Sypris Reports Fourth Quarter and Full-Year 2018 Results
Double-Digit Revenue and Margin Growth Forecast for 2019
HIGHLIGHTS
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- The Company’s fourth quarter revenue increased 11.5% over the prior-year quarter and 13.5% sequentially, with both segments contributing to the improvements.
-
Full-year revenue increased 9.0% for Sypris Technologies and 2.7% for
Sypris Electronics , underscoring favorable market conditions and strong customer relationships. - Gross margin for Sypris Technologies increased to 14.3% of revenue for the quarter, up from 11.3% in the prior-year period and up from 8.9% sequentially, reflecting mix and productivity improvements.
- Gross margin for Sypris Technologies increased to 12.6% in 2018, up from 1.4% in 2017, primarily attributable to the full-year impact of cost structure reductions, revenue growth and operational improvements.
- Company gross margin for the full year more than doubled in 2018, reaching 8.6% compared with 4.0% for the prior-year.
-
During the fourth quarter, the Company entered into a series of supply
agreements with
Sistemas Automotrices de Mexico, S.A. de C.V. (“Sisamex”), to supply Sisamex with a variety of driveline components for use in the commercial vehicle, agricultural and all-terrain markets. -
The Company’s outlook for 2019 includes revenue of
$100-$110 million , representing 19% year-over-year growth at the midpoint, and gross margin of 14%-16%, with both business segments forecasted to register solid profitability for the year.
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“We were pleased with the year-over-year revenue growth and margin
expansion at Sypris Technologies,” commented
“We also experienced strengthening demand for our energy-related products, which resulted in a 22% increase sequentially in revenue. A number of production, supply and other constraints that we experienced in the previous quarter were mitigated in the current period.
“During the fourth quarter, the Company entered into a series of agreements to continue to supply axle shafts to Sisamex, in addition to the introduction of new driveline products for use in the commercial vehicle, agricultural and all-terrain markets. Sisamex is a long-term strategic partner, and expanding the range of products we supply further strengthens this relationship. We expect to begin production on the new products during 2019,” he continued.
“While shipments at
Concluding, Mr. Gill said, “We continue to see strong demand in each of our primary markets to support our revenue outlook for 2019. Our customer base and the markets we serve remain resilient and are considerably more diversified than at any point in our recent history. We are confident that the combination of our forecasted revenue growth and lower fixed manufacturing overhead costs, driven by effective cost-reduction actions, will contribute to our expected return to profitability in 2019.”
Fourth Quarter and Full-Year Results
The Company reported revenue of
For the full-year ended
Sypris Technologies
Revenue for Sypris Technologies was
Revenue for
Outlook
Commenting on the future, Mr. Gill added, “Buoyed by current volume growth, we expect to capitalize on additional opportunities across our markets for healthy revenue expansion in 2019. We also anticipate new contract awards and market expansion in each of our targeted markets for energy, automotive, commercial vehicle, and aerospace and defense products, as well as new electronics programs.
“Third-party forecasts for the Class 8 commercial vehicle market
indicate that freight volumes will remain strong well into the second
half of 2019, albeit off from record-breaking 2018 levels. The energy
market continues to benefit from increased demand and higher oil prices.
The National Defense Authorization Act for Fiscal Year 2019 provides
nearly
“Our revenue outlook for 2019 is in the range of
"We expect to see meaningful improvements in gross margin, up to 14.0%-16.0% for the year as a whole, with sequential improvements from the first to second half periods.”
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 | ||||||||||||
(In thousands, except per share amounts) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, |
||||||||||||
2018 | 2017 | |||||||||||
(Unaudited) | ||||||||||||
Revenue | $ | 23,955 | $ | 21,489 | ||||||||
Net loss | $ | (188 | ) | $ | (1,234 | ) | ||||||
Loss per common share: | ||||||||||||
Basic | $ | (0.01 | ) | $ | (0.06 | ) | ||||||
Diluted | $ | (0.01 | ) | $ | (0.06 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 20,555 | 20,393 | ||||||||||
Diluted | 20,555 | 20,393 | ||||||||||
Year Ended | ||||||||||||
December 31, |
||||||||||||
2018 | 2017 | |||||||||||
(Unaudited) | ||||||||||||
Revenue | $ | 87,969 | $ | 82,294 | ||||||||
Net loss | $ | (3,505 | ) | $ | (10,822 | ) | ||||||
Loss per common share: | ||||||||||||
Basic | $ | (0.17 | ) | $ | (0.53 | ) | ||||||
Diluted | (0.17 | ) | (0.53 | ) | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 20,512 | 20,326 | ||||||||||
Diluted | 20,512 | 20,326 | ||||||||||
Sypris Solutions, Inc. | |||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||
(in thousands, except for per share data) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||
Net revenue: | |||||||||||||||||
Sypris Technologies | $ | 15,130 | $ | 14,525 | $ | 59,816 | $ | 54,891 | |||||||||
Sypris Electronics | 8,825 | 6,964 | 28,153 | 27,403 | |||||||||||||
Total net revenue |
23,955 | 21,489 | 87,969 | 82,294 | |||||||||||||
Cost of sales: | |||||||||||||||||
Sypris Technologies | 12,973 | 12,887 | 52,293 | 54,148 | |||||||||||||
Sypris Electronics | 9,577 | 7,089 | 28,104 | 24,816 | |||||||||||||
Total cost of sales | 22,550 | 19,976 | 80,397 | 78,964 | |||||||||||||
Gross profit (loss): | |||||||||||||||||
Sypris Technologies | 2,157 | 1,638 | 7,523 | 743 | |||||||||||||
Sypris Electronics | (752 | ) | (125 | ) | 49 | 2,587 | |||||||||||
Total gross profit | 1,405 | 1,513 | 7,572 | 3,330 | |||||||||||||
Selling, general and administrative | 1,213 | 2,953 | 10,474 | 13,078 | |||||||||||||
Research and development | - | 2 | - | 38 | |||||||||||||
Severance, relocation and other costs | 306 | 125 | 1,394 | 2,360 | |||||||||||||
Operating loss | (114 | ) | (1,567 | ) | (4,296 | ) | (12,146 | ) | |||||||||
Interest expense, net | 185 | 207 | 850 | 809 | |||||||||||||
Other expense (income), net | 215 | 148 | (1,436 | ) | (1,515 | ) | |||||||||||
Loss before taxes | (514 | ) | (1,922 | ) | (3,710 | ) | (11,440 | ) | |||||||||
Income tax benefit, net | (326 | ) | (688 | ) | (205 | ) | (618 | ) | |||||||||
Net loss | $ | (188 | ) | $ | (1,234 | ) | $ | (3,505 | ) | $ | (10,822 | ) | |||||
Loss per common share: | |||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.17 | ) | $ | (0.53 | ) | |||||
Diluted | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.17 | ) | $ | (0.53 | ) | |||||
Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 20,555 | 20,393 | 20,512 | 20,326 | |||||||||||||
Diluted | 20,555 | 20,393 | 20,512 | 20,326 | |||||||||||||
Sypris Solutions, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(in thousands, except for share data) | ||||||||
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
(Unaudited) | (Note) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,704 | $ | 8,144 | ||||
Accounts receivable, net | 9,881 | 9,317 | ||||||
Inventory, net | 18,584 | 17,641 | ||||||
Other current assets | 4,755 | 2,003 | ||||||
Assets held for sale | 1,474 | 2,898 | ||||||
Total current assets | 45,398 | 40,003 | ||||||
Property, plant and equipment, net | 14,655 | 15,574 | ||||||
Other assets | 1,515 | 1,578 | ||||||
Total assets | $ | 61,568 | $ | 57,155 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 13,427 | $ | 10,465 | ||||
Accrued liabilities | 14,965 | 10,330 | ||||||
Current portion of capital lease obligations | 593 | 829 | ||||||
Total current liabilities | 28,985 | 21,624 | ||||||
Long-term capital lease obligations | 2,804 | 3,397 | ||||||
Note payable - related party | 6,449 | 6,435 | ||||||
Other liabilities | 8,496 | 8,769 | ||||||
Total liabilities | 46,734 | 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 | 154,388 | 153,858 | ||||||
Accumulated deficit | (114,926 | ) | (111,591 | ) | ||||
Accumulated other comprehensive loss | (24,842 | ) | (25,551 | ) | ||||
Treasury stock, 16,192 in 2018 and 2017 | - | - | ||||||
Total stockholders’ equity | 14,834 | 16,930 | ||||||
Total liabilities and stockholders’ equity | $ | 61,568 | $ | 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. | ||||||||
Sypris Solutions, Inc. | ||||||||
Consolidated Cash Flow Statements | ||||||||
(in thousands) | ||||||||
Year Ended | ||||||||
December 31, |
||||||||
2018 | 2017 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (3,505 | ) | $ | (10,822 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization | 2,648 | 3,884 | ||||||
Deferred income taxes | (509 | ) | (667 | ) | ||||
Stock-based compensation expense | 637 | 730 | ||||||
Deferred loan costs recognized | 14 | 60 | ||||||
Net loss (gain) on the sale of assets | 249 | (2,668 | ) | |||||
Insurance recovery gain | (2,275 | ) | - | |||||
Settlement gain | (1,890 | ) | - | |||||
Provision for excess and obsolete inventory | 520 | 116 | ||||||
Other noncash items | 278 | (32 | ) | |||||
Contributions to pension plans | (77 | ) | - | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (612 | ) | (1,419 | ) | ||||
Inventory | (2,857 | ) | (3,204 | ) | ||||
Prepaid expenses and other assets | (1,163 | ) | 951 | |||||
Accounts payable | 2,948 | 3,491 | ||||||
Accrued and other liabilities | 7,486 | 121 | ||||||
Net cash provided by (used in) operating activities | 1,892 | (9,459 | ) | |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (2,051 | ) | (1,637 | ) | ||||
Proceeds from sale of assets | 1,380 | 2,801 | ||||||
Insurance proceeds for recovery of property damage, net | 2,275 | - | ||||||
Net cash provided by investing activities | 1,604 | 1,164 | ||||||
Cash flows from financing activities: | ||||||||
Capital lease payments | (829 | ) | (208 | ) | ||||
Indirect repurchase of shares for minimum statutory tax withholdings | (107 | ) | (123 | ) | ||||
Net cash used in financing activities | (936 | ) | (331 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 2,560 | (8,626 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 8,144 | 16,770 | ||||||
Cash and cash equivalents at end of period | $ | 10,704 | $ | 8,144 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190328005286/en/
Source:
Anthony C. Allen
Chief Financial Officer
(502)
329-2000