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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): October 27, 2005
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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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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On October 27, 2005, Sypris Solutions, Inc. (the "Company") announced
its financial results for the third quarter and nine months ended
September 30, 2005. The full text of the press release is set forth in
Exhibit 99 hereto.
The information in this Form 8-K and the attached Exhibit is being
furnished pursuant to Item 2.02 "Results of Operations and Financial
Condition" and shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as
shall be expressly set forth by specific reference in such filing.
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
On October 27, 2005, Sypris Solutions, Inc. (the "Company") announced
its financial results for the third quarter and nine months ended
September 30, 2005. The full text of the press release is set forth in
Exhibit 99 hereto.
The information in this Form 8-K and the attached Exhibit is being
furnished pursuant to Item 7.01 "Regulation FD Disclosure" and shall
not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, except as shall be expressly
set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description of Exhibit
-------------- ----------------------
99 Press release issued October 27, 2005.
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: October 27, 2005 Sypris Solutions, Inc.
By: /s/ T. Scott Hatton
----------------------------------
T. Scott Hatton
Vice President and Chief Financial
Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Registrant's press release dated October 27, 2005.
Exhibit 99
Sypris Reports Third Quarter Earnings; Revenue Increases 19%
LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 27, 2005--Sypris Solutions, Inc.
(Nasdaq/NM: SYPR) today reported revenue increased 19% to a record $140.8
million for the third quarter compared to $118.5 million for the prior year
period. Net income for the period was $3.0 million, or $0.16 per diluted share,
compared to $3.8 million, or $0.21 per diluted share, for the third quarter of
2004.
For the nine months ended September 30, 2005, the Company reported revenue
increased 29% to a record $390.7 million compared to $303.7 million for the
prior year period. Net income was $5.6 million compared to $9.1 million for the
same period in 2004, while earnings per share were $0.30 per diluted share
compared to $0.52 per diluted share.
"The results for the third quarter reflected a continued improvement in the
Company's operating performance," said Jeffrey T. Gill, president and chief
executive officer. "Revenue continued to increase while operating margins
expanded sequentially as the result of improved efficiencies and volume. Cash
flow from operations reached a record $24.5 million during the period, resulting
in free cash flow of $17.8 million as several major capital projects neared
completion."
"Net orders for the quarter reached a record $139.2 million, driven by an
83% increase in bookings from our Electronics Group. The outlook for our markets
in general remains positive, though we believe the significant increase in
energy costs and rising interest rates will have a dampening effect on both
demand and margins. In response to these factors, we will maintain a stringent
focus on process improvement and cost containment throughout the Company."
The Industrial Group
Revenue for our Industrial Group increased 20% to $94.5 million in the
third quarter from $78.4 million for the prior year period, and increased 5.4%
sequentially from the second quarter of this year. Gross profit for the quarter
was $7.3 million compared to $9.3 million for the same period in 2004 and
decreased 2.6% sequentially from the second quarter of this year as a result of
extended customer shutdowns early in the period to rebalance inventories.
"Net orders were $78.8 million for the quarter, while backlog increased 12%
to $131.9 million compared to the prior year quarter," said Gill. "Orders and
revenue were in line with our expectations for the quarter. We believe that we
have now reached the top of the current truck market cycle and expect shipments
during the coming quarters to remain relatively stable, subject to the number of
workdays in a quarter and any impact on the demand for commercial vehicles
related to rising energy costs and interest rates, or reductions in construction
spending and consumer demand, among others. Nevertheless, we continue to believe
that we are well positioned to benefit from the continued trend in outsourcing
by many of the Tier 1 suppliers as these customers implement initiatives to
improve efficiencies and reduce investments in non-core operations."
The Electronics Group
Revenue for our Electronics Group increased 16% to $46.3 million in the
third quarter compared to $40.0 million for the prior year period, and improved
29% sequentially from the second quarter of this year. Gross profit for the
quarter increased 21% to $8.3 million compared to $6.8 million for the same
period in 2004, reflecting improvements in data systems shipments and test and
measurement margins.
Revenue for the Aerospace & Defense segment increased 19% to $33.9 compared
to $28.4 million for the prior year period and increased 41% from the second
quarter of 2005. Revenue for the Test & Measurement segment increased 7% from
that of the prior year period at $12.4 million, and increased 5% sequentially
from the second quarter of this year. Gross profit for the Aerospace & Defense
segment increased 21% to $5.4 million from $4.5 million for the prior year
period, and increased 59% from the second quarter of 2005. Gross profit for the
Test & Measurement segment increased 22% to $2.9 million from $2.4 million for
the same period in 2004, but decreased slightly on a sequential basis from the
second quarter of this year.
"Net orders for our Electronics Group increased 83% to $60.4 million for
the quarter, while backlog remained firm at $121.0 million," said Gill. "The
increase in bookings for our Electronics Group represented a substantial
improvement over recent quarters and while we believe the opportunity for growth
in this important segment is improving, we will remain somewhat cautious in our
outlook until such time as we see a more defined trend in contract awards."
Outlook
Gill added, "Looking forward, we expect revenue for the fourth quarter of
2005 to be in the range of $135 to $140 million compared to $122 million for the
prior year period, which represents a 13% increase at the midpoint of our
guidance. Earnings for the fourth quarter are forecast to be in the range of
$0.12 to $0.15 per diluted share compared to a loss of $0.04 per diluted share
for the prior year. The revenue outlook reflects an increased degree of
conservatism regarding year-end shipments and the potential for customer
shutdowns during the holidays, while the earnings outlook incorporates the
impact of the reduced shipments, higher energy prices and rising interest
rates."
"Revenue for 2005 is forecast to be in the range of $525 to $530 million
compared to $425 million for 2004, which represents a 24% increase in revenue
for 2005 at the midpoint of the range. Earnings for 2005 are forecast to be in
the range of $0.42 to $0.45 per diluted share compared to $0.47 per diluted
share for 2004. As we look beyond the current year, we plan to issue guidance
for 2006 on Thursday, December 15, 2005, at which time we will convene a
conference call to field questions and address any comments."
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 test and
measurement services. For more information about Sypris Solutions, visit its Web
site at www.sypris.com.
This release, and oral statements referring hereto, contain
"forward-looking statements," from which actual results may differ materially
due to factors such as: cost and availability of raw materials such as steel,
components, freight, or utilities; cost and inefficiencies associated with
increasing our manufacturing capacity and launching new programs; stability and
predictability of customers' forecasts, backlogs or scheduling demands; costs
associated with breakdowns or repairs of machinery and equipment; growth beyond
our productive capacity, reductions, cyclical downturns or competitive pressures
in our markets; cost, efficiency and yield of our operations including overtime
costs, expediting costs or scrap rates; our ability to improve results of
acquired businesses and associated costs; inventory valuation risks; product
mix; changes in government or other customer programs; reliance on major
customers or suppliers; revised contract prices or estimates of major contract
costs; dependence on management; labor relations; risks of foreign operations;
currency exchange rates; costs and supply of debt, equity capital, or insurance;
significant increases in working capital; impairments or write-offs of goodwill
or fixed assets; pension valuation risks; changes in licenses, security
clearances, or other legal rights to operate, manage our work force or import
and export as needed; completion of the internal control assessment process;
costs of compliance with regulatory or contractual obligations; regulatory
actions or sanctions; litigation, including customer, creditor, stockholder,
environmental or asbestos-related claims; war, terrorism or political
uncertainty; disasters; unknown risks and uncertainties; or risk factors in our
SEC filings.
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SYPRIS SOLUTIONS, INC.
Financial Highlights
(In thousands, except per share amounts)
Three Months Ended
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Sept. 30, Sept. 30,
2005 2004
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Restated(1)
Revenue $140,811 $118,457
Net income $3,001 $3,791
Earnings per common share:
Basic $0.17 $0.21
Diluted $0.16 $0.21
Weighted average shares outstanding:
Basic 18,036 17,889
Diluted 18,423 18,306
Nine Months Ended
---------------------
Sept. 30, Sept. 30,
2005 2004
--------- ---------
Restated(1)
Revenue $390,654 $303,729
Net income $5,572 $9,100
Earnings per common share:
Basic $0.31 $0.54
Diluted $0.30 $0.52
Weighted average shares outstanding:
Basic 18,009 16,851
Diluted 18,328 17,504
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change increased previously reported earnings for the third quarter
and first nine months of 2004 by $304,000, or $0.02 per diluted share
and $230,000, or $0.01 per diluted share, respectively.
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Sypris Solutions, Inc.
Consolidated Income Statements
(in thousands, except for per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2004 2004
2005 Restated(1) 2005 Restated(1)
-------------------- ---------------------
(Unaudited) (Unaudited)
Net revenue:
Industrial Group $94,504 $78,429 $272,867 $185,102
Aerospace & Defense 33,866 28,350 81,957 83,715
Test & Measurement 12,441 11,678 35,830 34,912
----------- -------- ----------- ---------
Electronics Group 46,307 40,028 117,787 118,627
----------- -------- ----------- ---------
Total net revenue 140,811 118,457 390,654 303,729
Cost of sales:
Industrial Group 87,161 69,082 251,586 163,762
Aerospace & Defense 28,498 23,899 70,829 69,011
Test & Measurement 9,546 9,302 27,386 27,428
----------- -------- ----------- ---------
Electronics Group 38,044 33,201 98,215 96,439
----------- -------- ----------- ---------
Total cost of sales 125,205 102,283 349,801 260,201
Gross profit:
Industrial Group 7,343 9,347 21,281 21,340
Aerospace & Defense 5,368 4,451 11,128 14,704
Test & Measurement 2,895 2,376 8,444 7,484
----------- -------- ----------- ---------
Electronics Group 8,263 6,827 19,572 22,188
----------- -------- ----------- ---------
Total gross profit 15,606 16,174 40,853 43,528
Selling, general and
administrative 8,492 8,915 26,158 25,701
Research and development 767 1,084 2,384 2,483
Amortization of intangible
assets 161 145 474 411
----------- -------- ----------- ---------
Operating income 6,186 6,030 11,837 14,933
Interest expense, net 1,797 646 4,566 1,161
Other (income) expense, net (89) 15 (856) (91)
----------- -------- ----------- ---------
Income before income taxes 4,478 5,369 8,127 13,863
Income tax expense 1,477 1,578 2,555 4,763
----------- -------- ----------- ---------
Net income $3,001 $3,791 $5,572 $9,100
=========== ======== =========== =========
Earnings per common share:
Basic $0.17 $0.21 $0.31 $0.54
Diluted $0.16 $0.21 $0.30 $0.52
Dividends declared per
common share $0.03 $0.03 $0.09 $0.09
Weighted average shares
outstanding:
Basic 18,036 17,889 18,009 16,851
Diluted 18,423 18,306 18,328 17,504
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change increased previously reported earnings for the third quarter
and first nine months of 2004 by $304,000, or $0.02 per diluted share
and $230,000, or $0.01 per diluted share, respectively.
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Sypris Solutions, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
Dec. 31,
Sept. 30, 2004
2005 Restated(1)
----------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $22,505 $14,060
Accounts receivable, net 109,595 104,637
Inventory, net 98,997 92,016
Other current assets 17,790 21,566
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Total current assets 248,887 232,279
Property, plant and equipment, net 180,870 166,940
Goodwill 14,277 14,277
Other assets 22,996 17,682
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Total assets $467,030 $431,178
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $92,036 $61,778
Accrued liabilities 26,651 20,378
Current portion of long-term debt -- 7,000
----------- ---------
Total current liabilities 118,687 89,156
Long-term debt 112,000 110,000
Other liabilities 21,856 23,083
----------- ---------
Total liabilities 252,543 222,239
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; 18,164,058
and 17,920,500 shares issued and outstanding
in 2005 and 2004, respectively 182 179
Additional paid-in capital 143,336 140,898
Unearned compensation (1,335) --
Retained earnings 74,172 70,227
Accumulated other comprehensive loss (1,868) (2,365)
----------- ---------
Total stockholders' equity 214,487 208,939
----------- ---------
Total liabilities and stockholders' equity $467,030 $431,178
=========== =========
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change increased previously reported inventory, retained earnings and
other liabilities balances at December 31, 2004 by $2,224,000,
$1,503,000 and $721,000, respectively.
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Sypris Solutions, Inc.
Consolidated Cash Flow Statements
(in thousands)
Nine Months Ended
September 30,
--------------------
2004
2005 Restated(1)
---------- --------
(Unaudited)
Cash flows from operating activities:
Net income $5,572 $9,100
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 18,698 13,564
Other noncash charges 1,714 1,108
Changes in operating assets and liabilities,
net of acquisitions in 2004:
Accounts receivable (5,095) (49,139)
Inventory (8,006) (25,949)
Accounts payable 30,809 35,488
Accrued liabilities 6,542 4,574
Other (2,108) (2,800)
---------- --------
Net cash provided by (used in) operating
activities 48,126 (14,054)
Cash flows from investing activities:
Capital expenditures (32,776) (38,245)
Purchase of net assets of acquired entities -- (29,399)
Changes in nonoperating assets and liabilities (1,330) (33)
---------- --------
Net cash used in investing activities (34,106) (67,677)
Cash flows from financing activities:
Net repayments under revolving credit agreements (5,000) (30,550)
Proceeds from long-term debt -- 55,000
Cash dividends paid (1,619) (1,486)
Proceeds from issuance of common stock 1,044 57,080
---------- --------
Net cash (used in) provided by
financing activities (5,575) 80,044
Net increase (decrease) in cash and cash
equivalents 8,445 (1,687)
Cash and cash equivalents at beginning of period 14,060 12,019
---------- --------
Cash and cash equivalents at end of period $22,505 $10,332
========== ========
(1) On January 1, 2005, the Company changed its accounting policy
for inventory and cost of sales at one manufacturing facility. Prior
year amounts have been restated as required for comparability. The
change increased previously reported earnings for the third quarter
and first nine months of 2004 by $304,000, or $0.02 per diluted share
and $230,000, or $0.01 per diluted share, respectively.
CONTACT: Sypris Solutions, Inc.
T. Scott Hatton, 502-329-2000