Sypris Awarded Long-Term Contract Extension With Global Truck OEM

Rhea-AI Summary

Sypris Technologies, a subsidiary of Sypris Solutions (NASDAQ: SYPR), has secured a long-term, sole-source extension to its supply agreement with a major global commercial vehicle manufacturer. The contract extends Sypris' provision of Ultra® Axle Shafts for the customer's branded drive axles in medium and heavy-duty trucks.

This extension marks over 25 years of continuous supply to this customer and its subsidiaries. The components are important for the performance of heavy-duty vehicle drive axles. Federico Aviles, VP and GM of Sypris Technologies Mexico, expressed pride in the strategic partnership and anticipates future collaboration opportunities.

Positive

• Secured long-term, sole-source contract extension with a major global truck OEM
• Continuation of over 25 years of continuous supply relationship
• Supplies essential components for heavy-duty vehicle performance

Negative

• None.

Insights

Market Research Analyst

Sypris Technologies has secured a long-term contract extension with a major commercial vehicle manufacturer, which is significant for several reasons. Firstly, it represents an ongoing relationship that has lasted over 25 years, showcasing the reliability and quality of Sypris’ products. This contract solidifies Sypris' role in the supply chain of a major industry player, which may help stabilize revenue streams and potentially lead to additional collaborations in the future.

From a market perspective, this deal ensures a steady demand for Sypris’ Ultra® Axle Shafts, which are critical components in heavy-duty truck drive axles. The heavy-duty commercial vehicle market is currently experiencing growth driven by increasing demand for transportation and logistics services. This contract extension places Sypris in a favorable position to capitalize on this trend, supporting its market expansion and revenue consistency.

Investors should note that long-term agreements like this one can reduce the risk of revenue volatility. It also indicates a strong strategic alignment between Sypris and its customer, which can enhance trust in Sypris’ financial outlook.

Financial Analyst

The long-term contract extension between Sypris Technologies and a leading global commercial vehicle OEM has promising financial implications. This agreement, while not specifying exact financial terms, signals a continuous stream of revenue for Sypris, which is vital for financial stability and planning. Given the competitive nature of the automotive supply sector, securing a sole-source agreement demonstrates Sypris’ competitive advantage in terms of quality and reliability of their drivetrain components.

Such agreements are particularly valuable as they offer predictability in revenue and cash flow, which can positively impact profit margins and facilitate better financial forecasting. This can also lead to improved investor confidence and potentially bolster stock performance. Additionally, the longevity of the relationship with this customer suggests a strong mutual dependence and satisfaction, reducing the risk of contract disputes or termination.

In the short-term, investors might not see an immediate spike in revenue figures, but the stability offered by this agreement should be viewed positively for long-term financial health.

To Supply Drivetrain Components for Heavy-Duty Commercial Vehicles

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Sypris Technologies, Inc., a subsidiary of Sypris Solutions, Inc. (Nasdaq/GM: SYPR), announced today that it has entered into a long-term, sole-source extension to its current supply agreement with one of the world’s largest commercial vehicle manufacturers.

The agreement provides for a continuation of Sypris’ Ultra® Axle Shafts for use in the assemblies of the customer’s branded drive axles for medium and heavy-duty trucks. The components produced by Sypris are essential to the performance of the drive axles of heavy-duty vehicles. The new agreement is effective immediately and once completed represents over 25 years of continuous supply of products to this customer and its subsidiaries.

Commenting on the announcement, Federico Aviles, Vice President and General Manager of Sypris Technologies Mexico, S. de R.L. de C. V., stated, “We are pleased to enter into the next chapter of our strategic relationship with this important customer. The successful finalization of this agreement sets the stage for us to focus on additional opportunities for collaboration in the future. Our customer is a global leader in the commercial vehicle industry, and we are proud to serve as a partner by supplying quality products to support its reputation for high-performance and durability.”

Sypris Technologies, Inc. is a premier manufacturer and supplier of drivetrain and other critical components for the commercial and recreational vehicle, automotive, mining, agriculture, industrial and energy markets. Sypris is headquartered in Louisville, Kentucky. Through its operations in North America, Sypris continues to meet the needs of the industry after more than 90 years of service. For more information about the Company, visit its Web site at www.sypris.com.

Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the federal securities laws. Forward-looking statements include our plans and expectations of future financial and operational performance. Each forward-looking statement herein is subject to risks and uncertainties, as detailed in our most recent Form 10-K and Form 10-Q and other SEC filings. Briefly, we currently believe that such risks also include the following: the fees, costs and supply of, or access to, debt, equity capital, or other sources of liquidity; our failure to achieve profitability on a timely basis by steadily increasing our revenues from profitable contracts with a diversified group of customers, which would cause us to continue to use existing cash resources or require us to sell assets to fund operating losses; cost, quality and availability or lead times of raw materials such as steel, component, parts, natural gas or utilities including increased cost relating to inflation; dependence on, retention or recruitment of key employees and highly skilled personnel and distribution of our human capital; the cost, quality, timeliness, efficiency and yield of our operations and capital investments, including the impact of inflation, tariffs, product recalls or related liabilities, employee training, working capital, production schedules, cycle times, scrap rates, injuries, wages, overtime costs, freight or expediting costs; volatility of our customers’ forecasts and our contractual obligations to meet current scheduling demands and production levels, which may negatively impact our operational capacity and our effectiveness to integrate new customers or suppliers, and in turn cause increases in our inventory and working capital levels; our failure to successfully complete final contract negotiations with regard to our announced contract “orders”, “wins” or “awards”; significant delays or reductions due to a prolonged continuing resolution or U.S. government shut down reducing the spending on products and services; adverse impacts of new technologies or other competitive pressures which increase our costs or erode our margins; breakdowns, relocations or major repairs of machinery and equipment, especially in our Toluca Plant; the termination or non-renewal of existing contracts by customers; the costs and supply of insurance on acceptable terms and with adequate coverage; the costs of compliance with our auditing, regulatory or contractual obligations; health care or other benefit costs; our failure to successfully win new business or develop new or improved products or new markets for our products; war, geopolitical conflict, terrorism, or political uncertainty, including disruptions resulting from the Russia-Ukraine war or the Israel and Gaza conflict, including arising out of international sanctions, foreign currency fluctuations and other economic impacts; our reliance on a few key customers, third party vendors and sub-suppliers; inventory valuation risks including excessive or obsolescent valuations or price erosions of raw materials or component parts on hand or other potential impairments, non-recoverability or write-offs of assets or deferred costs; disputes or litigation involving governmental, supplier, customer, employee, creditor, stockholder, product liability, warranty or environmental claims; failure to adequately insure or to identify product liability, environmental or other insurable risks; unanticipated or uninsured product liability claims, disasters, public health crises, losses or business risks; labor relations; strikes; union negotiations; costs associated with environmental claims relating to properties previously owned; our inability to patent or otherwise protect our inventions or other intellectual property rights from potential competitors or fully exploit such rights which could materially affect our ability to compete in our chosen markets; our reliance on revenues from customers in the oil and gas and automotive markets, with increasing consumer pressure for reductions in environmental impacts attributed to greenhouse gas emissions and increased vehicle fuel economy; changes in licenses, security clearances, or other legal rights to operate, manage our work force or import and export as needed; cyber security threats and disruptions, including ransomware attacks on our systems and the systems of third-party vendors and other parties with which we conduct business, all of which may become more pronounced in the event of geopolitical conflicts and other uncertainties, such as the conflict in Ukraine; our ability to maintain compliance with the Nasdaq listing standards minimum closing bid price; risks related to owning our common stock, including increased volatility; possible public policy response to a public health emergency, including U.S. or foreign government legislation or restrictions that may impact our operations or supply chain; or unknown risks and uncertainties. We undertake no obligation to update our forward-looking statements, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240717863313/en/

Federico Aviles

Vice President & General Manager

(502) 420-1222

Source: Sypris Technologies, Inc.

FAQ

What new contract did Sypris Solutions (SYPR) announce?

Sypris Solutions (SYPR) announced a long-term, sole-source extension to its supply agreement with a major global commercial vehicle manufacturer for Ultra® Axle Shafts used in medium and heavy-duty trucks.

How long has Sypris been supplying components to this customer?

The new agreement represents over 25 years of continuous supply of products to this customer and its subsidiaries.

What products will Sypris (SYPR) supply under this contract extension?

Sypris (SYPR) will continue to supply Ultra® Axle Shafts for use in the assemblies of the customer's branded drive axles for medium and heavy-duty trucks.

Who commented on the contract extension for Sypris Solutions (SYPR)?

Federico Aviles, Vice President and General Manager of Sypris Technologies Mexico, S. de R.L. de C. V., commented on the contract extension.