Revenue Performance - Sypris Technologies' net revenue decreased by 5.9%, or $1.2 million, to $18.35 million in Q1 2024 compared to Q1 2023, primarily due to decreased sales volumes in energy products and the commercial vehicle market [93]. - Sypris Electronics' net revenue increased by 34.5%, or $4.4 million, to $17.2 million in Q1 2024 compared to Q1 2023, driven by ramping production for follow-on programs [94]. Profitability - The gross profit for Sypris Technologies decreased by 22.3% to $2.05 million in Q1 2024, with a gross margin of 11.2%, down from 13.5% in Q1 2023 [95]. - Sypris Electronics' gross profit decreased by 45.3% to $0.83 million in Q1 2024, with a gross margin of 4.8%, down from 11.9% in Q1 2023 [96]. Expenses and Financial Health - Selling, general and administrative expenses increased by 13.7% to $4.26 million in Q1 2024, rising as a percentage of revenue to 12.0% from 11.6% in the prior year [97]. - As of March 31, 2024, the company had an accumulated deficit and a net loss, with negative cash flow from operating activities amounting to $1.7 million for Q1 2024, compared to $1.2 million in Q1 2023 [100][109]. - The company experienced a liquidity shortfall in Q4 2023 and Q1 2024, necessitating negotiations with suppliers to amend payment terms [100]. - The company plans to implement contingency measures, including cost reduction initiatives, if revenue forecasts are not met [102]. Inventory and Cash Flow - The company's net inventory increased from $42.1 million to $77.3 million between December 31, 2022, and December 31, 2023, primarily due to delays in shipments related to contracts with aerospace and defense customers [100]. - Cash and cash equivalents stood at approximately $8.1 million as of March 31, 2024, with $3.0 million held outside the U.S., which could incur withholding taxes if repatriated [103]. - The company reported a cash flow usage of $4.3 million due to an increase in accounts receivable, offset by a $6.4 million source of cash from a decrease in inventory [109]. Financing and Commitments - The company received a total of $9.0 million in secured promissory note obligations from Gill Family Capital Management as of March 31, 2024, up from $6.5 million as of December 31, 2023 [104][106]. - Net cash provided by financing activities was $2.2 million for Q1 2024, driven by proceeds from the note and equipment financing obligations [111]. - The company had purchase commitments totaling approximately $41.3 million as of March 31, 2024, primarily for inventory and manufacturing equipment [108]. - As of March 31, 2024, the company had $3.1 million outstanding under finance lease obligations with a weighted average interest rate of 8.8% [107]. Market Outlook - The North American Class 8 truck production increased by 8% in 2023, but is expected to decrease by 10% in 2024, starting in Q2 [82]. - Supply chain challenges and electronic component shortages are anticipated to continue impacting Sypris Electronics' operations throughout 2024 [85]. - The oil and gas markets are expected to see increased demand in 2024, driven by rising production activity, particularly in liquefied natural gas shipments to Europe [83]. - The federal budget for national defense is projected at $895 billion for FY 2025, with $850 billion allocated for the DoD base budget, indicating ongoing support for defense spending [88]. - Sypris Technologies plans to pursue new business opportunities across various markets to achieve a more balanced portfolio [84].
Sypris Solutions(SYPR) - 2024 Q1 - Quarterly Report