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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): February 23, 2006
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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
================================================================================
- --------------------------------------------------------------------------------
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 February 23, 2006, Sypris Solutions, Inc. (the "Company")
announced its financial results for the fourth quarter and fiscal
year ended December 31, 2005. 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 February 23, 2006, Sypris Solutions, Inc. (the "Company")
announced its financial results for the fourth quarter and fiscal
year ended December 31, 2005. 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.
(d) Exhibits.
Exhibit Number Description of Exhibit
-------------- ----------------------
99 Press release issued February 23, 2006.
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: February 23, 2006 Sypris Solutions, Inc.
By: /s/ T. Scott Hatton
--------------------------------
T. Scott Hatton
Vice President
and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
99 Registrant's press release dated February 23, 2006.
Exhibit 99
Sypris Reports Fourth Quarter
Results; Company Generates Record Cash Flow
LOUISVILLE, Ky.--(BUSINESS WIRE)--Feb. 23, 2006--Sypris Solutions,
Inc. (Nasdaq/NM: SYPR) today reported revenue increased 9% to $132.1
million for the fourth quarter compared to $121.7 million for the
prior year period. The Company reported a loss for the period of $0.3
million, or $0.01 per diluted share, compared to a loss of $0.8
million, or $0.04 per diluted share, for the fourth quarter of 2004.
For the full year 2005, the Company reported revenue increased 23%
to a record $522.8 million compared to $425.4 million for the prior
year. Net income for the year was $5.3 million, or $0.29 per diluted
share, compared to $8.3 million, or $0.47 per diluted share, for 2004.
"The Company's fourth quarter earnings performance was in line
with our expectations," said Jeffrey T. Gill, president and chief
executive officer. "Although volume softened during the period, we
were able to finish at the higher end of our earnings guidance for the
quarter. In addition, cash flow from operations reached $24.5 million
for the period and $72.6 million for the year, resulting in record
free cash flow of $21.0 million and $36.3 million for the fourth
quarter and full year 2005, respectively."
"Net orders for the quarter reached $132.1 million and a record
$525.2 million for the year, driven by an increase in bookings from
our Industrial Group, while backlog of $252.3 million remained at near
record levels. The outlook for our markets in general remains
positive, although we believe that in the current environment of
increasing energy costs and rising interest rates, we must clearly
remain dedicated to improving the operating effectiveness of the
business."
The Industrial Group
Orders and revenue were slightly better than expected as orders
for fourth quarter were $105.6 million and backlog increased 14% to
$150.4 million compared to the prior year quarter. Revenue for our
Industrial Group increased 15% to $86.7 million in the fourth quarter
from $75.3 million for the prior year period, but decreased 8%
sequentially from the third quarter of this year. Gross profit for the
quarter was $1.6 million as a result of lower volume, increased energy
costs and overtime costs.
The Electronics Group
Although orders and revenue in fourth quarter were lower than
anticipated as customer delays pushed out requirements, second half
orders for 2005 increased 18% over the prior year period and second
half revenue for 2005 increased 6% over the final six months of last
year.
Orders were $26.4 million for fourth quarter and backlog was
$101.9 million. Revenue for our Electronics Group decreased 2% to
$45.4 million in fourth quarter compared to $46.4 million for prior
year period, and decreased 2% sequentially from third quarter of this
year. Gross profit for the quarter increased 42% to $8.9 million
compared to $6.3 million for the same period in 2004, reflecting
improvements in both business segments of this group.
Revenue for the Aerospace & Defense segment decreased 4% to $33.9
million compared to $35.5 million for the prior year period, while
gross profit for the Aerospace & Defense segment increased 39% to $6.4
million from $4.6 million for the prior year period.
Revenue for the Test & Measurement segment increased 5% from that
of the prior year period to $11.5 million, while gross profit for the
Test & Measurement segment increased 49% to $2.5 million from $1.7
million for the same period in 2004.
Outlook
Gill added, "Even though the first quarter traditionally
represents the Company's seasonally lowest period, we expect revenue
for the first quarter of 2006 to be in the range of $130 to $135
million compared to $124.2 million for the first quarter of 2005,
which represents a 7% increase at the midpoint of our guidance.
Earnings for the first quarter of 2006 are forecast to be in the range
of $0.04 to $0.06 per diluted share, compared to $0.03 per diluted
share for the first quarter of 2005, and are consistent with the
assumptions reflected in our December outlook."
"The revenue forecast for the full year 2006 remains unchanged and
is expected to be in the range of $555 to $565 million compared to
$522.8 million for 2005, which represents a 7% increase in revenue for
2006 at the midpoint of the range. Earnings are forecast to be in the
range of $0.45 to $0.55 per diluted share compared to $0.29 per
diluted share for 2005, which represents a 72% increase for 2006 at
the midpoint of the range."
Gill continued, "We expect 2006 to represent another strong year
for cash flow generation, with cash flow from operations expected to
be in the range of $50.0 to $60.0 million, and free cash flow to be in
the range of $30.0 to $40.0 million. We believe that the continued
strength of the Company's cash flow during the coming year could prove
to be of significant benefit as we continue to evaluate future growth
opportunities."
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 test and measurement
services. For more information about Sypris Solutions, visit its Web
site at 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 subsequent SEC filings. Briefly, such risks also include:
cost and availability of raw materials such as steel, components,
freight, natural gas or utilities; cost and inefficiencies associated
with increasing our manufacturing capacity and launching new programs;
stability and predictability of our costs and margins or our
customers' forecasts, financial conditions (including bankruptcies or
other restructurings), late payments, low-margin product mix, market
shares, changing product requirements or scheduling demands; costs
associated with breakdowns or repairs of machinery and equipment;
growth beyond our productive capacity, cyclical or other downturns,
adverse impacts of new technologies or other competitive pressures
which erode our margins; cost, efficiency and yield of our operations
including capital investments, working capital, scrap rates, cycle
times, injuries, self-insured risks, wages, freight, production
schedules, overtime costs, expediting costs or scrap rates; failure to
make strategic acquisitions or to integrate and improve results of
acquired businesses or to identify and adequately insure environmental
or other risks in due diligence; inventory valuation risks due to
obsolescence, shrinkage, price, overstocking or underbilling; changes
in government funded or other customer programs; reliance on major
customers or suppliers; revised contract prices or estimates of major
contract costs; dependence on, recruitment or retention of management
or other key employees; union negotiations; pension valuation, health
care or other benefit costs; labor relations; strikes; risks of
foreign operations; currency exchange rates; costs and supply of debt,
equity capital, or insurance due to poor operating or financial
results, new business risks, credit ratings, debt covenants, contract
claims, insurance conditions or regulatory developments; impairments
or write-offs of goodwill or fixed assets; changes in licenses,
security clearances, or other legal rights to operate, manage our work
force or import and export as needed; completion of the internal
control assessment process; costs of compliance with auditing,
regulatory or contractual obligations; regulatory actions or
sanctions; contract terminations or other disputes or litigation,
involving customer, supplier, creditor, stockholder, product
liability, environmental or asbestos-related claims; war, terrorism or
political uncertainty; unanticipated or uninsured disasters, losses or
business risks; inaccurate data about markets, customers or business
conditions; unknown risks and uncertainties; or other risk factors in
our SEC filings.
SYPRIS SOLUTIONS, INC.
Financial Highlights
(In thousands, except per share amounts)
Three Months Ended
December 31,
-----------------------
2004
Restated
2005 (1)
------------ ---------
Unaudited
Revenue $ 132,112 $121,673
Net loss $ (251) $ (801)
Loss per common share:
Basic $ (0.01) $ (0.04)
Diluted $ (0.01) $ (0.04)
Weighted average shares outstanding:
Basic 18,037 17,916
Diluted 18,037 17,916
Year Ended
December 31,
-----------------------
2004
Restated
2005 (1)
------------ ---------
Unaudited
Revenue $ 522,766 $425,402
Net income $ 5,321 $ 8,299
Earnings per common share:
Basic $ 0.30 $ 0.48
Diluted $ 0.29 $ 0.47
Weighted average shares outstanding:
Basic 18,016 17,119
Diluted 18,323 17,745
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility.
Prior year amounts have been restated as required for
comparability. The change increased previously reported earnings
for the fourth quarter and year ended 2004 by $662,000, or $0.04
per diluted share, and $892,000, or $0.05 per diluted share,
respectively.
Sypris Solutions, Inc.
Consolidated Income Statements
(in thousands, except for per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------------------------------
2004 2004
Restated Restated
2005 (1) 2005 (1)
----------------------- ---------------------
(Unaudited) (Unaudited)
Net revenue:
Industrial Group $ 86,735 $ 75,308 $ 359,602 $ 260,410
Aerospace & Defense 33,906 35,464 115,863 119,179
Test & Measurement 11,471 10,901 47,301 45,813
------------- --------- ----------- ---------
Electronics Group 45,377 46,365 163,164 164,992
------------- --------- ----------- ---------
Total net revenue 132,112 121,673 522,766 425,402
Cost of sales:
Industrial Group 85,100 71,644 336,686 235,406
Aerospace & Defense 27,538 30,884 98,367 99,895
Test & Measurement 8,989 9,234 36,375 36,662
------------- --------- ----------- ---------
Electronics Group 36,527 40,118 134,742 136,557
------------- --------- ----------- ---------
Total cost of sales 121,627 111,762 471,428 371,963
Gross profit:
Industrial Group 1,635 3,664 22,916 25,004
Aerospace & Defense 6,368 4,580 17,496 19,284
Test & Measurement 2,482 1,667 10,926 9,151
------------- --------- ----------- ---------
Electronics Group 8,850 6,247 28,422 28,435
------------- --------- ----------- ---------
Total gross profit 10,485 9,911 51,338 53,439
Selling, general and
administrative 9,511 9,547 35,669 35,248
Research and
development 449 1,214 2,833 3,697
Amortization of
intangible assets 140 185 614 596
------------- --------- ----------- ---------
Operating income
(loss) 385 (1,035) 12,222 13,898
Interest expense, net 1,413 939 5,979 2,100
Other income, net (469) (47) (1,325) (138)
------------- --------- ----------- ---------
(Loss) income before
income taxes (559) (1,927) 7,568 11,936
Income tax (benefit)
expense (308) (1,126) 2,247 3,637
------------- --------- ----------- ---------
Net (loss) income $ (251)$ (801)$ 5,321 $ 8,299
============= ========= =========== =========
(Loss) earnings per
common share:
Basic $ (0.01)$ (0.04)$ 0.30 $ 0.48
Diluted $ (0.01)$ (0.04)$ 0.29 $ 0.47
Dividends declared per
common share $ 0.03 $ 0.03 $ 0.12 $ 0.12
Weighted average
shares outstanding:
Basic 18,037 17,916 18,016 17,119
Diluted 18,037 17,916 18,323 17,745
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility.
Prior year amounts have been restated as required for
comparability. The change increased previously reported earnings
for the fourth quarter and year ended 2004 by $662,000, or $0.04
per diluted share, and $892,000, or $0.05 per diluted share,
respectively. Amounts were derived from the 2004 audited financial
statements included in the Company's form 10-K filing.
Sypris Solutions, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
December
31, 2004
December 31, Restated
2005 (1)
------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,060 $ 14,060
Accounts receivable, net 95,432 104,637
Inventory, net 79,724 92,016
Other current assets 26,020 21,566
------------- ----------
Total current assets 213,236 232,279
Property, plant and equipment, net 176,719 166,940
Goodwill 14,277 14,277
Other assets 13,392 17,682
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Total assets $ 417,624 $ 431,178
============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 76,567 $ 61,778
Accrued liabilities 24,904 20,378
Current portion of long-term debt -- 7,000
------------- ----------
Total current liabilities 101,471 89,156
Long-term debt 80,000 110,000
Other liabilities 22,419 23,083
------------- ----------
Total liabilities 203,890 222,239
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;
18,165,658 and 17,920,500 shares issued and
outstanding in 2005 and
2004, respectively 182 179
Additional paid-in capital 143,350 140,898
Retained earnings 73,375 70,227
Accumulated other comprehensive loss (1,934) (2,365)
Unearned compensation (1,239) --
------------- ----------
Total stockholders' equity 213,734 208,939
------------- ----------
Total liabilities and stockholders' equity $ 417,624 $ 431,178
============= ==========
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility.
Prior year amounts have been restated as required for
comparability. The change increased previously reported inventory,
retained earnings and other liabilities balances at December 31,
2004 by $2,224,000, $1,503,000 and $721,000, respectively. Amounts
were derived from the 2004 audited financial statements included
in the Company's form 10-K filing.
Sypris Solutions, Inc.
Consolidated Cash Flow Statements
(in thousands)
Year Ended December 31,
-----------------------
2004
Restated
2005 (1)
-------------------
(Unaudited)
Cash flows from operating activities:
Net income $ 5,321 $ 8,299
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 25,909 19,066
Other noncash charges 518 6,377
Changes in operating assets and liabilities,
net of acquisitions in 2004:
Accounts receivable 8,595 (60,995)
Inventory 11,555 (27,004)
Other current assets 3,363 (9,971)
Accounts payable 15,119 33,947
Accrued liabilities 2,208 2,871
---------- --------
Net cash provided by (used in) operating
activities 72,588 (27,410)
Cash flows from investing activities:
Capital expenditures (36,264) (55,900)
Proceeds from sale of assets 649 47
Purchase of net assets of acquired entities -- (29,648)
Changes in nonoperating assets and liabilities (625) (640)
---------- --------
Net cash used in investing activities (36,240) (86,141)
Cash flows from financing activities:
Net change in debt under revolving credit
agreements (37,000) 5,800
Proceeds from long-term debt -- 55,000
Cash dividends paid (2,164) (2,023)
Proceeds from issuance of common stock 816 56,815
---------- --------
Net cash (used in) provided by financing
activities (38,348) 115,592
---------- --------
Net (decrease) increase in cash and cash
equivalents (2,000) 2,041
Cash and cash equivalents at beginning of
period 14,060 12,019
---------- --------
Cash and cash equivalents at end of period $ 12,060 $ 14,060
========== ========
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility.
Prior year amounts have been restated as required for
comparability. The change increased previously reported earnings
for 2004 by $892,000, or $0.05 per diluted share, but has no
effect on cash flow from operations. Amounts were derived from the
2004 audited financial statements included in the Company's form
10-K filing.
CONTACT: Sypris Solutions, Inc.
T. Scott Hatton, 502-329-2000