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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): October 21, 2004
______________
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 October 21, 2004, Sypris Solutions, Inc. (the "Company") announced
its financial results for the third quarter and nine months ended
September 30, 2004. 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 October 21, 2004, the Company announced its financial results for
the third quarter and nine months ended September 30, 2004. 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
-------------- ----------------------
99 Press release issued October 21, 2004.
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: October 21, 2004 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 October 21, 2004
Exhibit 99
Sypris Reports 72% Increase in Third Quarter Revenue;
Net Orders Rise 52% to $109 Million
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 21, 2004--Sypris Solutions,
Inc. (Nasdaq/NM:SYPR) today reported revenue increased 72% to a record
$118.5 million for the third quarter in 2004 compared to $68.9 million
for the prior year period. Net income for the third quarter increased
to $3.5 million compared to $0.7 million for the same quarter in 2003,
while earnings per share increased to $0.19 per diluted share compared
to $0.05 per diluted share for the third quarter of 2003. The
financial results for the third quarter of 2004 reflected the impact
of a 24% increase in the number of fully diluted shares outstanding
compared to the prior year period, or approximately $0.05 per share,
and the favorable resolution of a federal tax audit, which
approximated $0.02 per share.
For the nine months ended September 30, 2004, the Company reported
revenue increased 53% to a record $303.7 million compared to $198.4
million for the prior year period. Net income increased 87% to $8.9
million compared to $4.7 million for the same period in 2003, while
earnings per share increased 55% to $0.51 per diluted share compared
to $0.33 per diluted share for the prior year period. The results for
the first nine months of 2004 reflected the impact of a 20% increase
in the number of fully diluted shares outstanding compared to the
prior year period, or approximately $0.10 per diluted share, and the
favorable resolution of the federal tax audit previously mentioned,
which approximated $0.02 per share.
"We are pleased with the financial results for the quarter," said
Jeffrey T. Gill, president and chief executive officer. "The rapid
growth of the Company's top line reflected the positive impact of
shipments under recently-announced long-term contracts with Dana and
ArvinMeritor, and the continued growth of the commercial vehicle
market. The Company's operating margins expanded on both a year over
year and on a sequential basis, driven in large part by the increased
volume and improved performance of our Industrial Group."
"Net orders increased 52% during the quarter to $109.4 million
when compared to the prior year quarter, while the Company's backlog
climbed 36% to $242.1 million, reflecting the impact of the new
contract awards and a 35% increase in the production of commercial
vehicles from year ago levels. The Company's balance sheet remains
strong, with approximately $110 million of potentially available
credit and cash to support additional growth initiatives."
"We believe the outlook remains positive, despite growing
indications that constraints in the commercial vehicle supply chain
may restrain production rates over the near term. As we move into
2005, the Company expects to benefit from production related to
several new customer programs, while the Company's operating
performance is expected to benefit from the increasing volumes with
margins targeted to improve sequentially throughout the year if and
when capacity constraints and supply chain issues are resolved."
The Industrial Group
Revenue for our Industrial Group increased 250% to a record $78.4
million in the third quarter compared to $22.4 million for the prior
year period, and increased 35% sequentially from the second quarter of
this year. Gross profit increased 531% to $8.9 million compared to
$1.4 million for the same period in 2003, and increased 60%
sequentially from the second quarter of this year.
For the nine months ended September 30, 2004, revenue for our
Industrial Group increased 162% to a record $185.1 million from $70.7
million in the prior year period. Gross profit for the first nine
months increased 184% to $21.0 million compared to $7.4 million for
the same period in 2003. The financial results were driven primarily
by an increase in demand from the commercial vehicle market and the
commencement of shipments to Dana and ArvinMeritor under recently
announced contract awards.
Gill continued, "The performance of our Industrial Group continued
to reflect the stronger market for commercial vehicle production.
Bookings increased 229% for the quarter to $76.2 million compared to
the prior year period, and increased 190% to $230.0 million for the
first nine months of this year when compared to the same period for
2003, while backlog increased 149% to $117.9 million when compared to
last year. Margins improved on both a year over year and on a
sequential basis, but continued to reflect the impact of capacity
constraints and supply issues, albeit on a somewhat lesser scale than
earlier this year."
The Electronics Group
Revenue for our Electronics Group was $40.0 million in the third
quarter compared to $46.5 million for the prior year period and $37.7
million for the second quarter of this year. Gross profit for the
quarter was $6.8 million compared to $8.2 million in the same period
in 2003 and $7.5 million for the second quarter of 2004, primarily as
a result of a change in mix reflecting increased sales of lower margin
circuit card assemblies and reduced sales of higher margin products to
certain government agencies.
For the nine months ended September 30, 2004, revenue for our
Electronics Group was $118.6 million compared to $127.7 million for
the prior year period. Gross profit for the first nine months was
$22.2 million compared to $25.2 million for the prior year period,
primarily reflecting the lower level of shipments for the period and
the change in mix mentioned above.
"Net orders for our Electronics Group declined during the quarter
to $33.1 million, but backlog remained solid at $124.0 million," said
Jeffrey T. Gill. "In the short-term, we believe the outlook for growth
in this segment of our business will remain somewhat constrained at
least until such time as the delays in program funding to accommodate
our current military operations are successfully resolved. For the
long-term, we remain optimistic that we are well-positioned on a
series of major programs that should contribute to the Company's
growth in the future."
Outlook
Gill added, "Our outlook for the balance of the year remains
appropriately cautious, with revenue for the fourth quarter expected
to be in the range of $120.0 to $124.0 million versus $78.2 million
for the prior year period, which represents an increase of 53% at the
midpoint of the range. We believe that supply chain issues impacting
our Industrial Group will continue to exert pressure on production
efficiencies throughout the quarter, thereby restraining the potential
for meaningful margin expansion in the short-term. As a result,
earnings for the fourth quarter are forecast to be in the range of
$0.17 to $0.20 per diluted share, assuming 18.4 million weighted
average shares outstanding, compared to the $0.23 per diluted share on
14.9 million weighted average shares outstanding for the prior year
quarter."
"For the full year 2004, we now expect revenue to be in the range
of $423 to $427 million compared to our prior forecast of $405 to $415
million and $276.6 million for 2003, which represents an increase of
54% at the midpoint of the range compared to 2003. Earnings are
forecast to be in the range of $0.68 to $0.71 per diluted share,
assuming 17.7 million weighted average shares outstanding, compared to
prior guidance of $0.70 to $0.80 per diluted share and $0.56 per
diluted share for 2003, based on 14.7 million weighted average shares
outstanding."
"As we look forward to 2005, we have increased our top line
expectations for the full year as a result of the continued strength
of new contract awards, with revenue now forecast to be in the range
of $500 to $520 million compared to our prior forecast of $480 to $500
million and guidance of $423 to $427 million for 2004. The outlook for
earnings remains unchanged, with earnings per share forecast to be in
the range of $1.00 to $1.10, assuming 19.0 million weighted average
shares outstanding, compared to guidance of $0.68 to $0.71 per diluted
share for 2004, which represents an increase of 51% at the midpoint of
the range. We expect our Industrial Group to serve as the primary
source for revenue growth in 2005 with both revenue and earnings
expected to increase sequentially throughout the year as new programs
booked during 2004 enter production during 2005."
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 for users of test
and measurement equipment. For more information about Sypris
Solutions, visit its Web site at www.sypris.com.
This release, and oral statements referring hereto, contain
"forward-looking statements," from which actual results may differ
materially due to factors such as: cost and supply of raw materials
such as steel, components, or utilities; growth, reduction or
competitive pressures in our markets; cost, efficiency and yield of
our operations; our ability to improve results of acquired businesses;
inventory valuation risks; product mix; changes in government or other
customer programs; reliance on major customers or suppliers; revised
estimates of major contract costs; dependence on management; labor
relations; risks of foreign operations; currency exchange rates; costs
and supply of debt, equity capital, or insurance; pension valuation
risks; changes in licenses, security clearances, or other legal rights
to operate, manage our work force or import and export as needed;
compliance costs; regulatory actions or sanctions; litigation,
including customer, creditor, stockholder, environmental or
asbestos-related claims; war, terrorism or political uncertainty;
disasters; unknown risks and uncertainties; or risk factors in our SEC
filings.
SYPRIS SOLUTIONS, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
Three Months Ended
-----------------------
Sept. 30, Sept. 28,
2004 2003
----------- -----------
Revenue $ 118,457 $ 68,898
Net income $ 3,487 $ 686
Earnings per common share:
Basic $ 0.19 $ 0.05
Diluted $ 0.19 $ 0.05
Weighted average shares outstanding:
Basic 17,888 14,241
Diluted 18,306 14,799
Nine Months Ended
-----------------------
Sept. 30, Sept. 28,
2004 2003
----------- -----------
Revenue $ 303,729 $ 198,434
Net income $ 8,870 $ 4,744
Earnings per common share:
Basic $ 0.53 $ 0.33
Diluted $ 0.51 $ 0.33
Weighted average shares outstanding:
Basic 16,765 14,221
Diluted 17,504 14,562
SYPRIS SOLUTIONS, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except for per share data)
Three Months Ended Nine Months Ended
------------------- -------------------
September September September September
30, 28, 30, 28,
2004 2003 2004 2003
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net revenue:
Electronics Group $ 40,028 $ 46,468 $118,627 $127,701
Industrial Group 78,429 22,430 185,102 70,733
--------- --------- --------- ---------
Total net revenue 118,457 68,898 303,729 198,434
Cost of sales:
Electronics Group 33,201 38,304 96,439 102,515
Industrial Group 69,569 21,025 164,130 63,358
--------- --------- --------- ---------
Total cost of sales 102,770 59,329 260,569 165,873
--------- --------- --------- ---------
Gross profit 15,687 9,569 43,160 32,561
Selling, general and
administrative 8,915 6,925 25,701 20,110
Research and development 1,084 1,030 2,483 3,118
Amortization of intangible
assets 145 67 411 109
--------- --------- --------- ---------
Operating income 5,543 1,547 14,565 9,224
Interest expense, net 646 384 1,161 1,417
Other expense (income), net 15 65 (91) 217
--------- --------- --------- ---------
Income before income
taxes 4,882 1,098 13,495 7,590
Income tax expense 1,395 412 4,625 2,846
--------- --------- --------- ---------
Net income $ 3,487 $ 686 $ 8,870 $ 4,744
========= ========= ========= =========
Earnings per common share:
Basic $ 0.19 $ 0.05 $ 0.53 $ 0.33
Diluted $ 0.19 $ 0.05 $ 0.51 $ 0.33
Dividends declared per common
share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Weighted average shares
outstanding:
Basic 17,888 14,241 16,765 14,221
Diluted 18,306 14,799 17,504 14,562
SYPRIS SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
September 30, December 31,
2004 2003
------------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,332 $ 12,019
Accounts receivable, net 93,820 45,484
Inventory, net 93,606 61,932
Other current assets 11,120 11,370
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Total current assets 208,878 130,805
Property, plant and equipment, net 153,262 106,683
Goodwill 14,277 14,277
Other assets 13,525 11,730
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$ 389,942 $ 263,495
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 62,155 $ 29,598
Accrued liabilities 21,876 17,491
Current portion of long-term debt 8,150 3,200
------------- -------------
Total current liabilities 92,181 50,289
Long-term debt 72,500 53,000
Other liabilities 15,992 15,425
------------- -------------
Total liabilities 180,673 118,714
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; 17,903,622
and 14,283,323 shares issued and
outstanding in 2004 and 2003,
respectively 179 143
Additional paid-in capital 140,712 83,541
Retained earnings 70,724 63,443
Accumulated other comprehensive income
(loss) (2,346) (2,346)
------------- -------------
Total stockholders' equity 209,269 144,781
------------- -------------
$ 389,942 $ 263,495
============= =============
SYPRIS SOLUTIONS, INC.
CONSOLIDATED CASH FLOW STATEMENTS
(in thousands)
Nine Months Ended
---------------------------
September 30, September 28,
2004 2003
------------- -------------
(Unaudited)
Cash flows from operating activities:
Net income $ 8,870 $ 4,744
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation and amortization 13,564 9,387
Other noncash charges 1,108 685
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (49,139) (4,494)
Inventory (26,946) 1,031
Other current assets (1,435) 1,424
Accounts payable 35,488 1,517
Accrued liabilities 4,436 858
------------ ------------
Net cash (used in) provided by
operating activities (14,054) 15,152
Cash flows from investing activities:
Capital expenditures (38,245) (16,983)
Purchase of the net assets of acquired
entities (29,399) (1,520)
Proceeds from sale of assets -- 15
Changes in nonoperating assets and
liabilities (33) 172
------------ ------------
Net cash used in investing
activities (67,677) (18,316)
Cash flows from financing activities:
Net (decrease) increase in debt under
revolving credit agreements (30,550) 4,000
Proceeds from long-term debt 55,000 --
Cash dividends paid (1,486) (1,275)
Proceeds from issuance of common stock 57,080 677
------------ ------------
Net cash provided by financing
activities 80,044 3,402
------------ ------------
Net (decrease) increase in cash and cash
equivalents (1,687) 238
Cash and cash equivalents at beginning of
period 12,019 12,403
------------ ------------
Cash and cash equivalents at end of period $ 10,332 $ 12,641
============ ============
CONTACT: Sypris Solutions, Inc.
David D. Johnson, 502-329-2000