Good day and welcome to the Sypris Solutions, Inc. conference call. Today's call is being recorded. At this time, for opening remarks, I would like to turn the call over to the President and Chief Executive Officer, Mr. Jeffrey Gill. Please go ahead.

Thank you Katie and good morning everyone. Tony Allen and I would like to welcome you to this call, the purpose of which is to review the company's financial results for the first quarter of 2020. For those of you who have access to our PowerPoint presentation this morning, please advance to slide two 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 three. I will lead you through 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. Before we begin on slide four, however, I would like to take just a moment to discuss our current environment, especially in light of the public and private activities being taken to address the COVID-19 virus and the potential impact of these actions on Sypris. I am very pleased to be able to say that as of this date, we do not have any employees or their family members who have contracted the virus. We…

Thanks Jeff. Good morning everyone. I would like to discuss with you some of the highlights of our first quarter financial results. Q1 consolidated revenue was $22.4 million, an increase of 14.6% from the first quarter of last year. The year-over-year increase in revenue of $2.9 million was followed by an increase in consolidated gross profit of $2.7 million, a multiple of over three times the prior year period and an increase of $900,000 or 32.6% sequentially. Consolidated gross margin was 16% for the first quarter, up 1,160 basis points from a year ago and 350 basis points sequentially from Q4. Revenue for Sypris Technologies decreased 15% to $13.7 million from $16.1 million a year ago. However, gross profit increased nearly $200,000 and gross margin improved 390 basis points to 18.2% in Q1. During the first two months of 2020, we saw the commercial vehicle demand rebound sequentially from Q4 following the holiday shutdown. However, that changed in March as the impact of COVID-19 began to the impact North American production. Thus far, the highest impact to revenue for Sypris from COVID-19 has been on our technology segment, primarily for our customers in the commercial vehicle and automotive markets. Additionally, while energy product shipments decreased in Q1 about 15% on both a year-over-year and sequential basis, we anticipate that opportunities with our natural gas products will offset the headwinds from lower demand for oil over the balance of the year. As expected, the launch of new programs in the automotive and sport utility markets contributed to revenue at a higher level in Q1 than in prior periods and served to partially offset the lower demand in other markets. The year-over-year improvement in gross margin for technologies reflects the continuous improvement initiatives implemented by our team which are driving improvements in…

[Operator Instructions]. We will take a question from Joel Cahill with Jameson Companies.

Hi. Good morning guys. Thanks for the call.

Good morning Joel.

Good morning Joel.

I think one of the things that was most helpful was showing that revenue mix. I really do appreciate that and that seems like a very important step to show really how far you guys have come and that's remarkable. I really applaud that.

Okay. Thanks Joel.

So just to like, so the PPP that came, that's post quarter-end and so is the Kentucky facility, right?

It did come subsequent to quarter-end and the sale of the property, the real estate was also subsequent to Q1. So those would be reported in Q2.

Now while we are just on that real quick, there was a $2 million decline in PP&E but that wouldn't be this Kentucky facility? Am I wrong?

No. You are not wrong. What you are looking at on the balance sheet reflects some movement in the translation due to the FedEx -- or to the FX change, I am sorry. So the peso moved up.

Okay. Thanks.

Yes. The peso moved up considerably and as we were peso functional in Mexico and so we have to remeasure and that's what you are seeing.

Okay. Got it. So this is from just, you are saying, the decline in the peso since it was moved up to the 25 area?

Yes. Correct. It moved up from close to 19 to closer to 24 from December to March. Yes.

Yes. Absolutely. Okay. And so just so I am aware, is that something that you guys do, any typical hedging on? Or is this you have the [indiscernible] facility.

No. We do not do any hedging on that, Joel. And what you are seeing on the balance sheet is really a non-cash event on those assets.

Okay. Yes. I am familiar. I just wanted to make sure that I understood. And so okay, great. And while we are on the balance sheet too and I am sorry if this is just pretty simple. But that the Gill family note, it looked like there was $2.5 million that had moved to current. I don't recall what the current expiry is on that. Would you just give me some insight here?

Yes. It's three tranches. The first is April 1, 2021. So that's what you are seeing.

Okay. Got it. All right. That's helpful. Okay. Great. And when you were touching on margins, if we can just go back to that now, you were saying 15% consolidated which is excellent. Do you see that there is upside opportunity there? Do you believe that you can maintain that for the year? I mean I know you are not giving guidance for the end of the year right now other than just kind of anecdotally. But where do you see that?

Well, in the short term, Joel, no, we don't anticipate that we are going to maintain that. We are going to need to see the recovery in the market before we will be able to achieve that again. So the impact, in particular what we are seeing in Q2, on us is going to change that. We need to see where the markets go in Q3 and Q4. We believe that the pieces are in place operationally, certainly for when demand ramps that we will get back to that number. But we are going to need to topline them to move up before we can do that.

Okay. Great. And I will jump back if anybody else has any questions. And I will follow-up if there is time. Thank you.

[Operator Instructions]. We will take a follow-up from Joel Cahill with Jameson Companies.

Okay. Great. Sorry. I just wanted to be cognizant in any case. So two questions. Do you know roughly kind of just for tracking balance sheet like for next quarter, roughly where this building has been held on the balance sheet on its depreciated basis that we are selling?

Sure. It was included in the assets held for sale as of the end of the year and not quite half of that number.

Okay.

So we will be reporting a gain on that in the second quarter.

Yes. I figured as much. And then if I could just touch on one of the unpleasant ones. As far as the NASDAQ reporting or the NASDAQ issue with potential delisting, do you have anything that, any approach to that and any thoughts to share there?

Yes. I don't know if you are aware, if you followed it or not, but they did, NASDAQ implemented a tolling period due to the pandemic that will extend the period of compliance for us about another 60 days from July 1.

Okay.

So we are going to have some additional time to cure that to regain compliance. And so we will be monitoring that as we go through the balance of Q2 and then into the early Q3 to see if there is any further actions required.

Okay. Yes. That's great to know. And then my last one. Jeff, you mentioned some new markets. Are you open to sharing anything that's looking particularly interesting?

Well, I don't think I should talk specifically about it, Joel. But the diversification has been really working for us. And so our objective is to continue to open new markets for both of our segments. And the expectation also is to move up the value add chain, if you will and take on more technically challenging, more proprietary type work because, as Tony indicated, we believe there is a nice opportunity to over time continue to accrete our margins. And that's what we have been working on, on the last several years and that's what we will continue to do.

Okay. Great. Yes. Fully understood. I just was interested if there was any to share. But yes, gentlemen, thank you. I don't have any other questions. So thank you very much.

Okay. Thank you, Joel.

With no additional questions in the queue, I would like to turn the call back over to Mr. Gill for any additional or closing remarks.

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

That concludes today's call. We appreciate your participation.

Thank you Katie.