Reading time ( words)
Sypris Solutions, Inc. reported financial results for its first quarter ended April 2, 2023.
- Revenue for the first quarter increased 23.4% year-over-year, driven by double digit expansion of shipments at both segments.
- Orders for the period rose 73.6% from the prior-year period, while backlog increased 121.0%, reflecting positive demand from customers across both segments of the business.
- Revenue for Sypris Electronics expanded 42.0% year-over-year, driven by increased sales to customers serving the communications markets and improved material availability compared to the prior-year period.
- Orders for Sypris Electronics increased 91.4% during the period, driving firm backlog up to over $131.6 million, representing a $73.1 million or 125.0% increase over the prior-year period and an 11.0% increase from year end.
- Revenue for Sypris Technologies increased 13.7% year-over-year reflecting positive growth across the energy, commercial vehicle and recreational vehicle markets.
- Orders for Sypris Technologies energy products increased 25.7% during the first quarter compared to the same period in 2022, pushing backlog up 61.0% over the prior-year period and 19.6% from year end.
- During the quarter, Sypris Electronics announced that it had received an award to produce and test electronic interface modules for a U.S. Department of Defense missile weapons system as part of an ongoing modernization program. Production is expected to begin in 2023.
- Subsequent to quarter end, Sypris Electronics announced that it received additional releases under a multi-year production contract to produce and test power supply modules for a large, mission-critical U.S. Navy electronic warfare program, with deliveries to begin in 2023. The upgrade will provide the capability to jam incoming missiles that threaten a warship, cue decoys, and adapt quickly to evolving threats.
- During the quarter, Sypris Technologies announced that it had entered into an amendment to its existing supply agreement with Detroit Diesel Corporation, a subsidiary of Daimler Truck North America, to produce a new series of part numbers for driveline components for use in Detroit® Diesel-branded drive axles. The components to be produced by Sypris will be essential to the performance of the drive axles of Freightliner’s heavy-duty trucks. Production is expected to begin in 2023.
- Subsequent to quarter end, Sypris Technologies announced that it was awarded a new program to supply drivetrain components for use in the production of a new model of side-by-side utility-terrain vehicles, with production expected to begin in 2024.
- The Company updated its full-year outlook for 2023, maintaining the expected increase in revenue at 25%-30% year-over-year while adjusting the gross margin guidance to a 150-200 basis point increase, with unfavorable foreign currency exchange rates impacting margins in the near term. Cash flow from operations is expected to remain strong, reflecting increased year-over-year profitability.
“We were pleased with our first quarter performance, as both operating segments reported significant growth in revenue and orders. Our teammates have done an excellent job navigating inflationary pressures, supply chain challenges, customer demand volatility and currency fluctuations to position the business for further growth and increased profitability during the remainder of 2023,” commented Jeffrey T. Gill, President and Chief Executive Officer.
“Backlog for Sypris Electronics continued to increase on both a year-over-year and on a sequential basis, resulting in our largest book of business in over a decade. The record $131.6 million backlog is expected to support revenue growth, with deliveries now scheduled well into 2025. Customer funding has already been secured for a portion of these key programs, which enables us to lock in multi-year component purchases and help mitigate potential future supply chain issues.
“Demand from Sypris Technologies customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained relatively stable, with new product line shipments offsetting headwinds for automotive and commercial vehicle components as our customers adjust inventory levels to align with OEM build schedules. While we continue to experience some volatility within this market, current forecasts are predicting a slight increase in the North American Class 8 truck market production for 2023.
“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. The successful extension of long-term contracts with two of our key Sypris Technologies’ customers in 2022 and new awards in 2023 support our revenue base and provide opportunities to expand these relationships in the coming years.
“Shipment of Sypris Technologies energy products increased 27.0% year-over-year, while orders during the quarter increased 25.7%. With open quotes outstanding on several large projects both domestically and internationally, additional opportunities for growth may exist with these projects and other projects in support of elevated domestic natural gas production and rising domestic oil production. We are also actively pursuing applications for our products in adjacent markets to further diversify our industry and customer portfolios.”
First Quarter Results
The Company reported revenue of $32.3 million for the first quarter of 2023, compared to $26.2 million for the prior-year comparable period. Additionally, the Company reported a net loss of $0.2 million, or $0.01 per share, as compared to net income of $0.2 million, or $0.01 per diluted share, for the prior-year period.