EPS UP 133%; BACKLOG UP 57%; 2022 OUTLOOK
RAISED
Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported
financial results for its fourth quarter and full-year ended
December 31, 2021.
HIGHLIGHTS ─────────────────────
- Revenue for
the fourth quarter increased 25.2% year-over-year, driven by a
30.0% increase at Sypris Electronics and a 21.7% increase at Sypris
Technologies.
- Gross profit
increased 65.1% year-over-year, the result of an 83.5% increase at
Sypris Electronics and a 51.5% increase at Sypris
Technologies.
- Gross margin
increased 420 basis points to 17.1%, reflecting a 540-basis point
expansion for Sypris Electronics and a 310-basis point increase for
Sypris Technologies.
- Earnings per
diluted share rose 133.3% to $0.02 per share, up from a loss of
$0.06 per share for the prior-year period, reflecting the combined
strength of top line growth and margin expansion. EPS for the full
year increased 62.5% to $0.13 per share, up from $0.08 per share
for 2020.
- Year-end
backlog increased 56.8% when compared to the prior-year period,
driven by a 46.1% increase in orders for the year at Sypris
Electronics.
- Sypris
Electronics recently announced several important new contract
awards, including the following:
- A contract
to manufacture and test embedded circuit card assemblies that will
perform certain cryptographic functions for the Army Key Management
System, with production to begin in 2022;
- A multi-year
follow-on contract to produce and test electronic power supply
modules for a large, mission-critical U.S. Navy program, which is
expected to result in a meaningful step-up in shipments from
existing levels beginning in 2022; and
- A multi-year
follow-on contract to produce and test a variety of electronic
power supply modules for a mission-critical, long-range,
precision-guided anti-ship missile system, which is forecast to
result in a material increase in production volume from existing
levels beginning in 2022.
- Subsequent
to quarter-end, Sypris Technologies announced a long-term,
sole-source contract extension to provide drivetrain components for
use in the production of medium and heavy-duty commercial vehicles.
In addition, the Company was awarded a new program to supply
components for use in all-terrain vehicles.
- The Company
updated its outlook for 2022, with revenue now expected to increase
25% to 30% year-over-year, up from prior guidance of 25% in
November. Gross margins are now expected to expand 200 to 250 basis
points on the year, up from 200 basis points previously, while cash
flow from operations is still forecast to increase materially
year-over-year.
────────────────────
“We were pleased with our fourth quarter performance, as both
segments reported strong double-digit growth in both revenue and
gross profit while operating in an increasingly dynamic
environment. Our teammates throughout the company simply did an
excellent job and as a result, we are well-positioned for further
growth in 2022,” commented Jeffrey T. Gill, Chairman, President
& Chief Executive Officer.
“Full year revenue increased over 18% from the prior year,
primarily driven by strong demand in the automotive, commercial
vehicle, sport utility and off-highway markets served by Sypris
Technologies. Our recent announcement of the long-term, sole-source
contract extension with one of our key customers, when combined
with the favorable outlook in our markets, provides Sypris
Technologies with a solid path for additional growth going
forward.”
“Backlog for Sypris Electronics reached its highest point in
over a decade, with deliveries now scheduled well into 2023.
Revenue in the fourth quarter increased 23% sequentially and 30%
year-over-year, while recent contract wins are expected to provide
meaningful growth to our top line during 2022. We have received
customer support for multi-year material commitments to meet this
growth, which is expected to help alleviate future potential
production disruptions.”
“Our energy markets have strengthened, resulting in a
much-improved fourth quarter for our energy products business when
compared to the prior year. Additional opportunities for growth may
exist with new projects in support of increasing oil and gas
production. We are also actively pursuing applications for our
products in new and adjacent markets to further diversify our
market and customer portfolios.”
Fourth Quarter and Full-Year Results
The Company reported revenue of $25.8 million for the fourth
quarter ended December 31, 2021, compared to $20.6 million for the
prior-year period. Net income was $0.4 million for the fourth
quarter of 2021, or $0.02 per diluted share, compared to a net loss
of $1.2 million, or $0.06 per share, for the prior-year period.
Results for the quarter ended December 31, 2020, include a loss of
$0.6 million on the disposal of assets.
For the full-year 2021, the Company reported revenue of $97.4
million compared with $82.3 million for the prior year. Net income
was $2.9 million, or $0.13 per diluted share, for 2021 compared
with $1.7 million, or $0.08 per diluted share, for the prior year.
Results for 2021 include the recognition of a $3.6 million gain on
the forgiveness of the Company’s PPP loan. Results for 2020 include
an income tax benefit of $3.2 million, primarily from the release
of a valuation allowance on certain foreign deferred tax assets,
and net gains of $0.2 million from the sale of idle assets by
Sypris Technologies.
Sypris Technologies
Revenue for Sypris Technologies was $14.7 million in the fourth
quarter of 2021 compared to $12.1 million for the prior-year
period, reflecting the positive impact of new programs, the
strength of the commercial vehicle market and increased energy
related product sales. Gross profit for the fourth quarter of 2021
was $2.3 million, or 15.8% of revenue, compared to $1.5 million, or
12.7% of revenue, for the same period in 2020. Gross profit for the
fourth quarter of 2021 was positively impacted by the increase in
volume and a favorable product mix.
Sypris Electronics
Revenue for Sypris Electronics was $11.1 million in the fourth
quarter of 2021 compared to $8.5 million for the prior-year period.
Shipments under a full rate production contract ramped during the
fourth quarter of 2021 along with increased shipments for a
communications program, driving the increase in revenue. Supply
chain constraints partially offset these gains, limiting shipments
on certain other programs in the period. Gross profit for the
fourth quarter of 2021 was $2.1 million, or 18.7% of revenue,
compared to $1.1 million, or 13.3% of revenue, for the same period
in 2020 due to higher volumes and a more favorable mix. Sypris
Electronics secured favorable pricing from a customer on certain
units shipped during the period on one of its multi-year programs.
Additionally, a price increase was enacted during 2021 on another
key multi-year program that will continue into 2022.
Outlook
Commenting on the future, Mr. Gill added, “Demand is up
considerably from customers serving the automotive, commercial
vehicle and sport utility markets, with Class 8 forecasts showing
year-over-year production increases of 11.9% for 2022 and an
additional 21.6% in 2023. Similarly, demand from customers in the
defense and communications sector remains robust. While the outlook
for the energy market is somewhat uncertain, we continue to secure
new orders on important projects around the world.”
“We expect our backlog and markets to support continued revenue
and earnings growth during 2022. We have updated our outlook
accordingly, with revenue forecast to increase 25-30%
year-over-year. We expect gross margin to follow suit, expanding
200-250 basis points in 2022 when compared to the prior year, while
cash flow from operations is forecast to increase materially
year-over-year supported by strong earnings growth.”
Webcast and Conference Call Information
Sypris Solutions will host a listen only conference call to
discuss the Company's financial results today, March 17, 2022, at
9:00 a.m. (Eastern Time). To listen to the call, participants
should dial (833) 316-0560 approximately 10 minutes prior to the
start of the call (ask to be joined into the Sypris Solutions, Inc.
call).
The live broadcast of Sypris’ quarterly conference call will
also be available online at www.sypris.com on March 17, 2022,
beginning at 9:00 a.m. (Eastern Time). The online replay will be
available at approximately 11:00 a.m. (Eastern Time) and continue
for 30 days. Related presentation materials will be posted to the
“Investor Information” section of the Company’s website at
www.sypris.com, located under the sub-heading “Upcoming Events,”
prior to the call.
About Sypris Solutions
Sypris Solutions is a diversified provider of truck components,
oil and gas pipeline components and aerospace and defense
electronics. The Company produces a wide range of manufactured
products, often under multi-year, sole-source contracts. 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: our failure to achieve and maintain
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; our failure to
successfully complete final contract negotiations with regard to
our announced contract “orders”, “wins” or “awards”; our failure to
successfully win new business or develop new or improved products
or new markets for our products; the termination or non-renewal of
existing contracts by customers; breakdowns, relocations or major
repairs of machinery and equipment, especially in our Toluca Plant;
volatility of our customers’ forecasts especially in the commercial
truck markets and our contractual obligations to meet current
scheduling demands and production levels (especially in our Toluca
Plant), 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; the impact of the current coronavirus disease
(“COVID-19”) and economic conditions on our future operations;
possible public policy response to the pandemic, including U. S or
foreign government legislation or restrictions that may impact our
operations or supply chain; 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; dependence on, retention or
recruitment of key employees and distribution of our human capital;
inaccurate data about markets, customers or business conditions;
disputes or litigation involving governmental, supplier, customer,
employee, creditor, stockholder, product liability, warranty or
environmental claims; the fees, costs and supply of, or access to,
debt, equity capital, or other sources of liquidity; 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; 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;
the costs of compliance with our auditing, regulatory or
contractual obligations; labor relations; strikes; union
negotiations; costs associated with environmental claims relating
to properties previously owned; pension valuation, health care or
other benefit costs; our inability to patent or otherwise protect
our inventions or other intellectual property from potential
competitors; adverse impacts of new technologies or other
competitive pressures which increase our costs or erode our
margins; 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; 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; risks of foreign
operations; currency exchange rates; war, geopolitical conflict,
terrorism, or political uncertainty, including disruptions
resulting from the conflict between Russia and Ukraine arising out
of international sanctions, foreign currency fluctuations and other
economic impacts; the potential default of the U.S. federal
government if Congress fails to pass a 2022 budget resolution;
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; 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,
2021
2020
(Unaudited)
Revenue
$
25,800
$
20,614
Net income (loss)
$
436
$
(1,174
)
Income (loss) per common share: Basic
$
0.02
$
(0.06
)
Diluted
$
0.02
$
(0.06
)
Weighted average shares outstanding: Basic
21,694
21,259
Diluted
22,941
21,259
Year Ended December 31,
2021
2020
(Unaudited) Revenue
$
97,434
$
82,346
Net income
$
2,923
$
1,668
Income per common share: Basic
$
0.14
$
0.08
Diluted
$
0.13
$
0.08
Weighted average shares outstanding: Basic
21,585
21,084
Diluted
23,001
21,086
Sypris Solutions, Inc. Consolidated Statements of
Operations (in thousands, except for per share data)
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
(Unaudited) (Unaudited) Net revenue: Sypris
Technologies
$
14,715
$
12,087
$
61,737
$
45,321
Sypris Electronics
11,085
8,527
35,697
37,025
Total net revenue
25,800
20,614
97,434
82,346
Cost of sales: Sypris Technologies
12,389
10,552
53,622
39,157
Sypris Electronics
9,008
7,395
29,306
31,137
Total cost of sales
21,397
17,947
82,928
70,294
Gross profit: Sypris Technologies
2,326
1,535
8,115
6,164
Sypris Electronics
2,077
1,132
6,391
5,888
Total gross profit
4,403
2,667
14,506
12,052
Selling, general and administrative
3,291
2,838
12,596
11,962
Operating income (loss)
1,112
(171
)
1,910
90
Interest expense, net
224
202
868
838
Other expense, net
147
658
645
544
Forgiveness of PPP Loan and related interest
-
-
(3,599
)
-
Income (loss) before taxes
741
(1,031
)
3,996
(1,292
)
Income tax expense (benefit), net
305
143
1,073
(2,960
)
Net income (loss)
$
436
$
(1,174
)
$
2,923
$
1,668
Income (loss) per common share: Basic
$
0.02
$
(0.06
)
$
0.14
$
0.08
Diluted
$
0.02
$
(0.06
)
$
0.13
$
0.08
Dividends declared per common share
$
-
$
-
$
-
$
-
Weighted average shares outstanding: Basic
21,694
21,259
21,585
21,084
Diluted
22,941
21,259
23,001
21,086
Sypris Solutions, Inc. Consolidated Balance Sheets
(in thousands, except for share data)
December 31,
2021
2020
(Unaudited) ASSETS Current assets: Cash and cash
equivalents
$
11,620
$
11,606
Accounts receivable, net
8,467
7,234
Inventory, net
30,100
16,236
Other current assets
5,868
4,360
Total current assets
56,055
39,436
Property, plant and equipment, net
14,140
10,161
Operating lease right-of-use assets
5,140
6,103
Other assets
4,170
5,008
Total assets
$
79,505
$
60,708
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable
$
11,962
$
6,734
Accrued liabilities
19,646
11,969
Operating lease liabilities, current portion
1,063
965
Finance lease obligations, current portion
983
393
Equipment financing obligations, current portion
336
-
Note payable - PPP Loan, current portion
-
1,186
Total current liabilities
33,990
21,247
Operating lease liabilities, net of current portion
4,878
5,941
Finance lease obligations, net of current portion
3,469
1,927
Equipment financing obligations, net of current portion
868
-
Note payable - PPP Loan, net of current portion
-
2,372
Note payable - related party
6,484
6,477
Other liabilities
10,530
7,969
Total liabilities
60,219
45,933
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; 21,864,743 shares issued and 21,864,724 outstanding in
2021 and 21,302,194 shares issued and 21,300,958 outstanding in
2020
218
213
Additional paid-in capital
154,904
155,025
Accumulated deficit
(112,842
)
(115,765
)
Accumulated other comprehensive loss
(22,994
)
(24,698
)
Treasury stock, 19 and 1,236 in 2021 and 2020, respectively
-
-
Total stockholders’ equity
19,286
14,775
Total liabilities and stockholders’ equity
$
79,505
$
60,708
Sypris Solutions, Inc. Consolidated Cash Flow
Statements (in thousands)
Year Ended
December 31,
2021
2020
(Unaudited) Cash flows from operating activities: Net income
$
2,923
$
1,668
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
2,646
2,503
Forgiveness of PPP Loan and related interest
(3,599
)
-
Deferred income taxes
1,015
(3,070
)
Stock-based compensation expense
491
426
Deferred loan costs recognized
7
14
Net loss (gain) on the sale of assets
11
(236
)
Provision for excess and obsolete inventory
162
222
Non-cash lease expense
963
911
Other noncash items
150
(1
)
Contributions to pension plans
(297
)
(862
)
Changes in operating assets and liabilities: Accounts receivable
(1,265
)
214
Inventory
(13,978
)
4,230
Prepaid expenses and other assets
(1,314
)
(204
)
Accounts payable
5,268
(2,591
)
Accrued and other liabilities
11,055
424
Net cash provided by operating activities
4,238
3,648
Cash flows from investing activities: Capital expenditures
(2,824
)
(1,542
)
Proceeds from sale of assets
10
1,969
Net cash (used in) provided by investing activities
(2,814
)
427
Cash flows from financing activities: Principal payments on finance
lease obligations
(499
)
(715
)
Principal payments on equipment financing obligations
(176
)
-
Proceeds from Paycheck Protection Program loan
-
3,558
Indirect repurchase of shares for minimum statutory tax
withholdings
(607
)
(103
)
Net cash (used in) provided by financing activities
(1,282
)
2,740
Effect of exchange rate changes on cash balances
(128
)
(304
)
Net increase in cash and cash equivalents
14
6,511
Cash and cash equivalents at beginning of period
11,606
5,095
Cash and cash equivalents at end of period
$
11,620
$
11,606
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220317005102/en/
Anthony C. Allen Chief Financial Officer (502)
329-2000
Sypris Solutions (NASDAQ:SYPR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sypris Solutions (NASDAQ:SYPR)
Historical Stock Chart
From Jul 2023 to Jul 2024