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Sypris Solutions, Inc. reported financial results for its first quarter ended April 4, 2021.
- Customer orders were robust during the period, while revenue was less than the prior year quarter due to late material receipts and customer releases that have since been resolved and are expected to support future growth.
- Gross margin decreased from the prior-year period as a result of lower revenue, sales mix and the costs incurred to ramp up production in order to meet the significant increase in demand for future deliveries experienced at Sypris Technologies, since substantially resolved.
- Orders for Sypris Electronics increased 70% during the first quarter compared to the same period in 2020, driving backlog up 36.3% over the prior-year period and up 56.3% for the sequential quarter. Similarly, backlog for the energy products of Sypris Technologies increased 37.9% over the prior-year period and 74.9% sequentially, while the order board from commercial vehicle customers continued to increase significantly.
- The Company increased its full-year outlook for 2021, with revenue now expected to increase 25-30% year-over-year, up from prior guidance of 20%. The Company also reaffirmed its margin and cash flow expectations for the year, forecasting a 200-300 basis point expansion of margins and strong double-digit percentage growth in cash flow from operations.
- Sypris Electronics announced a contract award to manufacture and test a variety of electronic power supply modules for a mission-critical, long-range, precision-guided, anti-ship missile system, with production to begin during 2021.
- Sypris Technologies announced a long-term contract extension with a leading commercial vehicle manufacturer. The new contract continues the existing product lines and includes the award of two additional axle shaft model lines to begin production in 2021 and the adoption of certain Sypris Ultra® series lightweight axle shaft design features.
- Sypris Technologies also announced awards from two high-pressure energy projects. The contracts, which provide for the use of closures in the Anchor Field development project in the Gulf of Mexico and the planned upgrade of a natural gas pipeline system in North America, call for shipments to begin prior to year-end 2021.
- Subsequent to quarter-end, Sypris Electronics announced a contract award to manufacture and test a variety of electronic assemblies for a Government spacecraft program with production to begin during 2021.
“We are clearly now at the inflection point for Sypris. The significant growth in orders and the underlying strength of our markets is expected to have a material impact on the financial results of the Company beginning in the second quarter of 2021. Backlog is up 56% sequentially for Sypris Electronics, while the OEM backlog of Class 8 commercial vehicles is up 160% since August,” commented Jeffrey T. Gill, President and Chief Executive Officer.
“Customer orders for Sypris Electronics increased 70% over the prior-year period, with deliveries now scheduled well into 2023. Shipments were impacted during the first quarter by late material receipts and a delay in customer releases; however, both issues have since been resolved. We expect the first quarter shortfall to be recovered during the balance of the year, combining with recent contract wins to provide meaningful sequential growth in the top line going forward.
“Demand from customers serving the automotive, commercial vehicle, sport utility and off-highway markets has continued to accelerate. Freight demand is currently overwhelming industry capacity with orders for the past six months up 153% year-over-year. The recent announcement of the long-term contract extension with one of our key customers combined with the improved outlook for these markets gives us a clear path to support our growth objectives going forward.
“As we discussed on our previous call, activity levels in the oil and gas industry are expected to remain challenging during the first half of 2021. However, steadily improving commodity prices, gradually reopening economies and increasing pipeline activity have resulted in increased orders recently, and we continue to anticipate year-over-year growth of our energy related products.”
Concluding, Gill said, “Our customer base and the markets we serve are considerably more diversified than at any point in our recent history. As an essential business, we have a responsibility to ensure that our defense, communications, energy, and transportation sectors remain vibrant. We will continue to monitor developments, act promptly to mitigate risks and take the necessary steps required to ensure deliveries continue to be made to our customers in a timely manner.”
First Quarter Results
The Company reported revenue of $20.0 million for the first quarter of 2021, compared to $22.4 million for the prior-year period. Additionally, the Company reported a net loss of $1.6 million for the first quarter of 2021, or $0.08 per share, compared to a net loss of $0.3 million, or $0.01 per share, for the prior-year period.