Sypris Reports Second Quarter Results
EPS Increases 75%; Gross Margin Expands 350 Basis Points
HIGHLIGHTS
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- The Company’s second quarter 2019 consolidated revenue increased 6.4% to
$24.4 million compared with the prior-year quarter and increased 24.9% sequentially. - The Company’s gross margin increased 350 basis points to 16.3% for the second quarter of 2018 and up from 4.4% in the first quarter of 2019. Gross profit increased 36.0% to
$4.0 million , up from$2.9 million from the prior-year. - The Company’s EPS increased 75% to
$0.07 per share, up from$0.04 per share for the prior-year period. - Revenue for Sypris Technologies increased 10.1% to
$16.9 million during the quarter compared to the prior-year period. - Gross margin for Sypris Technologies increased 500 basis points to 17.6% from the second quarter of 2018 and increased 330 basis points from 14.3% in the first quarter of 2019.
- Revenue for
Sypris Electronics was flat with the year-earlier quarter at$7.6 million , while gross margin improved 50 basis points to 13.6% when compared to the prior-year period. - Orders for
Sypris Electronics were up 200% on both a comparable period and sequential basis, with approximately 40% of the new bookings targeted for shipment in 2019 and the balance in 2020 and 2021. - The Company updated its outlook for 2019. The Company now expects to achieve revenues of
$95-$105 million for the year, representing 14% year-over-year growth at the midpoint, and gross margin of 14%-16%, with both business segments forecasted to register solid profitability over the second half of the year.
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“We are pleased to report profitable results for the second quarter of 2019,” commented
“Shipment volumes at Sypris Technologies remained strong in the quarter to support demand coming from the automotive and commercial vehicle markets. Energy products also performed well during the period, with orders increasing 58% during the quarter reflecting strong demand from domestic as well as international customers.
“Shipments at
Concluding, Mr. Gill said, “We continue to see strong demand in each of our primary markets to support our revenue outlook for the balance of the year. Our customer base and the markets we serve remain resilient and are considerably more diversified than at any point in our recent history. The combination of additional revenue growth and improved mix are expected to drive further margin expansion during the second half of 2019.”
Second Quarter Results
The Company reported revenue of
For the six months ended
Sypris Technologies
Revenue for Sypris Technologies was
Revenue for
Outlook
Commenting on the future, Mr. Gill added, “Our markets are poised to provide Sypris with the opportunity for healthy, double-digit revenue growth during 2019. We anticipate new contract awards and market expansion in each of our targeted markets for energy, automotive, commercial vehicle, and aerospace and defense products as well as new electronics programs.
“Demand from the commercial vehicle market is expected to continue to drive production at historically high levels during the second half of 2019. The energy market also continues to benefit from strong demand and higher oil prices. Both the House and
“As a result, we are pleased to update our guidance for 2019, with full-year revenue expected to be in the range of
“We expect to see further expansion of our gross margin during the second half of 2019, resulting in gross margin of 14%-16% for the full year. The positive results are expected to be supported by the continuation of top line growth and an improved mix of sales during the second half of 2019.”
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.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
SYPRIS SOLUTIONS, INC. | ||||||||
Financial Highlights | ||||||||
(In thousands, except per share amounts) | ||||||||
Three Months Ended | ||||||||
June 30, | July 1, | |||||||
2019 |
2018 |
|||||||
(Unaudited) | ||||||||
Revenue |
$ |
24,444 |
|
$ |
22,971 |
|
||
Net income |
$ |
1,503 |
|
$ |
814 |
|
||
Income per common share: | ||||||||
Basic |
$ |
0.07 |
|
$ |
0.04 |
|
||
Diluted |
$ |
0.07 |
|
$ |
0.04 |
|
||
Weighted average shares outstanding: | ||||||||
Basic |
|
20,875 |
|
|
20,541 |
|
||
Diluted |
|
20,875 |
|
|
20,855 |
|
||
Six Months Ended | ||||||||
June 30, | July 1, | |||||||
2019 |
2018 |
|||||||
(Unaudited) | ||||||||
Revenue |
$ |
44,008 |
|
$ |
42,913 |
|
||
Net loss |
$ |
(1,533 |
) |
$ |
(981 |
) |
||
Loss per common share: | ||||||||
Basic |
$ |
(0.07 |
) |
$ |
(0.05 |
) |
||
Diluted |
|
(0.07 |
) |
|
(0.05 |
) |
||
Weighted average shares outstanding: | ||||||||
Basic |
|
20,772 |
|
|
20,468 |
|
||
Diluted |
|
20,772 |
|
|
20,468 |
|
||
|
Sypris Solutions, Inc. | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except for per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | July 1, | June 30, | July 1, | |||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net revenue: | ||||||||||||||||
Sypris Technologies |
$ |
16,878 |
|
$ |
15,327 |
|
$ |
33,019 |
|
$ |
29,834 |
|
||||
Sypris Electronics |
|
7,566 |
|
|
7,644 |
|
|
10,989 |
|
|
13,079 |
|
||||
Total net revenue |
|
24,444 |
|
|
22,971 |
|
|
44,008 |
|
|
42,913 |
|
||||
Cost of sales: | ||||||||||||||||
Sypris Technologies |
|
13,915 |
|
|
13,397 |
|
|
27,752 |
|
|
25,797 |
|
||||
Sypris Electronics |
|
6,540 |
|
|
6,640 |
|
|
11,407 |
|
|
12,151 |
|
||||
Total cost of sales |
|
20,455 |
|
|
20,037 |
|
|
39,159 |
|
|
37,948 |
|
||||
Gross profit (loss): | ||||||||||||||||
Sypris Technologies |
|
2,963 |
|
|
1,930 |
|
|
5,267 |
|
|
4,037 |
|
||||
Sypris Electronics |
|
1,026 |
|
|
1,004 |
|
|
(418 |
) |
|
928 |
|
||||
Total gross profit |
|
3,989 |
|
|
2,934 |
|
|
4,849 |
|
|
4,965 |
|
||||
Selling, general and administrative |
|
3,604 |
|
|
3,171 |
|
|
7,058 |
|
|
6,319 |
|
||||
Severance, relocation and other costs |
|
103 |
|
|
305 |
|
|
201 |
|
|
814 |
|
||||
Operating income (loss) |
|
282 |
|
|
(542 |
) |
|
(2,410 |
) |
|
(2,168 |
) |
||||
Interest expense, net |
|
232 |
|
|
221 |
|
|
449 |
|
|
434 |
|
||||
Other (income), net |
|
(1,493 |
) |
|
(1,623 |
) |
|
(1,442 |
) |
|
(1,707 |
) |
||||
Income (loss) before taxes |
|
1,543 |
|
|
860 |
|
|
(1,417 |
) |
|
(895 |
) |
||||
Income tax expense, net |
|
40 |
|
|
46 |
|
|
116 |
|
|
86 |
|
||||
Net income (loss) |
$ |
1,503 |
|
$ |
814 |
|
$ |
(1,533 |
) |
$ |
(981 |
) |
||||
Income (loss) per common share: | ||||||||||||||||
Basic |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
(0.07 |
) |
$ |
(0.05 |
) |
||||
Diluted |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
(0.07 |
) |
$ |
(0.05 |
) |
||||
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
||||
Weighted average shares outstanding: | ||||||||||||||||
Basic |
|
20,875 |
|
|
20,541 |
|
|
20,772 |
|
|
20,468 |
|
||||
Diluted |
|
20,875 |
|
|
20,855 |
|
|
20,772 |
|
|
20,468 |
|
Sypris Solutions, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(in thousands, except for share data) | ||||||||
June 30, | December 31, | |||||||
2019 |
2018 |
|||||||
(Unaudited) | (Note) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
4,462 |
|
$ |
10,704 |
|
||
Accounts receivable, net |
|
11,108 |
|
|
9,881 |
|
||
Inventory, net |
|
19,919 |
|
|
18,584 |
|
||
Other current assets |
|
6,031 |
|
|
4,755 |
|
||
Assets held for sale |
|
1,212 |
|
|
1,474 |
|
||
Total current assets |
|
42,732 |
|
|
45,398 |
|
||
Property, plant and equipment, net |
|
14,073 |
|
|
14,655 |
|
||
Operating lease right-of-use assets |
|
7,368 |
|
|
- |
|
||
Other assets |
|
1,606 |
|
|
1,515 |
|
||
Total assets |
$ |
65,779 |
|
$ |
61,568 |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable |
$ |
10,997 |
|
$ |
13,427 |
|
||
Accrued liabilities |
|
14,797 |
|
|
14,965 |
|
||
Operating lease liabilities, current portion |
|
800 |
|
|
- |
|
||
Finance lease obligations, current portion |
|
649 |
|
|
593 |
|
||
Total current liabilities |
|
27,243 |
|
|
28,985 |
|
||
Note payable - related party |
|
6,456 |
|
|
6,449 |
|
||
Operating lease liabilities, net of current portion |
|
7,353 |
|
|
- |
|
||
Finance lease obligations, net of current portion |
|
2,715 |
|
|
2,804 |
|
||
Other liabilities |
|
6,907 |
|
|
8,496 |
|
||
Total liabilities |
|
50,674 |
|
|
46,734 |
|
||
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; 21,345,900 shares issued and 21,329,708 outstanding in 2019 and 21,414,374 shares issued and 21,398,182 outstanding in 2018 |
|
214 |
|
|
214 |
|
||
Additional paid-in capital |
|
154,538 |
|
|
154,388 |
|
||
Accumulated deficit |
|
(115,017 |
) |
|
(114,926 |
) |
||
Accumulated other comprehensive loss |
|
(24,630 |
) |
|
(24,842 |
) |
||
Treasury stock, 16,192 in 2019 and 2018 |
|
- |
|
|
- |
|
||
Total stockholders’ equity |
|
15,105 |
|
|
14,834 |
|
||
Total liabilities and stockholders’ equity |
$ |
65,779 |
|
$ |
61,568 |
|
||
Note: The balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. |
Sypris Solutions, Inc. | ||||||||
Consolidated Cash Flow Statements | ||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
June 30, | July 1, | |||||||
2019 |
2018 |
|||||||
(Unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss |
$ |
(1,533 |
) |
$ |
(981 |
) |
||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization |
|
1,407 |
|
|
1,310 |
|
||
Stock-based compensation expense |
|
283 |
|
|
348 |
|
||
Deferred loan costs recognized |
|
7 |
|
|
7 |
|
||
Net (gain) loss on the sale of assets |
|
(477 |
) |
|
225 |
|
||
Insurance recovery gain |
|
- |
|
|
(2,275 |
) |
||
Provision for excess and obsolete inventory |
|
283 |
|
|
(31 |
) |
||
Other noncash items |
|
281 |
|
|
20 |
|
||
Contributions to pension plans |
|
(45 |
) |
|
(11 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(1,248 |
) |
|
(2,807 |
) |
||
Inventory |
|
(1,581 |
) |
|
(969 |
) |
||
Prepaid expenses and other assets |
|
(1,179 |
) |
|
(2,053 |
) |
||
Accounts payable |
|
(2,415 |
) |
|
3,368 |
|
||
Accrued and other liabilities |
|
449 |
|
|
1,132 |
|
||
Net cash used in operating activities |
|
(5,768 |
) |
|
(2,717 |
) |
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(671 |
) |
|
(1,206 |
) |
||
Proceeds from sale of assets |
|
634 |
|
|
1,358 |
|
||
Insurance proceeds for recovery of property damage, net |
|
- |
|
|
2,275 |
|
||
Net cash (used in) provided by investing activities |
|
(37 |
) |
|
2,427 |
|
||
Cash flows from financing activities: | ||||||||
Capital lease payments |
|
(304 |
) |
|
(556 |
) |
||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(133 |
) |
|
(107 |
) |
||
Net cash used in financing activities |
|
(437 |
) |
|
(663 |
) |
||
Net decrease in cash and cash equivalents |
|
(6,242 |
) |
|
(953 |
) |
||
Cash and cash equivalents at beginning of period |
|
10,704 |
|
|
8,144 |
|
||
Cash and cash equivalents at end of period |
$ |
4,462 |
|
$ |
7,191 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005189/en/
Source:
Anthony C. Allen
Chief Financial Officer
(502) 329-2000