Sypris Reports Second Quarter Results
Sypris Electronics Sales up 28%; Gross Profit Up 73%
Results for the second quarter of 2020 fundamentally reflected these expectations, highlighted by the improved performance of
HIGHLIGHTS
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- The Company’s second quarter revenue decreased 29.8% compared to the prior-year quarter and 23.5% sequentially, reflecting lower market volumes driven by the temporary closure of customer operations in response to the pandemic, while the subsequent restart of operations in June has had a corresponding positive impact on demand.
-
Sypris Electronics revenue increased 28.3% during the quarter compared to the prior-year period and 11.5% sequentially, supported by a strong backlog of orders, which has increased 22.5% since year-end 2019. -
Sypris Electronics gross profit increased 72.9% and 61.6% on a year-over-year and sequential basis, respectively. Gross margin increased 470 basis points compared to the prior year and 570 basis points sequentially to 18.3%. -
As a result of the higher levels of shipments, operating margins for
Sypris Electronics increased to 10.6%, reflecting a material improvement over its historical results on both a year-over-year and sequential basis. -
Sypris Technologies revenue decreased 55.9% during the quarter compared to the prior-year period and 45.7% sequentially due to many customers idling operations throughout the quarter in response to the pandemic. These operations have since reopened, resulting in a positive impact on demand. -
During the second quarter, the Company completed the sale of its 90-year-old former manufacturing facility that was located on approximately 20 acres of land in
Louisville, Kentucky , for$1.7 million . The facility had been closed and unoccupied since the fourth quarter of 2017. -
The Company secured a
$3.6 million loan in May under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Securities Act. The proceeds have been used to cover payroll costs, rent and utility costs in accordance with the terms and conditions of the loan. -
Subsequent to quarter-end,
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. -
Subsequent to quarter-end,
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 in the Trans Mountain Pipeline Expansion project inCanada , call for shipments to begin in the second half of 2020.
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“While the economic headwinds and disruptions in the quarter had an impact on our results, we are pleased with our performance during the period,” commented
“Revenue for
“The temporary closure of operations by customers serving the energy, automotive, commercial vehicle, sport utility and off-highway markets had a significant impact on
“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,
Second Quarter Results
The Company reported revenue of
For the six months ended
Revenue for
Revenue for
Outlook
Commenting on the future,
“As anticipated, the impact of the pandemic has been felt less on customers in defense-related markets and as a result, the outlook for
“Our operations have remained open to meet the important needs of our customers who serve defense, communications, energy, transportation and other critical infrastructure industries. We expect the road back for the economy to be a potentially uncertain journey.”
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
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Financial Highlights |
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(In thousands, except per share amounts) |
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Three Months Ended |
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2020 |
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2019 |
||||
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(Unaudited) |
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Revenue |
$ |
17,153 |
|
$ |
24,444 |
|
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Net (loss) income |
$ |
(348 |
) |
$ |
1,503 |
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(Loss) income per common share: | |||||||||||||
Basic |
$ |
(0.02 |
) |
$ |
0.07 |
|
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Diluted |
$ |
(0.02 |
) |
$ |
0.07 |
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Weighted average shares outstanding: | |||||||||||||
Basic |
|
21,016 |
|
|
20,875 |
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Diluted |
|
21,016 |
|
|
20,875 |
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Six Months Ended |
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2020 |
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2019 |
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(Unaudited) |
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Revenue |
$ |
39,578 |
|
$ |
44,008 |
|
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Net loss |
$ |
(653 |
) |
$ |
(1,533 |
) |
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Loss per common share: | |||||||||||||
Basic |
$ |
(0.03 |
) |
$ |
(0.07 |
) |
|||||||
Diluted |
|
(0.03 |
) |
|
(0.07 |
) |
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Weighted average shares outstanding: | |||||||||||||
Basic |
|
21,005 |
|
|
20,772 |
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Diluted |
|
21,005 |
|
|
20,772 |
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Consolidated Statements of Operations |
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(in thousands, except for per share data) |
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Three Months Ended |
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Six Months Ended |
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2020 |
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2019 |
|
2020 |
|
2019 |
||||||||
|
|
|
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(Unaudited) |
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(Unaudited) |
||||||||||||
Net revenue: | ||||||||||||||||||
$ |
7,445 |
|
$ |
16,878 |
|
$ |
21,162 |
|
$ |
33,019 |
|
|||||||
|
9,708 |
|
|
7,566 |
|
|
18,416 |
|
|
10,989 |
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Total net revenue |
|
17,153 |
|
|
24,444 |
|
|
39,578 |
|
|
44,008 |
|
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Cost of sales: | ||||||||||||||||||
|
7,216 |
|
|
13,915 |
|
|
18,440 |
|
|
27,752 |
|
|||||||
|
7,934 |
|
|
6,540 |
|
|
15,544 |
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|
11,407 |
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Total cost of sales |
|
15,150 |
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|
20,455 |
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|
33,984 |
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|
39,159 |
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Gross profit (loss): | ||||||||||||||||||
|
229 |
|
|
2,963 |
|
|
2,722 |
|
|
5,267 |
|
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|
1,774 |
|
|
1,026 |
|
|
2,872 |
|
|
(418 |
) |
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Total gross profit |
|
2,003 |
|
|
3,989 |
|
|
5,594 |
|
|
4,849 |
|
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Selling, general and administrative |
|
2,830 |
|
|
3,604 |
|
|
6,053 |
|
|
7,058 |
|
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Severance, relocation and other costs |
|
33 |
|
|
103 |
|
|
124 |
|
|
201 |
|
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Operating (loss) income |
|
(860 |
) |
|
282 |
|
|
(583 |
) |
|
(2,410 |
) |
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Interest expense, net |
|
193 |
|
|
232 |
|
|
420 |
|
|
449 |
|
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Other (income), net |
|
(769 |
) |
|
(1,493 |
) |
|
(486 |
) |
|
(1,442 |
) |
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(Loss) income before taxes |
|
(284 |
) |
|
1,543 |
|
|
(517 |
) |
|
(1,417 |
) |
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Income tax expense, net |
|
64 |
|
|
40 |
|
|
136 |
|
|
116 |
|
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Net (loss) income |
$ |
(348 |
) |
$ |
1,503 |
|
$ |
(653 |
) |
$ |
(1,533 |
) |
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(Loss) income per common share: | ||||||||||||||||||
Basic |
$ |
(0.02 |
) |
$ |
0.07 |
|
$ |
(0.03 |
) |
$ |
(0.07 |
) |
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Diluted |
$ |
(0.02 |
) |
$ |
0.07 |
|
$ |
(0.03 |
) |
$ |
(0.07 |
) |
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Dividends declared per common share |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
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Weighted average shares outstanding: | ||||||||||||||||||
Basic |
|
21,016 |
|
|
20,875 |
|
|
21,005 |
|
|
20,772 |
|
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Diluted |
|
21,016 |
|
|
20,875 |
|
|
21,005 |
|
|
20,772 |
|
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Consolidated Balance Sheets |
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(in thousands, except for share data) |
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2020 |
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2019 |
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(Unaudited) |
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(Note) |
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ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents |
$ |
7,810 |
|
$ |
5,095 |
|
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Accounts receivable, net |
|
6,376 |
|
|
7,444 |
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|||||
Inventory, net |
|
18,485 |
|
|
20,784 |
|
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Other current assets |
|
4,309 |
|
|
4,282 |
|
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Assets held for sale |
|
1,230 |
|
|
2,233 |
|
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Total current assets |
|
38,210 |
|
|
39,838 |
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Property, plant and equipment, net |
|
9,883 |
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11,675 |
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Operating lease right-of-use assets |
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6,523 |
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|
7,014 |
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Other assets |
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1,407 |
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|
1,529 |
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Total assets |
$ |
56,023 |
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$ |
60,056 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable |
$ |
6,536 |
|
$ |
9,346 |
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Accrued liabilities |
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12,358 |
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12,495 |
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Operating lease liabilities, current portion |
|
919 |
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|
841 |
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Finance lease obligations, current portion |
|
587 |
|
|
684 |
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Note payable - related party, current portion |
|
2,500 |
|
|
- |
|
|||||
Note payable - PPP loan, current portion |
|
1,581 |
|
|
- |
|
|||||
Total current liabilities |
|
24,481 |
|
|
23,366 |
|
|||||
Operating lease liabilities, net of current portion |
|
6,433 |
|
|
6,906 |
|
|||||
Finance lease obligations, net of current portion |
|
2,128 |
|
|
2,351 |
|
|||||
Note payable - related party |
|
3,971 |
|
|
6,463 |
|
|||||
Note payable - PPP Loan |
|
1,977 |
|
|
- |
|
|||||
Other liabilities |
|
5,515 |
|
|
7,539 |
|
|||||
Total liabilities |
|
44,505 |
|
|
46,625 |
|
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Stockholders’ equity: | |||||||||||
Preferred stock, par value |
|
- |
|
|
- |
|
|||||
Series A preferred stock, par value |
|
- |
|
|
- |
|
|||||
Common stock, non-voting, par value |
|
- |
|
|
- |
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Common stock, par value |
|
213 |
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|
213 |
|
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Additional paid-in capital |
|
154,923 |
|
|
154,702 |
|
|||||
Accumulated deficit |
|
(118,086 |
) |
|
(117,433 |
) |
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Accumulated other comprehensive loss |
|
(25,532 |
) |
|
(24,051 |
) |
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|
- |
|
|
- |
|
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Total stockholders’ equity |
|
11,518 |
|
|
13,431 |
|
|||||
Total liabilities and stockholders’ equity |
$ |
56,023 |
|
$ |
60,056 |
|
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Note: The balance sheet at |
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Consolidated Cash Flow Statements |
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(in thousands) |
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Six Months Ended |
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2020 |
|
2019 |
||||
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|
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|
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(Unaudited) |
||||||
Cash flows from operating activities: | |||||||||||||
Net loss |
$ |
(653 |
) |
$ |
(1,533 |
) |
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Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||
Depreciation and amortization |
|
1,259 |
|
|
1,407 |
|
|||||||
Stock-based compensation expense |
|
228 |
|
|
283 |
|
|||||||
Deferred loan costs recognized |
|
7 |
|
|
7 |
|
|||||||
Net gain on the sale of assets |
|
(958 |
) |
|
(477 |
) |
|||||||
Provision for excess and obsolete inventory |
|
125 |
|
|
283 |
|
|||||||
Non-cash lease expense |
|
491 |
|
|
452 |
|
|||||||
Other noncash items |
|
100 |
|
|
(130 |
) |
|||||||
Contributions to pension plans |
|
(34 |
) |
|
(45 |
) |
|||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable |
|
1,053 |
|
|
(1,248 |
) |
|||||||
Inventory |
|
1,813 |
|
|
(1,425 |
) |
|||||||
Prepaid expenses and other assets |
|
(457 |
) |
|
(1,088 |
) |
|||||||
Accounts payable |
|
(2,697 |
) |
|
(2,457 |
) |
|||||||
Accrued and other liabilities |
|
(1,318 |
) |
|
177 |
|
|||||||
Net cash used in operating activities |
|
(1,041 |
) |
|
(5,794 |
) |
|||||||
Cash flows from investing activities: | |||||||||||||
Capital expenditures |
|
(833 |
) |
|
(671 |
) |
|||||||
Proceeds from sale of assets |
|
1,968 |
|
|
634 |
|
|||||||
Net cash provided by (used in) investing activities |
|
1,135 |
|
|
(37 |
) |
|||||||
Cash flows from financing activities: | |||||||||||||
Finance lease payments |
|
(320 |
) |
|
(304 |
) |
|||||||
Proceeds from Paycheck Protection Program loan |
|
3,558 |
|
|
- |
|
|||||||
Indirect repurchase of shares for minimum statutory tax withholdings |
|
(7 |
) |
|
(133 |
) |
|||||||
Net cash provided by (used in) financing activities |
|
3,231 |
|
|
(437 |
) |
|||||||
Effect of exchange rate changes on cash balances |
|
(610 |
) |
|
26 |
|
|||||||
Net increase (decrease) in cash and cash equivalents |
|
2,715 |
|
|
(6,242 |
) |
|||||||
Cash and cash equivalents at beginning of period |
|
5,095 |
|
|
10,704 |
|
|||||||
Cash and cash equivalents at end of period |
$ |
7,810 |
|
$ |
4,462 |
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20200813005078/en/
Chief Financial Officer
(502) 329-2000
Source: