LOUISVILLE, Ky., Nov 08, 2011 (BUSINESS WIRE) -- Sypris Solutions, Inc. (Nasdaq/NM: SYPR) today reported financial results for its third quarter ended October 2, 2011.

HIGHLIGHTS

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• Revenue increased 24% from the prior year quarter driven by a 38% increase in sales for the Industrial Group.
• Gross profit increased 42% from the prior year period, reflecting a 197% increase in gross profit for the Industrial Group.
• Gross margin increased to 11.3% of revenue, up from 9.8% for the third quarter of last year.
• Earnings increased to $0.30 per diluted share, up from a loss of $0.10 per share for the prior year period.
• Free cash flow for the quarter increased to $6.8 million, or $0.36 per share.
• The Company announced a new long-term supply agreement to provide drivetrain components to Sisamex Automotrices de Mexico.
• The Company hosted a two week cyber training program, including a nationwide ethical hacking Capture the Flag event that was won by a team from Brigham Young University.

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The Company reported revenue of $91.2 million for the third quarter compared to $73.4 million for the prior year period. The Company reported net income of $6.1 million, or $0.30 per diluted share, for the third quarter compared to a net loss of $1.9 million, or $0.10 per share, for the prior year period.

Pretax income from continuing operations of $7.9 million for the three months ended October 2, 2011 included a pretax gain of $3.6 million from the disposition of idle assets and a foreign currency translation gain of $2.8 million before tax.

For the nine months ended October 2, 2011, the Company reported revenue of $252.0 million compared to $199.4 million for the prior year period and net income of $6.6 million, or $0.33 per diluted share, compared to a net loss of $8.6 million, or $0.46 per share.

The Company's income from continuing operations for the nine months ended October 2, 2011 was $7.0 million, or $0.35 per diluted share, as compared to a loss of $8.1 million, or $0.43 per share, for the prior year period.

Pretax income from continuing operations of $10.0 million for the nine months ended October 2, 2011 included a pretax gain of $3.0 million in connection with a settlement regarding prior year volumes with one of its customers, a pretax gain of $4.2 million from the disposition of idle assets and a foreign currency translation gain of $2.1 million before tax.

"Our Industrial Group continued to show important signs of progress during the quarter, with revenue and income increasing on a year-over-year basis," said Jeffrey T. Gill, president and chief executive officer. "We expect the improved cost profile and strong operational performance to make a material contribution to the growth and profitability of the Company during the remainder of the year."

"Revenue for our Electronics Group increased 15% sequentially for the quarter, while gross profit increased 223% sequentially. While sales volumes for the near term continue to reflect the impact of the delayed approval by Congress of the fiscal 2011 Defense Appropriations Bill, we continued to see improvement in the order flow during the quarter as funds began to be allocated through the various departments and agencies for new program use."

The Industrial Group

Revenue for our Industrial Group increased 38% to $72.6 million in the third quarter compared to $52.7 million for the prior year period, primarily as a result of increased demand from customers in the commercial vehicle and trailer markets. Gross profit for the quarter increased 197% to $6.9 million, or 10% of revenue, compared to $2.3 million, or 4% of revenue for the same period in 2010, reflecting the positive conversion associated with the increase in revenue and productivity.

The Electronics Group

Revenue for our Electronics Group was $18.5 million in the third quarter compared to $20.7 million in the prior year period, while gross profit for the quarter was $3.3 million, or 18% of revenue, compared to $4.9 million, or 24% of revenue for the same period in 2010. Revenue for the period continued to reflect the impact of the delay in funding for orders as a result of the late enactment of 2011 Federal budget, while gross profit was impacted by unfavorable mix and additional engineering costs for product portfolio improvements.

Outlook

Mr. Gill added, "We will continue to concentrate on the daily execution of our business as we finish 2011. We expect to see strong double digit comparable period growth in the top line of our Industrial Group going forward, as recently announced contracts add additional volume going into the new year. Our team remains acutely focused on increasing the rate of profit conversion from each revenue dollar, thereby driving further margin expansion and earnings during the year."

"For our Electronics Group, we expect to see the continued recovery of the defense market once the 2012 budget authorization is enacted."

"The Company is well-positioned and our team is focused on delivering improved operational and financial results during the year."

Sypris Solutions is a diversified provider of outsourced services and specialty products. The Company performs a wide range of manufacturing, engineering, design and other technical services, typically under multi-year, sole-source contracts with corporations and government agencies in the markets for truck components and assemblies and aerospace and defense electronics. For more information about Sypris Solutions, visit its Web site at http://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 and Form 10-Q and subsequent SEC filings.Briefly, we currently believe that such risks also include: potential impairments, non-recoverability or write-offs of goodwill, assets or deferred costs, including capitalized pre-contract costs related to the development of a replacement for certain aerospace and defense products; inventory valuation risks including obsolescence, shrinkage, theft, overstocking or underbilling; declining revenues in our aerospace and defense business lines as we transition from legacy products and services into new market segments and technologies; U.S. government spending on products and services that our Electronics Group provides, including the timing of budgetary decisions; potential liabilities associated with discontinued operations, including post-closing indemnifications or claims related to business or asset dispositions;the costs of compliance with our auditing, regulatory or contractual obligations; regulatory actions or sanctions (in each case including FCPA, OSHA and Federal Acquisition Regulations, among others); adverse determinations by government contracting officers, especially regarding the potential retrofit of certain electronic products with respect to alleged "latent defects," which are disputed by the Company; dependence on, recruitment or retention of key employees; pension valuation, health care or other benefit costs; labor relations; strikes; union negotiations; changes in licenses, security clearances, or other legal rights to operate, manage our work force or import and export as needed; breakdowns, relocations or major repairs of machinery and equipment; changes or delays in government or other customer budgets, funding or programs; potential weaknesses in internal controls over [financial reporting and] enterprise risk management; reliance on major customers or suppliers, especially in the automotive or aerospace and defense electronics sectors; the cost, efficiency and yield of our operations and capital investments, including working capital, production schedules, cycle times, scrap rates, injuries, wages, overtime costs, freight or expediting costs; our inability to successfully launch or sustain new or next generation programs or product features, especially in accordance with budgets or committed delivery schedules; disputes or litigation, involving customer, supplier, lessor, landlord, creditor, stockholder, product liability or environmental claims; the costs and supply of debt, equity capital, or insurance; fees, costs or other dilutive effects of refinancing, compliance with covenants; cost and availability of raw materials such as steel, component parts, natural gas or utilities; volatility of our customers' forecasts, financial conditions, market shares, product requirements or scheduling demands; adverse impacts of new technologies or other competitive pressures which increase our costs or erode our margins; failure to adequately insure or to identify environmental or other insurable risks; revised contract prices or estimates of major contract costs; risks of foreign operations; currency exchange rates; war, terrorism, computer hacking or other cyber attacks, or political uncertainty; unanticipated or uninsured disasters, losses or business risks; inaccurate data about markets, customers or business conditions; or unknown risks and uncertainties.

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included in this press release, the company has provided information regarding free cash flow, which is a non-GAAP financial measure.

Free cash flow is defined as cash provided by operating activities less capital expenditures. Free cash flow is useful in analyzing the company's ability to service and repay its debt. Management uses this non-GAAP measure in planning and forecasting for future periods.

This non-GAAP measure should not be considered a substitute for our reported results prepared in accordance with GAAP.

SOURCE: Sypris Solutions, Inc.

Sypris Solutions, Inc.
Brian A. Lutes, 502-329-2000
Chief Financial Officer