Revenue Up 17%; Backlog Exceeds $115
Million
Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported
financial results for its fourth quarter and full-year ended
December 31, 2023.
HIGHLIGHTS
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- Consolidated revenue for the quarter increased
16.9% and 23.7% for the full year driven by double digit expansion
of shipments across both segments.
- Revenue for Sypris Electronics increased 25.2%
and 42.7% for the quarter and full year, respectively, reflecting
the continued growth in demand from customers serving the markets
for Electronic Warfare, Aircraft and Missile Avionics, and Subsea
Communications.
- Revenue for Sypris Technologies increased
10.8% and 12.5% for the quarter and full year, respectively,
resulting from increased demand from customers serving the
Commercial Vehicle, Specialty Automotive and Energy markets.
- During the quarter, Sypris Electronics
announced that it had received two multimillion-dollar follow-on
contract awards from a U.S. global defense contractor for the
full-rate production of advanced integrated electronic warfare and
communications avionics system modules for one of the largest
Government DoD programs. Sypris also received releases for the
first year of production with shipments scheduled to continue into
mid-year 2025.
- Sypris Electronics also announced a follow-on
award from a U.S. DoD prime contractor for a secure communications
infrastructure program. Sypris will produce and test the embedded
circuit card assemblies that will perform certain cryptographic
functions for the Army Key Management System. Production is
expected to begin in 2024.
- Subsequent to quarter end, Sypris Technologies
received an award to supply specialty high-pressure closures for
use in a large international liquified natural gas project. The
closures will be integrated into the filtration systems of the
carbon capture and storage facilities of the project. Production is
expected to be completed during 2024.
- The outlook for 2024 remains positive, with
revenue now expected to increase 10-15% year-over-year, reflecting
the continued momentum of new contract awards and strong backlog
across many of the Company’s markets. We expect gross profit to
increase 20-25% for 2024, while gross margin is forecast to expand
150-175 basis points on a year-over-year basis.
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“We continued to expand across all segments of our business
during the fourth quarter. Material shortages and the disruptions
associated with new program launches are abating, and our focus is
clearly on meeting the growing demand of our customers,” commented
Jeffrey T. Gill, President and Chief Executive Officer.
“The backlog in excess of $110 million for Sypris Electronics is
expected to support revenue growth through 2024 and beyond.
Customer funding has already been secured for a portion of these
key programs, which enables us to procure inventory under
multi-year purchase orders to mitigate future supply chain
issues.
“Overall demand from customers serving the automotive,
commercial vehicle, sport utility and off-highway markets has
remained solid. We continue to invest in new equipment, maintain or
upgrade existing assets, and drive continuous improvement
initiatives to add capacity and support more cost-efficient
operations in the future.
“Orders for our energy products remain positive, with open
quotes outstanding on several large projects. Additional
opportunities for growth may exist with new projects globally in
support of increasing LNG demand. We are also actively pursuing
applications for our products in adjacent markets to further
diversify our industry and customer portfolios.”
Fourth Quarter and Full-Year Results
The Company reported revenue of $34.7 million for the fourth
quarter ended December 31, 2023, compared to $29.7 million for the
prior-year comparable period. The Company incurred a net loss of
$1.1 million, or $0.05 per diluted share, compared to net income of
$0.1 million, or $0.01 per diluted share, for the prior-year
period.
For the full-year 2023, the Company reported revenue of $136.2
million compared with $110.1 million for the prior year. The
Company reported a net loss of $1.6 million, or $0.07 per share,
for 2023 compared with a net loss of $2.5 million, or $0.11 per
diluted share, for the prior year.
Sypris Technologies
Revenue for Sypris Technologies increased to $19.0 million in
the fourth quarter of 2023, compared to $17.2 million for the
prior-year period, due to steel price increase pass-throughs. Gross
profit for the fourth quarter of 2023 was $3.1 million, or 16.3% of
revenue, compared to $2.2 million, or 12.9% of revenue, for the
same period in 2022. Gross profit for the fourth quarter of 2023
was favorably impacted by a customer payment for negative material
surcharges and foreign exchange impacts on its contract with Sypris
Technologies, offset by production inefficiencies driven by
volatile customer demand schedules.
Sypris Electronics
Revenue for Sypris Electronics increased to $15.7 million in the
fourth quarter of 2023 compared to $12.5 million for the prior-year
period. Gross profit for the fourth quarter of 2023 was $1.3
million, or 8.1% of revenue, compared to $2.4 million, or 18.9% of
revenue, for the same period in 2022. Gross profit and gross margin
for 2023 were negatively impacted by ramp-up costs on two major
programs.
Outlook
Commenting on the future, Mr. Gill added, “While challenging
supply chain conditions and new program launches impacted our 2023
results, demand from customers serving the automotive, commercial
vehicle and sport utility markets remains positive. Similarly,
demand from customers in the defense and communications sector
continues to be robust, while the outlook for the energy market
continues to move in the right direction.
“Our healthy backlog, new program wins, and long-term contract
extensions are expected to support continued revenue and earnings
growth during 2024. We now expect revenue to increase 10-15%
year-over-year as a result of the combined strength of our backlog
for Sypris Electronics and increasing orders for our energy
products. We also continue to expect to achieve gross margin
expansion in the range of 150 to 175 basis points with gross profit
forecast to increase 20-25% in 2024.”
About Sypris Solutions
Sypris Solutions is a diversified manufacturing and engineering
services company serving the defense, transportation,
communications, and energy industries. 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.
Forward-looking statements include our plans and expectations of
future financial and operational performance. 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: the fees, costs and supply
of, or access to, debt, equity capital, or other sources of
liquidity; our failure to achieve profitability on a timely basis
by steadily increasing our revenues from profitable contracts with
a diversified group of customers, which would cause us to continue
to use existing cash resources or require us to sell assets to fund
operating losses; risks of foreign operations, including foreign
currency exchange rate risk exposure, which could impact our
operating results; volatility of our customers’ forecasts and our
contractual obligations to meet current scheduling demands and
production levels, which may negatively impact our operational
capacity and our effectiveness to integrate new customers or
suppliers, and in turn cause increases in our inventory and working
capital levels; cost, quality and availability or lead times of raw
materials such as steel, component parts (especially electronic
components), natural gas or utilities including increased cost
relating to inflation; dependence on, retention or recruitment of
key employees and highly skilled personnel and distribution of our
human capital; the cost and availability of full-time accounting
personnel with technical accounting knowledge to execute, review
and approve all aspects of the financial statement close and
reporting process; the cost, quality, timeliness, efficiency and
yield of our operations and capital investments, including the
impact of inflation, tariffs, product recalls or related
liabilities, employee training, working capital, production
schedules, cycle times, scrap rates, injuries, wages, overtime
costs, freight or expediting costs; the termination or non-renewal
of existing contracts by customers; our failure to successfully
complete final contract negotiations with regard to our announced
contract “orders”, “wins” or “awards”; significant delays or
reductions due to a prolonged continuing resolution or U.S.
government shutdown reducing the spending on products and services
that Sypris Electronics provides; adverse impacts of new
technologies or other competitive pressures which increase our
costs or erode our margins; breakdowns, relocations or major
repairs of machinery and equipment, especially in our Toluca Plant;
the costs and supply of insurance on acceptable terms and with
adequate coverage; the costs of compliance with our auditing,
regulatory or contractual obligations; pension valuation, health
care or other benefit costs; our reliance on revenues from
customers in the oil and gas and automotive markets, with
increasing consumer pressure for reductions in environmental
impacts attributed to greenhouse gas emissions and increased
vehicle fuel economy; our failure to successfully win new business
or develop new or improved products or new markets for our
products; war, geopolitical conflict, terrorism, or political
uncertainty, or disruptions resulting from the Russia-Ukraine war
or the Israel and Gaza conflict, including arising out of
international sanctions, foreign currency fluctuations and other
economic impacts; our reliance on a few key customers, third party
vendors and sub-suppliers; inventory valuation risks including
excessive or obsolescent valuations or price erosions of raw
materials or component parts on hand or other potential
impairments, non-recoverability or write-offs of assets or deferred
costs; disputes or litigation involving governmental, supplier,
customer, employee, creditor, stockholder, product liability,
warranty or environmental claims; failure to adequately insure or
to identify product liability, environmental or other insurable
risks; unanticipated or uninsured product liability claims,
disasters, public health crises, losses or business risks; labor
relations; strikes; union negotiations; costs associated with
environmental claims relating to properties previously owned; our
inability to patent or otherwise protect our inventions or other
intellectual property rights from potential competitors or fully
exploit such rights which could materially affect our ability to
compete in our chosen markets; changes in licenses, security
clearances, or other legal rights to operate, manage our work force
or import and export as needed; cyber security threats and
disruptions, including ransomware attacks on our systems and the
systems of third-party vendors and other parties with which we
conduct business, all of which may become more pronounced in the
event of geopolitical conflicts and other uncertainties, such as
the conflict in Ukraine; our ability to maintain compliance with
the Nasdaq listing standards minimum closing bid price; risks
related to owning our common stock, including increased volatility;
possible public policy response to a public health emergency,
including U. S or foreign government legislation or restrictions
that may impact our operations or supply chain; or unknown risks
and uncertainties. We undertake no obligation to update our
forward-looking statements, except as may be required by law.
SYPRIS SOLUTIONS, INC.
Financial Highlights
(In thousands, except per share
amounts)
Three Months Ended
December 31,
2023
2022
(Unaudited)
Revenue
$
34,735
$
29,712
Net (loss) income
$
(1,079
)
$
140
(Loss) income per common share: Basic
$
(0.05
)
$
0.01
Diluted
$
(0.05
)
$
0.01
Weighted average shares outstanding: Basic
21,938
21,759
Diluted
21,938
21,759
Year Ended
December 31,
2023
2022
(Unaudited) Revenue
$
136,223
$
110,121
Net loss
$
(1,596
)
$
(2,494
)
Loss per common share: Basic
$
(0.07
)
$
(0.11
)
Diluted
$
(0.07
)
$
(0.11
)
Weighted average shares outstanding: Basic
21,876
21,729
Diluted
21,876
21,729
Sypris Solutions, Inc.
Consolidated Statements of
Operations
(in thousands, except for per
share data)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
Net revenue: Sypris Technologies
$
19,025
$
17,163
$
77,920
$
69,259
Sypris Electronics
15,710
12,549
58,303
40,862
Total net revenue
34,735
29,712
136,223
110,121
Cost of sales: Sypris Technologies
15,922
14,947
68,712
60,709
Sypris Electronics
14,436
10,172
50,263
34,559
Total cost of sales
30,358
25,119
118,975
95,268
Gross profit: Sypris Technologies
3,103
2,216
9,208
8,550
Sypris Electronics
1,274
2,377
8,040
6,303
Total gross profit
4,377
4,593
17,248
14,853
Selling, general and administrative
4,660
3,789
16,279
14,489
Operating (loss) income
(283
)
804
969
364
Interest expense, net
246
326
777
1,110
Other expense, net
342
145
1,125
800
(Loss) income before taxes
(871
)
333
(933
)
(1,546
)
Income tax expense, net
208
193
663
948
Net (loss) income
$
(1,079
)
$
140
$
(1,596
)
$
(2,494
)
(Loss) income per common share: Basic
$
(0.05
)
$
0.01
$
(0.07
)
$
(0.11
)
Diluted
$
(0.05
)
$
0.01
$
(0.07
)
$
(0.11
)
Dividends declared per common share
$
-
$
-
$
-
$
-
Weighted average shares outstanding: Basic
21,938
21,759
21,876
21,729
Diluted
21,938
21,759
21,876
21,729
Sypris Solutions, Inc.
Consolidated Balance
Sheets
(in thousands, except for
share data)
December 31,
2023
2022
(Unaudited)
(Note)
ASSETS
Current assets: Cash and cash equivalents
$
7,881
$
21,648
Accounts receivable, net
8,929
8,064
Inventory, net
77,314
42,133
Other current assets
9,743
8,133
Total current assets
103,867
79,978
Property, plant and equipment, net
17,133
15,532
Operating lease right-of-use assets
3,309
4,251
Other assets
5,033
4,383
Total assets
$
129,342
$
104,144
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities: Accounts payable
$
26,737
$
17,638
Accrued liabilities
56,232
33,316
Operating lease liabilities, current portion
1,068
1,168
Finance lease obligations, current portion
1,327
1,102
Equipment financing obligations, current portion
618
398
Working capital line of credit
500
-
Note payable - related party, current portion
-
2,500
Total current liabilities
86,482
56,122
Operating lease liabilities, net of current portion
2,642
3,710
Finance lease obligations, net of current portion
1,852
2,536
Equipment financing obligations, net of current portion
1,333
738
Note payable - related party, net of current portion
6,484
3,989
Other liabilities
8,082
17,474
Total liabilities
106,875
84,569
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; 22,465,485 shares issued and 22,459,649 outstanding in
2023 and 22,175,664 shares issued and 22,175,645 outstanding in
2022
224
221
Additional paid-in capital
156,242
155,535
Accumulated deficit
(116,932
)
(115,336
)
Accumulated other comprehensive loss
(17,067
)
(20,845
)
Treasury stock, 5,835 in 2023 and 19 in 2022
-
-
Total stockholders’ equity
22,467
19,575
Total liabilities and stockholders’ equity
$
129,342
$
104,144
Note: The balance sheet at December 31, 2022, 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)
Year Ended
December 31,
2023
2022
(Unaudited)
Cash flows from operating activities: Net loss
$
(1,596
)
$
(2,494
)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Depreciation and amortization
3,259
3,088
Deferred income taxes
54
329
Stock-based compensation expense
813
683
Deferred loan costs amortized
3
6
Provision for excess and obsolete inventory
(167
)
65
Non-cash lease expense
942
890
Other noncash items
(56
)
(148
)
Contributions to pension plans
(16
)
(60
)
Changes in operating assets and liabilities: Accounts receivable
(1,096
)
345
Inventory
(34,693
)
(11,804
)
Prepaid expenses and other assets
(1,105
)
(3,072
)
Accounts payable
8,984
5,556
Accrued and other liabilities
13,585
20,409
Net cash (used in) provided by operating activities
(11,089
)
13,793
Cash flows from investing activities: Capital expenditures
(2,139
)
(3,041
)
Proceeds from sale of assets
-
10
Net cash used in investing activities
(2,139
)
(3,031
)
Cash flows from financing activities: Proceeds from equipment
financing obligations
710
-
Proceeds from working capital line of credit
500
-
Proceeds from Note Payable - related party
2,500
-
Principal payments on finance lease obligations
(1,168
)
(982
)
Principal payments on equipment financing obligations
(551
)
(352
)
Principal payments on Note Payable - related party
(2,500
)
-
Indirect repurchase of shares for minimum statutory tax
withholdings
(105
)
(49
)
Net cash used in financing activities
(614
)
(1,383
)
Effect of exchange rate changes on cash balances
75
649
Net (decrease) increase in cash and cash equivalents
(13,767
)
10,028
Cash and cash equivalents at beginning of period
21,648
11,620
Cash and cash equivalents at end of period
$
7,881
$
21,648
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240328095435/en/
Richard L Davis Chief Financial Officer (502)
329-2000
Sypris Solutions (NASDAQ:SYPR)
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