Sypris Reports Third Quarter Results
Revenue up 33%; Margins Expand; Positive 2024 Outlook
HIGHLIGHTS
─────────────────────
-
Revenue for the quarter increased 33.3% year-over-year, driven by a 73.5% increase for
Sypris Electronics and a 13.8% increase forSypris Technologies . -
Gross profit increased 105.0% year-over-year, with an improvement of 186.8% for
Sypris Electronics and 36.2% forSypris Technologies . -
Gross margin for the quarter increased 420 basis points to 12.0% with an increase of 710 basis points to 18.1% for
Sypris Electronics and 120 basis points to 7.5% forSypris Technologies . -
Backlog increased by 8.4%, reflecting a 9.0% year-over-year increase at
Sypris Electronics after having taken into account the significant increase in shipments during the period. -
During the quarter,
Sypris Technologies announced that it had received an order to supply 72-inch insulated joints for use in the expansion of the Atoka Water Pipeline for theOklahoma City Water Utilities Trust . Shipments are expected to begin in 2023 and extend into 2024. -
Sypris Technologies also announced that it had received an award for specialty high-pressure closures for use in theVenture Global CP2 LNG Export Terminal and theVenture Global CP Express Natural Gas Pipeline Project . Shipments under this award are anticipated to be completed by year-end 2023. -
Subsequent to quarter end,
Sypris Electronics announced that it had received a follow-on contract to manufacture advanced integrated electronic warfare and communications avionics system modules for an American family of single-seat, single-engine, all-weather stealth multirole combat aircraft. The program is one of the largest governmentDOD programs, and production is expected to begin in 2023 and will continue into mid-year 2025. -
The Company updated its full-year outlook for 2023, with revenue now expected to increase 25% year-over-year, at the lower end of our prior guidance due to customer design changes. Gross profit is expected to increase in line with revenue, while gross margin is expected to approximate the prior year due to the continuing unfavorable impact of the Mexican peso relative to the
U.S. dollar. - The outlook for 2024 remains quite positive, reflecting a strong backlog and the continued momentum of new contract awards across many of the Company’s markets. Revenue for 2024 is forecast to increase 15-20%. Gross profit is expected to increase 25-30%, while gross margins are expected to expand 150-200 basis points year-over-year.
────────────────────
“We were pleased with our third quarter performance, as both operating segments reported significant growth in revenue, gross profit, and gross margin. Our teammates have done an excellent job navigating inflationary pressures, supply chain challenges, customer demand volatility and currency fluctuations to position the business for further growth and increased profitability during the remainder of 2023,” commented
“Backlog for
“Overall demand from customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained stable. We continue to invest in new equipment and drive continuous improvement initiatives to support more cost-efficient operations, which will help offset headwinds for our automotive and commercial vehicle components as our customers adjust inventory levels to align with OEM build schedules.
“Shipments of
Third Quarter Results
The Company reported revenue of
For the nine months ended
Revenue for
Revenue for
Outlook
Commenting on the future,
“We have updated our outlook for 2023 to include a 25% growth in the top line, which is at the lower end of our previous guidance. Gross profit is expected to increase in line with revenue, while the continuing unfavorable impact of the Mexican peso relative to the
“With a strong backlog, new program wins and long-term contract extensions in place, we are confident that 2024 has the potential to be very positive for
Webcast and Conference Call Information
The live broadcast of Sypris’ quarterly conference call will also be available online at www.sypris.com on
About
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
Financial Highlights | ||||||||
(In thousands, except per share amounts) | ||||||||
Three Months Ended | ||||||||
2023 |
2022 |
|||||||
(Unaudited) | ||||||||
Revenue |
$ |
33,581 |
|
$ |
25,199 |
|
||
Net loss |
$ |
(555 |
) |
$ |
(2,242 |
) |
||
Loss per common share: | ||||||||
Basic |
$ |
(0.03 |
) |
$ |
(0.10 |
) |
||
Diluted |
$ |
(0.03 |
) |
$ |
(0.10 |
) |
||
Weighted average shares outstanding: | ||||||||
Basic |
|
21,880 |
|
|
21,740 |
|
||
Diluted |
|
21,880 |
|
|
21,740 |
|
||
Nine Months Ended | ||||||||
2023 |
2022 |
|||||||
(Unaudited) | ||||||||
Revenue |
$ |
101,488 |
|
$ |
80,409 |
|
||
Net loss |
$ |
(517 |
) |
$ |
(2,634 |
) |
||
Loss per common share: | ||||||||
Basic |
$ |
(0.02 |
) |
$ |
(0.12 |
) |
||
Diluted |
$ |
(0.02 |
) |
$ |
(0.12 |
) |
||
Weighted average shares outstanding: | ||||||||
Basic |
|
21,848 |
|
|
21,716 |
|
||
Diluted |
|
21,848 |
|
|
21,716 |
|
||
Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except for per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net revenue: | ||||||||||||||||
$ |
19,337 |
|
$ |
16,990 |
|
$ |
58,895 |
|
$ |
52,096 |
|
|||||
|
14,244 |
|
|
8,209 |
|
|
42,593 |
|
|
28,313 |
|
|||||
Total net revenue |
|
33,581 |
|
|
25,199 |
|
|
101,488 |
|
|
80,409 |
|
||||
Cost of sales: | ||||||||||||||||
|
17,878 |
|
|
15,919 |
|
|
52,790 |
|
|
45,762 |
|
|||||
|
11,663 |
|
|
7,309 |
|
|
35,827 |
|
|
24,387 |
|
|||||
Total cost of sales |
|
29,541 |
|
|
23,228 |
|
|
88,617 |
|
|
70,149 |
|
||||
Gross profit: | ||||||||||||||||
|
1,459 |
|
|
1,071 |
|
|
6,105 |
|
|
6,334 |
|
|||||
|
2,581 |
|
|
900 |
|
|
6,766 |
|
|
3,926 |
|
|||||
Total gross profit |
|
4,040 |
|
|
1,971 |
|
|
12,871 |
|
|
10,260 |
|
||||
Selling, general and administrative |
|
4,170 |
|
|
3,574 |
|
|
11,619 |
|
|
10,700 |
|
||||
Operating (loss) income |
|
(130 |
) |
|
(1,603 |
) |
|
1,252 |
|
|
(440 |
) |
||||
Interest expense, net |
|
127 |
|
|
273 |
|
|
531 |
|
|
784 |
|
||||
Other expense, net |
|
199 |
|
|
382 |
|
|
783 |
|
|
655 |
|
||||
Loss before taxes |
|
(456 |
) |
|
(2,258 |
) |
|
(62 |
) |
|
(1,879 |
) |
||||
Income tax expense (benefit), net |
|
99 |
|
|
(16 |
) |
|
455 |
|
|
755 |
|
||||
Net loss |
$ |
(555 |
) |
$ |
(2,242 |
) |
$ |
(517 |
) |
$ |
(2,634 |
) |
||||
Loss per common share: | ||||||||||||||||
Basic |
$ |
(0.03 |
) |
$ |
(0.10 |
) |
$ |
(0.02 |
) |
$ |
(0.12 |
) |
||||
Diluted |
$ |
(0.03 |
) |
$ |
(0.10 |
) |
$ |
(0.02 |
) |
$ |
(0.12 |
) |
||||
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
||||
Weighted average shares outstanding: | ||||||||||||||||
Basic |
|
21,880 |
|
|
21,740 |
|
|
21,848 |
|
|
21,716 |
|
||||
Diluted |
|
21,880 |
|
|
21,740 |
|
|
21,848 |
|
|
21,716 |
|
||||
Consolidated Balance Sheets | ||||||||
(in thousands, except for share data) | ||||||||
|
2023 |
|
|
2022 |
|
|||
(Unaudited) | (Note) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
8,409 |
|
$ |
21,648 |
|
||
Accounts receivable, net |
|
10,777 |
|
|
8,064 |
|
||
Inventory, net |
|
76,669 |
|
|
42,133 |
|
||
Other current assets |
|
9,284 |
|
|
8,133 |
|
||
Total current assets |
|
105,139 |
|
|
79,978 |
|
||
Property, plant and equipment, net |
|
16,659 |
|
|
15,532 |
|
||
Operating lease right-of-use assets |
|
3,584 |
|
|
4,251 |
|
||
Other assets |
|
4,511 |
|
|
4,383 |
|
||
Total assets |
$ |
129,893 |
|
$ |
104,144 |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable |
$ |
25,553 |
|
$ |
17,638 |
|
||
Accrued liabilities |
|
56,052 |
|
|
33,316 |
|
||
Operating lease liabilities, current portion |
|
1,120 |
|
|
1,168 |
|
||
Finance lease obligations, current portion |
|
1,168 |
|
|
1,102 |
|
||
Equipment financing obligations, current portion |
|
624 |
|
|
398 |
|
||
Working capital line of credit |
|
500 |
|
|
- |
|
||
Note payable - related party, current portion |
|
- |
|
|
2,500 |
|
||
Total current liabilities |
|
85,017 |
|
|
56,122 |
|
||
Operating lease liabilities, net of current portion |
|
2,890 |
|
|
3,710 |
|
||
Finance lease obligations, net of current portion |
|
1,834 |
|
|
2,536 |
|
||
Equipment financing obligations, net of current portion |
|
1,429 |
|
|
738 |
|
||
Note payable - related party, net of current portion |
|
3,993 |
|
|
3,989 |
|
||
Other liabilities |
|
13,319 |
|
|
17,474 |
|
||
Total liabilities |
|
108,482 |
|
|
84,569 |
|
||
Stockholders’ equity: | ||||||||
Preferred stock, par value |
||||||||
no shares issued |
|
- |
|
|
- |
|
||
Series A preferred stock, par value |
||||||||
authorized; no shares issued |
|
- |
|
|
- |
|
||
Common stock, non-voting, par value |
||||||||
authorized; no shares issued |
|
- |
|
|
- |
|
||
Common stock, par value |
||||||||
22,465,485 shares issued and 22,454.649 outstanding in 2023 and | ||||||||
22,175,664 shares issued and 22,175,645 outstanding in 2022 |
|
224 |
|
|
221 |
|
||
Additional paid-in capital |
|
156,044 |
|
|
155,535 |
|
||
Accumulated deficit |
|
(115,853 |
) |
|
(115,336 |
) |
||
Accumulated other comprehensive loss |
|
(19,004 |
) |
|
(20,845 |
) |
||
|
- |
|
|
- |
|
|||
Total stockholders’ equity |
|
21,411 |
|
|
19,575 |
|
||
Total liabilities and stockholders’ equity |
$ |
129,893 |
|
$ |
104,144 |
|
||
Note: The balance sheet at |
Consolidated Cash Flow Statements | ||||||||
(in thousands) | ||||||||
Nine Months Ended | ||||||||
|
2023 |
|
|
2022 |
|
|||
(Unaudited) | ||||||||
Cash flow from operating activities | ||||||||
Net loss |
$ |
(517 |
) |
$ |
(2,634 |
) |
||
Adjustments to reconcile net loss to net cash | ||||||||
(used in) provided by operating activities: | ||||||||
Depreciation and amortization |
|
2,392 |
|
|
2,302 |
|
||
Deferred income taxes |
|
(56 |
) |
|
451 |
|
||
Stock-based compensation expense |
|
615 |
|
|
512 |
|
||
Deferred loan costs recognized |
|
3 |
|
|
4 |
|
||
Net loss on the sale of assets |
|
- |
|
|
4 |
|
||
Provision for excess and obsolete inventory |
|
(22 |
) |
|
92 |
|
||
Non-cash lease expense |
|
667 |
|
|
690 |
|
||
Other noncash items |
|
178 |
|
|
82 |
|
||
Contributions to pension plans |
|
(10 |
) |
|
(60 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(2,845 |
) |
|
(528 |
) |
||
Inventory |
|
(34,146 |
) |
|
(5,062 |
) |
||
Prepaid expenses and other assets |
|
(464 |
) |
|
(2,215 |
) |
||
Accounts payable |
|
7,841 |
|
|
3,877 |
|
||
Accrued and other liabilities |
|
18,195 |
|
|
10,780 |
|
||
Net cash (used in) provided by operating activities |
|
(8,169 |
) |
|
8,295 |
|
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(1,890 |
) |
|
(2,811 |
) |
||
Proceeds from sale of assets |
|
- |
|
|
6 |
|
||
Net cash used in investing activities |
|
(1,890 |
) |
|
(2,805 |
) |
||
Cash flows from financing activities: | ||||||||
Proceeds from equipment financing obligations |
|
210 |
|
|
- |
|
||
Proceeds from working capital line of credit |
|
500 |
|
|
- |
|
||
Principal payments on finance lease obligations |
|
(845 |
) |
|
(725 |
) |
||
Principal payments on equipment financing obligations |
|
(387 |
) |
|
(253 |
) |
||
Principal payments on Note Payable - related party |
|
(2,500 |
) |
|
- |
|
||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(104 |
) |
|
(40 |
) |
||
Net cash used in financing activities |
|
(3,126 |
) |
|
(1,018 |
) |
||
Effect of exchange rate changes on cash balances |
|
(54 |
) |
|
382 |
|
||
Net (decrease) increase in cash and cash equivalents |
|
(13,239 |
) |
|
4,854 |
|
||
Cash and cash equivalents at beginning of period |
|
21,648 |
|
|
11,620 |
|
||
Cash and cash equivalents at end of period |
$ |
8,409 |
|
$ |
16,474 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20231115621670/en/
Richard L Davis
Chief Financial Officer
(502) 329-2000
Source: