Sypris Reports First Quarter Results
Reaffirms 2019 Growth and Margin Expansion Guidance
Results for the first quarter of 2019 fundamentally reflected these
expectations, especially with respect to Sypris Technologies. However,
an anticipated and ongoing shortage of electronic components and
resulting labor inefficiencies continued to have a negative impact on
HIGHLIGHTS
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The Company’s first quarter 2019 consolidated revenue was largely flat
compared with the prior-year quarter, while consolidated gross margin
for the first quarter declined to 8.1% from 10.2% in the year-earlier
quarter, both reflecting primarily the expected near-term drag from
Sypris Electronics . - Revenue for Sypris Technologies increased 11.3% during the quarter compared to the prior-year period, primarily reflecting increased sales volume with customers in the commercial vehicle market.
- Gross profit for Sypris Technologies increased 9.3% for the first quarter of 2019 from the year-earlier quarter, while operating income increased 245% to 6.5% of sales, up from 2.1% for the prior year period.
-
Revenue for
Sypris Electronics declined in the first quarter of 2019, compared with the year-earlier quarter, reflecting a delay in shipments under a pending new contract and the effect of aforementioned shortages of certain electronic components and extensive lead-time issues in the electronic industry. -
The Company reaffirmed its outlook for 2019, including revenue of
$100-$110 million for the year, representing 19% year-over-year growth at the midpoint, and gross margin of 14%-16%, with both business segments forecasted to register solid profitability beginning in the last half of the year.
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“We are pleased with the year-over-year revenue growth at Sypris
Technologies,” commented
“While 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 our expected revenue growth and lower fixed manufacturing overhead costs, driven by effective cost reduction actions, are the keys to our return to profitability for 2019.”
First Quarter Results
The Company reported revenue of
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.
“Third-party forecasts for the Class 8 commercial vehicle market
indicate production will be up approximately 4% in 2019 over the record
setting highs in 2018. The energy market continues to benefit from
strong demand and higher oil prices. The National Defense Authorization
Act for Fiscal Year 2019 provides nearly
“As a result, we are pleased to reaffirm our guidance for 2019, with
full-year revenue expected to be in the range of
“We expect to see meaningful improvements in gross margin, up to 14%-16% for the year as a whole, with sequential improvements from the first to second half periods."
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 |
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(In thousands, except per share amounts) |
|||||||||||
Three Months Ended | |||||||||||
March 31, | April 1, | ||||||||||
2019 | 2018 | ||||||||||
(Unaudited) | |||||||||||
Revenue | $ | 19,564 | $ | 19,942 | |||||||
Net loss | $ | (2,305 | ) | $ | (1,795 | ) | |||||
Loss per common share: | |||||||||||
Basic | $ | (0.11 | ) | $ | (0.09 | ) | |||||
Diluted | (0.11 | ) | (0.09 | ) | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 20,669 | 20,394 | |||||||||
Diluted | 20,669 | 20,394 | |||||||||
Sypris Solutions, Inc. | |||||||||||
Consolidated Statements of Operations | |||||||||||
(in thousands, except for per share data) | |||||||||||
Three Months Ended | |||||||||||
March 31, | April 1, | ||||||||||
2019 | 2018 | ||||||||||
(Unaudited) | |||||||||||
Net revenue: | |||||||||||
Sypris Technologies | $ | 16,141 | $ | 14,507 | |||||||
Sypris Electronics | 3,423 | 5,435 | |||||||||
Total net revenue | 19,564 | 19,942 | |||||||||
Cost of sales: | |||||||||||
Sypris Technologies | 13,837 | 12,400 | |||||||||
Sypris Electronics | 4,136 | 5,511 | |||||||||
Total cost of sales | 17,973 | 17,911 | |||||||||
Gross profit (loss): | |||||||||||
Sypris Technologies | 2,304 | 2,107 | |||||||||
Sypris Electronics | (713 | ) | (76 | ) | |||||||
Total gross profit | 1,591 | 2,031 | |||||||||
Selling, general and administrative | 3,454 | 3,148 | |||||||||
Severance, relocation and other costs | 98 | 509 | |||||||||
Operating loss | (1,961 | ) | (1,626 | ) | |||||||
Interest expense, net | 217 | 213 | |||||||||
Other expense (income), net | 51 | (84 | ) | ||||||||
Loss before taxes | (2,229 | ) | (1,755 | ) | |||||||
Income tax expense, net | 76 | 40 | |||||||||
Net loss | $ | (2,305 | ) | $ | (1,795 | ) | |||||
Loss per common share: | |||||||||||
Basic | $ | (0.11 | ) | $ | (0.09 | ) | |||||
Diluted | $ | (0.11 | ) | $ | (0.09 | ) | |||||
Dividends declared per common share | $ | - | $ | - | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 20,669 | 20,394 | |||||||||
Diluted | 20,669 | 20,394 | |||||||||
Sypris Solutions, Inc. | |||||||||||
Consolidated Balance Sheets | |||||||||||
(in thousands, except for share data) | |||||||||||
March 31, | December 31, | ||||||||||
2019 | 2018 | ||||||||||
(Unaudited) | (Note) | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 5,689 | $ | 10,704 | |||||||
Accounts receivable, net | 9,120 | 9,881 | |||||||||
Inventory, net | 21,209 | 18,584 | |||||||||
Other current assets | 4,385 | 4,755 | |||||||||
Assets held for sale | 1,474 | 1,474 | |||||||||
Total current assets | 41,877 | 45,398 | |||||||||
Property, plant and equipment, net | 14,758 | 14,655 | |||||||||
Operating lease right-of-use assets | 7,532 | - | |||||||||
Other assets | 1,509 | 1,515 | |||||||||
Total assets | $ | 65,676 | $ | 61,568 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 11,670 | $ | 13,427 | |||||||
Accrued liabilities | 14,717 | 14,965 | |||||||||
Operating lease liabilities, current portion | 980 | - | |||||||||
Finance lease obligations, current portion | 632 | 593 | |||||||||
Total current liabilities | 27,999 | 28,985 | |||||||||
Note payable - related party | 6,453 | 6,449 | |||||||||
Operating lease liabilities, net of current portion | 7,367 | - | |||||||||
Finance lease obligations, net of current portion | 2,889 | 2,804 | |||||||||
Other liabilities | 6,810 | 8,496 | |||||||||
Total liabilities | 51,518 | 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; 21,370,395 shares issued and 21,354,203 outstanding in 2019 and 21,414,374 shares issued and 21,398,182 outstanding in 2018 |
214 | 214 | |||||||||
Additional paid-in capital | 154,450 | 154,388 | |||||||||
Accumulated deficit | (115,789 | ) | (114,926 | ) | |||||||
Accumulated other comprehensive loss | (24,717 | ) | (24,842 | ) | |||||||
Treasury stock, 16,192 in 2019 and 2018 | - | - | |||||||||
Total stockholders’ equity | 14,158 | 14,834 | |||||||||
Total liabilities and stockholders’ equity | $ | 65,676 | $ | 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. |
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Sypris Solutions, Inc. | |||||||||||
Consolidated Cash Flow Statements | |||||||||||
(in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | April 1, | ||||||||||
2019 | 2018 | ||||||||||
(Unaudited) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (2,305 | ) | $ | (1,795 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||||||
Depreciation and amortization | 691 | 672 | |||||||||
Stock-based compensation expense | 111 | 143 | |||||||||
Deferred loan costs recognized | 4 | 3 | |||||||||
Gain on the sale of assets | - | (281 | ) | ||||||||
Provision for excess and obsolete inventory | 37 | (75 | ) | ||||||||
Other noncash items | (127 | ) | 68 | ||||||||
Contributions to pension plans | (10 | ) | (11 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 758 | (675 | ) | ||||||||
Inventory | (2,664 | ) | 78 | ||||||||
Prepaid expenses and other assets | 398 | (667 | ) | ||||||||
Accounts payable | (1,801 | ) | 1,047 | ||||||||
Accrued and other liabilities | 436 | 847 | |||||||||
Net cash used in operating activities | (4,472 | ) | (646 | ) | |||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (348 | ) | (406 | ) | |||||||
Proceeds from sale of assets | - | 363 | |||||||||
Net cash used in investing activities | (348 | ) | (43 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Capital lease payments | (146 | ) | (425 | ) | |||||||
Indirect repurchase of shares for minimum statutory tax withholdings | (49 | ) | - | ||||||||
Net cash used in financing activities | (195 | ) | (425 | ) | |||||||
Net decrease in cash and cash equivalents | (5,015 | ) | (1,114 | ) | |||||||
Cash and cash equivalents at beginning of period | 10,704 | 8,144 | |||||||||
Cash and cash equivalents at end of period | $ | 5,689 | $ | 7,030 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190515005226/en/
Source:
Anthony C. Allen
Chief Financial Officer
(502)
329-2000