Sypris Reports Second Quarter Results
REVENUE UP 51%; EPS RISES TO
HIGHLIGHTS
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-
Revenue for the second quarter increased 51.4% year-over-year and 30.0% sequentially, driven by the accelerating expansion of shipments at
Sypris Technologies . - Gross profit increased 103.2% year-over-year and 137.3% sequentially, while gross margin expanded to 16.6%, up 420 basis points over the prior year and up 750 basis points sequentially, with both segments reporting margin expansion.
-
Earnings per diluted share rose to
$0.17 per share, up from a loss of$0.02 per share in the prior-year period, reflecting strong revenue growth, positive operating performance and the forgiveness of the Paycheck Protection Program (“PPP”) loan by theSmall Business Administration (“SBA”). -
Backlog for
Sypris Electronics increased 29.3% year-over-year and 51.9% year-to-date on the strength of orders in the first half of 2021. Similarly, backlog for the energy products ofSypris Technologies increased 56.4% year-over-year and 32.3% year-to-date, while the order board from commercial vehicle customers continued to increase significantly. -
Sypris Electronics revenue expanded 30.0% sequentially, while gross profit increased 179.1% and gross margin reached 20.4% of sales. -
Sypris Technologies revenue increased 130.2% year-over-year and 29.9% sequentially, while gross profit surged and gross margin expanded significantly to 14.6%. - The Company updated its full-year outlook for 2021, with revenue now expected to increase 30-35% year-over-year, up from prior guidance of 25-30% in May and 20% in March. The continued improvement in the Company’s financial performance is expected to accelerate during the second half of 2021, with gross margin expected to expand 300-400 basis points over the comparable period of 2020. Cash flow from operations for 2021 is expected to increase significantly year-over-year.
-
Sypris Electronics announced a number of important contract awards during the quarter, including the following:-
A contract to manufacture and test electronic assemblies for power management and other systems for a
Deep Space program from aU.S. DOD prime contractor, with production to begin during 2021. - An agreement to manufacture and test electronic power supply modules for multiple high-reliability Subsea Communication Networks, with production to begin during 2021 and continue into 2022.
-
A full-rate production award from a
U.S. DOD prime contractor to manufacture and test multiple electronic power supply modules for a large mission-critical Electronic Warfare program for theU.S. Navy , with production to begin during 2021.
-
A contract to manufacture and test electronic assemblies for power management and other systems for a
-
Sypris Technologies announced awards for specialty high-pressure closures for use in two large projects, the Golden Pass LNG Export project and the Cherry Point Refinery Renewable Diesel Optimization project, with shipments expected to be completed during 2021. -
Subsequent to quarter end,
Sypris Electronics announced a contract award to manufacture and test embedded circuit card assemblies that will perform certain Cryptographic functions for the Army Key Management System, with production to begin during 2021.
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“Both operating segments reported notable improvements in their financial results for the quarter, contributing to a strong quarter for the Company and positioning the business for further improvements during the second half. Backlog for
“Backlog 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 supply chain constraints currently dictating OEM production levels. The continued strong 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 remained 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,
Second Quarter Results
The Company reported revenue of
For the six months ended
Revenue for
Revenue for
Outlook
Commenting on the future,
“The second 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 through the second half of the year, with a strong rise in revenue, margins and income forecast for the period and continuing going forward.
“As a result, we have updated our outlook to include a 30-35% growth in the Company’s top line in 2021, which is up from our previous guidance of 25-30% in May and 20% in March. Gross margin is forecast to expand 300 to 400 basis points year-over-year during the second half of 2021, which is expected to contribute to strong double-digit percentage growth in cash flow generated from operations for the full year.
“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 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. The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has and will likely adversely affect our business. The Company has continued to operate at each location and sought to remain compliant with government regulations imposed due to the COVID-19 pandemic.
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 |
$ |
25,969 |
$ |
17,153 |
|
|||||||
Net income (loss) |
$ |
3,823 |
$ |
(348 |
) |
|||||||
Income (loss) per common share: | ||||||||||||
Basic |
$ |
0.18 |
$ |
(0.02 |
) |
|||||||
Diluted |
$ |
0.17 |
$ |
(0.02 |
) |
|||||||
Weighted average shares outstanding: | ||||||||||||
Basic |
|
21,356 |
|
21,016 |
|
|||||||
Diluted |
|
22,846 |
|
21,016 |
|
|||||||
Six Months Ended |
||||||||||||
|
|
|
||||||||||
2021 |
|
2020 |
||||||||||
(Unaudited) |
||||||||||||
Revenue |
$ |
45,951 |
$ |
39,578 |
|
|||||||
Net income (loss) |
$ |
2,193 |
$ |
(653 |
) |
|||||||
Income (loss) per common share: | ||||||||||||
Basic |
$ |
0.10 |
$ |
(0.03 |
) |
|||||||
Diluted |
$ |
0.10 |
$ |
(0.03 |
) |
|||||||
Weighted average shares outstanding: | ||||||||||||
Basic |
|
21,475 |
|
21,005 |
|
|||||||
Diluted |
|
22,979 |
|
21,005 |
|
|
||||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||||
(in thousands, except for per share data) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
|
|
(Unaudited) |
|
(Unaudited) |
||||||||||||
Net revenue: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
$ |
17,139 |
|
|
$ |
7,445 |
|
|
$ |
30,329 |
|
|
$ |
21,162 |
|
|
|
|
|
|
8,830 |
|
|
|
9,708 |
|
|
|
15,622 |
|
|
|
18,416 |
|
|
Total net revenue |
|
|
|
25,969 |
|
|
|
17,153 |
|
|
|
45,951 |
|
|
|
39,578 |
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
14,630 |
|
|
|
7,216 |
|
|
|
26,649 |
|
|
|
18,440 |
|
|
|
|
|
|
7,030 |
|
|
|
7,816 |
|
|
|
13,177 |
|
|
|
15,292 |
|
|
Total cost of sales |
|
|
|
21,660 |
|
|
|
15,032 |
|
|
|
39,826 |
|
|
|
33,732 |
|
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
2,509 |
|
|
|
229 |
|
|
|
3,680 |
|
|
|
2,722 |
|
|
|
|
|
|
1,800 |
|
|
|
1,892 |
|
|
|
2,445 |
|
|
|
3,124 |
|
|
Total gross profit |
|
|
|
4,309 |
|
|
|
2,121 |
|
|
|
6,125 |
|
|
|
5,846 |
|
|
Selling, general and administrative |
|
|
3,416 |
|
|
|
2,981 |
|
|
|
6,298 |
|
|
|
6,429 |
|
||
Operating income (loss) |
|
|
893 |
|
|
|
(860 |
) |
|
|
(173 |
) |
|
|
(583 |
) |
||
Interest expense, net |
|
|
|
211 |
|
|
|
193 |
|
|
|
433 |
|
|
|
420 |
|
|
Other expense (income), net |
|
|
145 |
|
|
|
(769 |
) |
|
|
366 |
|
|
|
(486 |
) |
||
Forgiveness of PPP Loan and related interest |
|
|
(3,599 |
) |
|
|
- |
|
|
|
(3,599 |
) |
|
|
- |
|
||
Income (loss) before taxes |
|
|
4,136 |
|
|
|
(284 |
) |
|
|
2,627 |
|
|
|
(517 |
) |
||
Income tax expense, net |
|
|
|
313 |
|
|
|
64 |
|
|
|
434 |
|
|
|
136 |
|
|
Net income (loss) |
|
|
$ |
3,823 |
|
|
$ |
(348 |
) |
|
$ |
2,193 |
|
|
$ |
(653 |
) |
|
Income (loss) per common share: |
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
|
|
$ |
0.18 |
|
|
$ |
(0.02 |
) |
|
$ |
0.10 |
|
|
$ |
(0.03 |
) |
Diluted |
|
|
|
$ |
0.17 |
|
|
$ |
(0.02 |
) |
|
$ |
0.10 |
|
|
$ |
(0.03 |
) |
Dividends declared per common share |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
|
|
|
21,356 |
|
|
|
21,016 |
|
|
|
21,475 |
|
|
|
21,005 |
|
Diluted |
|
|
|
|
22,846 |
|
|
|
21,016 |
|
|
|
22,979 |
|
|
|
21,005 |
|
Consolidated Balance Sheets | |||||||||||
(in thousands, except for share data) | |||||||||||
|
|
|
|||||||||
2021 |
|
2020 |
|||||||||
(Unaudited) |
|
(Note) |
|||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents |
$ |
18,194 |
|
$ |
11,606 |
|
|||||
Accounts receivable, net |
|
10,479 |
|
|
7,234 |
|
|||||
Inventory, net |
|
23,317 |
|
|
16,236 |
|
|||||
Other current assets |
|
5,146 |
|
|
4,360 |
|
|||||
Total current assets |
|
57,136 |
|
|
39,436 |
|
|||||
Property, plant and equipment, net |
|
11,313 |
|
|
10,161 |
|
|||||
Operating lease right-of-use assets |
|
5,665 |
|
|
6,103 |
|
|||||
Other assets |
|
4,552 |
|
|
5,008 |
|
|||||
Total assets |
$ |
78,666 |
|
$ |
60,708 |
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable |
$ |
13,798 |
|
$ |
6,734 |
|
|||||
Accrued liabilities |
|
17,101 |
|
|
13,409 |
|
|||||
Operating lease liabilities, current portion |
|
1,013 |
|
|
965 |
|
|||||
Finance lease obligations, current portion |
|
447 |
|
|
393 |
|
|||||
Equipment financing obligations, current portion |
|
265 |
|
|
- |
|
|||||
Note payable - PPP Loan, current portion |
|
- |
|
|
1,186 |
|
|||||
Note payable - related party, current portion |
|
2,500 |
|
|
- |
|
|||||
Total current liabilities |
|
35,124 |
|
|
22,687 |
|
|||||
Operating lease liabilities, net of current portion |
|
5,420 |
|
|
5,941 |
|
|||||
Finance lease obligations, net of current portion |
|
1,827 |
|
|
1,927 |
|
|||||
Equipment financing obligations, net of current portion |
|
741 |
|
|
- |
|
|||||
Note payable - PPP Loan, net of current portion |
|
- |
|
|
2,372 |
|
|||||
Note payable - related party, net of current portion |
|
3,981 |
|
|
6,477 |
|
|||||
Other liabilities |
|
14,875 |
|
|
6,529 |
|
|||||
Total liabilities |
|
61,968 |
|
|
45,933 |
|
|||||
Stockholders’ equity: | |||||||||||
Preferred stock, par value |
|||||||||||
no shares issued |
|
- |
|
|
- |
|
|||||
Series A preferred stock, par value |
|||||||||||
authorized; no shares issued |
|
- |
|
|
- |
|
|||||
Common stock, non-voting, par value |
|||||||||||
authorized; no shares issued |
|
- |
|
|
- |
|
|||||
Common stock, par value |
|||||||||||
21,514,964 shares issued and 21,514,945 outstanding in 2021 and | |||||||||||
21,302,194 shares issued and 21,300,958 outstanding in 2020 |
|
215 |
|
|
213 |
|
|||||
Additional paid-in capital |
|
154,804 |
|
|
155,025 |
|
|||||
Accumulated deficit |
|
(113,572 |
) |
|
(115,765 |
) |
|||||
Accumulated other comprehensive loss |
|
(24,749 |
) |
|
(24,698 |
) |
|||||
|
- |
|
|
- |
|
||||||
Total stockholders’ equity |
|
16,698 |
|
|
14,775 |
|
|||||
Total liabilities and stockholders’ equity |
$ |
78,666 |
|
$ |
60,708 |
|
|||||
Note: The balance sheet at |
Consolidated Cash Flow Statements | |||||||||||||
(in thousands) | |||||||||||||
Six Months Ended |
|||||||||||||
|
|
|
|||||||||||
|
2021 |
|
|
|
2020 |
|
|||||||
(Unaudited) | |||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income (loss) |
$ |
2,193 |
|
$ |
(653 |
) |
|||||||
Adjustments to reconcile net income (loss) to net cash | |||||||||||||
provided by (used in) operating activities: | |||||||||||||
Depreciation and amortization |
|
1,274 |
|
|
1,259 |
|
|||||||
Forgiveness of PPP Loan and related interest |
|
(3,599 |
) |
|
- |
|
|||||||
Deferred income taxes |
|
266 |
|
|
- |
|
|||||||
Stock-based compensation expense |
|
163 |
|
|
228 |
|
|||||||
Deferred loan costs recognized |
|
3 |
|
|
7 |
|
|||||||
Net loss (gain) on the sale of assets |
|
11 |
|
|
(958 |
) |
|||||||
Provision for excess and obsolete inventory |
|
65 |
|
|
125 |
|
|||||||
Non-cash lease expense |
|
438 |
|
|
491 |
|
|||||||
Other noncash items |
|
90 |
|
|
100 |
|
|||||||
Contributions to pension plans |
|
(254 |
) |
|
(34 |
) |
|||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable |
|
(3,270 |
) |
|
1,053 |
|
|||||||
Inventory |
|
(7,063 |
) |
|
1,813 |
|
|||||||
Prepaid expenses and other assets |
|
(335 |
) |
|
(457 |
) |
|||||||
Accounts payable |
|
7,218 |
|
|
(2,697 |
) |
|||||||
Accrued and other liabilities |
|
11,406 |
|
|
(1,318 |
) |
|||||||
Net cash provided by (used in) operating activities |
|
8,606 |
|
|
(1,041 |
) |
|||||||
Cash flows from investing activities: | |||||||||||||
Capital expenditures |
|
(1,213 |
) |
|
(833 |
) |
|||||||
Proceeds from sale of assets |
|
10 |
|
|
1,968 |
|
|||||||
Net cash (used in) provided by investing activities |
|
(1,203 |
) |
|
1,135 |
|
|||||||
Cash flows from financing activities: | |||||||||||||
Principal payments on finance lease obligations |
|
(211 |
) |
|
(320 |
) |
|||||||
Principal payments on equipment financing obligations |
|
(65 |
) |
|
- |
|
|||||||
Proceeds from Paycheck Protection Program loan |
|
- |
|
|
3,558 |
|
|||||||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(382 |
) |
|
(7 |
) |
|||||||
Net cash (used in) provided by financing activities |
|
(658 |
) |
|
3,231 |
|
|||||||
Effect of exchange rate changes on cash balances |
|
(157 |
) |
|
(610 |
) |
|||||||
Net increase in cash and cash equivalents |
|
6,588 |
|
|
2,715 |
|
|||||||
Cash and cash equivalents at beginning of period |
|
11,606 |
|
|
5,095 |
|
|||||||
Cash and cash equivalents at end of period |
$ |
18,194 |
|
$ |
7,810 |
|
|||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210812005118/en/
Chief Financial Officer
(502) 329-2000
Source: