Sypris Reports First Quarter Results
Gross Margins Expand; Orders up 133% at
Results for the first quarter of 2020 fundamentally reflected these expectations, with year-over-year gains in gross margin and operating income. However, the Company began to experience lower revenue late in the first quarter due to the global economic impact of the COVID-19 pandemic. The Company expects this impact to increase during the coming months.
HIGHLIGHTS
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- The Company’s first quarter revenue increased 14.6% compared to the prior-year quarter and increased 3.7% sequentially as shipments from new programs increased for both segments of the business.
- The Company’s gross margin increased to 16.0% of revenue, up from 4.4% in the first quarter of 2019 and up 350 basis points sequentially.
- The Company’s operating income was positive for the quarter, driven by a 317.6% increase in gross profit and a 6.7% decrease in SG&A when compared to the prior-year period. Sequentially, gross profit increased 32.6% while SG&A decreased 7.2%.
-
For
Sypris Technologies , gross margin increased 390 basis points to 18.2% compared to the prior-year quarter despite lower revenue, while operating income increased 7.0%. Operating margin increased to 8.2% of sales, up from 6.5% for the same period in 2019 and up from 5.4% sequentially. -
For
Sypris Electronics , revenue increased 154.4% during the quarter compared to the prior-year period, reflecting the improved availability of electronic components. Gross margin increased to 12.6% of sales, while operating margin increased to 4.7% of revenue. Orders increased 132.6% year-over-year, resulting in a 45.1% increase in backlog. -
During the quarter,
Sypris Electronics announced that it had received a new contract award from BAE Systems to manufacture and test electronic power supply modules for a large, mission-critical military program, with production to begin this year. -
Subsequent to quarter end, the Company completed the sale of its 90-year-old former manufacturing facility that was located on approximately 20 acres of land in
Louisville, Kentucky , for$1.7 million . The facility had been closed and unoccupied since the fourth quarter of 2017. -
Additionally, the Company secured a
$3.6 million loan in May under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Securities Act, which will be used to cover payroll costs, rent and utility costs in accordance with the terms and conditions of the loan.
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“While the economic headwinds and disruptions in the quarter had an impact on our results, we are pleased with our performance during the period,” commented
“Revenue for
Concluding,
First Quarter Results
The Company reported revenue of
Revenue for
Revenue for
Outlook
Commenting on the future,
“First and foremost, we are focused on the health and safety of our employees, their families and our customers. We are closely monitoring local, state and federal government agencies and will follow all recommendations. The extent and duration of the impacts that COVID-19 may have on our business are not known at this time, but we are monitoring developments in order to be in a position to take appropriate action.
“Our operations have remained open to meet the important needs of our customers who serve defense, energy, transportation and other critical infrastructure industries. We expect the road back for the economy to be a potentially uncertain journey. If accurate, we would anticipate the impact to be felt less on customers in defense-related markets and more on those who serve industrial, consumer and travel-related markets.”
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. Such statements may relate to projections of the company’s revenue, earnings, and other financial and operational measures, our liquidity, our ability to mitigate or manage disruptions posed by COVID-19, and the impact of COVID-19 and economic conditions on our future operations, among other matters. In
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 |
||||||||
|
|
|
||||||
2020 |
|
2019 |
||||||
(Unaudited) | ||||||||
Revenue |
$ |
22,425 |
|
$ |
19,564 |
|
||
Net loss |
$ |
(305 |
) |
$ |
(3,036 |
) |
||
Loss per common share: | ||||||||
Basic |
$ |
(0.01 |
) |
$ |
(0.15 |
) |
||
Diluted |
|
(0.01 |
) |
|
(0.15 |
) |
||
Weighted average shares outstanding: | ||||||||
Basic |
|
20,988 |
|
|
20,669 |
|
||
Diluted |
|
20,988 |
|
|
20,669 |
|
||
Consolidated Statements of Operations | ||||||||
(in thousands, except for per share data) | ||||||||
Three Months Ended |
||||||||
|
|
|||||||
2020 |
2019 |
|||||||
(Unaudited) | ||||||||
Net revenue: | ||||||||
$ |
13,717 |
|
$ |
16,141 |
|
|||
|
8,708 |
|
|
3,423 |
|
|||
Total net revenue |
|
22,425 |
|
|
19,564 |
|
||
Cost of sales: | ||||||||
|
11,224 |
|
|
13,837 |
|
|||
|
7,610 |
|
|
4,867 |
|
|||
Total cost of sales |
|
18,834 |
|
|
18,704 |
|
||
Gross profit (loss): | ||||||||
|
2,493 |
|
|
2,304 |
|
|||
|
1,098 |
|
|
(1,444 |
) |
|||
Total gross profit |
|
3,591 |
|
|
860 |
|
||
Selling, general and administrative |
|
3,223 |
|
|
3,454 |
|
||
Severance, relocation and other costs |
|
91 |
|
|
98 |
|
||
Operating income (loss) |
|
277 |
|
|
(2,692 |
) |
||
Interest expense, net |
|
227 |
|
|
217 |
|
||
Other expense, net |
|
283 |
|
|
51 |
|
||
Loss before taxes |
|
(233 |
) |
|
(2,960 |
) |
||
Income tax expense, net |
|
72 |
|
|
76 |
|
||
Net loss |
$ |
(305 |
) |
$ |
(3,036 |
) |
||
Loss per common share: | ||||||||
Basic |
$ |
(0.01 |
) |
$ |
(0.15 |
) |
||
Diluted |
$ |
(0.01 |
) |
$ |
(0.15 |
) |
||
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
||
Weighted average shares outstanding: | ||||||||
Basic |
|
20,988 |
|
|
20,669 |
|
||
Diluted |
|
20,988 |
|
|
20,669 |
|
||
Consolidated Balance Sheets | ||||||||
(in thousands, except for share data) | ||||||||
|
|
|
||||||
2020 |
|
2019 |
||||||
(Unaudited) | (Note) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
5,206 |
|
$ |
5,095 |
|
||
Accounts receivable, net |
|
8,922 |
|
|
7,444 |
|
||
Inventory, net |
|
19,401 |
|
|
20,784 |
|
||
Other current assets |
|
3,782 |
|
|
4,282 |
|
||
Assets held for sale |
|
2,167 |
|
|
2,233 |
|
||
Total current assets |
|
39,478 |
|
|
39,838 |
|
||
Property, plant and equipment, net |
|
9,687 |
|
|
11,675 |
|
||
Operating lease right-of-use assets |
|
6,727 |
|
|
7,014 |
|
||
Other assets |
|
1,374 |
|
|
1,529 |
|
||
Total assets |
$ |
57,266 |
|
$ |
60,056 |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable |
$ |
10,686 |
|
$ |
9,346 |
|
||
Accrued liabilities |
|
11,624 |
|
|
12,495 |
|
||
Operating lease liabilities, current portion |
|
862 |
|
|
841 |
|
||
Finance lease obligations, current portion |
|
667 |
|
|
684 |
|
||
Note payable - related party, current portion |
|
2,500 |
|
|
- |
|
||
Total current liabilities |
|
26,339 |
|
|
23,366 |
|
||
Operating lease liabilities, net of current portion |
|
6,672 |
|
|
6,906 |
|
||
Finance lease obligations, net of current portion |
|
2,225 |
|
|
2,351 |
|
||
Note payable - related party |
|
3,967 |
|
|
6,463 |
|
||
Other liabilities |
|
6,756 |
|
|
7,539 |
|
||
Total liabilities |
|
45,959 |
|
|
46,625 |
|
||
Stockholders’ equity: | ||||||||
Preferred stock, par value |
|
- |
|
|
- |
|
||
Series A preferred stock, par value |
|
- |
|
|
- |
|
||
Common stock, non-voting, par value |
|
- |
|
|
- |
|
||
Common stock, par value |
213 |
213 |
||||||
Additional paid-in capital |
|
154,789 |
|
|
154,702 |
|
||
Accumulated deficit |
|
(117,738 |
) |
|
(117,433 |
) |
||
Accumulated other comprehensive loss |
|
(25,957 |
) |
|
(24,051 |
) |
||
|
- |
|
|
- |
|
|||
Total stockholders’ equity |
|
11,307 |
|
|
13,431 |
|
||
Total liabilities and stockholders’ equity |
$ |
57,266 |
|
$ |
60,056 |
|
||
Note: The balance sheet at |
||||||||
Consolidated Cash Flow Statements | ||||||||
(in thousands) | ||||||||
Three Months Ended |
||||||||
|
|
|||||||
2020 |
2019 |
|||||||
(Unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss |
$ |
(305 |
) |
$ |
(3,036 |
) |
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization |
|
620 |
|
|
691 |
|
||
Non-cash compensation expense |
|
94 |
|
|
111 |
|
||
Deferred loan costs recognized |
|
4 |
|
|
4 |
|
||
Net gain on the sale of assets |
|
(154 |
) |
|
- |
|
||
Provision for excess and obsolete inventory |
|
40 |
|
|
37 |
|
||
Non-cash lease expense |
|
288 |
|
|
164 |
|
||
Other noncash items |
|
190 |
|
|
(86 |
) |
||
Contributions to pension plans |
|
(34 |
) |
|
(10 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(1,478 |
) |
|
758 |
|
||
Inventory |
|
846 |
|
|
(2,486 |
) |
||
Prepaid expenses and other assets |
|
(99 |
) |
|
473 |
|
||
Accounts payable |
|
1,474 |
|
|
(1,187 |
) |
||
Accrued and other liabilities |
|
(772 |
) |
|
40 |
|
||
Net cash provided by (used in) operating activities |
|
714 |
|
|
(4,527 |
) |
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(453 |
) |
|
(348 |
) |
||
Proceeds from sale of assets |
|
288 |
|
|
- |
|
||
Net cash used in investing activities |
|
(165 |
) |
|
(348 |
) |
||
Cash flows from financing activities: | ||||||||
Finance lease payments |
|
(143 |
) |
|
(146 |
) |
||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(7 |
) |
|
(49 |
) |
||
Net cash used in financing activities |
|
(150 |
) |
|
(195 |
) |
||
Effect of exchange rate changes on cash balances |
|
(288 |
) |
|
55 |
|
||
Net increase (decrease) in cash and cash equivalents |
|
111 |
|
|
(5,015 |
) |
||
Cash and cash equivalents at beginning of period |
|
5,095 |
|
|
10,704 |
|
||
Cash and cash equivalents at end of period |
$ |
5,206 |
|
$ |
5,689 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200520005047/en/
Chief Financial Officer
(502) 329-2000
Source: