Sypris Reports Fourth Quarter and Full Year Results
New Contracts and Market Strength Fuel 2021 Outlook
The Company’s results for 2020 fundamentally reflected these expectations, highlighted by the improved performance of
HIGHLIGHTS
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- Consolidated gross margin for the full year 2020 increased 280 basis points from 2019 to 14.0% despite a 6.3% decrease in revenue primarily attributable to the impact of COVID-19 in the second quarter.
- Consolidated gross profit for the full year 2020 improved 17.0% from 2019 and, when combined with lower spending for selling, general and administrative expenses, contributed to a 102.1% increase in operating income compared to 2019.
-
Earnings per diluted share for the full year 2020 increased to
$0.08 compared to a loss of$0.19 per share for the prior year, reflecting the improvement in operating income and the release of a valuation allowance on certain foreign deferred tax assets. -
Full year 2020 revenue for
Sypris Electronics increased 41.3% from the prior year, reflecting its strong backlog and improved electronic component availability. Gross margin improved 1,420 basis points from the prior year to 14.6% in 2020. -
Subsequent to quarter-end,
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. -
Subsequent to quarter-end,
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. -
Subsequent to quarter-end,
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. - The impact of these recent contract wins, when combined with current positive market conditions, is forecast to fuel an increase of 20% in revenue, a 200 to 300 basis point expansion of margins and strong double-digit percentage growth in cash flow from operations for the year.
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“While the economic headwinds and disruptions in 2020 had an impact on our results, we are pleased with our performance during the year. Our operations performed extremely well during 2020 and returned to profitability, despite the adverse conditions incurred during the second quarter, which continued during the course of the year,” commented
“Full year revenue for
“Demand from customers serving the automotive, commercial vehicle, sport utility, and off-highway markets recovered in the second half of 2020, with Class 8 North American production up almost 32% over the first half. 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 in the coming year.
“The energy markets faced unprecedented pressures in 2020, with the COVID-19 outbreak driving depressed demand, uncertainty and spending reductions for the entire oil and gas industry. We have remained vigilant in our pursuit of new opportunities in these markets, which has resulted in recent contract awards. While we expect activity levels in this market to remain challenging during the first half of 2021, steadily improving commodity prices, gradually reopening economies and increasing pipeline activity is anticipated to lead to year-over-year growth.
“Gross profit for 2020 was
Concluding,
Fourth Quarter and Full-Year Results
The Company reported revenue of
For the full-year 2020, the Company reported revenue of
Revenue for
Revenue for
Outlook
Commenting on the future,
“Demand has strengthened significantly from customers serving the automotive, commercial vehicle and sport utility markets, with Class 8 forecasts showing year-over-year production increases of over 41% for 2021. Similarly, demand from customers in the defense and communications sector remains robust. While the energy market continues to be volatile, we continue to secure new orders on important projects around the world.
“The continuing momentum of new contract awards, when combined with increasingly positive market conditions, provide important support for our financial outlook for 2021, which includes 20% growth in the Company’s top line, 200 to 300 basis points of further expansion in the Company’s gross margin and strong double digit percentage growth in cash flow generated from operations.
“As we prepare for 2021, 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 believe that the outlook for the coming year has the potential to be very positive for
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 | |||||||
|
2020 |
|
|
2019 |
|
||
(Unaudited) | |||||||
Revenue |
$ |
20,614 |
|
$ |
21,624 |
|
|
Net loss |
$ |
(1,174 |
) |
$ |
(859 |
) |
|
Loss per common share: | |||||||
Basic |
$ |
(0.06 |
) |
$ |
(0.04 |
) |
|
Diluted |
$ |
(0.06 |
) |
$ |
(0.04 |
) |
|
Weighted average shares outstanding: | |||||||
Basic |
|
21,259 |
|
|
20,974 |
|
|
Diluted |
|
21,259 |
|
|
20,974 |
|
|
Year Ended | |||||||
|
2020 |
|
|
2019 |
|
||
(Unaudited) | |||||||
Revenue |
$ |
82,346 |
|
$ |
87,891 |
|
|
Net income (loss) |
$ |
1,668 |
|
$ |
(3,949 |
) |
|
Income (loss) per common share: | |||||||
Basic |
$ |
0.08 |
|
$ |
(0.19 |
) |
|
Diluted |
|
0.08 |
|
|
(0.19 |
) |
|
Weighted average shares outstanding: | |||||||
Basic |
|
21,084 |
|
|
20,865 |
|
|
Diluted |
|
21,086 |
|
|
20,865 |
|
Consolidated Statements of Operations | ||||||||||||
(in thousands, except for per share data) | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
(Unaudited) | (Unaudited) | |||||||||||
Net revenue: | ||||||||||||
$ |
12,087 |
|
$ |
13,010 |
|
$ |
45,321 |
|
$ |
61,683 |
|
|
|
8,527 |
|
|
8,614 |
|
|
37,025 |
|
|
26,208 |
|
|
Total net revenue |
|
20,614 |
|
|
21,624 |
|
|
82,346 |
|
|
87,891 |
|
Cost of sales: | ||||||||||||
|
10,552 |
|
|
11,006 |
|
|
39,157 |
|
|
51,898 |
|
|
|
7,512 |
|
|
7,910 |
|
|
31,624 |
|
|
26,110 |
|
|
Total cost of sales |
|
18,064 |
|
|
18,916 |
|
|
70,781 |
|
|
78,008 |
|
Gross profit: | ||||||||||||
|
1,535 |
|
|
2,004 |
|
|
6,164 |
|
|
9,785 |
|
|
|
1,015 |
|
|
704 |
|
|
5,401 |
|
|
98 |
|
|
Total gross profit |
|
2,550 |
|
|
2,708 |
|
|
11,565 |
|
|
9,883 |
|
Selling, general and administrative |
|
2,721 |
|
|
3,474 |
|
|
11,351 |
|
|
13,680 |
|
Severance, relocation and other costs |
|
- |
|
|
118 |
|
|
124 |
|
|
509 |
|
Operating (loss) income |
|
(171 |
) |
|
(884 |
) |
|
90 |
|
|
(4,306 |
) |
Interest expense, net |
|
202 |
|
|
227 |
|
|
838 |
|
|
903 |
|
Other expense (income), net |
|
658 |
|
|
(100 |
) |
|
544 |
|
|
(1,256 |
) |
Loss before income taxes |
|
(1,031 |
) |
|
(1,011 |
) |
|
(1,292 |
) |
|
(3,953 |
) |
Income tax expense (benefit), net |
|
143 |
|
|
(152 |
) |
|
(2,960 |
) |
|
(4 |
) |
Net (loss) income |
$ |
(1,174 |
) |
$ |
(859 |
) |
$ |
1,668 |
|
$ |
(3,949 |
) |
(Loss) income per common share: | ||||||||||||
Basic |
$ |
(0.06 |
) |
$ |
(0.04 |
) |
$ |
0.08 |
|
$ |
(0.19 |
) |
Diluted |
$ |
(0.06 |
) |
$ |
(0.04 |
) |
$ |
0.08 |
|
$ |
(0.19 |
) |
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
Weighted average shares outstanding: | ||||||||||||
Basic |
|
21,259 |
|
|
20,974 |
|
|
21,084 |
|
|
20,865 |
|
Diluted |
|
21,259 |
|
|
20,974 |
|
|
21,086 |
|
|
20,865 |
|
Consolidated Balance Sheets | ||||||
(in thousands, except for share data) | ||||||
|
2020 |
|
|
2019 |
|
|
(Unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents |
$ |
11,606 |
|
$ |
5,095 |
|
Accounts receivable, net |
|
7,234 |
|
|
7,444 |
|
Inventory, net |
|
16,236 |
|
|
20,784 |
|
Other current assets |
|
3,948 |
|
|
4,282 |
|
Assets held for sale |
|
412 |
|
|
2,233 |
|
Total current assets |
|
39,436 |
|
|
39,838 |
|
Property, plant and equipment, net |
|
10,161 |
|
|
11,675 |
|
Operating lease right-of-use assets |
|
6,103 |
|
|
7,014 |
|
Other assets |
|
5,008 |
|
|
1,529 |
|
Total assets |
$ |
60,708 |
|
$ |
60,056 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable |
$ |
6,734 |
|
$ |
9,346 |
|
Accrued liabilities |
|
13,409 |
|
|
12,495 |
|
Operating lease liabilities, current portion |
|
965 |
|
|
841 |
|
Finance lease obligations, current portion |
|
393 |
|
|
684 |
|
Note payable - PPP loan, current portion |
|
1,186 |
|
|
- |
|
Total current liabilities |
|
22,687 |
|
|
23,366 |
|
Operating lease liabilities, net of current portion |
|
5,941 |
|
|
6,906 |
|
Finance lease obligations, net of current portion |
|
1,927 |
|
|
2,351 |
|
Note payable - related party |
|
6,477 |
|
|
6,463 |
|
Note payable - PPP Loan, net of current portion |
|
2,372 |
|
|
- |
|
Other liabilities |
|
6,529 |
|
|
7,539 |
|
Total liabilities |
|
45,933 |
|
|
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 |
|
155,025 |
|
|
154,702 |
|
Accumulated deficit |
|
(115,765 |
) |
|
(117,433 |
) |
Accumulated other comprehensive loss |
|
(24,698 |
) |
|
(24,051 |
) |
|
- |
|
|
- |
|
|
Total stockholders’ equity |
|
14,775 |
|
|
13,431 |
|
Total liabilities and stockholders’ equity |
$ |
60,708 |
|
$ |
60,056 |
|
Consolidated Cash Flow Statements | ||||||
(in thousands) | ||||||
Year Ended, | ||||||
|
2020 |
|
|
2019 |
|
|
(Unaudited) | ||||||
Cash flows from operating activities: | ||||||
Net income (loss) |
$ |
1,668 |
|
$ |
(3,949 |
) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||
Depreciation and amortization |
|
2,503 |
|
|
2,671 |
|
Deferred income taxes |
|
(3,070 |
) |
|
(260 |
) |
Stock-based compensation expense |
|
426 |
|
|
469 |
|
Deferred loan costs recognized |
|
14 |
|
|
11 |
|
Net gain on the disposal or abandonment of assets |
|
(236 |
) |
|
(654 |
) |
Provision for excess and obsolete inventory |
|
222 |
|
|
616 |
|
Non-cash lease expense |
|
911 |
|
|
650 |
|
Other noncash items |
|
(1 |
) |
|
52 |
|
Contributions to pension plans |
|
(862 |
) |
|
(382 |
) |
Changes in operating assets and liabilities: | ||||||
Accounts receivable |
|
214 |
|
|
2,425 |
|
Inventory |
|
4,230 |
|
|
(2,621 |
) |
Prepaid expenses and other assets |
|
(204 |
) |
|
756 |
|
Accounts payable |
|
(2,591 |
) |
|
(4,100 |
) |
Accrued and other liabilities |
|
424 |
|
|
(1,537 |
) |
Net cash provided by (used in) operating activities |
|
3,648 |
|
|
(5,853 |
) |
Cash flows from investing activities: | ||||||
Capital expenditures |
|
(1,542 |
) |
|
(859 |
) |
Proceeds from sale of assets |
|
1,969 |
|
|
1,858 |
|
Net cash provided by investing activities |
|
427 |
|
|
999 |
|
Cash flows from financing activities: | ||||||
Principal payments on finance lease obligations |
|
(715 |
) |
|
(632 |
) |
Proceeds from Paycheck Protection Program loan |
|
3,558 |
|
|
- |
|
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(103 |
) |
|
(156 |
) |
Net cash provided by (used in) financing activities |
|
2,740 |
|
|
(788 |
) |
Effect of exchange rate changes on cash balances |
|
(304 |
) |
|
33 |
|
Net increase (decrease) in cash and cash equivalents |
|
6,511 |
|
|
(5,609 |
) |
Cash and cash equivalents at beginning of period |
|
5,095 |
|
|
10,704 |
|
Cash and cash equivalents at end of period |
$ |
11,606 |
|
$ |
5,095 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210318005188/en/
Chief Financial Officer
(502) 329-2000
Source: