SYPRIS SOLUTIONS INC Q1 FY2022 earnings call

• New contract awards: In early February, Sypris Electronics received multi-year follow-on contracts from U.S. DoD prime contractors for electronic power supply modules. Sypris Technologies announced a long-term sole-source contract extension and a new program for side-by-side all-terrain vehicles. On April 19th, a multi-year contract extension was received from a global commercial vehicle OEM.
• Market outlooks: Production of Class 8 heavy vehicles expected to increase in 2022 and 2023. U.S. natural gas and oil prices up, with positive outlook for energy consumption. Defense spending rising, backlog in defense segment up. Revenue forecast to increase 25%-30% in 2022, with defense-related markets expected to contribute a 20% increase in overall mix to 36% of sales.
• Progress: First quarter 2022 was positive, serving as a solid foundation for growth. Revenue increased 31%, backlog grew 9%, gross profit rose 148%, and gross margin expanded by 810 basis points. Earnings per share improved 113% to $0.01 per share.

For the first quarter of 2022, revenue increased 31% year-over-year. Sypris Electronics saw a 33% revenue increase, with gross profit expanding 113%, and its gross margin increased 580 basis points to 15%. Sypris Technologies had a 30% revenue increase, with gross profit up 167%, and its gross margin rose 940 basis points to 18% of revenue. Consolidated gross margin expanded by 810 basis points to 17% for the quarter. Backlog for Sypris Electronics was up 12% from the prior year, and energy products backlog increased 30% from year-end.

• Full-year 2022 revenue expected to increase 25% to 30% year-over-year.
• Gross margins forecast to expand 200 basis points to 250 basis points during 2022.
• Cash flow from operations expected to increase materially.

• Material shortages and supply chain issues continued to challenge the business. On certain defense programs, faced component availability challenges and production delays due to design issues and supply chain delays.

Q: A: Q: A: