SYPR's Q1 Loss Narrows Y/Y on Margin Gains, Electronics Backlog Growth

Shares of Sypris Solutions, Inc. SYPR have slipped 0.6% since the company reported earnings for the first quarter of 2025, trailing the S&P 500’s 1.4% growth over the same period. Over the past month, the stock has also declined 0.6%, sharply underperforming the broader market’s robust 15.4% climb.

For the quarter ended March 30, 2025, Sypris incurred a net loss of 4 cents per share, which narrowed from 10 cents per share a year earlier. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company reported revenue of $29.5 million, marking a 17% year-over-year decline from $35.6 million in the prior-year period. The revenue dip was attributed to a downturn in the commercial vehicle market, shipment delays at Sypris Electronics, and the shift to a sub-maquiladora operating model in Mexico, which reduced recognized revenue. Despite the revenue contraction, Sypris narrowed its net loss to $0.9 million from a net loss of $2.2 million a year earlier, reflecting improved operational efficiencies and a better gross margin profile.

Profitability Metrics Show Strong Improvement

Gross profit increased 16.7% year over year to $3.4 million, up from $2.9 million, while consolidated gross margin rose by 330 basis points. The Electronics segment was a notable driver, with gross profit surging 51.1% to $1.3 million due to a more favorable program mix and cost efficiencies on ramped contracts. Gross margin in this segment improved 310 basis points to 7.9%. Meanwhile, Sypris Technologies maintained flat gross profit at $2.1 million, but its margin jumped 430 basis points to 15.5%, buoyed by favorable foreign exchange in Mexico.

Management Commentary Highlights Strategic Focus

CEO Jeffrey T. Gill emphasized the company’s commitment to operational excellence, noting that Sypris Electronics now boasts a backlog exceeding $80 million, more than a year’s worth of sales for the segment. A portion of these contracts is already funded, allowing the company to place long-lead inventory orders and mitigate supply chain risk. Gill also acknowledged macroeconomic headwinds, particularly tariff-related uncertainty, and stated that despite a modest decline in production volumes for the commercial vehicle market, diversified end-market exposure should cushion the impact.

Factors Impacting Quarterly Results

The drop in revenues for both business segments was largely cyclical and operational. For Sypris Technologies, revenue fell to $13.6 million from $18.4 million, reflecting both end-market weakness and a $1.6 million impact from its transition to sub-maquiladora operations in Mexico. Nevertheless, foreign exchange tailwinds helped maintain profitability. Sypris Electronics saw revenues decline to $15.9 million from $17.2 million, primarily due to customer delivery timing. However, a $0.6 million equitable adjustment tied to a scope modification in a major contract positively affected profitability.

Withdrawn Guidance Reflects Cautious Stance

Given macroeconomic uncertainty, particularly the unclear ramifications of new tariffs, management has withdrawn its full-year 2025 guidance initially issued on March 27, 2025. The company stated it would suspend future guidance until greater visibility emerges. While acknowledging an expected modest revenue decline due to the Mexican shipment conversion and softer commercial vehicle demand, Gill pointed to the electronics backlog and robust energy product orders as potential offsets.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com