
Executive Summary & Highlights Sypris Solutions reported improved first-quarter results with increased gross profit and margins, reduced net loss, and strategic focus on operational excellence and market diversification Company Overview & Key Highlights Sypris Solutions reported improved first-quarter results with a 16.7% increase in gross profit and expanded margins, leading to a reduced net loss and improved EPS, despite a decline in overall revenue - Gross Profit: Up 16.7% from the prior-year period, while gross margin expanded 330 basis points4 - EPS: Loss of $0.04 per share, an improvement of $0.06 per share from a loss of $0.10 per share for the prior-year period4 - Sypris Electronics Gross Profit: Improved 51.1% from the prior year, reflecting a more favorable mix of programs and lower costs, with gross margin growing 310 basis points4 - Sypris Technologies Gross Profit: Up slightly compared to the prior-year period, with gross margins increasing by 430 basis points, positively impacted by favorable foreign exchange rates4 - Sypris Technologies Energy Products Backlog: Orders remained at an elevated level, driving backlog up 32.8% from year-end4 CEO Commentary & Strategic Focus CEO Jeffrey T. Gill emphasized operational excellence to execute the over $80 million Sypris Electronics backlog and highlighted market diversification efforts in Sypris Technologies, including pursuing growth in LNG, AI data centers, and CO2 capture markets - Operational Focus: Focused on operational excellence to drive timely and efficient execution of Sypris Electronics' over $80 million backlog3 - Supply Chain Mitigation: Customer funding secured for a portion of key programs enables procurement of inventory under multi-year purchase orders to mitigate future supply chain issues3 - Market Diversification (Sypris Technologies): Accomplished market diversification by adding new programs in automotive, sport-utility, and off-highway markets to help offset anticipated cyclical decline for the commercial vehicle market5 - Growth Opportunities (Energy Products): Actively pursuing applications in adjacent markets including CO2 capture and new global projects supporting increasing LNG demand, including support for AI data centers' electricity demand6 First Quarter Financial Results The company's first-quarter results show a revenue decline but significant improvements in net loss and gross profit margins across both Sypris Technologies and Sypris Electronics segments Consolidated Financial Performance The Company reported a decrease in first-quarter revenue to $29.5 million from $35.6 million in the prior year, but significantly reduced its net loss from $2.2 million to $0.9 million, resulting in an improved loss per share of $0.04 Consolidated Financial Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :----------------- | :--------------------- | :--------------------- | :----- | | Revenue | $29,508 | $35,553 | (17.0%) | | Net Loss | $(899) | $(2,221) | 59.5% (improvement) | | Basic EPS | $(0.04) | $(0.10) | 60.0% (improvement) | | Diluted EPS | $(0.04) | $(0.10) | 60.0% (improvement) | Segment Performance Both Sypris Technologies and Sypris Electronics experienced revenue declines but achieved significant gross margin improvements due to favorable factors and cost management Sypris Technologies Sypris Technologies' revenue decreased to $13.6 million due to a cyclical decline in the commercial vehicle market, delayed energy product shipments, and a shift to a sub-maquiladora services agreement in Mexico. Despite this, gross profit remained stable at $2.1 million, and gross margin improved significantly to 15.5%, aided by favorable foreign exchange rates Sypris Technologies Financial Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :----------------- | :--------------------- | :--------------------- | :----- | | Revenue | $13,573 | $18,350 | (26.0%) | | Gross Profit | $2,107 | $2,051 | 2.7% | | Gross Margin | 15.5% | 11.2% | +430 bps | - Revenue Decline Factors: Attributed to the anticipated cyclical decline in the commercial vehicle market, a delay in energy product sales shipments, and a $1.6 million revenue decrease from operating under a sub-maquiladora services agreement in Mexico8 - Gross Profit Impact: Positively impacted by $0.4 million from favorable foreign currency exchange rates for the Mexican subsidiary, partially offset by decreased volumes8 Sypris Electronics Sypris Electronics reported a revenue decrease to $15.9 million due to changes in customer delivery schedules. However, gross profit significantly improved by 51.1% to $1.3 million, and gross margin expanded to 7.9%, partly due to a $0.6 million equitable adjustment for scope modifications on a new contract Sypris Electronics Financial Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :----------------- | :--------------------- | :--------------------- | :----- | | Revenue | $15,935 | $17,203 | (7.4%) | | Gross Profit | $1,259 | $833 | 51.1% | | Gross Margin | 7.9% | 4.8% | +310 bps | - Revenue Decline Factor: Primarily a result of changes in customer delivery schedules for the current year9 - Gross Profit Impact: Included a $0.6 million request for equitable adjustment to offset certain additional costs for scope modifications in 2024 on a new contract, approved and recognized in Q1 20259 Business Outlook Management expresses confidence in 2025's potential despite market uncertainty, but has withdrawn financial guidance due to potential new tariffs and plans to suspend future guidance until economic stability Management Commentary & Future Prospects Management expressed confidence in 2025's potential despite market uncertainty, driven by a strong backlog, new program wins, and long-term contract extensions. They anticipate a modest revenue decline from specific factors but expect strong backlog and energy product orders to partially offset this - Confidence for 2025: Management is confident that 2025 has the potential to be very positive for Sypris, despite increased market uncertainty, due to a strong backlog, new program wins, and long-term contract extensions10 - Anticipated Revenue Decline: A modest decline in revenue is anticipated due to the conversion of certain shipments from Mexico to a value-add only sub-maquiladora basis and the cyclical decrease in production volumes in the commercial vehicle market10 - Offsetting Factors: The combined strength of Sypris Electronics' backlog and robust orders for energy products is expected to serve as a partial offset to the anticipated revenue decline10 Withdrawal of Financial Guidance Due to macroeconomic uncertainty, particularly related to potential new tariffs, the Company has withdrawn its 2025 financial guidance and plans to suspend future guidance until the economic outlook stabilizes - Withdrawal of Guidance: The Company is withdrawing the 2025 financial guidance provided in its earnings release on March 27, 202510 - Reason for Withdrawal: Due to macroeconomic uncertainty related to the potential impact of new tariffs10 - Future Guidance: Plans to suspend any future guidance until the outlook for the economy stabilizes10 Company Information Sypris Solutions is a diversified manufacturing and engineering services company, with this section also detailing cautionary forward-looking statements and associated risks About Sypris Solutions Sypris Solutions is a diversified manufacturing and engineering services company that serves the defense, transportation, communications, and energy industries - Business Type: Sypris Solutions is a diversified manufacturing and engineering services company11 - Industries Served: Serves the defense, transportation, communications, and energy industries11 Forward-Looking Statements This section serves as a cautionary disclosure regarding forward-looking statements, outlining various risks and uncertainties that could impact future financial and operational performance, including tariffs, supply chain issues, and geopolitical conflicts - Nature of Statements: The press release contains "forward-looking" statements regarding plans and expectations of future financial and operational performance12 - Key Risks Highlighted: Risks include fees/costs of capital, contract termination, failure to achieve profitability, volatility of customer forecasts, raw material costs (inflation, tariffs), reliance on key customers/vendors, foreign operations risks (FX), delays in contract negotiations, government shutdowns, operational efficiency, inventory valuation, new technologies, product liability, machinery breakdowns, compliance costs, pension/benefit costs, dependence on key employees, reliance on oil/gas and automotive markets, failure to win new business, war/geopolitical conflict (Russia-Ukraine, Israel-Gaza), labor relations, litigation, cybersecurity threats, Nasdaq listing compliance, public health emergencies12 Financial Statements This section presents the company's consolidated financial statements, including highlights, statements of operations, balance sheets, and cash flow statements for the first quarter Financial Highlights This section provides a concise overview of the company's key consolidated financial results for the three months ended March 30, 2025, compared to the prior-year period Consolidated Financial Highlights | Metric | Three Months Ended March 30, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Revenue | $29,508 | $35,553 | | Net loss | $(899) | $(2,221) | | Loss per common share: Basic | $(0.04) | $(0.10) | | Loss per common share: Diluted | $(0.04) | $(0.10) | | Weighted average shares outstanding: Basic | 22,140 | 21,965 | | Weighted average shares outstanding: Diluted | 22,140 | 21,965 | Consolidated Statements of Operations The Consolidated Statements of Operations detail the company's revenues, costs, and profitability for the quarter, showing a decrease in total net revenue but an improvement in gross profit and a reduced operating and net loss for the first quarter of 2025 compared to 2024 Consolidated Statements of Operations (Three Months Ended) | Metric (in thousands) | March 30, 2025 | March 31, 2024 | | :-------------------------- | :------------- | :------------- | | Net revenue: Sypris Technologies | $13,573 | $18,350 | | Net revenue: Sypris Electronics | $15,935 | $17,203 | | Total net revenue | $29,508 | $35,553 | | Total cost of sales | $26,142 | $32,669 | | Gross profit: Sypris Technologies | $2,107 | $2,051 | | Gross profit: Sypris Electronics | $1,259 | $833 | | Total gross profit | $3,366 | $2,884 | | Selling, general and administrative | $3,496 | $4,258 | | Operating loss | $(130) | $(1,374) | | Net loss | $(899) | $(2,221) | | Basic Loss per common share | $(0.04) | $(0.10) | | Diluted Loss per common share | $(0.04) | $(0.10) | Consolidated Balance Sheets The Consolidated Balance Sheets present the company's financial position, showing a decrease in total assets and liabilities from December 31, 2024, to March 30, 2025, with a slight reduction in total stockholders' equity Consolidated Balance Sheet (as of) | Metric (in thousands) | March 30, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Total current assets | $89,914 | $98,018 | | Total assets | $110,203 | $119,376 | | Total current liabilities | $69,479 | $79,461 | | Total liabilities | $91,226 | $99,795 | | Total stockholders' equity | $18,977 | $19,581 | | Cash and cash equivalents | $6,624 | $9,675 | | Inventory, net | $62,527 | $66,680 | Consolidated Cash Flow Statements The Consolidated Cash Flow Statements indicate a net cash outflow from operating activities of $5.5 million for Q1 2025, an increase from $1.7 million in Q1 2024, while financing activities provided $2.5 million in cash, leading to an overall net decrease in cash and cash equivalents Consolidated Cash Flow Summary (Three Months Ended) | Metric (in thousands) | March 30, 2025 | March 31, 2024 | | :-------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(5,534) | $(1,709) | | Net cash used in investing activities | $(3) | $(316) | | Net cash provided by financing activities | $2,497 | $2,210 | | Net (decrease) increase in cash and cash equivalents | $(3,051) | $215 | | Cash and cash equivalents at end of period | $6,624 | $8,096 |