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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2004
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Sypris Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24020 61-1321992
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (502) 329-2000
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99 Registrant's press release dated April 22, 2004.
Item 12. Results of Operations and Financial Conditions
The Registrant's press release dated April 22, 2004, reporting its 2004
first quarter results of operations and financial condition is furnished as
Exhibit 99 and incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 22, 2004 Sypris Solutions, Inc.
By: /s/ David D. Johnson
-----------------------------
David D. Johnson
Vice President and Chief Financial Officer
2
INDEX TO EXHIBITS
Exhibit Description
Number -----------
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99 Registrant's press release dated April 22, 2004
Exhibit 99
Sypris Reports 52% Increase in First Quarter Revenue; Net Orders Rise
59% to Record $105 Million
LOUISVILLE, Ky.--(BUSINESS WIRE)--Apr. 22, 2004--Sypris
Solutions, Inc. (Nasdaq/NM:SYPR) today reported revenue increased 52%
to a record $89.4 million for the first quarter compared to $58.9
million for the prior year period. Net income increased 146% to $3.4
million from $1.4 million for the prior year quarter, while earnings
per share increased 120% to $0.22 per diluted share compared to $0.10
per diluted share for the first quarter of 2003. The results for the
quarter reflected the impact of an 8% increase in the number of fully
diluted shares outstanding compared to the prior year period, or
roughly $0.02 per diluted share.
"We are pleased with the financial results for the quarter," said
Jeffrey T. Gill, president and chief executive officer. "Net orders
increased 59% to a record $104.7 million when compared to the prior
year quarter, resulting in a 33% increase in backlog to a record
$214.3 million. Stockholders' equity increased 36% to $197.4 million
during the period from $144.8 million at the close of 2003 while net
debt decreased by $42.5 million, primarily as a result of the
successful completion of the Company's stock offering in March 2004."
"We believe the Company is well positioned to continue its growth
initiatives. The new contract with Dana is expected to make a positive
contribution to the Company's top line throughout the year, while our
balance sheet remains in excellent shape, with almost $125 million of
cash and credit capacity available to support additional growth
opportunities. The increase in the number of shares outstanding as a
result of the stock offering is expected to improve the float of the
Company's shares and hopefully their long-term attractiveness to
investors as well."
The Industrial Group
Revenue for our Industrial Group increased 109% to $48.5 million
in the first quarter from $23.2 million for the prior year period, and
increased 93% sequentially from the fourth quarter of last year
primarily as a result of volume associated with the new Dana contract
that started in January and a general increase in demand for medium
and heavy-duty trucks. Gross profit for the quarter increased 148% to
$6.6 million from $2.7 million for the same period in 2003 and 177%
sequentially from the fourth quarter of last year, primarily due to
the increase in shipments during the period.
"Net orders increased 80% to a record $57.5 million for the
quarter, while backlog increased 73% to a record $82.2 million," said
Gill. "The transition of the new contract with Dana has proceeded
smoothly and we are very pleased with the results to date. The market
for medium and heavy-duty trucks has improved, with build rates
estimated to have increased 30% during the quarter. We continue to
believe that the long-term outlook for this market remains positive
and that we are well positioned to benefit from any continued
strengthening in this important segment."
The Electronics Group
Revenue for our Electronics Group increased 15% to $40.9 million
in the first quarter from $35.7 million for the prior year period, but
declined 23% sequentially from the fourth quarter of last year, which
is consistent with the Company's historic performance and reflects the
seasonal swings in the government's procurement cycle. Gross profit
for the quarter increased 8% to $7.9 million from $7.3 million for the
same period in 2003, but declined 29% sequentially from the fourth
quarter of last year, traditionally the strongest period for this
business.
"Net orders increased 39% to $47.2 million for the quarter, while
backlog increased 17% to a record $132.1 million," said Gill. "We
believe the outlook for aerospace and defense spending remains solid
and with the expected firming of the economy, we should see an
increasingly positive contribution from our test and measurement
services business, which has been impacted by the downturn in the
markets for commercial aerospace, telecommunications and semiconductor
products during the past several years."
Outlook
Gill added, "The first quarter represented a solid start for the
Company and we believe the outlook for the balance of the year remains
positive. Revenue for the second quarter is expected to be in the
range of $90 to $93 million compared to $70.6 million for the second
quarter of 2003, which represents a 30% increase in revenue for the
period at the midpoint of the range. We expect the top line to benefit
from the sequential growth of our Electronics Group during the quarter
as it moves beyond its seasonally lowest period."
"Earnings for the second quarter of 2004 are expected to be in the
range of $0.21 to $0.23 per diluted share, assuming 18.7 million
weighted average shares outstanding, compared to $0.19 per diluted
share for the second quarter of 2003 based upon 14.4 million weighted
average shares outstanding. At the midpoint of this range, net income
is forecast to increase 54% compared to the prior year period while
earnings per share is forecast to increase 16%, reflecting the impact
of the increase in the number of weighted average shares outstanding
as a result of the recent stock offering."
"As a result of the Company's solid performance during the first
quarter and the successful completion of the stock offering during
March, we believe that it is appropriate to adjust our outlook for
revenue and earnings for the full year 2004. Revenue for 2004 is now
expected to be in the range of $360 to $370 million compared to our
prior forecast of $350 to $360 million and $276.6 million for 2003,
which represents a 32% increase in revenue for 2004 at the midpoint of
the range. The change in outlook primarily reflects a strengthening in
orders for our Industrial Group."
"As a result of the stock offering, we expect the number of
weighted average shares outstanding for 2004 to increase 19% to 18.0
million shares from our prior forecast of 15.1 million shares and 14.7
million shares for 2003. The impact of the additional shares from the
offering and the associated reduction in interest expense lowers our
prior earnings forecast to $0.88 to $0.98 per diluted share from $1.00
to $1.10 per diluted share, solely as a result of the stock offering.
However, we believe it to be appropriate to modify this adjusted range
to reflect the strengthening outlook for our business and now expect
earnings to be in the range of $0.92 to $1.00 per diluted share for
2004. At the midpoint of this range, net income is forecast to
increase 112% compared to the prior year while earnings per share is
forecast to increase by 71%, reflecting the impact of the increase in
the number of shares outstanding as a result of the recent stock
offering."
Gill continued, "The outlook for the Company remains positive. We
hope to complete the previously announced multi-year outsourcing
agreement with ArvinMeritor in the very near future, and the second
phase of the previously announced eight-year outsourcing agreement
with Dana by the end of June. Should we be successful in closing these
transactions as planned, these two agreements are expected to
contribute a combined $125 to $135 million per year to the Company's
top line upon reaching full production. Both contracts remain subject
to a variety of standard conditions to closing. We will update our
guidance to reflect the impact of these contracts on the Company's
financial results for 2004 at the time of any closing for each
transaction."
Sypris Solutions is a diversified provider of technology-based
outsourced services and specialty products. The Company performs a
wide range of manufacturing and technical services, typically under
multi-year, sole-source contracts with major corporations and
government agencies in the markets for aerospace and defense
electronics, truck components and assemblies, and for users of test
and measurement equipment. For more information about Sypris
Solutions, visit its Web site at www.sypris.com.
This press release, and any oral statements made with reference to
this cautionary guidance, includes "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
they relate to, or may affect, the Company's future results. These
statements only reflect management's current opinions and no assurance
can be given that any of these results will actually occur. Important
factors could cause performance to differ materially from projected
results contained in, or based upon, these statements, including: the
discovery of, or failure to discover, material issues during due
diligence; the failure to agree on the final terms of definitive
agreements, long-term supply agreements, collective bargaining
agreements, or related agreements or any party's breach of, or refusal
to close the transactions reflected in, those agreements; the ability
to successfully manage growth or contraction in the economy, or the
commercial vehicle or electronics markets; access to capital on
favorable terms as needed for operations or growth; the ability to
achieve expected annual savings and synergies from past and future
business combinations; competitive factors and price pressures;
availability of third party component parts at reasonable prices;
inventory risks due to shifts in market demand and/or price erosion of
purchased components; changes in product mix; program changes, delays,
or cancellations by the government or other customers; concentrated
reliance on major customers or suppliers; cost and yield issues
associated with the Company's manufacturing facilities; revisions in
estimated costs related to major contracts; labor relations; risks
inherent in operating abroad, including foreign currency exchange
rates; performance of our pension fund portfolios; changes in
applicable law or in the Company's regulatory authorizations, security
clearances, or other legal rights to conduct its business, deal with
its work force or export goods and services; adverse regulatory
actions, or other governmental sanctions; risks of litigation,
including litigation with respect to environmental or asbestos-related
matters, customer or supplier claims, or stockholders; the effects
(including possible increases in the cost of doing business) resulting
from future war and terrorists activities or political uncertainties;
natural disasters, casualties, utility disruptions, or the failure to
anticipate unknown risks and uncertainties present in the Company's
businesses; dependence on current management; as well as other factors
included in the Company's filings with the Securities and Exchange
Commission.
SYPRIS SOLUTIONS, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
Three Months Ended
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Mar. 31, Mar. 30,
2004 2003
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Revenue $ 89,376 $ 58,915
Net income $ 3,399 $ 1,379
Earnings per common share:
Basic $ 0.23 $ 0.10
Diluted $ 0.22 $ 0.10
Weighted average shares outstanding:
Basic 14,791 14,184
Diluted 15,593 14,407
SYPRIS SOLUTIONS, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except for per share data)
Three Months Ended
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Mar. 31, Mar. 30,
2004 2003
-------- --------
(Unaudited)
Net revenue:
Electronics Group $ 40,925 $ 35,689
Industrial Group 48,451 23,226
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Total net revenue 89,376 58,915
Cost of sales:
Electronics Group 33,024 28,390
Industrial Group 41,875 20,574
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Total cost of sales 74,899 48,964
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Gross profit 14,477 9,951
Selling, general and administrative 8,158 6,149
Research and development 524 1,022
Amortization of intangible assets 126 21
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Operating income 5,669 2,759
Interest expense, net 288 486
Other (income) expense, net (58) 67
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Income before income taxes 5,439 2,206
Income tax expense 2,040 827
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Net income $ 3,399 $ 1,379
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Earnings per common share:
Basic $ 0.23 $ 0.10
Diluted $ 0.22 $ 0.10
Dividends declared per common share $ 0.03 $ 0.03
Weighted average shares outstanding:
Basic 14,791 14,184
Diluted 15,593 14,407
SYPRIS SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
Mar. 31, Dec. 31,
2004 2003
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,337 $ 12,019
Accounts receivable, net 61,276 45,484
Inventory, net 64,520 61,932
Other current assets 9,534 11,370
-------- --------
Total current assets 146,667 130,805
Property, plant and equipment, net 109,764 106,683
Goodwill 14,277 14,277
Other assets 12,608 11,730
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$283,316 $263,495
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 35,632 $ 29,598
Accrued liabilities 21,809 17,491
Current portion of long-term debt 8,000 3,200
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Total current liabilities 65,441 50,289
Long-term debt 5,000 53,000
Other liabilities 15,450 15,425
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Total liabilities 85,891 118,714
Stockholders' equity:
Preferred stock, par value $0.01 per share,
981,600 shares authorized; no shares issued -- --
Series A preferred stock, par value $0.01 per
share, 18,400 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; 17,398,365 and
14,283,323 shares issued and outstanding in 2004
and 2003, respectively 174 143
Additional paid-in capital 133,183 83,541
Retained earnings 66,414 63,443
Accumulated other comprehensive income (loss) (2,346) (2,346)
-------- --------
Total stockholders' equity 197,425 144,781
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$283,316 $263,495
======== ========
SYPRIS SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
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Mar. 31, Mar. 30,
2004 2003
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(Unaudited)
Cash flows from operating activities:
Net income $ 3,399 $ 1,379
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,001 3,001
Other noncash charges 215 211
Changes in operating assets and liabilities:
Accounts receivable (15,959) (1,853)
Inventory (2,674) 559
Other assets 1,836 1,639
Accounts payable 7,972 (3,087)
Accrued liabilities 3,149 (777)
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Net cash provided by operating activities 1,939 1,072
Cash flows from investing activities:
Capital expenditures (8,875) (4,073)
Changes in nonoperating assets and liabilities 233 392
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Net cash used in investing activities (8,642) (3,681)
Cash flows from financing activities:
Net decrease in debt under revolving credit
agreements (43,200) (7,000)
Cash dividends paid (428) (425)
Proceeds from issuance of common stock 49,649 179
-------- --------
Net cash provided by (used in) financing
activities 6,021 (7,246)
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Net decrease in cash and cash equivalents (682) (9,855)
Cash and cash equivalents at beginning of period 12,019 12,403
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Cash and cash equivalents at end of period $ 11,337 $ 2,548
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CONTACT: Sypris Solutions, Inc., Louisville
David D. Johnson, 502-329-2000
www.sypris.com