Sypris Reports Second Quarter Results
Revenue and Margin Continue to Expand; Confirms Second Half Guidance
HIGHLIGHTS
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The Company’s revenue increased 15.2% sequentially from the first
quarter of 2018, while gross margin increased to 12.8% of revenue, up
260 basis points sequentially and up 520 basis points from the second
quarter of 2017. Earnings improved to
$0.04 per share from a loss of$0.15 for the prior-year period. - Revenue for Sypris Technologies increased 9.0% during the quarter compared with the prior-year period, reflecting the impact of new contract awards and favorable market conditions.
- Gross margin for Sypris Technologies increased to 12.6% of revenue, up from 2.3% for the prior-year period, reflecting the impact of increased revenue and significantly lower operating costs.
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Revenue for
Sypris Electronics increased 40.6% sequentially and 6.3% compared with the prior-year period, reflecting strong backlog and an improvement in the timely receipt of certain electronic components. -
Gross margin for
Sypris Electronics increased to 13.1% of revenue for the quarter, up sequentially from a loss of 1.4% for the first quarter of 2018, reflecting the positive conversion on the increase in shipments. - The Company’s performance for the first half of 2018 was strong compared with the prior-year period, with revenue, gross profit and gross margin increasing by 8.8%, 361.4%, and 890 basis points, respectively.
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The Company confirmed its financial guidance for the second half of
2018, with revenue forecasted to be in the range of
$47.0-$51.0 million , representing top-line growth of 14% at the midpoint on a year-over-year basis, and gross profit forecasted to be in the range of 16.0%-18.0% of revenue.
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“We are pleased to report another solid quarter of growing revenue and a
rebuilding bottom line, underscoring positive operating income of Sypris
Technologies for the third consecutive quarter. Our performance reflects
the benefits of our previously announced cost-reduction efforts
alongside our work to target more strategic marketing opportunities,”
commented
“The financial results of
Concluding, Mr. Gill said, “We continue to see strong demand in each of our primary markets to support our revenue outlook for the balance of the year. Our customer base and the markets we serve remain resilient and are considerably more diversified than at any point in our recent history. The combination of our expected revenue growth and lower fixed manufacturing overhead costs, driven by our cost-reduction actions, will contribute to our return to profitability for 2018.”
Second Quarter Results
The Company reported revenue of
For the six months ended
Sypris Technologies
Revenue for Sypris Technologies was
Revenue for
Outlook
Commenting on the future, Mr. Gill added, “Alongside current volume growth, we are poised to capitalize on additional opportunities across our markets for healthy, double-digit revenue expansion during the balance of 2018. New contract awards and market expansion are expected to occur in each of our targeted markets for energy, automotive, commercial vehicle, and aerospace and defense products.
“Third-party forecasts for the Class 8 commercial vehicle market
indicate production will be up significantly in 2018 compared with 2017.
The energy market continues to benefit from increased demand and higher
oil prices. The National Defense Authorization Act for Fiscal Year 2018
provides nearly $700 billion in funding for the
“As a result, we are pleased to confirm our guidance for the second half
of 2018, with revenue and gross margin expected to be in the range of
“We expect selling, general and administrative spending to be in the range of 12.0%-13.5% of revenue for the second half of 2018, subject to actual top-line performance. The net result is that we expect to be profitable on a consolidated basis for the full year 2018.”
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
SYPRIS SOLUTIONS, INC. | |||||||||||
Financial Highlights |
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(In thousands, except per share amounts) |
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Three Months Ended | |||||||||||
July 1, | July 2, | ||||||||||
2018 | 2017 | ||||||||||
(Unaudited) | |||||||||||
Revenue | $ | 22,971 | $ | 21,249 | |||||||
Net income (loss) | $ | 814 | $ | (3,147 | ) | ||||||
Income (loss) per common share: | |||||||||||
Basic | $ | 0.04 | $ | (0.15 | ) | ||||||
Diluted | $ | 0.04 | $ | (0.15 | ) | ||||||
Weighted average shares outstanding: | |||||||||||
Basic | 20,541 | 20,350 | |||||||||
Diluted | 20,855 | 20,350 | |||||||||
Six Months Ended | |||||||||||
July 1, | July 2, | ||||||||||
2018 | 2017 | ||||||||||
(Unaudited) | |||||||||||
Revenue | $ | 42,913 | $ | 39,434 | |||||||
Net loss | $ | (981 | ) | $ | (6,455 | ) | |||||
Loss per common share: | |||||||||||
Basic | $ | (0.05 | ) | $ | (0.32 | ) | |||||
Diluted | (0.05 | ) | (0.32 | ) | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 20,468 | 20,261 | |||||||||
Diluted | 20,468 | 20,261 | |||||||||
Sypris Solutions, Inc. | |||||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||||
(in thousands, except for per share data) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
July 1, | July 2, | July 1, | July 2, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||
Net revenue: | |||||||||||||||||||||
Sypris Technologies | $ | 15,327 | $ | 14,059 | $ | 29,834 | $ | 26,819 | |||||||||||||
Sypris Electronics | 7,644 | 7,190 | 13,079 | 12,615 | |||||||||||||||||
Total net revenue | 22,971 | 21,249 | 42,913 | 39,434 | |||||||||||||||||
Cost of sales: | |||||||||||||||||||||
Sypris Technologies | 13,397 | 13,736 | 25,797 | 27,140 | |||||||||||||||||
Sypris Electronics | 6,640 | 5,890 | 12,151 | 11,218 | |||||||||||||||||
Total cost of sales | 20,037 | 19,626 | 37,948 | 38,358 | |||||||||||||||||
Gross profit (loss): | |||||||||||||||||||||
Sypris Technologies | 1,930 | 323 | 4,037 | (321 | ) | ||||||||||||||||
Sypris Electronics | 1,004 | 1,300 | 928 | 1,397 | |||||||||||||||||
Total gross profit | 2,934 | 1,623 | 4,965 | 1,076 | |||||||||||||||||
Selling, general and administrative | 3,171 | 3,581 | 6,319 | 6,991 | |||||||||||||||||
Research and development | - | 9 | - | 31 | |||||||||||||||||
Severance and equipment relocation costs | 305 | 880 | 814 | 1,878 | |||||||||||||||||
Operating loss | (542 | ) | (2,847 | ) | (2,168 | ) | (7,824 | ) | |||||||||||||
Interest expense, net | 221 | 206 | 434 | 394 | |||||||||||||||||
Other (income) expense, net | (1,623 | ) | 70 | (1,707 | ) | (1,778 | ) | ||||||||||||||
Income (loss) before taxes | 860 | (3,123 | ) | (895 | ) | (6,440 | ) | ||||||||||||||
Income tax expense, net | 46 | 24 | 86 | 15 | |||||||||||||||||
Net income (loss) | $ | 814 | $ | (3,147 | ) | $ | (981 | ) | $ | (6,455 | ) | ||||||||||
Income (loss) per common share: | |||||||||||||||||||||
Basic | $ | 0.04 | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.32 | ) | ||||||||||
Diluted | $ | 0.04 | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.32 | ) | ||||||||||
Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 20,541 | 20,350 | 20,468 | 20,261 | |||||||||||||||||
Diluted | 20,855 | 20,350 | 20,468 | 20,261 | |||||||||||||||||
Sypris Solutions, Inc. | |||||||||||
Consolidated Balance Sheets | |||||||||||
(in thousands, except for share data) | |||||||||||
July 1, | December 31, | ||||||||||
2018 | 2017 | ||||||||||
(Unaudited) | (Note) | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 7,191 | $ | 8,144 | |||||||
Accounts receivable, net | 12,124 | 9,317 | |||||||||
Inventory, net | 17,555 | 17,641 | |||||||||
Other current assets | 5,552 | 2,003 | |||||||||
Assets held for sale | 2,141 | 2,898 | |||||||||
Total current assets | 44,563 | 40,003 | |||||||||
Property, plant and equipment, net | 14,840 | 15,574 | |||||||||
Other assets | 750 | 1,578 | |||||||||
Total assets | $ | 60,153 | $ | 57,155 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 13,832 | $ | 10,465 | |||||||
Accrued liabilities | 11,294 | 10,330 | |||||||||
Current portion of capital lease obligations | 562 | 829 | |||||||||
Total current liabilities | 25,688 | 21,624 | |||||||||
Long-term capital lease obligations | 3,109 | 3,397 | |||||||||
Note payable - related party | 6,442 | 6,435 | |||||||||
Other liabilities | 8,652 | 8,769 | |||||||||
Total liabilities | 43,891 | 40,225 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, par value $0.01 per share, 975,150 shares authorized; no shares issued |
- | - | |||||||||
Series A preferred stock, par value $0.01 per share, 24,850 shares authorized; no shares issued |
- | - | |||||||||
Common stock, non-voting, par value $0.01 per share, 10,000,000 shares authorized; no shares issued |
- | - | |||||||||
Common stock, par value $0.01 per share, 30,000,000 shares authorized; 21,414,374 shares issued and 21,398,182 outstanding in 2018 and 21,438,269 shares issued and 21,422,077 outstanding in 2017 |
214 | 214 | |||||||||
Additional paid-in capital | 154,099 | 153,858 | |||||||||
Accumulated deficit | (112,402 | ) | (111,591 | ) | |||||||
Accumulated other comprehensive loss | (25,649 | ) | (25,551 | ) | |||||||
Treasury stock, 16,192 in 2018 and 2017 | - | - | |||||||||
Total stockholders’ equity | 16,262 | 16,930 | |||||||||
Total liabilities and stockholders’ equity | $ | 60,153 | $ | 57,155 | |||||||
Note: The balance sheet at December 31, 2017 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 the United States for a complete set of financial statements. |
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Sypris Solutions, Inc. | |||||||||||
Consolidated Cash Flow Statements | |||||||||||
(in thousands) | |||||||||||
Six Months Ended | |||||||||||
July 1, | July 2, | ||||||||||
2018 | 2017 | ||||||||||
(Unaudited) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (981 | ) | $ | (6,455 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||||||
Depreciation and amortization | 1,310 | 1,972 | |||||||||
Stock-based compensation expense | 348 | 395 | |||||||||
Deferred loan costs recognized | 7 | 30 | |||||||||
Net loss (gain) on the sale of assets | 225 | (2,537 | ) | ||||||||
Insurance recovery gain | (2,275 | ) |
- |
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Provision for excess and obsolete inventory | (31 | ) | 109 | ||||||||
Other noncash items | 20 | 596 | |||||||||
Contributions to pension plans | (11 | ) | - | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (2,807 | ) | (2,915 | ) | |||||||
Inventory | (969 | ) | (9,451 | ) | |||||||
Prepaid expenses and other assets | (2,053 | ) | 1,232 | ||||||||
Accounts payable | 3,368 | 8,518 | |||||||||
Accrued and other liabilities | 1,132 | 2,548 | |||||||||
Net cash used in operating activities |
(2,717 | ) | (5,958 | ) | |||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (1,206 | ) | (997 | ) | |||||||
Proceeds from sale of assets | 1,358 | 2,623 | |||||||||
Insurance proceeds for recovery of property damage | 2,275 |
- |
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Net cash provided by investing activities | 2,427 | 1,626 | |||||||||
Cash flows from financing activities: | |||||||||||
Capital lease payments | (556 | ) | (92 | ) | |||||||
Indirect repurchase of shares for minimum statutory tax withholdings | (107 | ) | (108 | ) | |||||||
Net cash used in financing activities | (663 | ) | (200 | ) | |||||||
Net decrease in cash and cash equivalents | (953 | ) | (4,532 | ) | |||||||
Cash and cash equivalents at beginning of period | 8,144 | 15,270 | |||||||||
Cash and cash equivalents at end of period | $ | 7,191 | $ | 10,738 | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180814005139/en/
Source:
Sypris Solutions, Inc.
Anthony C. Allen, 502-329-2000
Chief
Financial Officer