Sypris Reports Fourth Quarter Results
- Revenue increased by 16.9% for the quarter and 23.7% for the full year.
- Sypris Electronics revenue grew by 25.2% and 42.7% for the quarter and full year.
- Sypris Technologies revenue increased by 10.8% and 12.5% for the quarter and full year.
- Sypris received multimillion-dollar contracts for electronic warfare and communications avionics systems.
- The company secured awards for secure communications infrastructure and high-pressure closures for a liquified natural gas project.
- Despite a net loss of $1.1 million for the quarter and $1.6 million for the full year, the outlook for 2024 is positive with expected revenue growth of 10-15% and gross profit increase of 20-25%.
- Backlog exceeds $110 million for Sypris Electronics, supporting revenue growth through 2024.
- Customer funding secured for key programs to mitigate future supply chain issues.
- Positive demand from automotive, commercial vehicle, and energy markets.
- Gross margin forecasted to expand by 150-175 basis points in 2024.
- Net loss of $1.1 million for the quarter and $1.6 million for the full year.
- Gross profit negatively impacted by ramp-up costs on two major programs.
- Production inefficiencies driven by volatile customer demand schedules.
Insights
The reported increase in revenue for Sypris Solutions indicates a positive trajectory for the company's financial health. The significant backlog exceeding $115 million suggests a robust pipeline of future revenues, which may instill investor confidence. The growth in revenue for both Sypris Electronics and Sypris Technologies, driven by increased demand across various sectors, reflects a diversified business model capable of capitalizing on multiple market opportunities.
From a market perspective, the contracts with the U.S. Department of Defense and the involvement in large international projects such as liquified natural gas indicate strategic positioning in both defense and energy sectors. These sectors are known for long-term contracts and stable revenue streams, which can be attractive to investors seeking stability. The focus on continuous improvement initiatives and investment in new equipment could indicate a long-term strategy to improve efficiency and profitability.
Despite the revenue growth, the company's net loss in both the fourth quarter and full year raises questions about cost management and profitability. The net loss narrowing from the previous year is a positive sign; however, investors should closely monitor future profitability metrics. The expected gross margin expansion and gross profit increase in 2024 suggest that management is confident in improving operational efficiency.
Investors should consider the impact of steel price increases on Sypris Technologies and the ramp-up costs for Sypris Electronics' major programs, as these factors could affect future margins. The company's ability to pass through steel price increases and manage ramp-up costs effectively will be important in realizing the forecasted gross margin expansion.
The company's proactive approach to securing inventory under multi-year purchase orders to mitigate future supply chain issues demonstrates strategic foresight. As supply chain disruptions have been a global concern, Sypris Solutions' ability to secure customer funding and inventory for key programs could be a competitive advantage, potentially leading to uninterrupted production and delivery schedules.
The mention of material shortages and disruptions abating is a positive sign for operational stability. However, the dependency on steel prices and the potential volatility of customer demand schedules are factors that require ongoing risk management. The ability of Sypris Solutions to navigate these challenges will be critical in maintaining the positive outlook for 2024 and beyond.
Revenue Up
HIGHLIGHTS
─────────────────────
-
Consolidated revenue for the quarter increased
16.9% and23.7% for the full year driven by double digit expansion of shipments across both segments. -
Revenue for Sypris Electronics increased
25.2% and42.7% for the quarter and full year, respectively, reflecting the continued growth in demand from customers serving the markets for Electronic Warfare, Aircraft and Missile Avionics, and Subsea Communications. -
Revenue for Sypris Technologies increased
10.8% and12.5% for the quarter and full year, respectively, resulting from increased demand from customers serving the Commercial Vehicle, Specialty Automotive and Energy markets. -
During the quarter, Sypris Electronics announced that it had received two multimillion-dollar follow-on contract awards from a
U.S. global defense contractor for the full-rate production of advanced integrated electronic warfare and communications avionics system modules for one of the largest Government DoD programs. Sypris also received releases for the first year of production with shipments scheduled to continue into mid-year 2025. -
Sypris Electronics also announced a follow-on award from a
U.S. DoD prime contractor for a secure communications infrastructure program. Sypris will produce and test the embedded circuit card assemblies that will perform certain cryptographic functions for the Army Key Management System. Production is expected to begin in 2024. - Subsequent to quarter end, Sypris Technologies received an award to supply specialty high-pressure closures for use in a large international liquified natural gas project. The closures will be integrated into the filtration systems of the carbon capture and storage facilities of the project. Production is expected to be completed during 2024.
-
The outlook for 2024 remains positive, with revenue now expected to increase 10
-15% year-over-year, reflecting the continued momentum of new contract awards and strong backlog across many of the Company’s markets. We expect gross profit to increase 20-25% for 2024, while gross margin is forecast to expand 150-175 basis points on a year-over-year basis.
────────────────────
“We continued to expand across all segments of our business during the fourth quarter. Material shortages and the disruptions associated with new program launches are abating, and our focus is clearly on meeting the growing demand of our customers,” commented Jeffrey T. Gill, President and Chief Executive Officer.
“The backlog in excess of
“Overall demand from customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained solid. We continue to invest in new equipment, maintain or upgrade existing assets, and drive continuous improvement initiatives to add capacity and support more cost-efficient operations in the future.
“Orders for our energy products remain positive, with open quotes outstanding on several large projects. Additional opportunities for growth may exist with new projects globally in support of increasing LNG demand. We are also actively pursuing applications for our products in adjacent markets to further diversify our industry and customer portfolios.”
Fourth Quarter and Full-Year Results
The Company reported revenue of
For the full-year 2023, the Company reported revenue of
Sypris Technologies
Revenue for Sypris Technologies increased to
Sypris Electronics
Revenue for Sypris Electronics increased to
Outlook
Commenting on the future, Mr. Gill added, “While challenging supply chain conditions and new program launches impacted our 2023 results, demand from customers serving the automotive, commercial vehicle and sport utility markets remains positive. Similarly, demand from customers in the defense and communications sector continues to be robust, while the outlook for the energy market continues to move in the right direction.
“Our healthy backlog, new program wins, and long-term contract extensions are expected to support continued revenue and earnings growth during 2024. We now expect revenue to increase 10
About Sypris Solutions
Sypris Solutions is a diversified manufacturing and engineering services company serving the defense, transportation, communications, and energy industries. For more information about Sypris Solutions, 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; risks of foreign operations, including foreign currency exchange rate risk exposure, which could impact our operating results; 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; cost, quality and availability or lead times of raw materials such as steel, component parts (especially electronic components), 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 and availability of full-time accounting personnel with technical accounting knowledge to execute, review and approve all aspects of the financial statement close and reporting process; 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; the termination or non-renewal of existing contracts by customers; 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
SYPRIS SOLUTIONS, INC. |
||||||||
Financial Highlights |
||||||||
(In thousands, except per share amounts) |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
December 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
(Unaudited) |
||||||||
| Revenue | $ |
34,735 |
|
$ |
29,712 |
|
||
| Net (loss) income | $ |
(1,079 |
) |
$ |
140 |
|
||
| (Loss) income per common share: | ||||||||
| Basic | $ |
(0.05 |
) |
$ |
0.01 |
|
||
| Diluted | $ |
(0.05 |
) |
$ |
0.01 |
|
||
| Weighted average shares outstanding: | ||||||||
| Basic |
|
21,938 |
|
|
21,759 |
|
||
| Diluted |
|
21,938 |
|
|
21,759 |
|
||
Year Ended |
||||||||
December 31, |
||||||||
|
2023 |
|
|
|
2022 |
|
||
| (Unaudited) | ||||||||
| Revenue | $ |
136,223 |
|
$ |
110,121 |
|
||
| Net loss | $ |
(1,596 |
) |
$ |
(2,494 |
) |
||
| Loss per common share: | ||||||||
| Basic | $ |
(0.07 |
) |
$ |
(0.11 |
) |
||
| Diluted | $ |
(0.07 |
) |
$ |
(0.11 |
) |
||
| Weighted average shares outstanding: | ||||||||
| Basic |
|
21,876 |
|
|
21,729 |
|
||
| Diluted |
|
21,876 |
|
|
21,729 |
|
||
Sypris Solutions, Inc. |
|||||||||||||||
Consolidated Statements of Operations |
|||||||||||||||
(in thousands, except for per share data) |
|||||||||||||||
|
|
|
|||||||||||||
|
|
Three Months Ended |
|
Year Ended |
|||||||||||
|
|
December 31, |
|
December 31, |
|||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|||||||||||
| Net revenue: | |||||||||||||||
| Sypris Technologies | $ |
19,025 |
|
$ |
17,163 |
$ |
77,920 |
|
$ |
69,259 |
|
||||
| Sypris Electronics |
|
15,710 |
|
|
12,549 |
|
58,303 |
|
|
40,862 |
|
||||
| Total net revenue |
|
34,735 |
|
|
29,712 |
|
136,223 |
|
|
110,121 |
|
||||
| Cost of sales: | |||||||||||||||
| Sypris Technologies |
|
15,922 |
|
|
14,947 |
|
68,712 |
|
|
60,709 |
|
||||
| Sypris Electronics |
|
14,436 |
|
|
10,172 |
|
50,263 |
|
|
34,559 |
|
||||
| Total cost of sales |
|
30,358 |
|
|
25,119 |
|
118,975 |
|
|
95,268 |
|
||||
| Gross profit: | |||||||||||||||
| Sypris Technologies |
|
3,103 |
|
|
2,216 |
|
9,208 |
|
|
8,550 |
|
||||
| Sypris Electronics |
|
1,274 |
|
|
2,377 |
|
8,040 |
|
|
6,303 |
|
||||
| Total gross profit |
|
4,377 |
|
|
4,593 |
|
17,248 |
|
|
14,853 |
|
||||
| Selling, general and administrative |
|
4,660 |
|
|
3,789 |
|
16,279 |
|
|
14,489 |
|
||||
| Operating (loss) income |
|
(283 |
) |
|
804 |
|
969 |
|
|
364 |
|
||||
| Interest expense, net |
|
246 |
|
|
326 |
|
777 |
|
|
1,110 |
|
||||
| Other expense, net |
|
342 |
|
|
145 |
|
1,125 |
|
|
800 |
|
||||
| (Loss) income before taxes |
|
(871 |
) |
|
333 |
|
(933 |
) |
|
(1,546 |
) |
||||
| Income tax expense, net |
|
208 |
|
|
193 |
|
663 |
|
|
948 |
|
||||
| Net (loss) income | $ |
(1,079 |
) |
$ |
140 |
$ |
(1,596 |
) |
$ |
(2,494 |
) |
||||
| (Loss) income per common share: | |||||||||||||||
| Basic | $ |
(0.05 |
) |
$ |
0.01 |
$ |
(0.07 |
) |
$ |
(0.11 |
) |
||||
| Diluted | $ |
(0.05 |
) |
$ |
0.01 |
$ |
(0.07 |
) |
$ |
(0.11 |
) |
||||
| Dividends declared per common share | $ |
- |
|
$ |
- |
$ |
- |
|
$ |
- |
|
||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic |
|
21,938 |
|
|
21,759 |
|
21,876 |
|
|
21,729 |
|
||||
| Diluted |
|
21,938 |
|
|
21,759 |
|
21,876 |
|
|
21,729 |
|
||||
Sypris Solutions, Inc. |
||||||||
Consolidated Balance Sheets |
||||||||
(in thousands, except for share data) |
||||||||
|
|
|
|
|||||
|
December 31, |
|||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
(Unaudited) |
|
(Note) |
|||||
ASSETS |
||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
7,881 |
|
$ |
21,648 |
|
||
| Accounts receivable, net |
|
8,929 |
|
|
8,064 |
|
||
| Inventory, net |
|
77,314 |
|
|
42,133 |
|
||
| Other current assets |
|
9,743 |
|
|
8,133 |
|
||
| Total current assets |
|
103,867 |
|
|
79,978 |
|
||
| Property, plant and equipment, net |
|
17,133 |
|
|
15,532 |
|
||
| Operating lease right-of-use assets |
|
3,309 |
|
|
4,251 |
|
||
| Other assets |
|
5,033 |
|
|
4,383 |
|
||
| Total assets | $ |
129,342 |
|
$ |
104,144 |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
26,737 |
|
$ |
17,638 |
|
||
| Accrued liabilities |
|
56,232 |
|
|
33,316 |
|
||
| Operating lease liabilities, current portion |
|
1,068 |
|
|
1,168 |
|
||
| Finance lease obligations, current portion |
|
1,327 |
|
|
1,102 |
|
||
| Equipment financing obligations, current portion |
|
618 |
|
|
398 |
|
||
| Working capital line of credit |
|
500 |
|
|
- |
|
||
| Note payable - related party, current portion |
|
- |
|
|
2,500 |
|
||
| Total current liabilities |
|
86,482 |
|
|
56,122 |
|
||
| Operating lease liabilities, net of current portion |
|
2,642 |
|
|
3,710 |
|
||
| Finance lease obligations, net of current portion |
|
1,852 |
|
|
2,536 |
|
||
| Equipment financing obligations, net of current portion |
|
1,333 |
|
|
738 |
|
||
| Note payable - related party, net of current portion |
|
6,484 |
|
|
3,989 |
|
||
| Other liabilities |
|
8,082 |
|
|
17,474 |
|
||
| Total liabilities |
|
106,875 |
|
|
84,569 |
|
||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value |
|
- |
|
|
- |
|
||
| Series A preferred stock, par value |
|
- |
|
|
- |
|
||
| Common stock, non-voting, par value |
|
- |
|
|
- |
|
||
| Common stock, par value |
|
224 |
|
|
221 |
|
||
| Additional paid-in capital |
|
156,242 |
|
|
155,535 |
|
||
| Accumulated deficit |
|
(116,932 |
) |
|
(115,336 |
) |
||
| Accumulated other comprehensive loss |
|
(17,067 |
) |
|
(20,845 |
) |
||
| Treasury stock, 5,835 in 2023 and 19 in 2022 |
|
- |
|
|
- |
|
||
| Total stockholders’ equity |
|
22,467 |
|
|
19,575 |
|
||
| Total liabilities and stockholders’ equity | $ |
129,342 |
|
$ |
104,144 |
|
||
| Note: The balance sheet at December 31, 2022, has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by accounting principles generally accepted in |
||||||||
Sypris Solutions, Inc. |
||||||||
Consolidated Cash Flow Statements |
||||||||
(in thousands) |
||||||||
|
|
|
||||||
|
|
Year Ended |
||||||
|
|
December 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(Unaudited) |
||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(1,596 |
) |
$ |
(2,494 |
) |
||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization |
|
3,259 |
|
|
3,088 |
|
||
| Deferred income taxes |
|
54 |
|
|
329 |
|
||
| Stock-based compensation expense |
|
813 |
|
|
683 |
|
||
| Deferred loan costs amortized |
|
3 |
|
|
6 |
|
||
| Provision for excess and obsolete inventory |
|
(167 |
) |
|
65 |
|
||
| Non-cash lease expense |
|
942 |
|
|
890 |
|
||
| Other noncash items |
|
(56 |
) |
|
(148 |
) |
||
| Contributions to pension plans |
|
(16 |
) |
|
(60 |
) |
||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable |
|
(1,096 |
) |
|
345 |
|
||
| Inventory |
|
(34,693 |
) |
|
(11,804 |
) |
||
| Prepaid expenses and other assets |
|
(1,105 |
) |
|
(3,072 |
) |
||
| Accounts payable |
|
8,984 |
|
|
5,556 |
|
||
| Accrued and other liabilities |
|
13,585 |
|
|
20,409 |
|
||
| Net cash (used in) provided by operating activities |
|
(11,089 |
) |
|
13,793 |
|
||
| Cash flows from investing activities: | ||||||||
| Capital expenditures |
|
(2,139 |
) |
|
(3,041 |
) |
||
| Proceeds from sale of assets |
|
- |
|
|
10 |
|
||
| Net cash used in investing activities |
|
(2,139 |
) |
|
(3,031 |
) |
||
| Cash flows from financing activities: | ||||||||
| Proceeds from equipment financing obligations |
|
710 |
|
|
- |
|
||
| Proceeds from working capital line of credit |
|
500 |
|
|
- |
|
||
| Proceeds from Note Payable - related party |
|
2,500 |
|
|
- |
|
||
| Principal payments on finance lease obligations |
|
(1,168 |
) |
|
(982 |
) |
||
| Principal payments on equipment financing obligations |
|
(551 |
) |
|
(352 |
) |
||
| Principal payments on Note Payable - related party |
|
(2,500 |
) |
|
- |
|
||
| Indirect repurchase of shares for minimum statutory tax withholdings |
|
(105 |
) |
|
(49 |
) |
||
| Net cash used in financing activities |
|
(614 |
) |
|
(1,383 |
) |
||
| Effect of exchange rate changes on cash balances |
|
75 |
|
|
649 |
|
||
| Net (decrease) increase in cash and cash equivalents |
|
(13,767 |
) |
|
10,028 |
|
||
| Cash and cash equivalents at beginning of period |
|
21,648 |
|
|
11,620 |
|
||
| Cash and cash equivalents at end of period | $ |
7,881 |
|
$ |
21,648 |
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240328095435/en/
Richard L Davis
Chief Financial Officer
(502) 329-2000
Source: Sypris Solutions, Inc.
FAQ
What was the revenue increase percentage for Sypris Solutions (SYPR) in the fourth quarter?
What markets drove revenue growth for Sypris Electronics?
What awards did Sypris receive for its electronics segment?
What is the outlook for revenue in 2024 for Sypris Solutions?
What impacted the gross profit for Sypris Electronics in 2023?
