LOUISVILLE, KY -- Sypris Solutions today reported fourth quarter at its Electronics unit was $8.8 million, up 26% year-over-year, with new program ramps offsetting lower demand in certain legacy programs.

Electronic component availability and labor inefficiencies dampened margins during the period. Gross profit was affected by a $400,000 physical inventory adjustment and additional excess and obsolete inventory reserves of $500,000.

“While shipments at Sypris Electronics were generally on plan for the quarter, its results were adversely affected by operational challenges as we neared completion on an engineering manufacturing development program that included numerous design and material changes, and the ramp-up on a new program on which we incurred an unexpected level of inefficiencies," said Jeffrey T. Gill, president and chief executive. "Aside from operational challenges during the fourth quarter, we recognized charges totaling approximately $900,000 for a physical inventory adjustment, which we performed at year-end concurrent with our implementation of a new ERP system, and an increase to our reserve for excess and obsolete inventory on certain specific programs.”

Overall fourth quarter revenue increased 11.5% over a year ago and 13.5% sequentially to $24 million. The net loss was $200,000 versus a loss of $1.2 million for the prior-year quarter. The results for the most recent quarter a benefit in selling, general and administrative expense of $1.9 million for the favorable resolution of a legal fee.

For the year ended Dec. 31, net revenue increased 6.9% over 2017 to $88 million, and gross margin improved 460 basis points. The net loss improved to $3.5 million from a net loss of $10.8 million in 2017. Revenue increased 9% for Sypris Technologies and 2.7% for Sypris Electronics, underscoring favorable market conditions and strong customer relationships.

The company’s outlook for 2019 includes revenue of $100 million to $110 million, representing 19% year-over-year growth at the midpoint, and gross margin of 14%-16%, with both business segments forecasted to register solid profitability for the year.

“We were pleased with the year-over-year revenue growth and margin expansion at Sypris Technologies,” Gill said. “Shipment volumes remained strong in the quarter to support demand coming from the automotive and commercial vehicle markets, which experienced a 17% increase in shipments on a year-over-year basis.

“We also experienced strengthening demand for our energy-related products, which resulted in a 22% increase sequentially in revenue. A number of production, supply and other constraints that we experienced in the previous quarter were mitigated in the current period.

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