Sypris Reports Double-Digit Revenue and Margin Growth Forecast for 2019

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The Company reported revenue of $24.0 million for the fourth quarter compared with $21.5 million for the prior-year period. The Company reported a net loss of $0.2 million, or $0.01 per share, compared with a loss of $1.2 million, or $0.06 per share, for the prior-year quarter. The results for the quarter ended December 31, 2018, include a benefit in selling, general and administrative expense of $1.9 million for the favorable resolution of a legal fee.

For the full-year ended December 31, 2018, the Company reported revenue of $88.0 million compared with $82.3 million for the prior-year. The Company reported a net loss of $3.5 million, or $0.17 per share, compared with a net loss of $10.8 million, or $0.53 per share, for 2017. In addition to the $1.9 million legal fee benefit recorded in the fourth quarter, results for the year ended December 31, 2018, included an insurance recovery gain of $2.3 million, which was partially offset by a net loss of $0.2 million on the sale of excess equipment and costs of $1.4 million related to preparing the Broadway facility for sale or other use. Results for the year ended December 31, 2017, included net gains of $2.7 million related to the sale of excess equipment, which was partially offset by severance, relocation and other costs of $2.4 million.

Sypris Technologies

Revenue for Sypris Technologies was $15.1 million in the fourth quarter compared with $14.5 million for the prior-year period, primarily reflecting an increase in demand from customers in the automotive and commercial vehicle markets that was partially offset by lower energy product sales. Gross profit for the quarter was $2.2 million, or 14.3% of revenue, compared with $1.6 million, or 11.3% of revenue, for the same period in 2017. Gross profit benefitted from the increase in volume as well as cost improvements realized following the transfer of production from our Broadway Plant, which was completed as of the end of 2017.

Sypris Electronics

Revenue for Sypris Electronics was $8.8 million in the fourth quarter of 2018 compared with $7.0 million for the prior-year period. The increase in revenue over the prior-year was primarily due to the launch of a new program beginning late in the third quarter of 2018 that ramped up during the fourth quarter. Additionally, certain new smaller programs and the expansion of programs with existing customers offset demand reductions on legacy programs. However, electronic component availability and labor inefficiencies dampened our margins during the period. Gross profit was further affected during the fourth quarter of 2018 by a $0.4 million physical inventory adjustment and additional excess and obsolete inventory reserves of $0.5 million.

Outlook

Commenting on the future, Gill added, “Buoyed by current volume growth, we expect to capitalize on additional opportunities across our markets for healthy revenue expansion in 2019. We also anticipate new contract awards and market expansion in each of our targeted markets for energy, automotive, commercial vehicle, and aerospace and defense products, as well as new electronics programs.

“Third-party forecasts for the Class 8 commercial vehicle market indicate that freight volumes will remain strong well into the second half of 2019, albeit off from record-breaking 2018 levels. The energy market continues to benefit from increased demand and higher oil prices. The National Defense Authorization Act for Fiscal Year 2019 provides nearly $700 billion in funding for the U.S. Department of Defense, which is expected to support program growth and market expansion for Aerospace and Defense participants during the coming year.

“Our revenue outlook for 2019 is in the range of $100-$110 million, which primarily reflects strong market conditions for the commercial vehicle and energy markets that is partially offset by the impact of delayed electronic component receipts for the aerospace and defense market. We expect the second half of 2019 to improve sequentially as we are targeting to benefit from a normalization of these receipts and new program launches.

"We expect to see meaningful improvements in gross margin, up to 14.0%-16.0% for the year as a whole, with sequential improvements from the first to second half periods.”

About Sypris Solutions

Sypris Solutions is a diversified provider of truck components, oil and gas pipeline components, and aerospace and defense electronics. The Company performs a wide range of manufacturing services, often under multi-year, sole-source contracts.  

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