Benzinga | Aug 12, 2021 05:00PM EDT

Sypris Technologies Drives Q2 Margin Expansion, Raises FY21 Outlook

* Sypris Solutions Inc (NASDAQ:SYPR) reported second-quarter FY21 revenue growth of 51.4% year-on-year to $25.97 million, beating the analyst consensus of $20.7 million.

* Sypris Technologies revenue increased 130.2% Y/Y to $17.1 million, and Sypris Electronics revenue decreased 9% Y/Y to $8.8 million.

* Backlog for Sypris Electronics grew 29.3% Y/Y, while the OEM backlog of Class 8 commercial vehicles is estimated to be up 187% Y/Y.

* The gross margin expanded 420 bps to 16.6% as both the segments noted margin expansion. Sypris Technologies' gross margin increased 1,150 bps to a 14.6% increase in shipments, higher levels of fixed cost absorption, and significantly improved productivity. Sypris Electronics' gross margin rose 90 bps to 20.4%.

* EPS of $0.17 beat the analyst consensus loss of $(0.02).

* Sypris held $18.2 million in cash and equivalents and generated $8.6 million in operating cash flow during the six months ended Jul. 4. Shipments increased 30.0% Q/Q.

* The demand has strengthened significantly from customers serving the automotive, commercial vehicle, and sport utility markets, with Class 8 forecasts showing Y/Y production increases of over 34.6% for 2021 and an additional 24.6% in 2022.

* Similarly, demand from customers in the defense and communications sector remains robust, while the energy market continues to be volatile, Sypris continue to secure new orders on important projects globally.

* Outlook: Sypris increased FY21 revenue growth guidance from 25%-30% to 30%-35% Y/Y.

* It sees gross margin expansion of 300 bps - 400 bps Y/Y during the second half of 2021, leading to strong double-digit percentage growth in full-year operating cash flow.

* Price Action: SYPR shares closed higher by 2.17% at $3.30 on Thursday.