Sypris Reports Second Quarter Results
Announces Sale of Cyber Security Solutions Business for
HIGHLIGHTS
For the Second Quarter:
-
Revenue for the Company was
$23 .5 million, reflecting a reduction in demand for commercial vehicles and the rebalancing of inventory by certain customers. -
Gross profit increased $0.8 million, reflecting an improvement in
product mix within
Sypris Electronics . -
Revenue for
Sypris Electronics remained flat while gross profit increased$1 .6 million from the second quarter of 2015. -
Sypris Electronics entered into a new manufacturing facility lease agreement during the second quarter, which is expected to significantly reduce its operating facility costs beginning in 2017. -
Subsequent to quarter end, the Company:
-
Announced the sale of the Cyber Security Solutions business
(“CSS”) of
Sypris Electronics toAnalog Devices, Inc. (“ADI”) for$42 million of cash. - The all-cash transaction was structured as a purchase of assets, including intellectual property and know-how, and included a long-term agreement for Sypris to supply circuit card assemblies to ADI for certain CSS products.
-
Proceeds from the sale after expenses and escrow are expected to
be in the range of
$37.5 million and will be used to reduce debt and reinvest in the Company going forward. -
The CSS business supplies secure communications equipment,
identity authentication, key management and encryption services
for various agencies and services of the
US Government , as well as for foreign allies. -
The transaction closed on
Tuesday, August 16 .
-
Announced the sale of the Cyber Security Solutions business
(“CSS”) of
Commenting on the transaction,
The transaction included the intellectual property and know-how for
SiOMetricsTM, SypherTM, the
Gill continued, “Going forward,
“We are delighted to welcome Sypris’ CSS employees, expertise and
products to the ADI family,” said
Second Quarter and Six Month Results
The Company reported revenue of
For the six months ended July 3, 2016, the Company reported revenue of
“During the second quarter of 2016,
“Sypris Technologies continues to adjust manpower and overhead expenses to reflect the continued softness in the commercial vehicle market that started during the fourth quarter of 2015. We have worked diligently to control our costs while taking actions to rebuild and diversify our customer base,” Mr. Gill continued.
Sypris Technologies
Revenue for Sypris Technologies decreased 53.9% to
Revenue for
Outlook
Mr. Gill added, “We will continue to concentrate on daily execution
within both of our businesses. The Company is working to adjust manpower
and overhead expenses to align with projected levels of customer demand
and market requirements, while optimizing our ability to bring in
potential new business.
Forward Looking Statements
This press release contains “forward-looking” statements within
the meaning of the federal securities laws. 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 | ||||||||||||||
July 3, | July 5, | |||||||||||||
2016 | 2015 | |||||||||||||
(Unaudited) | ||||||||||||||
Revenue | $ | 23,504 | $ | 40,756 | ||||||||||
Net loss | $ | (5,203 | ) | $ | (8,416 | ) | ||||||||
Loss per common share: | ||||||||||||||
Basic | $ | (0.26 | ) | $ | (0.43 | ) | ||||||||
Diluted | $ | (0.26 | ) | $ | (0.43 | ) | ||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 19,749 | 19,701 | ||||||||||||
Diluted | 19,749 | 19,701 | ||||||||||||
Six Months Ended | ||||||||||||||
July 3, | July 5, | |||||||||||||
2016 | 2015 | |||||||||||||
(Unaudited) | ||||||||||||||
Revenue | $ | 50,442 | $ | 77,765 | ||||||||||
Net loss | $ | (10,302 | ) | $ | (21,449 | ) | ||||||||
Loss per common share: | ||||||||||||||
Basic | $ | (0.52 | ) | $ | (1.09 | ) | ||||||||
Diluted | (0.52 | ) | (1.09 | ) | ||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 19,725 | 19,675 | ||||||||||||
Diluted | 19,725 | 19,675 | ||||||||||||
Sypris Solutions, Inc. | |||||||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||||||
(in thousands, except for per share data) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 3, | July 5, | July 3, | July 5, | ||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Sypris Technologies | $ | 14,769 | $ | 32,010 | $ | 32,596 | $ | 60,080 | |||||||||||||||
Sypris Electronics | 8,735 | 8,746 | 17,846 | 17,685 | |||||||||||||||||||
Total net revenue | 23,504 | 40,756 | 50,442 | 77,765 | |||||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Sypris Technologies | 15,029 | 31,429 | 33,512 | 63,603 | |||||||||||||||||||
Sypris Electronics | 7,753 | 9,361 | 15,481 | 17,353 | |||||||||||||||||||
Total cost of sales | 22,782 | 40,790 | 48,993 | 80,956 | |||||||||||||||||||
Gross profit (loss): | |||||||||||||||||||||||
Sypris Technologies | (260 | ) | 581 | (916 | ) | (3,523 | ) | ||||||||||||||||
Sypris Electronics | 982 | (615 | ) | 2,365 | 332 | ||||||||||||||||||
Total gross profit (loss) | 722 | (34 | ) | 1,449 | (3,191 | ) | |||||||||||||||||
Selling, general and administrative | 5,241 | 7,327 | 11,744 | 16,445 | |||||||||||||||||||
Research and development | 90 | 195 | 214 | 528 | |||||||||||||||||||
Severance and equipment relocation costs | 38 | 281 | 522 | 566 | |||||||||||||||||||
Operating loss | (4,647 | ) | (7,837 | ) | (11,031 | ) | (20,730 | ) | |||||||||||||||
Interest expense, net | 964 | 1,154 | 1,840 | 1,488 | |||||||||||||||||||
Other income, net | (409 | ) | (575 | ) | (2,571 | ) | (754 | ) | |||||||||||||||
Loss before taxes | (5,202 | ) | (8,416 | ) | (10,300 | ) | (21,464 | ) | |||||||||||||||
Income tax expense (benefit), net | 1 | - | 2 | (15 | ) | ||||||||||||||||||
Net loss | $ | (5,203 | ) | $ | (8,416 | ) | $ | (10,302 | ) | $ | (21,449 | ) | |||||||||||
Loss per common share: | |||||||||||||||||||||||
Basic | $ | (0.26 | ) | $ | (0.43 | ) | $ | (0.52 | ) | $ | (1.09 | ) | |||||||||||
Diluted | $ | (0.26 | ) | $ | (0.43 | ) | $ | (0.52 | ) | $ | (1.09 | ) | |||||||||||
Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 19,749 | 19,701 | 19,725 | 19,675 | |||||||||||||||||||
Diluted | 19,749 | 19,701 | 19,725 | 19,675 | |||||||||||||||||||
Sypris Solutions, Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
(in thousands, except for share data) | ||||||||||||||
July 3, | December 31, | |||||||||||||
2016 | 2015 | |||||||||||||
(Unaudited) | (Note) | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 1,819 | $ | 1,349 | ||||||||||
Restricted cash - current | 6,000 | - | ||||||||||||
Accounts receivable, net | 12,277 | 12,394 | ||||||||||||
Inventory, net | 20,622 | 20,192 | ||||||||||||
Other current assets | 3,624 | 4,459 | ||||||||||||
Assets held for sale | - | 3,230 | ||||||||||||
Total current assets | 44,342 | 41,624 | ||||||||||||
Property, plant and equipment, net | 22,330 | 22,178 | ||||||||||||
Other assets | 3,142 | 3,090 | ||||||||||||
Total assets | $ | 69,814 | $ | 66,892 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 10,949 | $ | 11,311 | ||||||||||
Accrued liabilities | 14,504 | 11,661 | ||||||||||||
Revolving credit facility | 4,853 | 2,132 | ||||||||||||
Current portion of long-term debt and capital lease obligations | 1,912 | 1,714 | ||||||||||||
Total current liabilities | 32,218 | 26,818 | ||||||||||||
Long-term debt and capital lease obligations | 10,862 | 8,780 | ||||||||||||
Note payable - related party | 6,500 | 5,500 | ||||||||||||
Other liabilities | 10,820 | 6,082 | ||||||||||||
Total liabilities | 60,400 | 47,180 | ||||||||||||
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; 21,359,736 shares issued and 21,307,044 outstanding in 2016 and 20,826,236 shares issued and 20,776,544 outstanding in 2015 |
213 | 208 | ||||||||||||
Additional paid-in capital | 152,775 | 152,077 | ||||||||||||
Accumulated deficit | (117,114 | ) | (106,812 | ) | ||||||||||
Accumulated other comprehensive loss | (26,459 | ) | (25,760 | ) | ||||||||||
Treasury stock, 52,692 and 49,692 shares in 2016 and 2015, respectively | (1 | ) | (1 | ) | ||||||||||
Total stockholders’ equity | 9,414 | 19,712 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 69,814 | $ | 66,892 | ||||||||||
Note: The balance sheet at December 31, 2015, 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) | ||||||||||||||
Six Months Ended | ||||||||||||||
July 3, | July 5, | |||||||||||||
2016 | 2015 | |||||||||||||
(Unaudited) | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net loss | $ | (10,302 | ) | $ | (21,449 | ) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||||
Depreciation and amortization | 3,678 | 4,950 | ||||||||||||
Stock-based compensation expense | 703 | 501 | ||||||||||||
Deferred revenue recognized | - | (4,200 | ) | |||||||||||
Deferred loan costs recognized | 435 | 630 | ||||||||||||
Gain on the sale of assets | (2,391 | ) | - | |||||||||||
Provision for excess and obsolete inventory | 86 | 1,125 | ||||||||||||
Other noncash items | (505 | ) | (1,587 | ) | ||||||||||
Contributions to pension plans | - | (281 | ) | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | 151 | 25,317 | ||||||||||||
Inventory | (494 | ) | 1,400 | |||||||||||
Prepaid expenses and other assets | (215 | ) | (3,006 | ) | ||||||||||
Accounts payable | (369 | ) | (14,026 | ) | ||||||||||
Accrued and other liabilities | 2,237 | (355 | ) | |||||||||||
Net cash used in operating activities | (6,986 | ) | (10,981 | ) | ||||||||||
Cash flows from investing activities: | ||||||||||||||
Capital expenditures | (115 | ) | (883 | ) | ||||||||||
Proceeds from sale of assets | 11,086 | - | ||||||||||||
Change in restricted cash | (6,000 | ) | - | |||||||||||
Net cash provided by (used in) investing activities | 4,971 | (883 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||
Principal payments on Term Loan | (857 | ) | - | |||||||||||
Proceeds from related party note payable | 1,000 | 5,500 | ||||||||||||
Proceeds from note payable - Meritor | - | 3,047 | ||||||||||||
Net change in debt under New Revolving Credit Agreement | 2,721 | - | ||||||||||||
Net change in debt under Credit Facility | - | (251 | ) | |||||||||||
Debt issuance and modification costs | (379 | ) | (1,369 | ) | ||||||||||
Indirect repurchase of shares for minimum statutory tax withholdings | - | (77 | ) | |||||||||||
Cash dividends paid | - | (410 | ) | |||||||||||
Net cash provided by financing activities | 2,485 | 6,440 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 470 | (5,424 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 1,349 | 7,003 | ||||||||||||
Cash and cash equivalents at end of period | $ | 1,819 | $ | 1,579 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160817005716/en/
Source:
Sypris Solutions, Inc.
Anthony C. Allen, 502-329-2000
Chief
Financial Officer