Welcome to the Sypris Solutions, Inc. Conference Call. Today's call is being recorded. At this time, for opening remarks, I'd like to turn the call over to the President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead, sir.

Thank you, Noah. Welcome everyone. Tony Allen and I would like to welcome you to this call, the purpose of which is to review the trends reflected in the company's financial results for the first quarter of 2015. 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 are 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 would now like to proceed with the business discussion. Please advance to Slide 3. I will lead you through the first half of our presentation this morning, starting with an overview of the highlights for the year to be followed by a brief discussion of each of our two business segments. Tony will then lead you with a more detailed review of our financial results for the quarter. Now let's begin with the overview on slide 4, as we mentioned in our last call and in our annual report to stockholders for the year 2014 the discontinuation of the long term supply agreement with Dana at year-end was expected to have a material impact on the future outlook for our business since Dana represented approximately 59% of consolidated net revenue in 2014. We noted that the brunt of the financial impact was…

I would like to take you through the highlights of our financial results for the first quarter of 2015 and I will begin with our consolidated results and ask you to advance to slide 11. Q1 consolidated revenue totaled 37 million down 47.2 million compared to the prior year. The decline in revenue reflects the discontinuation of shipments to Dana effective January 1. Dana accounted for 59% of Q1 and full year revenue in 2014 and although we’re currently shipping some small quantities of components to Dana, our outlook for the balance of 2015 does not include any significant volume from this customer. Gross profit decreased to a loss of 3.2 million in the quarter from 10.6 million in the prior year period. The profit and cash flow metrics highlighted on this slide are primarily impacted by the Dana event which outweighs the year-over-year comparison of metrics in both segments. However we’re pleased to announce that Sypris Electronics reported gross profit of just under $1 million for the quarter on revenue of 8.9 million for a gross margin of 10.6%. Workforce reductions by Sypris Technologies in response to the decline in revenue gave rest to severance cost of approximately 300,000 which has been classified as a separate line item in our income statement. Legal fees incurred for litigation proceedings are included in selling, general and administrative expense and further impacted EBITDA during the quarter. Our free cash flow for the first quarter includes a working capital reduction which provided a source of cash in Q1 and lower spend on capital expenditures compared to the prior year period. The impact of these two items partially offset the year-over-year decline in EBITDA. Please advance to slide 12, and I will discuss EBITDA for the comparable first quarter periods. The most significant item…

[Operator Instructions]. And we will take our first question from Brad Mas with Needham & Company.

Just first off, I think on the last call you guys talked about the shipments to Northrop and the Cyber Range in Singapore would generate about 8 million in the first half, just wondering if that’s their expectation and then what amount that would be in Q2 and then if you can provide any color on what you expect from the two in the second half?

Yes we did commit shipments to Northrop in the first quarter and as Jeff discussed earlier I think I mentioned as well the Cyber Range is targeted for commissioning steel in the second quarter. So the large single program was Northrop - we have more than one program but the large program we discussed was shipped in Q1 and Q2. It's not expected to have significant volume at this point in the back half of the year.

Okay. And then regarding the Cyber Range I think you’ve talked about a potential pipeline in excess of 25 million, just wondering how many customers that would represent and then what some of the milestones that we can look for some of these potential awards?

Yes we have a deep funnel on the business development side for the Cyber Range and I would say out of that 25 million there are 4 or 5 customers that are more advanced in our discussions than others and on average I would say, you would think of this being in the neighborhood of ranging from $1.5 million to $2.5 million per range depending upon configuration and complexity and features.

And with regard to the EMS business in 2015, how should we think about seasonality going forward for the rest of the year?

Well we expect the EMS business to continue to grow as we go through the year and the activity there has been very positive and so we believe that by the time we get to the full year we will see strong double digit growth for that part of our business.

Okay. And then switching gears the joint venture in India do you still expect that to start in Q2 and then how should we think about the financial impact for the second half/

We expect to hopefully finish the documentation, enter into the joint venture agreement and all of those things by the time we get through Q2. Then my sense is Brad that it would take us probably in the neighborhood of 12 to 15 months for the venture to ramp up in terms of installing the equipment and doing those types of things. Our major contribution to this venture is in taking some mothballed equipment that we have here in Kentucky and taking over there it's profile perfectly for what the Indian market could use and we think that once we get up and going that the potential be to expand from the light truck market into the commercial vehicle market as well and so from a result standpoint on Sypris I don’t think we’re going to see anything until certainly mid to late 2016.

And then staying on the industrial business, just wondering either quantitatively or qualitatively what the utilizations were the in the quarter and how you see that in the Q2 in the second half?

You talking about capacity utilization?

Yes.

Well that is a difficult number to give you because the impact of the lost business affects two plants but not two other plants and so in the plants that were affected the utilization rate for the quarter was very, very low. It also reflects the fact in Mexico in particular we believe we will be able to bring that utilization rate back up as we go through the year because our operation in Mexico is extremely competitive, we have a great workforce and it's situated in think in a really great geographic area. So but as you can imagine the utilization during the first quarter was very low.

And then last one for me, just wondering if you can - how you would characterize the demand from the commercial vehicle customers and heavy duty in Class 4 through 7 versus what you guys thought at the end of 2014?

I missed part of your question.

Just wondering how you would characterize the demand in heavy duty in Class 4 through 7 versus what you thought three months ago?

In the medium duty it's remained steady from our standpoint, it hasn’t varied from expectations.

And then what about heavy duty?

Heavy just as well. In talking with our customers they are very bullish on the outlook for the heavy duty market even several of these customers feel that the market will remain strong, well into '16 so we will see how that plays.

And our next question comes from Alan Weber with Robotti & Company.

I might have missed this part, but as you look out for the balance of the year, I think I first - what is the acquisition - what was the purchase price of the acquisition? And then what do you expect kind of free cash flow or the cash flow to be - just kind of general range in terms of as revenues ramp up in the second half of the year working capital required, there is much additional investment.

The acquisition hasn’t closed and therefore we haven't announced publically any details around the purchase price or any of the associated projects or historical performance of the business and not in a position today certainly to disclose anything related to the acquisition in terms of the quantitative aspects. And as the second quarter numbers that we presented do not include any acquisition impact in our outlook. Regarding free cash flow in the back half of the year, we expect sequential improvement as we move through the year, we expect to get anticipate achieving positive cash flow in the back half of the number, capital needs are less than the prior year and we will monitor that and adjust that view as we move through the year based upon new program launches and we have modeled some of that as we look to the back half of the year on new business that we have either under contract or that were close to awards and we think that the cap spend that we have is appropriate based upon those projects.

And we will take our next question from Justin Putnam with Talanta Investment Group.

First question, so it sounds like in the back half of the year your business is going to reach some kind of normalization and so does that mean that you still like, your cost structure is aligned with new volume business that you have in the back half of the year or do you feel like there is a lot more work to be done, even beyond 2015 towards that concern?

Yes I think there is more work to be done Justin, I mean we have made appropriately adjustments to our cost structure but when you’re trying to back fill 60% of your revenue it doesn’t happen in one quarter, two quarters or three quarters. So there is ongoing work as we move through the balance of the year from a most of the significant adjustments that we will have to make on the variable side will have been made by the time we get to that second half but there is still in the back half of the year there are still plenty of work ahead to really drive the top line improvements and improve the overhead absorption as we move through the year.

So for the lining of your cost structure with your new revenue levels, you feel like that stabilization will be occur like in the first part of 2016 or toward the end or when we’re going to reach a stable period I guess is what I'm asking.

We believe that our cost structural will be fundamentally in-line by the end of Q2.

Okay, that seemed to be a little bit different than what Tony was saying there.

Well I don’t know that it is different Justin, as what I Jeff is communication which is consistent with what I said is that from a variable cost side most of the significant changes will have occurred by the time we enter the second half. When I say there is more work to be done and driving top line growth, obviously we’re not, our fixed overhead structure should still absorbing a loss in revenue of $200 million annual. So that element of it in terms of overhead absorption will continue through 2015 and then into 2016 but the variable said - Jeff correct, and I hope it was consistent with what I said that majority of those changes will have occurred by the end of Q2.

Okay so I appreciate you providing the outlook for second quarter and some numbers around that, that’s very helpful as far as understanding your business. Would you be willing to provide a little bit more either commentary or maybe some numbers around where you see your business as you reach that stable point where the impact half of the year into 2016, maybe just talking about the industrial business from a gross margin standpoint. I mean we all know historically your business was low-teens, gross margin business, do you see with the new business and that business that you’ve now, do you see once everything aligned properly? Do you see something approaching that level or where do you see the business as we reach kind of a normalization base?

We see the gross margin turning positive here shortly, we won't give back to the low-teens in 2015 but I think you should expect us to be in the mid to upper percentage single digits as we go through the second half of the year.

And that’s the reason of expectation for your business going forward, 2016, '17 so forth, that’s the type of business that you have?

Well I think that as we roll into '16 that you should expect our margins to climb back to historical levels but we need to - as Tony indicated, we need to continue to bring in the volume that will support the absorption on that basis.

[Operator Instructions]. And we have no further questions at this time.

Okay. Thank you Noah, and thank you everyone. Tony and I want to thank you for joining us on the call this morning. We certainly welcome your interest and of course your questions about our business. So thank you and have a great day.

And this does conclude today's conference. Thank you for your participation.