Revenue and Market Performance - Sypris Technologies' revenue is primarily generated from the sale of forged, machined, welded, and heat-treated steel components, with a focus on the heavy commercial vehicle and high-pressure energy pipeline applications [155]. - In 2024, production of Class 8 trucks in North America decreased by 2% compared to 2023, with a projected further decline of 5% in 2025 due to lower freight volumes and rates [158]. - Total net revenue increased by $3.96 million, or 2.9%, to $140.18 million in 2024 compared to 2023 [184]. - Sypris Technologies' net revenue decreased by $2.7 million, or 3.5%, to $75.2 million, primarily due to decreased sales volumes in the commercial vehicle market [185]. - Sypris Electronics' net revenue increased by $6.67 million, or 11.4%, to $65.0 million, driven by ramping production and new program shipments [188]. - Revenue for Sypris Technologies is expected to decrease slightly in 2025 due to anticipated declines in the commercial vehicle market, partially offset by higher energy component sales [187]. Cost and Profitability - Gross profit for Sypris Technologies increased by $3.6 million, or 39.3%, to $12.8 million, attributed to favorable foreign exchange rates and improved product mix [189]. - Gross profit for Sypris Electronics decreased by $0.9 million, or 12.1%, to $7.1 million, due to an unfavorable mix of programs and high unusable inventory [190]. - Selling, general and administrative expenses increased by $0.7 million, or 4.2%, to $17.0 million, primarily due to higher employee medical insurance claims and increased headcount [191]. - Interest expense increased by $0.9 million, or 116.7%, to $1.68 million, due to higher average debt and interest rates [192]. - The Company reported a net loss of $1.7 million for the year ended December 31, 2024, compared to a net loss of $1.6 million for 2023 [197]. Supply Chain and Operational Challenges - The company anticipates continued supply chain pressures and inflationary cost increases throughout 2025, which may negatively impact operational results [157]. - Sypris Electronics has encountered extended lead times for certain components, with waiting times approaching a year or more, affecting delivery schedules [161]. - The Company experienced a significant increase in net inventory in 2023, primarily due to delayed shipments related to contracts with Sypris Electronics' aerospace and defense customers [197]. Financial Position and Cash Flow - Cash used in operating activities was $11.1 million for the year ended December 31, 2023, while net cash provided by operating activities improved to $2.0 million in 2024 [197][205]. - As of December 31, 2024, the Company had approximately $9.7 million in cash and cash equivalents, with $4.0 million held outside the U.S. [200]. - The Company had purchase commitments totaling approximately $29.7 million as of December 31, 2024, primarily for inventory due through 2026 [204]. - Net cash provided by financing activities was $0.8 million in 2024, compared to net cash used of $0.6 million in 2023 [207]. - The decrease in inventory in 2024 resulted in a source of cash of $9.1 million, reflecting strategic inventory management efforts [205]. Strategic Initiatives and Future Outlook - Sypris Technologies aims to pursue new business opportunities across various markets, including light automotive and new pressure vessel applications, to achieve a more balanced portfolio [160]. - The ongoing geopolitical factors and macroeconomic variables, including high interest rates and rising material costs, are shaping the oil and gas markets served by Sypris [159]. - The company is positioned to compete for follow-on business opportunities as a subcontractor on future builds of several existing government programs, despite uncertainties surrounding the federal budget and debt ceiling [168]. - The Company is prepared to implement contingency plans, including cost reduction initiatives, if forecasted revenues are not achieved [199]. - The President's FY 2025 budget request includes $895 billion for national defense, with $850 billion allocated for the DoD base budget, reflecting a commitment to defense spending despite budgetary constraints [164].
Sypris Solutions(SYPR) - 2024 Q4 - Annual Report