead you through the balance of our presentation this morning. Tony?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [3]

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Thanks, Jeff. Good morning, everyone. I would like to discuss with you some of the highlights of our third quarter financial results. Please advance to Slide 10.

Q3 consolidated revenue was $21.1 million, a decrease of 1.3% from the third quarter of last year. The revenue split between Sypris Technologies and Sypris Electronics was $14.9 million and $6.2 million, respectively. The primary demand driver for Sypris Technologies continues to be the strong market conditions for our customers serving the commercial vehicle, automotive and energy markets. Our revenue for Q3 was up 9.6% from the prior year, and we see further upside in these markets as we enter the fourth quarter.

Revenue for Sypris Electronics declined during the third quarter as we face headwinds on existing programs, with electronic component availability constraining shipment levels on certain of our higher-running programs in the quarter. We are also working through a series of design changes on another key program that caused lower-than-expected shipments and the launch of a new program shifted to the right as we did not receive approval to begin shipments until late in Q3.

The supply chain team for Sypris Electronics continues to work closely with our customer base to resolve the challenges of component availability in the market that are impacting some of our programs. We will continue to pursue a variety of solutions, including identifying alternative sources of supply and qualifying alternative components. While the component shortages are expected to continue in the industry, we expect to resolve some of the near-term challenges, which should allow us to more efficiently balance production during the fourth quarter.

Consolidated gross margin improved 220 basis points to 5.7% compared with 3.5% in Q3 of '17. In early 2017, we announced plans for transferring production from our Broadway facility and the actions to reduce our costs by an estimated $26 million in 2018 compared to 2016. These actions were completed over the course of 2017 and the benefits are now more being reflected in a more material way in our cost of sales following the closure of the Broadway Plant in December. Sypris Technologies reported gross margin of 8.9% for Q3 compared to a loss of 4.2% in the prior year, reflecting a significant reduction in the fixed overhead structure for this segment.

Given the strength of the Class 8 heavy duty truck market this year and the product transfers from Broadway, the production volume at our Toluca facility in 2018 is expected to be nearly double the volume produced during 2017, and our team is working diligently to meet the rising demand while maintaining our high standards for quality and on-time delivery.

A number of initiatives were implemented during the third quarter to address lower-than-expected labor productivity metrics, increased spend on suppliers, higher electrical rates and excess scrap. Our Toluca workforce expanded rapidly during 2018 to meet the demand of increased production volumes. And in this process, our cost per unit increased due to inefficiencies stemming from training a significant number of new hires. We took corrective actions during the third quarter to bring our cost metrics back in line, including the modification of workday and shift schedules for our hourly workforce, the assignment of manufacturing engineers to analyze consumption and control the issuance of supplies, restrictions on the use of high electricity consumption machinery during peak rate hours and tighter controls to limit the amount of scrap generated from specific production issues.

Together with continuous improvement actions that are being implemented to increase throughput and our work sales, we were able to reduce our hourly workforce later in the quarter and began to see our overall cost per unit trend back to down to normal levels. These actions are expected to contribute to our ability to achieve our margin targets as we enter the fourth quarter and move into 2019.

Sypris Electronics had a challenging and disappointing performance for the quarter as the constraints on revenue translated into negative results with the gross profit line. Our ability to maintain or increase product flow on certain of our matured programs that would otherwise run consistently and provide us with the capability to flex production was limited by a few specific components that are on allocation or have long lead times. These challenges contribute to lower labor productivity and overhead absorption that flows directly into our margins in the current period.

We are also partnering with our customers to resolve certain product design changes and technical challenges that are typical with the launch of new programs. We received approval to begin shipments at the end of the third quarter on what will become a high run rate programs and shipments on this new program are expected to accelerate in the fourth quarter. We are also working proactively with our customers to mitigate supply chain risk as we launch new programs. This includes actions for the procurement of long-lead time and other high demand components during the initial phase of the program launch on a basis that neutralizes our working capital investment over the life of the program.

Our SG&A expense for Q3 declined 6.1% from the prior year, which also drove SG&A as a percent of revenue to 13.9% compared with 14.7% a year ago. Adjusted operating income improved 27% from the prior year, but fell well short of our target due to the lower margins reported for the quarter.

Please advance to Slide 11. Consolidated revenue for the first 9 months was $64 million, an increase of 5.3% from last year. The revenue split between Sypris Technologies and Sypris Electronics was $44.7 million and $19.3 million, respectively. This represents an increase over the prior year of 10.7% for Sypris Technologies and a decrease of 5.4% for Sypris Electronics. Gross margin for the first 9 months increased by 660 basis points to 9.6%, reflecting the increase in volume for Sypris Technologies and the impact of cost-reduction actions completed at the end of 2017. Our SG&A expense for the first 9 months was $9.3 million, a decrease of 8.5% or nearly $900,000 from the prior year, which also drives SG&A as a percent of revenue down to 14.5% compared with 16.6% a year ago. Adjusted operating income for the first 9 months improved by $5.2 million or 63% from the prior year, reflecting both the increase in gross margin and the reduction in SG&A expense.

Please advance to Slide 12. We are updating our outlook with new guidance for the fourth quarter as well as providing our initial outlook for 2019. We expect revenue to grow sequentially in the fourth quarter to a range of $24 million to $26 million. At the midpoint of the range, this represents a sequential increase of 18% and a year-over-year increase of approximately 16%. Our gross margin target for the fourth quarter is 13% to 15%, which is below the range we previously set for the second half of the year, yet indicative of the progress we are making in overcoming the obstacles that contributed to the setback in our third quarter performance.

SG&A is expected to be within 12% to 13.5% of revenue for the fourth quarter and finish lower in both absolute dollars and as a percent of revenue compared with the prior year. Our outlook for 2019 is for revenue to increase to $105 million to $110 million, with gross margin improving to 15% to 17% of revenue. The revenue target for 2019 represents a year-over-year increase of approximately 20% with both segments anticipated to contribute to the growth.

The 2019 outlook reflects our belief that strong market conditions will continue for our automotive and truck components and the launch of new products with both existing and new customers early in the year will provide incremental top line growth. We expect our current backlog together with anticipated follow-on awards on existing programs will drive double-digit growth in our aerospace and defense programs, and we expect modest growth to come from the energy market.

The additional volume will contribute to our margin improvement, but equally important will be the efforts underway to drive operational improvements and related variable cost reductions throughout our company. We expect to continue to reduce our SG&A spend as a percent of revenue in 2019 to contribute to improved operating margins. We believe our path to profitability is clear in 2019, and our team is energized by the prospect of delivering the results in the coming year.

Please advance to Slide 13. On this slide, we summarize year-over-year comparative data for revenue and gross margin. On the left side, we have our Q3 year-to-date comparison with revenue increasing 5.3% from $60.8 million to $64 million, while our gross margin increased by multiple of over 3x from 3% to 9.6%. The year-to-date improvement was driven by strong market conditions in the commercial vehicle market, coupled with the impact of cost reductions from the consolidation of operations for Sypris Technologies.

On the right side, we compare the actual results for the fourth quarter of '17 with the midpoint of our outlook range for revenue and gross margin for the fourth quarter of '18. We expect favorable market conditions for Sypris Technologies will continue during the fourth quarter, and that the program constraints that impacted Sypris Electronics during Q3 will improve in Q4.

This is expected to drive revenue up approximately 16% for the comparable periods, and the conversion coming from the revenue growth together with variable cost improvements will enable us to double our gross margin from the prior year.

Please advance to Slide 14. This slide highlights the improvement in gross margin performance for periods back to 2014 when our annual revenue was over $350 million, with approximately 70% generated from sales to the heavy truck market. As we managed through the last 3 years of change, we experienced a significant drop in margin performance as we realigned our cost profile to meet our new top line, but we started to see an upward trend in our performance beginning in the first half of 2017. Our gross margin of 9.6% for the first 9 months of this year is a 430 basis point improvement from the second half of 2017 and another step toward meeting our target range of 13% to 15% for the fourth quarter of '18. As we look beyond 2018, we expect to leverage our lower cost profile with new business awards and follow-on business opportunities to create further margin expansion opportunities.

Please advance to Slide 15, and I will offer a few takeaways. Our third quarter revenue was relatively flat with the prior year. However, gross margin improved to 5.7% in the third quarter compared to 3.5% in the prior year, an improvement of 220 basis points. SG&A declined 6.1% from Q3 of '17 and represented 13.9% of revenue for the quarter. We provided our outlook for the fourth quarter with revenue at $24 million to $26 million and gross margin of 13% to 15%. We provided our initial outlook for 2019, with revenue at $105 million to $110 million and gross margin of 15% to 17%. Our outlook reflects our backlog, new program launches that are going to contribute to revenue throughout 2019, and the strong market conditions for our heavy truck, energy and aerospace and defense programs. And finally, we expect to report positive adjusted operating income beginning in the fourth quarter and continuing to grow in 2019.

This concludes our call today. And at this time, I'd like to turn it back over to April to answer any questions you might have for us. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will first hear from Jim Ricchiuti of Needham & Company.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [2]

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Jeff and Tony, bear with me a second. I joined the call a little bit late, but I just want to try to understand a little better the factors that led to the uneven quarterly performance. Was the revenue shortfall more in the electronics portion of the business? And on the Sypris Technologies side, you were dealing more with some supply chain issues and labor productivity issues?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [3]

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Yes, Jim. The shortfall that we had came from the electronic side first and that was, as we mentioned, related to components and the timing of some programs that we expected to launch in the quarter. We also saw lighter demand on the energy side for technologies that impacted our revenue somewhat during the quarter. But the issues otherwise on technologies that we pointed out were more on the productivity and cost challenges as opposed to our top line.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [4]

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Okay. And Tony, I assume the issue also with -- the energy side also contributed to the margin weakness given that's higher margin business?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [5]

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Yes, absolutely.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [6]

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Okay. So at this point going forward, it sounds like you feel you have resolved some of the bulk of the issues on the technology side in terms of being able to make whatever necessary adjustments to workforce, productivity, et cetera?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [7]

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Yes, we do, Jim. It's a journey. And quite frankly, some of the things that happened in the quarter weren't anticipated. But what was good coming out of that was the response for our team that really identified some of the key problem areas during the quarter. Focused on those, and we were able to see improvement as we exited September in the majority of those areas.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [8]

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Okay. Should we assume a gradual improvement in margins in this part of the business, assuming the volumes or what they are and the current mix of business? Or do you assume more of a significant step-up?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [9]

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Yes, it's more gradual than we had anticipated coming into the second half of the year, and that's why we tempered our fourth quarter guidance somewhat in terms of overall gross margins for the business. So we do expect to see improvements. I think that will be notable. But it doesn't -- it's not getting expect the levels what we had previously expected.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [10]

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Okay. And then on the electronic side, it -- we've all heard a lot about component shortages. For the most part, where do you stand with having this behind you? Just I assume you've been able to leverage your relationships with your larger customers.

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [11]

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Yes, we have. And it's helped quite a bit. And Jeff noted it in his comments and I captured it and he tried to capture it mine as well. But the issues aren't -- that we're having currently aren't as widespread. There are specific components on specific programs that limit the amount of production we can run on those programs. So we're narrowing the bandwidth of the component problems, but we still face those in the third quarter. And we do expect based upon the outlook we have now with our suppliers that we'll see better results in that area in the fourth quarter.

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James Andrew Ricchiuti, Needham & Company, LLC, Research Division - Senior Analyst [12]

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Okay. And last question from me. I mean, it looks like you're laying out a pretty positive outlook for growth next year. And it sounds like you feel you've got pretty good visibility given the bookings levels you're seeing, the backlog. Is that fair to say? That's given you the confidence in putting that kind of an outlook at this point in the year?

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Anthony C. Allen, Sypris Solutions, Inc. - VP & CFO [13]

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It is Jim. Starting with the Class 8 market, continuing to look strong and the strength of the orders that the industry is seeing, we believe that market is going to continue to support our outlook for next year, and we're actually launching some new programs for some new components in that area. So there is a lot of momentum there, the backlog on the industrial side and -- I'm sorry, the backlog on the aerospace and defense programs gives us a lot of visibility into what to expect for 2019. And again, the Energy business, we think, is going to continue to be strong. So it's -- 20%, it's a big number, but we think it's within range.

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Operator [14]

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(Operator Instructions) Next, we'll hear from Joel Cahill of The Jameson Companies.

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Joel Cahill, [15]

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So next year looks exciting. Obviously, this quarter was a little bit disappointing from the way that you portrayed with various different slowdowns and bottlenecks and things. So Jim had some great questions, which I appreciate to layout next year. I'm interested in whether or not there are additional asset sales or anything to sort of lighten up the balance sheet that are in the foreseeable future?

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [16]

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Joel, this is Jeff. Yes, we plan to continue to liquidate excess assets that we have left over in our Broadway facility that we closed at the end of 2017. And we anticipate that, that will go on through much of 2019 as we work to wrap that up.

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Joel Cahill, [17]

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And then if we turn a little bit over to -- obviously, next year going to be generating profitability, that's a beautiful thing. If we turn over to the electronic side of the business, is it -- I understand what the answer is going to be, but I think it's still helpful to ask a question. Is it best -- is that business best held under Sypris Solutions overall given its relative size and some of the headaches that you've seen? I would imagine there's considerable value to the accreditations and just the length of service of those government contracts?

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [18]

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Well, let me see if I can answer your question, Joel. And if I miss it, please just ask again or phrase it in a different way. We think that there are a number of common characteristics that exist between our electronics business and the other 2 markets that we serve. And it's primarily in the fact that we're in a unique niche, and we have a pedigree and a history of doing things that are oftentimes more challenging and difficult than run-of-the-mill commodity-type work. And so we found that there is a specific segment in the Electronics business that's very similar to what we do, for example, in energy. And I think there's a lot of opportunity quite frankly as we look forward into '19 and '20 in that business. So did I hit what you were looking for? Did I miss it? Ask me another question and we'll see if we can...

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Joel Cahill, [19]

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Yes, that does, Jeff. I appreciate it. Understanding those synergies, it's helpful. Just making sure that I understand from the perspective that, there are a lot of really great things happening on the ST side, which that and in itself can really take the business back to -- could take the company back to some of its previous levels and then making sure that it makes sense on the SE, I guess -- or helping for me to understand how it makes sense on the SE side. And then forecasting now that you've got a great -- it's a quite tight revenue expectation, you tightened up your guidance for margins and SG&A and things. Next year, you should start producing some cash. If those forecasts come to, there should be some cash produced. Do you guys have any ideas on things that you'd like to be doing with that cash?

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [20]

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Well, yes, I think, you're right in both aspects that one we expect to generate free cash as we go into 2019, and what we're going to be looking to do, Joel, is how do we invest wisely to continue to grow the business. We're substantially reduced in footprint, if you will, from what we've used to be. And once we've established ourselves operationally and can demonstrate that we're solidly profitable, our objective is going to be to resume growing the business.

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Joel Cahill, [21]

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And you see those growth areas continuing in the core businesses?

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [22]

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Yes. I think there are a number of opportunities that we have to expand our footprint in ways where we can have a larger share with some of our customers, where we can grow into some adjacencies that recognize the unique kind of benefits that we bring to the table, and it could be very, very interesting.

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Operator [23]

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(Operator Instructions) It appears there are no further questions at this time. We'll turn the conference back over to our presenters for any additional or closing comments.

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Jeffrey T. Gill, Sypris Solutions, Inc. - Chairman, President & CEO [24]

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Thank you, April. Tony and I'd like to thank you for joining us for the call. We welcome your continued interest, and of course, your questions about our business. Thank you, and have a great day.

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Operator [25]

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That does conclude today's conference. Thank you all for your participation. You may now disconnect.