Sypris Solutions (NASDAQ: SYPR) reported Q2 EPS of $0.04. Revenue for the quarter came in at $22.97 million versus the consensus estimate of $23.05 million.

• The Company’s revenue increased 15.2% sequentially from the first quarter of 2018, while gross margin increased to 12.8% of revenue, up 260 basis points sequentially and up 520 basis points from the second quarter of 2017. Earnings improved to $0.04 per share from a loss of $0.15 for the prior-year period.
• Revenue for Sypris Technologies increased 9.0% during the quarter compared with the prior-year period, reflecting the impact of new contract awards and favorable market conditions.
• Gross margin for Sypris Technologies increased to 12.6% of revenue, up from 2.3% for the prior-year period, reflecting the impact of increased revenue and significantly lower operating costs.
• Revenue for Sypris Electronics increased 40.6% sequentially and 6.3% compared with the prior-year period, reflecting strong backlog and an improvement in the timely receipt of certain electronic components.
• Gross margin for Sypris Electronics increased to 13.1% of revenue for the quarter, up sequentially from a loss of 1.4% for the first quarter of 2018, reflecting the positive conversion on the increase in shipments.
• The Company’s performance for the first half of 2018 was strong compared with the prior-year period, with revenue, gross profit and gross margin increasing by 8.8%, 361.4%, and 890 basis points, respectively.
• The Company confirmed its financial guidance for the second half of 2018, with revenue forecasted to be in the range of $47.0-$51.0 million, representing top-line growth of 14% at the midpoint on a year-over-year basis, and gross profit forecasted to be in the range of 16.0%-18.0% of revenue.

GUIDANCE:

Commenting on the future, Mr. Gill added, “Alongside current volume growth, we are poised to capitalize on additional opportunities across our markets for healthy, double-digit revenue expansion during the balance of 2018. New contract awards and market expansion are expected to occur in each of our targeted markets for energy, automotive, commercial vehicle, and aerospace and defense products.

“Third-party forecasts for the Class 8 commercial vehicle market indicate production will be up significantly in 2018 compared with 2017. The energy market continues to benefit from increased demand and higher oil prices. The National Defense Authorization Act for Fiscal Year 2018 provides nearly $700 billion in funding for the U.S. Department of Defense, which is expected to support program growth and market expansion for Aerospace and Defense participants during the coming year. And, from a cost standpoint, we expect to benefit from significantly lower fixed overhead and production costs at Sypris Technologies, as well as from the elimination of severance and other expenses.

“As a result, we are pleased to confirm our guidance for the second half of 2018, with revenue and gross margin expected to be in the range of $47.0-$51.0 million and 16.0%-18.0%, respectively.

“We expect selling, general and administrative spending to be in the range of 12.0%-13.5% of revenue for the second half of 2018, subject to actual top-line performance. The net result is that we expect to be profitable on a consolidated basis for the full year 2018.”

For earnings history and earnings-related data on Sypris Solutions (SYPR) click here.