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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): June 30, 2004
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Sypris Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-24020 61-1321992
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(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 June 30, 2004.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
The Registrant's press release dated June 30, 2004, reporting lower
earnings forecast for the second quarter and full year 2004, is attached as
Exhibit 99 to this Form 8-K, and is furnished to the U.S. Securities and
Exchange Commission pursuant to Regulation FD.
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: June 30, 2004 Sypris Solutions, Inc.
By: /s/ David D. Johnson
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David D. Johnson
Vice President and
Chief Financial Officer
2
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Registrant's press release dated June 30, 2004
Exhibit 99.1
Sypris Lowers Earnings Forecast for 2004;
Program Delays and Steel Deliveries Impact Outlook
LOUISVILLE, Ky.--(BUSINESS WIRE)--June 30, 2004--Sypris Solutions,
Inc. (Nasdaq/NM:SYPR) today reported that it is lowering its financial
outlook for the second quarter and full year 2004. The Company now
expects earnings for the second quarter to be in the range of $0.10 to
$0.12 per diluted share, based on 18.7 million weighted average shares
outstanding, compared to prior guidance of $0.21 to $0.23 per diluted
share. Revenue for the second quarter is expected to approximate $94
million versus a prior forecast of $96 to $99 million.
"Shipments to aerospace and defense customers failed to reach
planned levels," said Jeffrey T. Gill, president and chief executive
officer, "driven in large part by our customer's request to delay
planned shipments on the Apache helicopter program in order to upgrade
certain software, while rapidly escalating demand from truck component
customers resulted in considerable manufacturing inefficiencies as we
worked to adjust production schedules and capacity to coincide with
steel allocations and customer needs."
"In addition to delayed shipments on the Apache, we are seeing
signs that funds are increasingly being diverted from program accounts
to support the operating needs of our military. Planned sales on a
number of smaller government programs continue to be postponed and as
a result, we believe that it is prudent to establish a more
conservative outlook for this part of our business for 2004, at least
until such time as the flow of funds to a variety of programs resumes
on a more reliable basis."
Gill continued, "The outlook for our Industrial Group continued to
strengthen, with orders expected to increase 230% over the second
quarter of 2003 and 40% sequentially from the first quarter of this
year, as a result of the rapid growth in build rates for commercial
vehicles and the commencement of new long-term contracts in 2004.
Unfortunately, the timely delivery of steel has created a significant
operational challenge as we continue to strive to match rapidly rising
production schedules with intermittent steel deliveries. The resultant
overtime, shortened production runs and expedited shipments required
to support customer needs has had a material impact on margins in the
short-term."
"As we look to the balance of the year, the Company's top line for
2004 is now expected to be in the range of $405 to $415 million, which
represents a 63% increase at the midpoint of our guidance, with the
Industrial Group representing a greater percentage of the total than
in prior forecasts. Earnings per share are now expected to be in the
range of $0.70 to $0.80 per share compared to prior guidance of $0.95
to $1.05 per share and $0.56 per share for 2003, reflecting a gradual
improvement in production efficiencies as we move through the balance
of the year."
Gill added, "This revised outlook includes the expected impact of
the outsourcing agreement with Dana for business in Toluca, Mexico,
which was also announced today. This contract is expected to generate
an additional $7 to $8 million of revenue for Sypris during each of
the third and fourth quarters of this year, $45 to $50 million of
revenue during 2005 and $65 million of annual revenue upon reaching
full production. The earnings impact of the new contract is expected
to be negligible for 2004 as we incur certain transition expenses
associated with the absorption of the new operation, but is forecast
to contribute $0.10 to $0.12 per diluted share to earnings for 2005,
assuming 19.2 million weighted average shares outstanding.
"As we look beyond this year, the impact of new contract awards
with Dana and ArvinMeritor are expected to fuel the future growth of
the Company's top line, with preliminary revenue expectations in the
range of $480 to $500 million for 2005."
The Industrial Group
Revenue for our Industrial Group is forecast to increase 123% to
$56.0 million in the second quarter from $25.1 million for the prior
year period, and to increase 15% sequentially from the first quarter
of this year. These results are in line with expectations, but are
approximately $4.0 to $5.0 million less than internal targets,
primarily as a result of a lack of steel to produce product. Gross
profit for the quarter is expected to increase 78% to $5.9 million
from $3.3 million for the same period in 2003, but to decline
sequentially from $6.6 million in the first quarter of this year as a
result of the production inefficiencies mentioned earlier.
"Net orders are expected to increase 230% to a record $80 million
for the quarter, without including the initial orders from the Dana
Toluca transaction, while backlog is expected to increase 129% to a
record $107 million," said Gill. "The transition of the new contract
with ArvinMeritor, which began on May 3, 2004, has proceeded smoothly
and we are very pleased with the results of our new plant in Kenton,
Ohio. We expect the outlook for demand from customers in this segment
to continue to strengthen over the next couple of years, while the
recovery in margins will be somewhat dependent upon the smoothing out
of steel deliveries, which we hope will improve as we move through the
balance of this year."
The Electronics Group
Revenue for the Electronics Group is expected to decline to $37.0
million in the second quarter from $45.5 million for the prior year
period, and to decline 10% sequentially from the first quarter of this
year. These results reflect a $6.0 to $7.0 million shortfall to
internal targets and were driven by a request from Honeywell to delay
$6.0 million of planned shipments during the quarter for the Apache
helicopter program. Gross profit for the quarter is forecast to be
$7.1 million compared to $9.7 million for the prior year period, and
down from $7.9 million in the first quarter of 2004, primarily as a
result of the decline in revenue.
Gill said, "The quarter is expected to be a challenging one for
our Electronics Group. The delay of $6.0 million of planned shipments
to Honeywell was disappointing, but understandable. Honeywell was
asked to upgrade certain software functions in the avionics package as
a result of the military's experience with the Apache in Iraq and
Honeywell has temporarily reduced demand for our components until the
upgrade is complete. Recovery of these delayed shipments is now
expected to occur during the first half of 2005."
A conference call is scheduled for Wednesday, June 30, 2004, at
5:30 p.m. Eastern Time to discuss the content of this release. The
call can be accessed live via the Internet. Visit www.sypris.com or
www.fulldisclosure.com for the link to the call or to listen to a
replay of the call, which will be available for 30 days.
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 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; the ability to successfully integrate
past and future business combinations; competitive factors and price
pressures; availability of raw materials such as steel or third party
component parts on a timely basis 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 reports filed with the Securities and
Exchange Commission.
CONTACT: Sypris Solutions Inc., Louisville
David D. Johnson, 502-329-2000