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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 2005
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Sypris Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24020 61-1321992
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (502) 329-2000
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================================================================================
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On April 21, 2005, Sypris Solutions, Inc. (the "Company") announced
its financial results for the first quarter ended March 31, 2005. The
full text of the press release is set forth in Exhibit 99 hereto.
The information in this Form 8-K and the attached Exhibit is being
furnished pursuant to Item 2.02 "Results of Operations and Financial
Condition" and shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as
shall be expressly set forth by specific reference in such filing.
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
On April 21, 2005, Sypris Solutions, Inc. (the "Company") announced
its financial results for the first quarter ended March 31, 2005. The
full text of the press release is set forth in Exhibit 99 hereto.
The information in this Form 8-K and the attached Exhibit is being
furnished pursuant to Item 7.01 "Regulation FD Disclosure" and shall
not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, except as shall be expressly
set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description of Exhibit
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99 Press release issued April 21, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 21, 2005 Sypris Solutions, Inc.
By: /s/ David D. Johnson
----------------------------------
David D. Johnson
Vice President and Chief Financial
Officer
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
99 Registrant's press release dated April 21, 2005.
Exhibit 99
Sypris Reports First Quarter Earnings; Revenue Increases 39%
LOUISVILLE, Ky.--(BUSINESS WIRE)--April 21, 2005--Sypris
Solutions, Inc. (Nasdaq/NM:SYPR) today reported revenue increased 39%
to a record $124.2 million for the first quarter compared to $89.4
million for the prior year period. Net income for the period was $0.6
million, or $0.03 per diluted share, compared to $3.3 million, or
$0.21 per diluted share, for the first quarter of 2004. The results
for the quarter reflect an 18% increase in weighted average shares
outstanding to 18.4 million shares compared to 15.6 million shares for
the prior year period.
"The results for the first quarter were consistent with our
expectations," said Jeffrey T. Gill, president and chief executive
officer. "Revenue continued to climb while the costs associated with
the increase in manufacturing capacity, launch of new programs and
disruption of material deliveries began to abate from the levels
experienced during the fourth quarter of 2004. We expect these cost
overruns to continue during the second quarter at a declining rate as
the new manufacturing cells are completed and new programs enter full
production, after which we expect margins to gradually return to
historical levels."
"The outlook for continued growth remains positive, with net
orders increasing 30% to a record $136.0 million during the quarter,
resulting in a 22% increase in backlog to a record $261.7 million. The
increase in orders represented the ninth consecutive quarter of
comparable period growth in bookings, reflecting strong demand from
the commercial vehicle market and the positive impact of recently
awarded long-term contracts during 2003 and 2004. Our task is clear.
We must complete the equipment installations and program launches so
that our success in generating new business translates into
commensurately higher earnings going forward."
The Industrial Group
Revenue for our Industrial Group increased 83% to $88.7 million in
the first quarter from $48.5 million for the prior year period, and
increased 18% sequentially from the fourth quarter of last year
primarily as a result of the continued strength in demand for medium
and heavy-duty trucks. Gross profit for the quarter declined 2% to
$6.4 million from $6.5 million for the same period in 2004, but
increased 75% sequentially from the fourth quarter of last year as a
result of the increase in shipments during the period, improved
manufacturing efficiencies, and lower costs incurred for the equipment
installations and program launches mentioned earlier.
"Net orders increased 90% to a record $109.2 million for the
quarter, while backlog increased 85% to a record $152.0 million," said
Gill. "The commencement of new programs contributed to the growth in
orders and backlog during the quarter, while the market for commercial
vehicles continued to expand, with build rates estimated to have
increased 29% during the quarter. We continue to believe that the
long-term outlook for this market remains positive and that we are
well positioned to benefit from any continued strengthening in this
important segment."
The Electronics Group
Revenue for our Electronics Group was $35.6 million in the first
quarter compared to $40.9 million for the prior year period and
declined 23% sequentially from the fourth quarter of last year, which
reflects the seasonal swings in the government's procurement cycle and
is consistent with the Company's historical performance. Gross profit
for the quarter was $5.0 million compared to $7.9 million for the same
period in 2004, primarily reflecting a continued decline in shipments
for data systems products.
Revenue for the Aerospace & Defense segment declined to $24.0
million from $29.6 million for the prior year period, while revenue
from the Test & Measurement segment increased slightly to $11.6
million from $11.4 million for the first quarter of 2004. Gross profit
for the Aerospace & Defense segment declined to $2.4 million from $5.5
million for the prior year period, primarily reflecting the reduction
in shipments for data systems products. Gross profit for the Test &
Measurement segment increased 5% to $2.6 million from $2.4 million for
the same period in 2004.
"Net orders for our Electronics Group approximated $26.8 million
for the quarter, while backlog declined 7% to $109.7 million," said
Gill. "The near term outlook for our data systems business continues
to be challenging, while the overall spending for aerospace and
defense programs remains solid. Assuming the continued firming of the
economy, we should see an increasingly positive contribution from our
Test & Measurement services business, which has been impacted by the
downturn in the markets for commercial aerospace, telecommunications
and semiconductor products during the past several years."
Outlook
Gill added, "Looking forward, we expect revenue for the second
quarter of 2005 to be in the range of $128 to $133 million compared to
$95.9 million for the prior year period, which represents a 36%
increase at the midpoint of our guidance. Earnings for the second
quarter of 2005 are forecast to be in the range of $0.09 to $0.13 per
diluted share compared to $0.11 per diluted share for the second
quarter of 2004. The earnings outlook reflects our view of certain
short-term costs in our Industrial Group for the completion of new
manufacturing cells, the launch of several new programs, and the
continuing impact of certain supply chain issues, as well as lower
levels of proprietary product sales in our Electronics Group."
"We believe the outlook for the full year remains solid. Revenue
for 2005 is forecast to be in the range of $525 to $545 million
compared to $425.4 million for 2004, which represents a 26% increase
in revenue for 2005 at the midpoint of the range. Earnings are
expected to increase during the second half of 2005 as a result of the
new automated capacity, shipments under new programs and the
elimination of start-up and overtime costs associated with the above.
As a result, we expect earnings of $0.65 to $0.75 per diluted share,
based upon 18.6 million weighted average shares outstanding, compared
to $0.47 per diluted share for 2004, which represents a 49% increase
for 2005 at the midpoint of the range."
Gill continued, "We expect the top line to continue to benefit
from the estimated $1.5 billion of new contract awards received during
this past year, the increasing demand in the commercial vehicle market
and the commencement of several new program launches. The Company's
earnings outlook remains subject to our ability to complete the
installation of the new manufacturing cells in accordance with plan,
the timely launch of the new component programs and the stabilization
of the global supply chain for steel and steel-related component
parts, among other factors."
Change in Accounting Method
Effective January 1, 2005, the Company changed its accounting
policy for inventory and costs of sales from the last-in first-out
method (LIFO) to the first-in first-out method (FIFO) for its
Louisville manufacturing facility, which conforms the accounting at
all Sypris locations to the FIFO method. The change results in a more
meaningful and understandable presentation of financial position to
users of the Company's financial statements and also requires
restatement of prior periods when presented for comparability and
consistency of presentation. The change decreases previously reported
earnings for the first quarter of 2004 by $74,000, or $0.01 per share
and increases previously reported earnings for the year ended December
31, 2004 by $0.9 million, or $0.05 per share. The change also
increases the previously reported inventory, retained earnings and
other liabilities balances at December 31, 2004 by $2.2 million, $1.5
million and $0.7 million, respectively.
Sypris Solutions is a diversified provider of technology-based
outsourced services and specialty products. The Company performs a
wide range of manufacturing and technical services, typically under
multi-year, sole-source contracts with major corporations and
government agencies in the markets for aerospace and defense
electronics, truck components and assemblies, and test and measurement
services. For more information about Sypris Solutions, visit its Web
site at www.sypris.com.
Each "forward-looking statement" herein is subject to serious
risks and should not be relied upon, as detailed in our most recent
Form 10-K filed with the SEC (e.g., at p. 27). Briefly, such risks
also include: costs of adding new capacity or programs; costs or
supplies of freight, raw materials, steel, components or utilities;
customers' financial conditions, scheduling demands or late payments;
market demand levels; competitive pressures; machinery breakdowns or
repairs; inefficient working capital, scrap rates, cycle times, wages,
freight, production schedules or cost controls; inventory valuation
due to obsolescence, shrinkage, price, overstocking or underbilling;
low-margin product mix; reliance on key customers or suppliers;
revised schedules, volumes, prices, cost or government funding of key
contracts; failure to improve acquired businesses or identify
environmental or other risks in due diligence; recruitment or
retention of management or other key employees; union negotiations;
pension, health care or other benefit costs; labor relations; strikes;
costs or supply of debt, equity or insurance due to operating or
financial results, new business risks, credit ratings, debt covenants,
contract claims, insurance conditions or regulatory developments;
impairments or write-offs of goodwill or fixed assets; loss of
licenses, security clearances or any legal rights to operate, manage
our work force, import or export; costs of audits, internal controls
or compliance; regulatory actions or sanctions; contract or tort
litigation including stockholder, customer, supplier, creditor,
product liability, environmental or asbestos claims; foreign
operations or currency risks; war, terrorism or political risks;
unanticipated or uninsured disasters, losses or business risks;
inaccurate data about markets or business conditions.
SYPRIS SOLUTIONS, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
Three Months Ended
-----------------------
Restated (1)
Mar. 31, Mar. 31,
2005 2004
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Revenue $ 124,241 $ 89,376
Net income $ 590 $ 3,325
Earnings per common share:
Basic $ 0.03 $ 0.22
Diluted $ 0.03 $ 0.21
Weighted average shares outstanding:
Basic 18,030 14,791
Diluted 18,367 15,593
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change decreases previously reported earnings for the first quarter of
2004 by $74,000, or $0.01 per diluted share.
SYPRIS SOLUTIONS, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except for per share data)
Three Months Ended
-----------------------
Restated (1)
March 31, March 31,
2005 2004
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(Unaudited)
Net revenue:
Industrial Group $ 88,690 $ 48,451
Aerospace & Defense 23,996 29,572
Test & Measurement 11,555 11,353
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Electronics Group 35,551 40,925
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Total net revenue 124,241 89,376
Cost of sales:
Industrial Group 82,293 41,994
Aerospace & Defense 21,605 24,110
Test & Measurement 8,984 8,914
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Electronics Group 30,589 33,024
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Total cost of sales 112,882 75,018
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Gross profit:
Industrial Group 6,397 6,457
Aerospace & Defense 2,391 5,462
Test & Measurement 2,571 2,439
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Electronics Group 4,962 7,901
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Total gross profit 11,359 14,358
Selling, general and administrative 8,553 8,158
Research and development 673 524
Amortization of intangible assets 138 126
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Operating income 1,995 5,550
Interest expense, net 1,261 288
Other income, net (181) (58)
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Income before income taxes 915 5,320
Income tax expense 325 1,995
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Net income $ 590 $ 3,325
========= ===========
Earnings per common share:
Basic $ 0.03 $ 0.22
Diluted $ 0.03 $ 0.21
Dividends declared per common share $ 0.03 $ 0.03
Weighted average shares outstanding:
Basic 18,030 14,791
Diluted 18,367 15,593
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change decreases previously reported earnings for the first quarter of
2004 by $74,000, or $0.01 per diluted share.
SYPRIS SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
Restated (1)
March 31, December 31,
2005 2004
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 16,475 $ 14,060
Accounts receivable, net 113,899 104,637
Inventory, net 99,676 96,476
Other current assets 15,602 21,566
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Total current assets 245,652 236,739
Property, plant and equipment, net 175,295 166,940
Goodwill 14,277 14,277
Other assets 13,090 13,222
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$448,314 $431,178
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 82,183 $ 61,778
Accrued liabilities 21,026 20,378
Current portion of long-term debt 2,000 7,000
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Total current liabilities 105,209 89,156
Long-term debt 110,000 110,000
Other liabilities 23,258 23,083
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Total liabilities 238,467 222,239
Stockholders' equity:
Preferred stock, par value $0.01 per share,
981,600 shares authorized; no shares issued -- --
Series A preferred stock, par value $0.01
per share, 18,400 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; 18,012,599
and 17,920,500 shares issued and
outstanding in 2005 and 2004,
respectively 180 179
Additional paid-in capital 141,718 140,898
Retained earnings 70,278 70,227
Accumulated other comprehensive loss (2,329) (2,365)
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Total stockholders' equity 209,847 208,939
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$448,314 $431,178
========== ============
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change increases previously reported inventory, retainedearnings and
other liabilities balances at December 31, 2004 by $2,224,000,
$1,503,000 and $721,000, respectively.
SYPRIS SOLUTIONS, INC.
CONSOLIDATED CASH FLOW STATEMENTS
(inthousands)
Three Months Ended
-----------------------
Restated (1)
March 31, March 31,
2005 2004
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(Unaudited)
Cash flows from operating activities:
Net income $ 590 $ 3,325
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,754 4,001
Other noncash charges 620 215
Changes in operating assets and
liabilities:
Accounts receivable (9,555) (15,959)
Inventory (3,600) (2,555)
Other current assets 5,872 1,836
Accounts payable 21,045 7,972
Accrued liabilities 1,133 3,104
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Net cash provided by operating
activities 21,859 1,939
Cash flows from investing activities:
Capital expenditures (14,598) (8,875)
Changes in nonoperating assets and liabilities (128) 233
---------- ------------
Net cash used in investing activities (14,726) (8,642)
Cash flows from financing activities:
Net decrease in debt under revolving
credit agreements (5,000) (43,200)
Cash dividends paid (538) (428)
Proceeds from issuance of common stock 820 49,649
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Net cash (used in) provided by
financing
activities (4,718) 6,021
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Net increase (decrease) in cash and cash
equivalents 2,415 (682)
Cash and cash equivalents at beginning of
period 14,060 12,019
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Cash and cash equivalents at end of period $ 16,475 $ 11,337
========== ============
(1)On January 1, 2005, the Company changed its accounting policy
forinventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change decreases previously reported earningsfor the first quarter of
2004 by $74,000, or $0.01 per diluted share,but has noeffect on cash
flow from operations.
CONTACT: Sypris Solutions Inc., Louisville
David D. Johnson, 502-329-2000