Sypris Reports Third Quarter Results
Sypris Solutions, Inc. (Nasdaq/NM: SYPR) today reported financial
results for its third quarter ended October 4, 2015.
HIGHLIGHTS
For the Third Quarter:
-
The Company’s gross margin increased to 6.4% of revenue, up
sequentially from losses of 0.1% and 8.5% for the second and first
quarters of 2015, respectively.
-
The Company generated $15.7 million in cash proceeds through
transactions involving the sale of its manufacturing assets located in
Morganton, North Carolina.
-
The Company reported a loss of $0.01 per share, up sequentially from a
loss of $0.43 per share for the second quarter, reflecting improved
operating performance, lower costs and the gain on the sale of the
Morganton assets.
-
The Company announced the commissioning its Cyber Range in the
Security Operations Center of the Ministry of Home Affairs for
Singapore, recognizing $2.0 million of revenue during the quarter.
-
Subsequent to quarter end, the Company:
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Secured a new lending facility of $27.0 million, replacing the
Company’s previous $8.5 million senior revolving credit facility;
-
Received a purchase order from NEC Corporation for the acquisition
of a Sypris Cyber Range for use in cyber threat competency
evaluation and response training; and
-
Entered into a long-term contract with Detroit Diesel Corporation,
a subsidiary of Daimler Trucks North America, to supply the Sypris
Ultra™ series lightweight axle shaft for use in Detroit™ Axles.
-
Announced that it had entered into a long-term contract with Volvo
Group North America LLC and Mack Trucks, Inc. for the supply of
axle shafts for use on Volvo’s Mack branded axle through 2018.
The Company reported revenue of $38.4 million for the third quarter
compared to $90.2 million for the prior year period, reflecting the
cessation of our shipments to Dana Holding Corporation as of December
31, 2014. Additionally, the Company reported a net loss of $0.3 million,
or $0.01 per share, as compared to a net loss of $1.2 million, or
$0.06 per share, for the prior year comparable period.
For the nine months ended October 4, 2015, the Company reported revenue
of $116.2 million compared to $267.6 million for the first nine months
of 2014. The Company reported a net loss for the nine months ended
October 4, 2015 of $21.7 million, or $1.10 per share, as compared to net
income of $0.9 million, or $0.04 per diluted share, for the prior year
comparable period. The results for the three and nine months ended
October 4, 2015 include a gain of $7.7 million from the Morganton sale
partially offset by a non-cash charge of $2.4 million to reserve our net
deferred tax asset in Mexico.
“Sypris Technologies continued to adjust manpower and overhead expenses
to reflect the cessation of shipments to Dana, while optimizing our
ability to bring in potential new business,” said Jeffrey T. Gill,
president and chief executive officer. “We believe that these
adjustments and reduced SG&A spending will make a positive contribution
to the Company’s overall financial performance during the remainder of
2015.”
“We previously announced the sale on July 9, 2015 of certain assets used
in our manufacturing facility in Morganton, North Carolina, to Meritor
Heavy Vehicles Systems, LLC. The Morganton facility was impacted by the
loss of the Dana business, leaving the majority of the facility
dedicated to Meritor which generated a strategic opportunity for both
parties culminating in the sale. The proceeds from the sale were used to
reduce the Company’s indebtedness, thereby improving the overall
strength of its balance sheet going forward.”
“As we look to the future, we will continue to review alternatives for
further improving our margins, business mix and return on assets,” Mr.
Gill continued.
Sypris Technologies
Revenue for Sypris Technologies decreased 66.3% to $27.8 million in the
third quarter compared to $82.6 million for the prior year period,
primarily as a result of the cessation of the Dana business, which
represented approximately 59% of our business in the prior year. Gross
profit for the quarter was $2.0 million, compared to $9.3 million for
the same period in 2014. On a sequential basis, revenue decreased 13%
from $32.0 million in the second quarter, while gross profit increased
$1.4 million to $2.0 million, from $0.6 million in the second quarter of
this year.
Sypris Electronics
Revenue for Sypris Electronics was $10.6 million in the third quarter of
2015 compared to $7.6 million in the prior year period, reflecting the
revenue associated with the commissioning of the Cyber Range and an
increase in product sales during the quarter. Gross profit for the
quarter was $0.5 million, compared to a loss of $1.1 million for the
same period in 2014.
Outlook
Mr. Gill added, “We will continue to concentrate on daily execution
within both of our businesses. Within Sypris Technologies, our legal
dispute with Dana remains unresolved, and since the beginning of 2015,
shipments to Dana have been minimal. New program launches and cost
reductions are anticipated to have a positive impact on income and cash
flow in future periods. Sypris Electronics will continue to face
near-term revenue challenges until such time as new programs, products
and cyber related services achieve sufficient traction to offset the
ongoing defense spending uncertainty.”
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; 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; reliance on
major customers or suppliers; 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 creditor, landlord, lessor, supplier,
customer, employee, stockholder, product liability or environmental
claims; our ability to successfully develop, launch or sustain new
products and programs; dependence on, retention or recruitment of key
employees especially in challenging markets; 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 due to negative due diligence findings or other
factors; declining revenues and backlog in our Sypris Electronics
business lines as we attempt to transition from legacy products and
services into new market segments and technologies; 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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|
Three Months Ended
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|
|
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|
|
October 4,
|
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September 28,
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
|
$
|
38,437
|
|
|
|
$
|
90,204
|
|
Net loss
|
|
|
|
|
|
$
|
(274
|
)
|
|
|
$
|
(1,159
|
)
|
Loss per common share:
|
|
|
|
|
|
|
|
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|
Basic
|
|
|
|
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$
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(0.01
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)
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|
|
$
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(0.06
|
)
|
|
Diluted
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.06
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
19,654
|
|
|
|
|
19,612
|
|
|
Diluted
|
|
|
|
|
|
|
19,654
|
|
|
|
|
19,612
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
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|
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|
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|
|
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|
|
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Nine Months Ended
|
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|
|
|
|
|
|
October 4,
|
|
|
September 28,
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
|
|
$
|
116,202
|
|
|
|
$
|
267,561
|
|
Net (loss) income
|
|
|
|
|
|
$
|
(21,723
|
)
|
|
|
$
|
863
|
|
(Loss) income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
$
|
(1.10
|
)
|
|
|
$
|
0.04
|
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Diluted
|
|
|
|
|
|
|
(1.10
|
)
|
|
|
|
0.04
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
19,684
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|
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|
|
19,564
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|
|
Diluted
|
|
|
|
|
|
|
19,684
|
|
|
|
|
19,607
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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
|
|
|
Nine Months Ended
|
|
|
|
|
October 4,
|
|
|
September 28,
|
|
October 4,
|
|
|
September 28,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Group
|
|
$
|
27,824
|
|
|
|
$
|
82,555
|
|
|
|
$
|
87,904
|
|
|
|
$
|
242,104
|
|
Electronics Group
|
|
|
10,613
|
|
|
|
|
7,649
|
|
|
|
|
28,298
|
|
|
|
|
25,457
|
|
Total net revenue
|
|
|
38,437
|
|
|
|
|
90,204
|
|
|
|
|
116,202
|
|
|
|
|
267,561
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Group
|
|
|
25,851
|
|
|
|
|
73,256
|
|
|
|
|
89,454
|
|
|
|
|
210,268
|
|
Electronics Group
|
|
|
10,118
|
|
|
|
|
8,739
|
|
|
|
|
27,471
|
|
|
|
|
27,693
|
|
Total cost of sales
|
|
|
35,969
|
|
|
|
|
81,995
|
|
|
|
|
116,925
|
|
|
|
|
237,961
|
|
Gross profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Group
|
|
|
1,973
|
|
|
|
|
9,299
|
|
|
|
|
(1,550
|
)
|
|
|
|
31,836
|
|
Electronics Group
|
|
|
495
|
|
|
|
|
(1,090
|
)
|
|
|
|
827
|
|
|
|
|
(2,236
|
)
|
Total gross profit (loss)
|
|
|
2,468
|
|
|
|
|
8,209
|
|
|
|
|
(723
|
)
|
|
|
|
29,600
|
|
Selling, general and administrative
|
|
|
5,969
|
|
|
|
|
8,273
|
|
|
|
|
22,414
|
|
|
|
|
25,406
|
|
Research and development
|
|
|
119
|
|
|
|
|
116
|
|
|
|
|
647
|
|
|
|
|
277
|
|
Severance
|
|
|
457
|
|
|
|
|
-
|
|
|
|
|
1,023
|
|
|
|
|
-
|
|
Operating (loss) income
|
|
|
(4,077
|
)
|
|
|
|
(180
|
)
|
|
|
|
(24,807
|
)
|
|
|
|
3,917
|
|
Interest expense, net
|
|
|
1,783
|
|
|
|
|
179
|
|
|
|
|
3,271
|
|
|
|
|
466
|
|
Other income, net
|
|
|
(7,841
|
)
|
|
|
|
(397
|
)
|
|
|
|
(8,595
|
)
|
|
|
|
(850
|
)
|
Income loss before taxes
|
|
|
1,981
|
|
|
|
|
38
|
|
|
|
|
(19,483
|
)
|
|
|
|
4,301
|
|
Income tax expense, net
|
|
|
2,255
|
|
|
|
|
1,197
|
|
|
|
|
2,240
|
|
|
|
|
3,438
|
|
Net (loss) income
|
|
$
|
(274
|
)
|
|
|
$
|
(1,159
|
)
|
|
|
$
|
(21,723
|
)
|
|
|
$
|
863
|
|
(Loss) income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
(1.10
|
)
|
|
|
$
|
0.04
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
(1.10
|
)
|
|
|
$
|
0.04
|
|
Dividends declared per common share
|
|
$
|
-
|
|
|
|
$
|
0.02
|
|
|
|
$
|
-
|
|
|
|
$
|
0.06
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,654
|
|
|
|
|
19,612
|
|
|
|
|
19,684
|
|
|
|
|
19,564
|
|
Diluted
|
|
|
19,654
|
|
|
|
|
19,612
|
|
|
|
|
19,684
|
|
|
|
|
19,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Sypris Solutions, Inc.
|
Consolidated Balance Sheets
|
(in thousands, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 4,
|
|
|
December 31,
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Note)
|
ASSETS
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,773
|
|
|
|
$
|
7,003
|
|
Accounts receivable, net
|
|
|
13,647
|
|
|
|
|
47,666
|
|
Inventory, net
|
|
|
23,348
|
|
|
|
|
29,031
|
|
Other current assets
|
|
|
4,829
|
|
|
|
|
5,666
|
|
Total current assets
|
|
|
43,597
|
|
|
|
|
89,366
|
|
Property, plant and equipment, net
|
|
|
26,464
|
|
|
|
|
37,654
|
|
Other assets
|
|
|
2,613
|
|
|
|
|
2,661
|
|
Total assets
|
|
$
|
72,674
|
|
|
|
$
|
129,681
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
12,821
|
|
|
|
$
|
39,027
|
|
Accrued liabilities
|
|
|
13,022
|
|
|
|
|
18,775
|
|
Current portion of long-term debt
|
|
|
2,893
|
|
|
|
|
17,000
|
|
Total current liabilities
|
|
|
28,736
|
|
|
|
|
74,802
|
|
|
|
|
|
|
|
|
|
|
|
Note payable - Meritor
|
|
|
3,780
|
|
|
|
|
-
|
|
Note payable - related party
|
|
|
5,500
|
|
|
|
|
-
|
|
Long-term debt
|
|
|
3,369
|
|
|
|
|
-
|
|
Other liabilities
|
|
|
7,532
|
|
|
|
|
7,991
|
|
Total liabilities
|
|
|
48,917
|
|
|
|
|
82,793
|
|
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; 20,826,236 shares issued and 20,788,544 outstanding in
2015 and 20,567,735 shares issued and 20,485,043 outstanding in
2014
|
|
|
208
|
|
|
|
|
206
|
|
Additional paid-in capital
|
|
|
151,952
|
|
|
|
|
151,314
|
|
Retained deficit
|
|
|
(101,319
|
)
|
|
|
|
(79,596
|
)
|
Accumulated other comprehensive loss
|
|
|
(27,083
|
)
|
|
|
|
(25,035
|
)
|
Treasury stock, 37,692 and 82,692 shares in 2015 and 2014,
respectively
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
Total stockholders’ equity
|
|
|
23,757
|
|
|
|
|
46,888
|
|
Total liabilities and stockholders’ equity
|
|
$
|
72,674
|
|
|
|
$
|
129,681
|
|
|
|
|
|
|
|
|
|
|
|
Note: The balance sheet at December 31, 2014 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 4,
|
|
|
September 28,
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$
|
(21,723
|
)
|
|
|
$
|
863
|
|
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
7,022
|
|
|
|
|
7,987
|
|
Deferred income taxes
|
|
|
|
2,436
|
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
717
|
|
|
|
|
1,235
|
|
Deferred revenue recognized
|
|
|
|
(4,200
|
)
|
|
|
|
(6,493
|
)
|
Deferred loan costs recognized
|
|
|
|
1,929
|
|
|
|
|
58
|
|
Gain on the sale of assets
|
|
|
|
(7,423
|
)
|
|
|
|
(4
|
)
|
Provision for excess and obsolete inventory
|
|
|
|
1,305
|
|
|
|
|
897
|
|
Other noncash items
|
|
|
|
(1,478
|
)
|
|
|
|
(135
|
)
|
Contributions to pension plans
|
|
|
|
(315
|
)
|
|
|
|
(907
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
23,384
|
|
|
|
|
(23,041
|
)
|
Inventory
|
|
|
|
2,154
|
|
|
|
|
(1,955
|
)
|
Prepaid expenses and other assets
|
|
|
|
(4,332
|
)
|
|
|
|
(835
|
)
|
Accounts payable
|
|
|
|
(12,051
|
)
|
|
|
|
22,993
|
|
Accrued and other liabilities
|
|
|
|
860
|
|
|
|
|
5,376
|
|
Net cash (used in) provided by operating activities
|
|
|
|
(11,715
|
)
|
|
|
|
6,039
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(1,155
|
)
|
|
|
|
(4,462
|
)
|
Proceeds from sale of assets
|
|
|
|
15,700
|
|
|
|
|
8
|
|
Net cash provided by (used in) investing activities
|
|
|
|
14,545
|
|
|
|
|
(4,454
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Net change in debt under Credit Facility
|
|
|
|
(10,738
|
)
|
|
|
|
1,000
|
|
Proceeds from related party note payable
|
|
|
|
5,500
|
|
|
|
|
-
|
|
Debt modification costs
|
|
|
|
(2,335
|
)
|
|
|
|
-
|
|
Common stock repurchases
|
|
|
|
-
|
|
|
|
|
(357
|
)
|
Indirect repurchase of shares for minimum statutory tax withholdings
|
|
|
|
(77
|
)
|
|
|
|
(420
|
)
|
Cash dividends paid
|
|
|
|
(410
|
)
|
|
|
|
(1,225
|
)
|
Proceeds from issuance of common stock
|
|
|
|
-
|
|
|
|
|
4
|
|
Net cash used in financing activities
|
|
|
|
(8,060
|
)
|
|
|
|
(998
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
(5,230
|
)
|
|
|
|
587
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
7,003
|
|
|
|
|
18,674
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
1,773
|
|
|
|
$
|
19,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151117005586/en/ Copyright Business Wire 2015
Source: Business Wire
(November 17, 2015 - 7:45 AM EST)
News by QuoteMedia
www.quotemedia.com
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