Sypris Reports Second Quarter Results
Gross Profit up
HIGHLIGHTS
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The Company’s second quarter 2024 consolidated revenue was even with the prior year at
, reflecting a rotation in mix driven by continued growth at Sypris Electronics and reduced shipments for Sypris Technologies. Orders are up$35.5 million 15.8% year-to-date, reflecting positive growth for both businesses. -
Gross profit for the Company increased
20.8% from the prior-year period and increased95.6% sequentially, while gross margin expanded 280 basis points and 780 basis points, respectively. -
Revenue for Sypris Electronics increased
13.6% , reflecting the positive impact of recently announced contracts with customers serving the markets for electronic warfare, aircraft and missile avionics, and subsea communications. Gross profit increased9.7% from the prior year and250.8% sequentially. Orders are up16.6% year-to-date. -
Gross profit for Sypris Technologies increased
35.5% year-over-year and32.6% sequentially, while gross margin expanded 520 basis points and 400 basis points, respectively. Orders for energy products are up13.6% year-to-date. -
During the quarter, Sypris Electronics announced that it received releases for an additional four systems under a multi-year production contract that was first announced in 2022. The modules to be produced by Sypris will be integrated into an electronic warfare improvement program for the
U.S. Navy. Deliveries are expected to begin in 2024. - Subsequent to quarter end, Sypris Technologies announced that it 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 Company reaffirmed its full-year outlook for 2024, maintaining the expected increase in revenue at 10
-15% year-over-year. Gross profit is expected to increase 20-25% , while gross margins are expected to expand 100-125 basis points year-over-year.
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“We were pleased with the year-over-year revenue growth at Sypris Electronics,” commented Jeffrey T. Gill, President and Chief Executive Officer. “The backlog at Sypris Electronics exceeds
“Demand from Sypris Technologies customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained relatively stable, with new product line shipments offsetting the anticipated cyclical decline for the commercial vehicle market. We believe that the market diversification Sypris Technologies has accomplished over recent years by adding new programs in the automotive, sport-utility and off-highway markets will help offset some of this decline.
“Orders for our energy products increased during the period, with open quotes yet to be closed still outstanding on several large projects. Additional opportunities for growth may exist with new global projects 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.”
Second Quarter Results
The Company reported revenue of
For the six months ended June 30, 2024, the Company reported revenue of
Sypris Technologies
Revenue for Sypris Technologies was
Sypris Electronics
Revenue for Sypris Electronics was
Outlook
Commenting on the future, Mr. Gill added, “Demand from customers serving the markets for electronic warfare, aircraft and missile avionics, secure and subsea communications, and ground-based radar remain robust, while the outlook for the energy market continues to move in the right direction. Similarly, demand from customers serving the automotive, commercial vehicle and sport utility markets remains healthy despite the anticipated cyclical decline in the commercial vehicle market.
“With a strong backlog, new program wins, and long-term contract extensions in place, we are confident that the second half of 2024 has the potential to be very positive for Sypris. As a result, we continue to 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 and maintain 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; 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; 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; risks of foreign operations, including foreign currency exchange rate risk exposure, which could impact our operating results; 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; 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 |
||||||||
June 30, |
|
July 2, |
||||||
2024 |
|
2023 |
||||||
(Unaudited) |
||||||||
Revenue | $ |
35,521 |
|
$ |
35,615 |
|||
Net income | $ |
16 |
|
$ |
213 |
|||
Income per common share: | ||||||||
Basic | $ |
0.00 |
|
$ |
0.01 |
|||
Diluted | $ |
0.00 |
|
$ |
0.01 |
|||
Weighted average shares outstanding: | ||||||||
Basic |
|
21,989 |
|
|
21,852 |
|||
Diluted |
|
22,288 |
|
|
22,446 |
|||
Six Months Ended |
||||||||
June 30, |
July 2, |
|||||||
2024 |
2023 |
|||||||
(Unaudited) |
||||||||
Revenue | $ |
71,074 |
|
$ |
67,907 |
|||
Net (loss) income | $ |
(2,205 |
) |
$ |
38 |
|||
(Loss) income per common share: | ||||||||
Basic | $ |
(0.10 |
) |
$ |
0.00 |
|||
Diluted | $ |
(0.10 |
) |
$ |
0.00 |
|||
Weighted average shares outstanding: | ||||||||
Basic |
|
21,973 |
|
|
21,824 |
|||
Diluted |
|
21,973 |
|
|
22,457 |
Sypris Solutions, Inc. |
||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||
(in thousands, except for per share data) |
||||||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||||||
June 30, |
|
July 2, |
|
June 30, |
|
July 2, |
||||||||||
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||||
(Unaudited) |
|
(Unaudited) |
||||||||||||||
Net revenue: | ||||||||||||||||
Sypris Technologies | $ |
17,841 |
$ |
20,058 |
$ |
36,191 |
|
$ |
39,558 |
|||||||
Sypris Electronics |
|
17,680 |
|
15,557 |
|
34,883 |
|
|
28,349 |
|||||||
Total net revenue |
|
35,521 |
|
35,615 |
|
71,074 |
|
|
67,907 |
|||||||
Cost of sales: | ||||||||||||||||
Sypris Technologies |
|
15,122 |
|
18,051 |
|
31,421 |
|
|
34,912 |
|||||||
Sypris Electronics |
|
14,758 |
|
12,894 |
|
31,128 |
|
|
24,164 |
|||||||
Total cost of sales |
|
29,880 |
|
30,945 |
|
62,549 |
|
|
59,076 |
|||||||
Gross profit: | ||||||||||||||||
Sypris Technologies |
|
2,719 |
|
2,007 |
|
4,770 |
|
|
4,646 |
|||||||
Sypris Electronics |
|
2,922 |
|
2,663 |
|
3,755 |
|
|
4,185 |
|||||||
Total gross profit |
|
5,641 |
|
4,670 |
|
8,525 |
|
|
8,831 |
|||||||
Selling, general and administrative |
|
4,368 |
|
3,704 |
|
8,626 |
|
|
7,449 |
|||||||
Operating income (loss) |
|
1,273 |
|
966 |
|
(101 |
) |
|
1,382 |
|||||||
Interest expense, net |
|
604 |
|
178 |
|
922 |
|
|
404 |
|||||||
Other expense, net |
|
194 |
|
513 |
|
535 |
|
|
584 |
|||||||
Income (loss) before taxes |
|
475 |
|
275 |
|
(1,558 |
) |
|
394 |
|||||||
Income tax expense, net |
|
459 |
|
62 |
|
647 |
|
|
356 |
|||||||
Net income (loss) | $ |
16 |
$ |
213 |
$ |
(2,205 |
) |
$ |
38 |
|||||||
Income (loss) per common share: | ||||||||||||||||
Basic | $ |
0.00 |
$ |
0.01 |
$ |
(0.10 |
) |
$ |
0.00 |
|||||||
Diluted | $ |
0.00 |
$ |
0.01 |
$ |
(0.10 |
) |
$ |
0.00 |
|||||||
Dividends declared per common share | $ |
- |
$ |
- |
$ |
- |
|
$ |
- |
|||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic |
|
21,989 |
|
21,852 |
|
21,973 |
|
|
21,824 |
|||||||
Diluted |
|
22,288 |
|
22,446 |
|
21,973 |
|
|
22,457 |
Sypris Solutions, Inc. |
|||||||
Consolidated Balance Sheets |
|||||||
(in thousands, except for share data) |
|||||||
June 30, |
|
December 31, |
|||||
2024 |
|
2023 |
|||||
(Unaudited) |
|
(Note) |
|||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
13,760 |
|
$ |
7,881 |
|
|
Accounts receivable, net |
|
11,510 |
|
|
8,929 |
|
|
Inventory, net |
|
64,843 |
|
|
77,314 |
|
|
Other current assets |
|
10,191 |
|
|
9,743 |
|
|
Total current assets |
|
100,304 |
|
|
103,867 |
|
|
Property, plant and equipment, net |
|
15,107 |
|
|
17,133 |
|
|
Operating lease right-of-use assets |
|
4,300 |
|
|
3,309 |
|
|
Other assets |
|
4,534 |
|
|
5,033 |
|
|
Total assets | $ |
124,245 |
|
$ |
129,342 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ |
22,519 |
|
$ |
26,737 |
|
|
Accrued liabilities |
|
50,410 |
|
|
56,232 |
|
|
Operating lease liabilities, current portion |
|
1,133 |
|
|
1,068 |
|
|
Finance lease obligations, current portion |
|
1,447 |
|
|
1,327 |
|
|
Equipment financing obligations, current portion |
|
564 |
|
|
618 |
|
|
Working capital line of credit |
|
500 |
|
|
500 |
|
|
Note payable - related party, current portion |
|
2,000 |
|
|
- |
|
|
Total current liabilities |
|
78,573 |
|
|
86,482 |
|
|
Operating lease liabilities, net of current portion |
|
3,573 |
|
|
2,642 |
|
|
Finance lease obligations, net of current portion |
|
1,502 |
|
|
1,852 |
|
|
Equipment financing obligations, net of current portion |
|
1,068 |
|
|
1,333 |
|
|
Note payable - related party, net of current portion |
|
6,982 |
|
|
6,484 |
|
|
Other liabilities |
|
13,527 |
|
|
8,082 |
|
|
Total liabilities |
|
105,225 |
|
|
106,875 |
|
|
Stockholders’ equity: | |||||||
Preferred stock, par value |
|
- |
|
|
|
- |
|
Series A preferred stock, par value |
|
- |
|
|
|
- |
|
Common stock, non-voting, par value |
|
- |
|
|
|
- |
|
Common stock, par value |
|
230 |
|
|
|
224 |
|
Additional paid-in capital |
|
156,675 |
|
|
156,242 |
|
|
Accumulated deficit |
|
(119,137 |
) |
|
(116,932 |
) |
|
Accumulated other comprehensive loss |
|
(18,748 |
) |
|
(17,067 |
) |
|
Treasury stock, 43,856 in 2024 and 5,835 in 2023 |
|
- |
|
|
- |
|
|
Total stockholders’ equity |
|
19,020 |
|
|
22,467 |
|
|
Total liabilities and stockholders’ equity | $ |
124,245 |
|
$ |
129,342 |
|
|
Note: The balance sheet at December 31, 2023, 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) |
||||||||
Six Months Ended |
||||||||
June 30, |
|
July 3, |
||||||
2024 |
|
2023 |
||||||
(Unaudited) |
||||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ |
(2,205 |
) |
$ |
38 |
|
||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
1,676 |
|
|
1,553 |
|
||
Deferred income taxes |
|
39 |
|
|
(121 |
) |
||
Stock-based compensation expense |
|
438 |
|
|
409 |
|
||
Deferred loan costs amortized |
|
4 |
|
|
3 |
|
||
Provision for excess and obsolete inventory |
|
508 |
|
|
(29 |
) |
||
Non-cash lease expense |
|
610 |
|
|
386 |
|
||
Other noncash items |
|
234 |
|
|
(68 |
) |
||
Contributions to pension plans |
|
(108 |
) |
|
(10 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(2,743 |
) |
|
(2,747 |
) |
||
Inventory |
|
11,563 |
|
|
(21,267 |
) |
||
Prepaid expenses and other assets |
|
(743 |
) |
|
(1,443 |
) |
||
Accounts payable |
|
(4,144 |
) |
|
4,688 |
|
||
Accrued and other liabilities |
|
(674 |
) |
|
22,296 |
|
||
Net cash provided by operating activities |
|
4,455 |
|
|
3,688 |
|
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(508 |
) |
|
(1,526 |
) |
||
Net cash used in investing activities |
|
(508 |
) |
|
(1,526 |
) |
||
Cash flows from financing activities: | ||||||||
Proceeds from equipment financing obligations |
|
430 |
|
|
210 |
|
||
Proceeds from Note Payable - related party |
|
2,500 |
|
|
- |
|
||
Principal payments on finance lease obligations |
|
(659 |
) |
|
(556 |
) |
||
Principal payments on equipment financing obligations |
|
(319 |
) |
|
(234 |
) |
||
Principal payments on Note Payable - related party |
|
- |
|
|
(2,500 |
) |
||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(1 |
) |
|
(83 |
) |
||
Net cash provided by (used in) financing activities |
|
1,951 |
|
|
(3,163 |
) |
||
Effect of exchange rate changes on cash balances |
|
(19 |
) |
|
(67 |
) |
||
Net increase (decrease) in cash and cash equivalents |
|
5,879 |
|
|
(1,068 |
) |
||
Cash and cash equivalents at beginning of period |
|
7,881 |
|
|
21,648 |
|
||
Cash and cash equivalents at end of period | $ |
13,760 |
|
$ |
20,580 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240813515155/en/
Richard L. Davis
Chief Financial Officer
(502) 329-2000
Source: Sypris Solutions, Inc.