LOUISVILLE, Ky.–(BUSINESS WIRE)–
Sypris Solutions, Inc. (Nasdaq/NM: SYPR) today reported financial
results for its fourth quarter and full year ended December 31, 2012.
HIGHLIGHTS
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For the Full Year:
Revenue increased to $342 million. Gross profit increased 24% to $44 million compared to the prior year. Gross margin increased to 12.8%, up 230 basis points from the prior
year. Earnings per share from continuing operations increased 16% to $0.50
per diluted share, up from $0.43 per diluted share in 2011. The Company reinstated its common dividend in March of 2012. The Company was added to the Russell 2000 Index effective June of 2012.
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The Company reported revenue of $341.6 million for 2012 compared to
$335.6 million for the prior year period and income from continuing
operations of $10.3 million, or $0.50 per diluted share, as compared to
$8.4 million, or $0.43 per diluted share, for the prior year.
“Our Industrial Group responded well to the reduction in the production
of commercial vehicles during the second half of 2012,” said Jeffrey T.
Gill, president and chief executive officer. “We now expect the
commercial vehicle market to remain stable at current levels in the
short-term, as OEMs focus on the introduction of the new model year
vehicles and engine technologies early in 2013.”
“However, with an estimated 70% of the vehicles on the road today being
of an age that is in excess of eight years, the eventual replacement
cycle is expected to be robust for an extended period of time. In the
interim, we believe that our improved cost profile and strong
operational performance, which resulted in an 80 basis point increase in
gross margin for our Industrial Group during the year when compared to
2011, will enable us to sustain the profitability of this business.”
“Our Aerospace and Defense business continues to be affected by
budgetary and funding uncertainties within the U.S. Department of
Defense that are not expected to be eliminated in the near term. Despite
the decline in revenue in 2012, our improved product mix resulted in a
61.9% increase in gross profit when compared to 2011.”
“In the long-term, we will continue to invest in new products and
programs to further improve the attractiveness of our business
portfolio, with a specific emphasis on trusted solutions for identity
management, cryptographic key distribution and cyber analytics. We
believe that our product mix going forward should help us to maintain
our margin in the face of what is likely to be lumpy revenue until the
many macroeconomic and policy issues are successfully resolved.”
Consolidated income from continuing operations for the full year ended
December 31, 2012 included a foreign currency related loss of
$0.8 million, a gain of $2.6 million on the sale of idle assets, a gain
of $1.9 million in connection with the sale of marketable securities and
a $1.7 million write-off of deferred contract costs, while income from
continuing operations for the prior year included gains of $3.0 million
in connection with a customer settlement, $4.5 million from the
disposition of idle assets and a foreign currency related gain of
$2.6 million.
The Company reported revenue of $67.5 million for the fourth quarter
compared to $83.6 million for the prior year period. The Company’s loss
from continuing operations for the three months ended December 31, 2012
was $0.9 million, or $0.04 per diluted share, as compared to income from
continuing operations of $1.4 million, or $0.07 per diluted share, for
the prior year period. The loss from continuing operations for the three
months ended December 31, 2012 included a $1.7 million non-cash
write-off of deferred contract costs, as mentioned above, due to the
current uncertainty surrounding sequestration.
The Industrial Group
Revenue for our Industrial Group decreased 23.2% to $55.5 million in the
fourth quarter compared to $72.2 million for the prior year period and
14.8% sequentially, primarily as a result of a recent move by commercial
vehicle OEM’s to rebalance inventory with lower levels of demand. Gross
profit for the quarter was $5.6 million, or 10.1% of revenue, compared
to $8.2 million, or 11.4% of revenue for the same period in 2011.
The Electronics Group
Revenue for our Electronics Group was $12.0 million in the fourth
quarter compared to $11.4 million in the prior year period, reflecting
higher revenue within our space business. Gross profit for the quarter
was $3.1 million, or 25.6% of revenue, compared to $0.5 million, or 4.5%
of revenue for the same period in 2011, reflecting improved product mix,
including increase product sales to overseas customers, which typically
carry higher margins.
Outlook
Mr. Gill added, “We will continue to concentrate on the daily execution
of our business. We expect recent investments in production cells and
automation by our Industrial Group to contribute to further margin
expansion going forward once volumes return to full replacement levels
later this year. Our Electronics Group will continue to face near-term
revenue challenges that we expect to be ongoing until the outlook for
defense spending is clarified and authorized.”
Sypris Solutions is a diversified provider of outsourced services and
specialty products. The Company performs a wide range of manufacturing,
engineering, design and other technical services, typically under
multi-year, sole-source contracts with corporations and government
agencies in the markets for truck components and assemblies and
aerospace and defense electronics. For more information about Sypris
Solutions, visit its Web site at www.sypris.com .
Each “forward-looking statement” herein is subject to serious
risks and should not be relied upon, as detailed in our most recent Form
10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently
believe that such risks also include the following: declining revenues
and backlog in our aerospace and defense business lines as we attempt to
transition from legacy products and services into new market segments
and technologies; dependence on, recruitment or retention of key
employees; our ability to successfully develop, launch or sustain new
products and programs within the Electronics Group especially in new
market segments and technologies; reliance on major customers or
suppliers, especially in the automotive or aerospace and defense
electronics sectors; adverse impacts of new technologies or other
competitive pressures which increase our costs or erode our margins;
potential impairments, non-recoverability or write-offs of goodwill,
assets or deferred costs; inventory valuation risks including
obsolescence, shrinkage, theft, overstocking or underbilling; the cost,
efficiency and yield of our operations and capital investments,
including working capital, production schedules, cycle times, scrap
rates, injuries, wages, overtime costs, freight or expediting costs;
potential weaknesses in internal controls over financial reporting and
enterprise risk management; U.S. government spending on products and
services that our Electronics Group provides, including the timing of
budgetary decisions; potential liabilities associated with discontinued
operations; fees, costs or other dilutive effects of refinancing, or
compliance with covenants; the costs of compliance with our auditing,
regulatory or contractual obligations; regulatory actions or sanctions
(including FCPA, OSHA and Federal Acquisition Regulations, among
others); breakdowns, relocations or major repairs of machinery and
equipment; pension valuation, health care or other benefit costs; labor
relations; strikes; union negotiations; cyber security threats and
disruptions; changes in licenses, security clearances, or other legal
rights to operate, manage our work force or import and export as needed;
changes or delays in customer budgets, funding or programs; disputes or
litigation involving customer, supplier, lessor, landlord, creditor,
stockholder, product liability or environmental claims; the costs and
supply of debt, equity capital, or insurance; cost and availability of
raw materials such as steel, component parts, natural gas or utilities;
volatility of our customers’ forecasts, financial conditions, market
shares, product requirements or scheduling demands; failure to
adequately insure or to identify environmental or other insurable risks;
revised contract prices or estimates of major contract costs; risks of
foreign operations; currency exchange rates; war, terrorism, or
political uncertainty; unanticipated or uninsured disasters, losses or
business risks; inaccurate data about markets, customers or business
conditions; or unknown risks and uncertainties.
SYPRIS SOLUTIONS, INC. Financial Highlights (In thousands, except per share amounts) Three Months Ended December 31, 2012 2011 (Unaudited) Revenue $ 67,466 $ 83,580 Net (loss) income $ (940 ) $ 1,323 Basic income (loss) per common share: Continuing operations $ (0.04 ) $ 0.07 Discontinued operations (0.01 ) – Net income per share $ (0.05 ) $ 0.07 Diluted income (loss) per common share: Continuing operations $ (0.04 ) $ 0.07 Discontinued operations (0.01 ) – Net (loss) income per share $ (0.05 ) $ 0.07 Weighted average shares outstanding: Basic 19,172 18,850 Diluted 19,172 19,032 Years Ended December 31, 2012 2011 (Unaudited) (Note) Revenue $ 341,604 $ 335,625 Net income $ 3,047 $ 7,907 Basic income (loss) per common share: Continuing operations $ 0.51 $ 0.43 Discontinued operations (0.38 ) (0.03 ) Net income per share $ 0.13 $ 0.40 Diluted income (loss) per common share: Continuing operations $ 0.50 $ 0.43 Discontinued operations (0.37 ) (0.03 ) Net income per share $ 0.13 $ 0.40 Weighted average shares outstanding: Basic 19,050 18,823 Diluted 19,415 19,008
Note: The selected data at December 31, 2011 has been derived from
the audited consolidated financial statements at that date and
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 Statements of Operations (in thousands, except for per share data) Three Months Ended Years Ended December 31, December 31, 2012 2011 2012 2011 (Unaudited) (Unaudited) (Note) Net revenue: Industrial Group $ 55,498 $ 72,223 $ 286,046 $ 273,305 Electronics Group 11,968 11,357 55,558 62,320 Total net revenue 67,466 83,580 341,604 335,625 Cost of sales: Industrial Group 49,919 64,023 255,065 245,962 Electronics Group 8,909 10,850 42,790 54,434 Total cost of sales …