Sypris Reports Third Quarter Results
Includes Sale of Cyber Security Solutions Business for
HIGHLIGHTS
For the Third Quarter:
-
Revenue for the Company was
$21 .4 million, reflecting a reduction in demand for commercial vehicles from Q3 of 2015, the rebalancing of inventory by certain customers and the impact of the sale of the Cyber Security Solutions business (“CSS”) ofSypris Electronics toAnalog Devices, Inc. (“ADI”) for$42 million of cash during the quarter, as previously announced. -
Net income for the quarter was
$21 .0 million, or$1.02 per diluted share, reflecting the gain on the sale of the CSS business. -
Revenue from the CSS product lines was
$1 .8 million and$11 .1 million for the three and nine-month periods ended October 2, 2016, respectively, compared to$6 .8 million and$10 .8 million for the prior year. -
The net proceeds of
$39 .3 million from the sale were used in part to retire all outstanding senior debt and support working capital needs with the balance being used primarily to reinvest in the Company going forward. -
Backlog for the retained
Sypris Electronics business was$30 .3 million as of the end of the third quarter of 2016 compared to$26 .8 million for the second quarter of 2016 and$12 .0 million as of the end of the third quarter of 2015. - Backlog for our energy products business increased approximately 42% year over year and 38% sequentially.
-
Sypris Electronics began its move to a new manufacturing facility during the third quarter, which is expected to significantly reduce its annual operating facility costs by approximately$2 .0 million beginning in 2017.
Commenting on the CSS transaction,
The transaction included the intellectual property and know-how for
SiOMetricsTM, SypherTM, the
Gill continued, “Going forward,
Third Quarter and Nine Month Results
The Company reported revenue of
For the nine months ended October 2, 2016, the Company reported revenue
of
The results for the three and nine months ended October 2, 2016 include
a gain of
“With the proceeds generated from the sale to ADI, we will be able to focus on our trusted manufacturing services platform going forward, which is poised for meaningful growth in the future,” said Jeffrey T. Gill, president and chief executive officer.
“Sypris Technologies continues to adjust manpower and overhead expenses to reflect the continued softness in the commercial vehicle market that started during the fourth quarter of 2015. We have worked diligently to control our costs while taking actions to rebuild and diversify our customer base,” Mr. Gill continued.
Sypris Technologies
Revenue for Sypris Technologies decreased 46.8% to
Revenue for
Revenue from the CSS product lines for the three and nine months ended
October 2, 2016 was
Outlook
Mr. Gill added, “The completion of the sale of the CSS business to ADI during the third quarter was another important milestone for the Company. As we move forward into 2017, the proceeds from this transaction also enables us to complete the actions we started in 2015 to position the Company to return to profitability. The Company is working to adjust manpower and overhead expenses to align with projected levels of customer demand and market requirements, while optimizing our ability to bring in potential new business.”
Forward Looking Statements
This press release contains “forward-looking” statements within
the meaning of the federal securities laws. 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 | ||||||||||||
October 2, | October 4, | |||||||||||
2016 | 2015 | |||||||||||
(Unaudited) | ||||||||||||
Revenue | $ | 21,384 | $ | 38,437 | ||||||||
Net income (loss) | $ | 20,993 | $ | (274 | ) | |||||||
Income (loss) per common share: | ||||||||||||
Basic | $ | 1.02 | $ | (0.01 | ) | |||||||
Diluted | $ | 1.02 | $ | (0.01 | ) | |||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 19,834 | 19,654 | ||||||||||
Diluted | 19,834 | 19,654 | ||||||||||
Nine Months Ended | ||||||||||||
October 2, | October 4, | |||||||||||
2016 | 2015 | |||||||||||
(Unaudited) | ||||||||||||
Revenue | $ | 71,826 | $ | 116,202 | ||||||||
Net income (loss) | $ | 10,691 | $ | (21,723 | ) | |||||||
Income (loss) per common share: | ||||||||||||
Basic | $ | 0.52 | $ | (1.10 | ) | |||||||
Diluted | 0.52 | (1.10 | ) | |||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 19,761 | 19,684 | ||||||||||
Diluted | 19,761 | 19,684 |
Sypris Solutions, Inc. | |||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||
(in thousands, except for per share data) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
October 2, | October 4, | October 2, | October 4, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
Net revenue: | |||||||||||||||||||
Sypris Technologies | $ | 14,796 | $ | 27,824 | $ | 47,392 | $ | 87,904 | |||||||||||
Sypris Electronics | 6,588 | 10,613 | 24,434 | 28,298 | |||||||||||||||
Total net revenue | 21,384 | 38,437 | 71,826 | 116,202 | |||||||||||||||
Cost of sales: | |||||||||||||||||||
Sypris Technologies | 15,159 | 25,851 | 48,671 | 89,454 | |||||||||||||||
Sypris Electronics | 6,946 | 10,118 | 22,427 | 27,471 | |||||||||||||||
Total cost of sales | 22,105 | 35,969 | 71,098 | 116,925 | |||||||||||||||
Gross profit (loss): | |||||||||||||||||||
Sypris Technologies | (363 | ) | 1,973 | (1,279 | ) | (1,550 | ) | ||||||||||||
Sypris Electronics | (358 | ) | 495 | 2,007 | 827 | ||||||||||||||
Total gross profit (loss) | (721 | ) | 2,468 | 728 | (723 | ) | |||||||||||||
Selling, general and administrative | 5,208 | 5,969 | 16,952 | 22,414 | |||||||||||||||
Research and development | 104 | 119 | 318 | 647 | |||||||||||||||
Severance and equipment relocation costs | - | 457 | 522 | 1,023 | |||||||||||||||
Operating loss | (6,033 | ) | (4,077 | ) | (17,064 | ) | (24,807 | ) | |||||||||||
Interest expense, net | 2,828 | 1,783 | 4,668 | 3,271 | |||||||||||||||
Loss on extinguishment of debt | 1,521 | - | 1,521 | - | |||||||||||||||
Other income, net | (31,595 | ) | (7,841 | ) | (34,166 | ) | (8,595 | ) | |||||||||||
Loss before taxes | 21,213 | 1,981 | 10,913 | (19,483 | ) | ||||||||||||||
Income tax expense, net | 220 | 2,255 | 222 | 2,240 | |||||||||||||||
Net income (loss) | $ | 20,993 | $ | (274 | ) | $ | 10,691 | $ | (21,723 | ) | |||||||||
Income (loss) per common share: | |||||||||||||||||||
Basic | $ | 1.02 | $ | (0.01 | ) | $ | 0.52 | $ | (1.10 | ) | |||||||||
Diluted | $ | 1.02 | $ | (0.01 | ) | $ | 0.52 | $ | (1.10 | ) | |||||||||
Dividends declared per common share | $ | - | $ | - | $ | - | $ | - | |||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 19,834 | 19,654 | 19,761 | 19,684 | |||||||||||||||
Diluted | 19,834 | 19,654 | 19,761 | 19,684 |
Sypris Solutions, Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
(in thousands, except for share data) | ||||||||||||||
October 2, | December 31, | |||||||||||||
2016 | 2015 | |||||||||||||
(Unaudited) | (Note) | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 21,100 | $ | 1,349 | ||||||||||
Restricted cash - current | 1,500 | - | ||||||||||||
Accounts receivable, net | 8,791 | 12,394 | ||||||||||||
Inventory, net | 15,166 | 20,192 | ||||||||||||
Other current assets | 3,178 | 4,459 | ||||||||||||
Assets held for sale | - | 3,230 | ||||||||||||
Total current assets | 49,735 | 41,624 | ||||||||||||
Property, plant and equipment, net | 20,924 | 22,178 | ||||||||||||
Other assets | 2,019 | 3,090 | ||||||||||||
Total assets | $ | 72,678 | $ | 66,892 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 9,471 | $ | 11,311 | ||||||||||
Accrued liabilities | 12,875 | 11,661 | ||||||||||||
Revolving credit facility | - | 2,132 | ||||||||||||
Current portion of long-term debt and capital lease obligations | 203 | 1,714 | ||||||||||||
Total current liabilities | 22,549 | 26,818 | ||||||||||||
Long-term debt and capital lease obligations | 3,008 | 8,966 | ||||||||||||
Note payable - related party | 6,360 | 5,314 | ||||||||||||
Other liabilities | 10,523 | 6,082 | ||||||||||||
Total liabilities | 42,440 | 47,180 | ||||||||||||
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; 21,330,882 shares issued and 21,278,190 outstanding in 2016 and 20,826,236 shares issued and 20,776,544 outstanding in 2015 |
213 | 208 | ||||||||||||
Additional paid-in capital | 153,050 | 152,077 | ||||||||||||
Accumulated deficit | (96,121 | ) | (106,812 | ) | ||||||||||
Accumulated other comprehensive loss | (26,903 | ) | (25,760 | ) | ||||||||||
Treasury stock, 52,692 and 49,692 shares in 2016 and 2015, respectively | (1 | ) | (1 | ) | ||||||||||
Total stockholders’ equity | 30,238 | 19,712 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 72,678 | $ | 66,892 | ||||||||||
Note: The balance sheet at December 31, 2015 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) | |||||||||||||||
Nine Months Ended | |||||||||||||||
October 2, | October 4, | ||||||||||||||
2016 | 2015 | ||||||||||||||
(Unaudited) | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 10,691 | $ | (21,723 | ) | ||||||||||
Adjustments to reconcile net income (loss) to net cash provided by used in operating activities: |
|||||||||||||||
Depreciation and amortization | 5,086 | 7,022 | |||||||||||||
Deferred income taxes | - | 2,436 | |||||||||||||
Stock-based compensation expense | 1,027 | 717 | |||||||||||||
Deferred revenue recognized | - | (4,200 | ) | ||||||||||||
Deferred loan costs recognized | 1,810 | 1,929 | |||||||||||||
Loss on extinguishment of debt | 1,521 | - | |||||||||||||
Gain on the sale of assets | (33,630 | ) | (7,423 | ) | |||||||||||
Provision for excess and obsolete inventory | 132 | 1,305 | |||||||||||||
Other noncash items | (178 | ) | (1,478 | ) | |||||||||||
Contributions to pension plans | - | (315 | ) | ||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 3,635 | 23,384 | |||||||||||||
Inventory | (1,637 | ) | 2,154 | ||||||||||||
Prepaid expenses and other assets | (554 | ) | (4,332 | ) | |||||||||||
Accounts payable | (1,833 | ) | (12,051 | ) | |||||||||||
Accrued and other liabilities | 966 | 860 | |||||||||||||
Net cash used in operating activities | (12,964 | ) | (11,715 | ) | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (1,404 | ) | (1,155 | ) | |||||||||||
Proceeds from sale of assets | 50,414 | 15,700 | |||||||||||||
Change in restricted cash | (1,500 | ) | - | ||||||||||||
Net cash provided by investing activities | 47,510 | 14,545 | |||||||||||||
Cash flows from financing activities: | |||||||||||||||
Repayment of term loan | (11,714 | ) | - | ||||||||||||
Repayment of New Revolving Credit Agreement | (2,132 | ) | - | ||||||||||||
Payment penalty on early extinguishment of debt | (1,521 | ) | - | ||||||||||||
Proceeds from related party note payable | 1,000 | 5,500 | |||||||||||||
Net change in debt under Credit Facility | - | (10,738 | ) | ||||||||||||
Debt issuance and modification costs | (379 | ) | (2,335 | ) | |||||||||||
Indirect repurchase of shares for minimum statutory tax withholdings | (49 | ) | (77 | ) | |||||||||||
Cash dividends paid | - | (410 | ) | ||||||||||||
Net cash used in financing activities | (14,795 | ) | (8,060 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | 19,751 | (5,230 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 1,349 | 7,003 | |||||||||||||
Cash and cash equivalents at end of period | $ | 21,100 | $ | 1,773 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20161116005487/en/
Source:
Sypris Solutions, Inc.
Anthony C. Allen, 502-329-2000
Chief
Financial Officer