Sypris Reports First Quarter Results
2021 OUTLOOK RAISED; ORDERS UP 70% AT
HIGHLIGHTS
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- Customer orders were robust during the period, while revenue was less than the prior year quarter due to late material receipts and customer releases that have since been resolved and are expected to support future growth.
-
Gross margin decreased from the prior-year period as a result of lower revenue, sales mix and the costs incurred to ramp up production in order to meet the significant increase in demand for future deliveries experienced at
Sypris Technologies , since substantially resolved. -
Orders for
Sypris Electronics increased 70% during the first quarter compared to the same period in 2020, driving backlog up 36.3% over the prior-year period and up 56.3% for the sequential quarter. Similarly, backlog for the energy products ofSypris Technologies increased 37.9% over the prior-year period and 74.9% sequentially, while the order board from commercial vehicle customers continued to increase significantly. - The Company increased its full-year outlook for 2021, with revenue now expected to increase 25-30% year-over-year, up from prior guidance of 20%. The Company also reaffirmed its margin and cash flow expectations for the year, forecasting a 200-300 basis point expansion of margins and strong double-digit percentage growth in cash flow from operations.
-
Sypris Electronics announced a contract award to manufacture and test a variety of electronic power supply modules for a mission-critical, long-range, precision-guided, anti-ship missile system, with production to begin during 2021. -
Sypris Technologies announced a long-term contract extension with a leading commercial vehicle manufacturer. The new contract continues the existing product lines and includes the award of two additional axle shaft model lines to begin production in 2021 and the adoption of certain Sypris Ultra® series lightweight axle shaft design features. -
Sypris Technologies also announced awards from two high-pressure energy projects. The contracts, which provide for the use of closures in the Anchor Field development project in theGulf of Mexico and the planned upgrade of a natural gas pipeline system inNorth America , call for shipments to begin prior to year-end 2021. -
Subsequent to quarter-end,
Sypris Electronics announced a contract award to manufacture and test a variety of electronic assemblies for a Government spacecraft program with production to begin during 2021.
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“We are clearly now at the inflection point for
“Customer orders for
“Demand from customers serving the automotive, commercial vehicle, sport utility and off-highway markets has continued to accelerate. Freight demand is currently overwhelming industry capacity with orders for the past six months up 153% year-over-year. The recent announcement of the long-term contract extension with one of our key customers combined with the improved outlook for these markets gives us a clear path to support our growth objectives going forward.
“As we discussed on our previous call, activity levels in the oil and gas industry are expected to remain challenging during the first half of 2021. However, steadily improving commodity prices, gradually reopening economies and increasing pipeline activity have resulted in increased orders recently, and we continue to anticipate year-over-year growth of our energy related products.”
Concluding,
First Quarter Results
The Company reported revenue of
Revenue for
Revenue for
Outlook
Commenting on the future,
“The first quarter marks the turning point for the Company. We expect the significant growth in orders and strength of our markets to have a substantial impact on our financial results beginning in the second quarter, with a strong increase in revenue and income for the period and continuing going forward.
“The continuing momentum of new contract awards, when combined with increasingly positive market conditions, provide important support to increase our revenue guidance for 2021. Our current outlook includes a 25-30% growth in the Company’s top line in 2021, a 200 to 300 basis points expansion in the Company’s gross margin and strong double-digit percentage growth in cash flow generated from operations.
“We remain focused on meeting the important needs of our customers who serve defense, communications, energy, transportation, and other critical infrastructure industries. With a strong backlog and recovering markets, we are confident that the remainder of 2021 has the potential to be very positive for Sypris.”
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. 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 the current coronavirus disease (“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 | ||||||
|
|
|||||
2021 |
2020 |
|||||
(Unaudited) | ||||||
Revenue |
$ |
19,982 |
|
$ |
22,425 |
|
Net loss |
$ |
(1,630 |
) |
$ |
(305 |
) |
Loss per common share: | ||||||
Basic |
$ |
(0.08 |
) |
$ |
(0.01 |
) |
Diluted |
|
(0.08 |
) |
|
(0.01 |
) |
Weighted average shares outstanding: | ||||||
Basic |
|
21,394 |
|
|
20,988 |
|
Diluted |
|
21,394 |
|
|
20,988 |
|
|
Consolidated Statements of Operations | ||||||
(in thousands, except for per share data) | ||||||
Three Months Ended | ||||||
|
|
|||||
2021 |
2020 |
|||||
(Unaudited) | ||||||
Net revenue: | ||||||
$ |
13,190 |
|
$ |
13,717 |
|
|
|
6,792 |
|
|
8,708 |
|
|
Total net revenue |
|
19,982 |
|
|
22,425 |
|
Cost of sales: | ||||||
|
12,019 |
|
|
11,224 |
|
|
|
6,147 |
|
|
7,476 |
|
|
Total cost of sales |
|
18,166 |
|
|
18,700 |
|
Gross profit (loss): | ||||||
|
1,171 |
|
|
2,493 |
|
|
|
645 |
|
|
1,232 |
|
|
Total gross profit |
|
1,816 |
|
|
3,725 |
|
Selling, general and administrative |
|
2,882 |
|
|
3,448 |
|
Operating income (loss) |
|
(1,066 |
) |
|
277 |
|
Interest expense, net |
|
222 |
|
|
227 |
|
Other expense, net |
|
221 |
|
|
283 |
|
Loss before taxes |
|
(1,509 |
) |
|
(233 |
) |
Income tax expense, net |
|
121 |
|
|
72 |
|
Net loss |
$ |
(1,630 |
) |
$ |
(305 |
) |
Loss per common share: | ||||||
Basic |
$ |
(0.08 |
) |
$ |
(0.01 |
) |
Diluted |
$ |
(0.08 |
) |
$ |
(0.01 |
) |
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
Weighted average shares outstanding: | ||||||
Basic |
|
21,394 |
|
|
20,988 |
|
Diluted |
|
21,394 |
|
|
20,988 |
|
Consolidated Balance Sheets | ||||||
(in thousands, except for share data) | ||||||
|
|
|||||
2021 |
2020 |
|||||
(Unaudited) |
(Note) |
|||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents |
$ |
9,369 |
|
$ |
11,606 |
|
Accounts receivable, net |
|
7,962 |
|
|
7,234 |
|
Inventory, net |
|
18,675 |
|
|
16,236 |
|
Other current assets |
|
4,580 |
|
|
4,360 |
|
Total current assets |
|
40,586 |
|
|
39,436 |
|
Property, plant and equipment, net |
|
10,430 |
|
|
10,161 |
|
Operating lease right-of-use assets |
|
5,887 |
|
|
6,103 |
|
Other assets |
|
4,691 |
|
|
5,008 |
|
Total assets |
$ |
61,594 |
|
$ |
60,708 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable |
$ |
10,056 |
|
$ |
6,734 |
|
Accrued liabilities |
|
11,681 |
|
|
13,409 |
|
Operating lease liabilities, current portion |
|
988 |
|
|
965 |
|
Finance lease obligations, current portion |
|
403 |
|
|
393 |
|
Equipment financing obligations, current portion |
|
104 |
|
|
- |
|
Note payable - PPP Loan, current portion |
|
1,779 |
|
|
1,186 |
|
Note payable - related party, current portion |
|
2,500 |
|
|
- |
|
Total current liabilities |
|
27,511 |
|
|
22,687 |
|
Operating lease liabilities, net of current portion |
|
5,683 |
|
|
5,941 |
|
Finance lease obligations, net of current portion |
|
1,822 |
|
|
1,927 |
|
Equipment financing obligations, net of current portion |
|
197 |
|
|
- |
|
Note payable - PPP Loan, net of current portion |
|
1,779 |
|
|
2,372 |
|
Note payable - related party, net of current portion |
|
3,979 |
|
|
6,477 |
|
Other liabilities |
|
8,125 |
|
|
6,529 |
|
Total liabilities |
|
49,096 |
|
|
45,933 |
|
Stockholders’ equity: | ||||||
Preferred stock, par value |
|
- |
|
|
- |
|
Series A preferred stock, par value |
|
- |
|
|
- |
|
Common stock, non-voting, par value |
|
- |
|
|
- |
|
Common stock, par value |
|
214 |
|
|
213 |
|
Additional paid-in capital |
|
154,783 |
|
|
155,025 |
|
Accumulated deficit |
|
(117,395 |
) |
|
(115,765 |
) |
Accumulated other comprehensive loss |
|
(25,104 |
) |
|
(24,698 |
) |
|
- |
|
|
- |
|
|
Total stockholders’ equity |
|
12,498 |
|
|
14,775 |
|
Total liabilities and stockholders’ equity |
$ |
61,594 |
|
$ |
60,708 |
|
|
|
Note: The balance sheet at |
Consolidated Cash Flow Statements | ||||||
(in thousands) | ||||||
Three Months Ended | ||||||
2021 |
2020 |
|||||
(Unaudited) | ||||||
Cash flows from operating activities: | ||||||
Net loss |
$ |
(1,630 |
) |
$ |
(305 |
) |
Adjustments to reconcile net loss to net cash | ||||||
(used in) provided by operating activities: | ||||||
Depreciation and amortization |
|
621 |
|
|
620 |
|
Deferred income taxes |
|
116 |
|
|
- |
|
Non-cash compensation expense |
|
61 |
|
|
94 |
|
Deferred loan costs recognized |
|
2 |
|
|
4 |
|
Net loss (gain) on the sale of assets |
|
20 |
|
|
(154 |
) |
Provision for excess and obsolete inventory |
|
2 |
|
|
40 |
|
Non-cash lease expense |
|
217 |
|
|
288 |
|
Other noncash items |
|
36 |
|
|
190 |
|
Contributions to pension plans |
|
(120 |
) |
|
(34 |
) |
Changes in operating assets and liabilities: | ||||||
Accounts receivable |
|
(733 |
) |
|
(1,478 |
) |
Inventory |
|
(2,431 |
) |
|
846 |
|
Prepaid expenses and other assets |
|
(108 |
) |
|
(99 |
) |
Accounts payable |
|
3,346 |
|
|
1,474 |
|
Accrued and other liabilities |
|
(309 |
) |
|
(772 |
) |
Net cash (used in) provided by operating activities |
|
(910 |
) |
|
714 |
|
Cash flows from investing activities: | ||||||
Capital expenditures |
|
(790 |
) |
|
(453 |
) |
Proceeds from sale of assets |
|
- |
|
|
288 |
|
Net cash used in investing activities |
|
(790 |
) |
|
(165 |
) |
Cash flows from financing activities: | ||||||
Principal payments on finance lease obligations |
|
(94 |
) |
|
(143 |
) |
Principal payments on equipment financing obligations |
|
(22 |
) |
|
- |
|
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(301 |
) |
|
(7 |
) |
Net cash used in financing activities |
|
(417 |
) |
|
(150 |
) |
Effect of exchange rate changes on cash balances |
|
(120 |
) |
|
(288 |
) |
Net (decrease) increase in cash and cash equivalents |
|
(2,237 |
) |
|
111 |
|
Cash and cash equivalents at beginning of period |
|
11,606 |
|
|
5,095 |
|
Cash and cash equivalents at end of period |
$ |
9,369 |
|
$ |
5,206 |
|
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Chief Financial Officer
(502) 329-2000
Source: