Sypris Solutions (NASDAQ: SYPR) reported Q4 EPS of ($0.04), $0.05 worse than the analyst estimate of $0.01. Revenue for the quarter came in at $21.6 million versus the consensus estimate of $23 million.

• The Company reported revenue of $21.6 million for the fourth quarter of 2019, compared to $24.0 million for the prior-year period.
• Additionally, the Company reported a net loss of $0.9 million for the fourth quarter, or $0.04 per share, compared to a net loss of $0.2 million, or $0.01 per share, for the prior-year period.
• The results for the quarter ended December 31, 2018, included a benefit in selling, general and administrative expense of $1.9 million for the favorable resolution of a legal fee dispute.

“Gross margin for Sypris Technologies increased 110 basis points for the fourth quarter and expanded by 330 basis points for the year, despite the reduced demand in the commercial vehicle market at the end of 2019,” commented Jeffrey T. Gill, President and Chief Executive Officer. “Shipments of energy related products remained strong in the quarter, reflecting demand from domestic as well as from international customers. The reduction of new program launch costs going forward is expected to have a meaningful impact on the financial results of the business beginning in early 2020.

“Revenue for Sypris Electronics increased 30.4% sequentially during the fourth quarter, reflecting the resolution of some of the challenges we have faced during the year with shortages of certain electronic components. As shipments rebound to normal run rates, we will continue to focus on improving operational performance, while recent new contract wins are expected to provide important support for the growth of the business during the coming year.”

Concluding, Mr. Gill said, “The ramp up of the recently announced new program awards is expected to help mitigate the softening within the commercial vehicle market. Our customer base and the markets we serve are considerably more diversified than at any point in our recent history. With that said, the global macroeconomic environment is experiencing uncertainty and volatility as a result of the COVID-19 outbreak, and we are closely monitoring the developments and will act promptly to mitigate the risks to our business as we look forward to 2020.”

Outlook

Commenting on the future, Mr. Gill added, “The ramp up of the recently announced new programs is expected to mitigate the expected softness coming from the Class 8 commercial vehicle market. The President of the United States’ proposed Fiscal Year 2021 budget request would provide $740 billion of funding for national security, $705 billion of which is for the Department of Defense. Maintaining defense spending at this level is expected to support program growth and market expansion for aerospace and defense participants during the coming years. The energy market has benefited from oil and natural gas infrastructure development providing opportunities to grow revenue from our product offerings.

“Our performance in early 2020 has improved sequentially from the fourth quarter of 2019 and is consistent with the outlook discussed on our previous earnings call in November. At this point our business has not been materially impacted by COVID-19, but the environment appears to be changing rapidly with regard to customers, suppliers and public policy, and we are paying close attention to developments on a daily basis. First and foremost, we are focused on the health and safety of our employees, their families and our customers. We are closely monitoring local, state and federal government agencies and will follow all recommendations. The extent and duration of the impacts that COVID-19 may have on our business are not known at this time, but we are monitoring developments in order to be in a position to take appropriate action.”

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