Sypris Reports Third Quarter Results
Gross Profit Rises 47%; New Contracts Announced
Results for the third quarter of 2020 fundamentally reflected these expectations, highlighted by a rebound in demand for
HIGHLIGHTS
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The Company’s third quarter revenue was even with the prior-year period, but increased 29.2% sequentially, reflecting a rebound in market conditions for
Sypris Technologies and continued growth forSypris Electronics . - Gross profit increased 47.1% quarter-over-quarter and 70.8% sequentially, while gross margin increased 490 basis points from the prior-year period and 370 basis points sequentially.
-
EPS increased to
$0.17 per share for the quarter compared to a loss of$0.07 per share for the prior year, reflecting the 47.1% improvement in gross profit and the release of a valuation allowance on certain foreign deferred tax assets, in consideration of the sustained profitability of and positive outlook for the Company’s operations inMexico , among other factors. -
Sypris Electronics revenue increased 52.6% during the quarter compared to the prior-year period, supported by a strong backlog of orders, which has increased 27.2% since year-end 2019, while supporting a 62.0% increase in shipments year-to-date over the prior year. -
During the third quarter,
Sypris Electronics announced an initial contract award from theLeonardo DRS Naval Electronics business unit to manufacture and test electronic assemblies for a shipboard system with production to begin during 2020. -
Sypris Electronics also announced contracts to manufacture a variety of electronic assemblies for mission-critical munition dispensing systems with production to begin during 2020 and continue into 2021. -
Sypris Technologies revenue increased 62.1% sequentially, as customers reopened operations that were temporarily idled during the second quarter in response to the global pandemic. -
Gross profit for
Sypris Technologies increased 732.8% sequentially, while gross margin increased to 15.8%, up from 3.1% for the second quarter of 2020. -
Sypris Technologies announced the award of orders for projects inBrazil andCanada . The contracts, which provide for the use of Ultra High-Pressure closures in the Libra Oil Field deep-water project inBrazil and Double-Bolt closures for use in the Trans Mountain Pipeline Expansion project inCanada , call for shipments to begin prior to year-end 2020. -
Sypris Technologies also announced a contract for the delivery of 58” Tool-less closures weighing 5.5 tons each for use in theAlberta Xpress Gas project, which will expand transmission capacity fromManitoba to delivery locations in the Midwestern and Southern US. Shipments are to be completed prior to year-end.
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“Our operations performed extremely well during the third quarter and returned to profitability as demand rebounded from the adverse conditions incurred during the second quarter,” commented
“Revenue for
“Demand from customers serving the automotive, commercial vehicle, sport utility, and off-highway markets recovered in the third quarter, resulting in a 62% increase in revenue sequentially. The outlook going forward has also improved significantly for these markets. Recent contract awards in our energy markets are also expected to contribute in the fourth quarter and early 2021 as we remain vigilant in our pursuit of new opportunities to support our growth objectives in the coming year.
“Gross profit for the first nine months of 2020 was
“Sypris Technologies has also been designated as an essential supplier to our customers serving the energy and transportation sectors of our country and as a result, our team will continue to take whatever steps are necessary to ensure that the needs of our customers are reliably met without delay.”
Concluding,
Third Quarter Results
The Company reported revenue of
The Company updated its quarterly evaluation on the realizability of deferred tax assets associated with its Mexican operating subsidiary as of
For the nine months ended
Revenue for
Revenue for
Outlook
Commenting on the future,
“As we close out this year and 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 one of positive top line growth and further margin expansion for
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 |
$ |
22,154 |
$ |
22,259 |
|
|
Net income (loss) |
$ |
3,495 |
$ |
(1,557 |
) |
|
Income (loss) per common share: | ||||||
Basic |
$ |
0.17 |
$ |
(0.07 |
) |
|
Diluted |
$ |
0.17 |
$ |
(0.07 |
) |
|
Weighted average shares outstanding: | ||||||
Basic |
|
21,064 |
|
20,941 |
|
|
Diluted |
|
21,080 |
|
20,941 |
|
|
Nine Months Ended | ||||||
2020 |
2019 |
|||||
(Unaudited) | ||||||
Revenue |
$ |
61,732 |
$ |
66,267 |
|
|
Net income (loss) |
$ |
2,842 |
$ |
(3,090 |
) |
|
Income (loss) per common share: | ||||||
Basic |
$ |
0.14 |
$ |
(0.15 |
) |
|
Diluted |
|
0.14 |
|
(0.15 |
) |
|
Weighted average shares outstanding: | ||||||
Basic |
|
21,026 |
|
20,829 |
|
|
Diluted |
|
21,026 |
|
20,829 |
|
|
Consolidated Statements of Operations | |||||||||||||||
(in thousands, except for per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Net revenue: | |||||||||||||||
$ |
12,072 |
|
$ |
15,654 |
|
$ |
33,234 |
|
$ |
48,673 |
|
||||
|
10,082 |
|
|
6,605 |
|
|
28,498 |
|
|
17,594 |
|
||||
Total net revenue |
|
22,154 |
|
|
22,259 |
|
|
61,732 |
|
|
66,267 |
|
|||
Cost of sales: | |||||||||||||||
|
10,165 |
|
|
13,140 |
|
|
28,605 |
|
|
40,892 |
|
||||
|
8,568 |
|
|
6,793 |
|
|
24,112 |
|
|
18,200 |
|
||||
Total cost of sales |
|
18,733 |
|
|
19,933 |
|
|
52,717 |
|
|
59,092 |
|
|||
Gross profit (loss): | |||||||||||||||
|
1,907 |
|
|
2,514 |
|
|
4,629 |
|
|
7,781 |
|
||||
|
1,514 |
|
|
(188 |
) |
|
4,386 |
|
|
(606 |
) |
||||
Total gross profit |
|
3,421 |
|
|
2,326 |
|
|
9,015 |
|
|
7,175 |
|
|||
Selling, general and administrative |
|
2,577 |
|
|
3,148 |
|
|
8,630 |
|
|
10,206 |
|
|||
Severance, relocation and other costs |
|
- |
|
|
190 |
|
|
124 |
|
|
391 |
|
|||
Operating income (loss) |
|
844 |
|
|
(1,012 |
) |
|
261 |
|
|
(3,422 |
) |
|||
Interest expense, net |
|
216 |
|
|
227 |
|
|
636 |
|
|
676 |
|
|||
Other expense (income), net |
|
372 |
|
|
286 |
|
|
(114 |
) |
|
(1,156 |
) |
|||
Income (loss) before taxes |
|
256 |
|
|
(1,525 |
) |
|
(261 |
) |
|
(2,942 |
) |
|||
Income tax (benefit) expense, net |
|
(3,239 |
) |
|
32 |
|
|
(3,103 |
) |
|
148 |
|
|||
Net Income (loss) |
$ |
3,495 |
|
$ |
(1,557 |
) |
$ |
2,842 |
|
$ |
(3,090 |
) |
|||
Income (loss) per common share: | |||||||||||||||
Basic |
$ |
0.17 |
|
$ |
(0.07 |
) |
$ |
0.14 |
|
$ |
(0.15 |
) |
|||
Diluted |
$ |
0.17 |
|
$ |
(0.07 |
) |
$ |
0.14 |
|
$ |
(0.15 |
) |
|||
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|||
Weighted average shares outstanding: | |||||||||||||||
Basic |
|
21,064 |
|
|
20,941 |
|
|
21,026 |
|
|
20,829 |
|
|||
Diluted |
|
21,080 |
|
|
20,941 |
|
|
21,026 |
|
|
20,829 |
|
|||
Consolidated Balance Sheets | |||||||
(in thousands, except for share data) | |||||||
2020 |
2019 |
||||||
(Unaudited) | (Note) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents |
$ |
8,294 |
|
$ |
5,095 |
|
|
Accounts receivable, net |
|
8,603 |
|
|
7,444 |
|
|
Inventory, net |
|
17,844 |
|
|
20,784 |
|
|
Other current assets |
|
4,766 |
|
|
4,282 |
|
|
Assets held for sale |
|
1,069 |
|
|
2,233 |
|
|
Total current assets |
|
40,576 |
|
|
39,838 |
|
|
Property, plant and equipment, net |
|
9,727 |
|
|
11,675 |
|
|
Operating lease right-of-use assets |
|
6,315 |
|
|
7,014 |
|
|
Other assets |
|
4,760 |
|
|
1,529 |
|
|
Total assets |
$ |
61,378 |
|
$ |
60,056 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable |
$ |
8,202 |
|
$ |
9,346 |
|
|
Accrued liabilities |
|
12,583 |
|
|
12,495 |
|
|
Operating lease liabilities, current portion |
|
942 |
|
|
841 |
|
|
Finance lease obligations, current portion |
|
383 |
|
|
684 |
|
|
Note payable - related party, current portion |
|
2,500 |
|
|
- |
|
|
Note payable - PPP loan, current portion |
|
2,174 |
|
|
- |
|
|
Total current liabilities |
|
26,784 |
|
|
23,366 |
|
|
Operating lease liabilities, net of current portion |
|
6,189 |
|
|
6,906 |
|
|
Finance lease obligations, net of current portion |
|
2,029 |
|
|
2,351 |
|
|
Note payable - related party |
|
3,974 |
|
|
6,463 |
|
|
Note payable - PPP Loan |
|
1,384 |
|
|
- |
|
|
Other liabilities |
|
5,816 |
|
|
7,539 |
|
|
Total liabilities |
|
46,176 |
|
|
46,625 |
|
|
Stockholders’ equity: | |||||||
Preferred stock, par value |
|
- |
|
|
- |
|
|
Series A preferred stock, par value |
|
- |
|
|
- |
|
|
Common stock, non-voting, par value |
|
- |
|
|
- |
|
|
Common stock, par value |
|||||||
21,321,790 shares issued and 21,316,752 outstanding in 2020 and | |||||||
21,324,618 shares issued and 21,298,426 outstanding in 2019 |
|
213 |
|
|
213 |
|
|
Additional paid-in capital |
|
155,004 |
|
|
154,702 |
|
|
Accumulated deficit |
|
(114,591 |
) |
|
(117,433 |
) |
|
Accumulated other comprehensive loss |
|
(25,424 |
) |
|
(24,051 |
) |
|
|
- |
|
|
- |
|
||
Total stockholders’ equity |
|
15,202 |
|
|
13,431 |
|
|
Total liabilities and stockholders’ equity |
$ |
61,378 |
|
$ |
60,056 |
|
|
Note: The balance sheet at |
|||||||
Consolidated Cash Flow Statements | |||||||
(in thousands) | |||||||
Nine Months Ended | |||||||
2020 |
2019 |
||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) |
$ |
2,842 |
|
$ |
(3,090 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization |
|
1,883 |
|
|
2,106 |
|
|
Deferred income taxes |
|
(3,257 |
) |
|
- |
|
|
Stock-based compensation expense |
|
335 |
|
|
389 |
|
|
Deferred loan costs recognized |
|
11 |
|
|
11 |
|
|
Net (gain) loss on the sale of assets |
|
(813 |
) |
|
(467 |
) |
|
Provision for excess and obsolete inventory |
|
222 |
|
|
503 |
|
|
Non-cash lease expense |
|
699 |
|
|
541 |
|
|
Other noncash items |
|
72 |
|
|
15 |
|
|
Contributions to pension plans |
|
(34 |
) |
|
(348 |
) |
|
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
|
(1,158 |
) |
|
1,198 |
|
|
Inventory |
|
2,409 |
|
|
(2,415 |
) |
|
Prepaid expenses and other assets |
|
(983 |
) |
|
207 |
|
|
Accounts payable |
|
(1,036 |
) |
|
(3,344 |
) |
|
Accrued and other liabilities |
|
(1,114 |
) |
|
1,646 |
|
|
Net cash provided by (used in) operating activities |
|
78 |
|
|
(3,048 |
) |
|
Cash flows from investing activities: | |||||||
Capital expenditures |
|
(1,151 |
) |
|
(553 |
) |
|
Proceeds from sale of assets |
|
1,969 |
|
|
653 |
|
|
Net cash provided by investing activities |
|
818 |
|
|
100 |
|
|
Cash flows from financing activities: | |||||||
Finance lease payments |
|
(623 |
) |
|
(466 |
) |
|
Proceeds from Paycheck Protection Program loan |
|
3,558 |
|
|
- |
|
|
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(33 |
) |
|
(138 |
) |
|
Net cash provided by (used in) financing activities |
|
2,902 |
|
|
(604 |
) |
|
Effect of exchange rate changes on cash balances |
|
(599 |
) |
|
(99 |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
3,199 |
|
|
(3,651 |
) |
|
Cash and cash equivalents at beginning of period |
|
5,095 |
|
|
10,704 |
|
|
Cash and cash equivalents at end of period |
$ |
8,294 |
|
$ |
7,053 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005228/en/
Chief Financial Officer
(502) 329-2000
Source: