Sypris Reports First Quarter Results
Electronics Business Reports Orders of $29.0 Million
Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial
results for its first quarter ended April 3, 2016.
HIGHLIGHTS
-
Revenue for the Company was $26.9 million, reflecting a reduction in
demand for commercial vehicles and the rebalancing of inventory by
certain customers.
-
Gross profit increased $3.9 million, reflecting the adjustment in our
fixed overhead structure within Sypris Technologies and an improvement
in product mix within Sypris Electronics.
-
Revenue and gross profit for Sypris Electronics increased $0.2 million
and $0.4 million, respectively, from the first quarter of 2015.
-
Sypris Electronics booked $29.0 million in multi-year orders for the
first quarter of 2016 as compared to $4.6 million for the comparable
period in 2015.
-
The Company completed a sale-leaseback transaction for its
underutilized manufacturing facility located in Toluca, Mexico,
generating gross proceeds of approximately $12.2 million.
-
The Company amended its revolving credit facility to provide
additional availability for use in the Company’s operations.
The Company reported revenue of $26.9 million for the first quarter
compared to $37.0 million for the prior year period. Additionally, the
Company reported a net loss of $5.1 million, or $0.26 per share, as
compared to a loss of $13.0 million, or $0.66 per share, for the prior
year comparable period.
“Sypris Electronics continued its efforts to diversify its portfolio of
products and services in response to the challenges posed by the U.S.
defense industry,” said Jeffrey T. Gill, president and chief executive
officer. “During the first quarter of 2016, we saw significant
year-over-year improvement, with multi-year orders increasing to
$29.0 million during the quarter from $4.6 million for the prior year
period. We are pleased to note that the strength in orders was across
the board, including demand for our legacy products, trusted
manufacturing, engineering services, and new technologies where the
Sypris Cyber Range continues to gain important momentum, and our
patented identity authentication solution, SiOMetrics™, is being
evaluated for use in a variety of applications to secure automotive,
industrial automation and smart cities projects. Progress within these
platforms represents an important step towards the achievement of our
long-term margin expansion and diversification objectives.”
“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 36.5% to $17.8 million in the
first quarter of 2016 compared to $28.1 million for the prior year
period, primarily as a result of softness in the commercial vehicle
industry and the divestiture of the Morganton, North Carolina facility
in July 2015. Gross profit for the quarter was a loss of $0.7 million,
compared to a loss of $4.1 million for the same period in 2015.
Sypris Electronics
Revenue for Sypris Electronics was $9.1 million in the first quarter of
2016 compared to $8.9 million in the prior year period, reflecting new
cyber related sales and an increase in product sales. Partially
offsetting this was a decrease in electronic manufacturing services due
to the completion of a program in 2015. Gross profit for the quarter was
$1.4 million, compared to $0.9 million for the prior year period,
primarily reflecting a favorable mix in sales of higher margin products
and services in addition to a reduction in the overhead structure.
Outlook
Mr. Gill added, “We will continue to concentrate on daily execution
within both of our businesses. 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. Sypris Electronics has continued to invest in a
number of product development projects and is encouraged by the award of
a significant engineering services contract in the defense sector during
the first quarter.”
Sypris Solutions is a diversified provider of outsourced services and
specialty products. The Company performs a wide range of manufacturing,
engineering, design and other technical services, typically under
multi-year, sole-source contracts with corporations and government
agencies in the markets for truck components and assemblies and
aerospace and defense electronics. For more information about Sypris
Solutions, visit its Web site at www.sypris.com.
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 SEC filings.
Briefly, we currently believe that such risks also include the
following: our failure to develop and implement plans to mitigate the
impact of loss of revenues from Dana or to adequately diversify our
revenue sources on a timely basis; orders received may be cancelled or
delayed by our customers, and even if we have a contractual right to
manufacture and ship such orders, we must balance such rights against
our longer term customer relationships; reliance on major customers or
suppliers, including the renewal of significant contracts or the
continued provision of trade credit terms despite concerns about our
financial condition or liquidity; declining markets or market share in
our commercial vehicle and energy-related product lines, especially as
we attempt to transition from legacy products and services into new
market segments, customers and technologies; the fees, costs and supply
of, or access to, debt, equity capital, or other sources of liquidity,
including the potentially material costs of our compliance with
covenants in, or the potential default under or acceleration of, our new
credit facilities; volatility of our customers’ forecasts, scheduling
demands and production levels which negatively impact our operational
capacity and our effectiveness to integrate new customers or suppliers;
dependence on, retention or recruitment of key employees especially in
challenging markets; the cost, quality, timeliness, efficiency and yield
of our operations and capital investments, including working capital,
production schedules, cycle times, scrap rates, injuries, wages,
overtime costs, freight or expediting costs; disputes or litigation
involving lessor, supplier, customer, employee, landlord, creditor,
stockholder, product liability or environmental claims; our ability to
successfully develop, launch or sustain new products and programs;
inventory valuation risks including excessive or obsolescent valuations;
potential impairments, non-recoverability or write-offs of assets or
deferred costs; our inability to successfully complete definitive
agreements for our targeted acquisitions or divestitures due to negative
due diligence findings or other factors; the costs of compliance with
our auditing, regulatory or contractual obligations; our inability to
patent or otherwise protect our inventions or other intellectual
property from potential competitors; our reliance on third party vendors
and sub-suppliers; adverse impacts of new technologies or other
competitive pressures which increase our costs or erode our margins;
cost and availability of raw materials such as steel, component parts,
natural gas or utilities; regulatory actions or sanctions (including
FCPA, OSHA and Federal Acquisition Regulations, among others); potential
weaknesses in internal controls over financial reporting and enterprise
risk management; U.S. government spending on products and services that
Sypris Electronics provides, including the timing of budgetary
decisions; changes in licenses, security clearances, or other legal
rights to operate, manage our work force or import and export as needed;
breakdowns, relocations or major repairs of machinery and equipment;
pension valuation, health care or other benefit costs; labor relations;
strikes; union negotiations; cyber security threats and disruptions;
changes or delays in customer budgets, funding or programs; failure to
adequately insure or to identify environmental or other insurable risks;
revised contract prices or estimates of major contract costs; risks of
foreign operations; currency exchange rates; war, terrorism, or
political uncertainty; unanticipated or uninsured disasters, losses or
business risks; inaccurate data about markets, customers or business
conditions; or unknown risks and uncertainties.
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SYPRIS SOLUTIONS, INC.
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Financial Highlights
|
(In thousands, except per share amounts)
|
|
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|
|
|
|
|
|
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|
|
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|
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Three Months Ended
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April 3,
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April 5,
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|
|
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2016
|
|
|
2015
|
|
|
|
|
|
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|
(Unaudited)
|
Revenue
|
|
|
|
|
|
$
|
26,938
|
|
|
|
$
|
37,009
|
|
Net loss
|
|
|
|
|
|
$
|
(5,099
|
)
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|
|
$
|
(13,033
|
)
|
Loss per common share:
|
|
|
|
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Basic
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|
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|
|
|
$
|
(0.26
|
)
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|
|
$
|
(0.66
|
)
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|
Diluted
|
|
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|
|
|
|
(0.26
|
)
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|
|
|
(0.66
|
)
|
Weighted average shares outstanding:
|
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|
Basic
|
|
|
|
|
|
|
19,702
|
|
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|
|
19,650
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|
Diluted
|
|
|
|
|
|
|
19,702
|
|
|
|
|
19,650
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|
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|
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Sypris Solutions, Inc.
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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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April 3,
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April 5,
|
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|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
(Unaudited)
|
Net revenue:
|
|
|
|
|
|
|
|
|
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|
Sypris Technologies
|
|
|
|
|
|
$
|
17,827
|
|
|
|
$
|
28,070
|
|
Sypris Electronics
|
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|
|
|
|
|
|
9,111
|
|
|
|
|
8,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total net revenue
|
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26,938
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37,009
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Cost of sales:
|
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Sypris Technologies
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18,483
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|
32,174
|
|
Sypris Electronics
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|
7,728
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|
7,992
|
|
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|
|
|
|
|
|
|
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Total cost of sales
|
|
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|
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26,211
|
|
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|
40,166
|
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|
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Gross profit (loss):
|
|
|
|
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|
|
|
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|
Sypris Technologies
|
|
|
|
|
|
|
(656
|
)
|
|
|
|
(4,104
|
)
|
Sypris Electronics
|
|
|
|
|
|
|
|
1,383
|
|
|
|
|
947
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Total gross profit
|
|
|
|
|
|
|
|
727
|
|
|
|
|
(3,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
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Selling, general and administrative
|
|
|
|
|
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6,503
|
|
|
|
|
9,118
|
|
Research and development
|
|
|
|
|
|
|
124
|
|
|
|
|
333
|
|
Severance and equipment relocation costs
|
|
|
|
|
|
|
484
|
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
|
|
|
|
|
(6,384
|
)
|
|
|
|
(12,893
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
876
|
|
|
|
|
334
|
|
Other income, net
|
|
|
|
|
|
|
|
(2,162
|
)
|
|
|
|
(179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes
|
|
|
|
|
|
|
(5,098
|
)
|
|
|
|
(13,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit), net
|
|
|
|
|
|
|
1
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
$
|
(5,099
|
)
|
|
|
$
|
(13,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
$
|
(0.26
|
)
|
|
|
$
|
(0.66
|
)
|
Diluted
|
|
|
|
|
|
|
$
|
(0.26
|
)
|
|
|
$
|
(0.66
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
19,702
|
|
|
|
|
19,650
|
|
Diluted
|
|
|
|
|
|
|
|
19,702
|
|
|
|
|
19,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sypris Solutions, Inc.
|
Consolidated Balance Sheets
|
(in thousands, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3,
|
|
|
December 31,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Note)
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
2,306
|
|
|
|
$
|
1,349
|
|
Restricted cash - current
|
|
|
|
|
|
6,000
|
|
|
|
|
-
|
|
Accounts receivable, net
|
|
|
|
|
|
13,470
|
|
|
|
|
12,394
|
|
Inventory, net
|
|
|
|
|
|
|
20,795
|
|
|
|
|
20,192
|
|
Other current assets
|
|
|
|
|
|
|
3,410
|
|
|
|
|
4,459
|
|
Assets held for sale
|
|
|
|
|
|
|
-
|
|
|
|
|
3,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
45,981
|
|
|
|
|
41,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
24,158
|
|
|
|
|
22,178
|
|
Other assets
|
|
|
|
|
|
|
|
3,242
|
|
|
|
|
3,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
73,381
|
|
|
|
$
|
66,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
$
|
10,276
|
|
|
|
$
|
11,311
|
|
Accrued liabilities
|
|
|
|
|
|
|
14,750
|
|
|
|
|
11,661
|
|
Revolving credit facility
|
|
|
|
|
|
|
2,581
|
|
|
|
|
2,132
|
|
Current portion of long-term debt and capital lease obligations
|
|
|
|
1,906
|
|
|
|
|
1,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
29,513
|
|
|
|
|
26,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and capital lease obligations
|
|
|
|
|
11,208
|
|
|
|
|
8,780
|
|
Note payable - related party
|
|
|
|
|
|
6,500
|
|
|
|
|
5,500
|
|
Other liabilities
|
|
|
|
|
|
|
|
11,214
|
|
|
|
|
6,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
58,435
|
|
|
|
|
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; 21,311,736 shares issued and 21,265,044 outstanding in
2016 and 20,826,236 shares issued and 20,776,544 outstanding in
2015
|
|
|
|
213
|
|
|
|
|
208
|
|
Additional paid-in capital
|
|
|
|
|
|
|
152,435
|
|
|
|
|
152,077
|
|
Accumulated deficit
|
|
|
|
|
|
|
(111,911
|
)
|
|
|
|
(106,812
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(25,790
|
)
|
|
|
|
(25,760
|
)
|
Treasury stock, 46,692 and 49,692 shares in 2016 and 2015,
respectively
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
|
|
|
14,946
|
|
|
|
|
19,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
|
|
$
|
73,381
|
|
|
|
$
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
April 3,
|
|
|
April 5,
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
(Unaudited)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
$
|
(5,099
|
)
|
|
|
$
|
(13,033
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
1,953
|
|
|
|
|
2,180
|
|
Stock-based compensation expense
|
|
|
|
|
363
|
|
|
|
|
206
|
|
Deferred revenue recognized
|
|
|
|
|
-
|
|
|
|
|
(2,170
|
)
|
Deferred loan costs recognized
|
|
|
|
|
205
|
|
|
|
|
77
|
|
Gain on the sale of assets
|
|
|
|
|
|
(2,370
|
)
|
|
|
|
-
|
|
Provision for excess and obsolete inventory
|
|
|
|
25
|
|
|
|
|
82
|
|
Other noncash items
|
|
|
|
|
|
137
|
|
|
|
|
(183
|
)
|
Contributions to pension plans
|
|
|
|
|
-
|
|
|
|
|
(77
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
(1,066
|
)
|
|
|
|
17,303
|
|
Inventory
|
|
|
|
|
|
|
(630
|
)
|
|
|
|
(1,047
|
)
|
Prepaid expenses and other assets
|
|
|
|
|
423
|
|
|
|
|
(691
|
)
|
Accounts payable
|
|
|
|
|
|
(1,048
|
)
|
|
|
|
(7,046
|
)
|
Accrued and other liabilities
|
|
|
|
|
2,397
|
|
|
|
|
(916
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
|
(4,710
|
)
|
|
|
|
(5,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(40
|
)
|
|
|
|
(295
|
)
|
Proceeds from sale of assets
|
|
|
|
|
|
11,066
|
|
|
|
|
-
|
|
Change in restricted cash
|
|
|
|
|
|
(6,000
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
5,026
|
|
|
|
|
(295
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Principal payments on Term Loan
|
|
|
|
|
(429
|
)
|
|
|
|
-
|
|
Proceeds from related party note payable
|
|
|
|
|
1,000
|
|
|
|
|
4,000
|
|
Net change in debt under New Revolving Credit Agreement
|
|
|
449
|
|
|
|
|
-
|
|
Net change in debt under Credit Facility
|
|
|
|
|
-
|
|
|
|
|
(1,051
|
)
|
Debt issuance and modification costs
|
|
|
|
|
(379
|
)
|
|
|
|
(440
|
)
|
Indirect repurchase of shares for minimum statutory tax withholdings
|
|
|
-
|
|
|
|
|
(77
|
)
|
Cash dividends paid
|
|
|
|
|
|
-
|
|
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
|
641
|
|
|
|
|
2,022
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
957
|
|
|
|
|
(3,588
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
1,349
|
|
|
|
|
7,003
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
2,306
|
|
|
|
$
|
3,415
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160518005173/en/ Copyright Business Wire 2016
Source: Business Wire
(May 18, 2016 - 7:00 AM EDT)
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