Sypris Solutions — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported second quarter revenue of $30.3 million, a decrease from $31.4 million in the prior-year period.
• Reported net loss of $3.1 million ($0.14 per share) for the quarter, compared to a net loss of $2.1 million ($0.09 per share) in the prior-year period.
• Six-month revenue totaled $56.2 million, down from $60.9 million in the first half of 2025.
• Six-month net loss was $7.2 million, compared to $3.0 million in the prior-year period.
• Second quarter gross profit for Sypris Technologies was $2.7 million (18.5% margin), an increase from $2.1 million (15.2% margin) in the prior year.
• Second quarter gross profit for Sypris Electronics was a loss of $0.8 million (-4.9% margin), compared to a profit of $0.4 million (2.5% margin) in the prior year.
• Total gross profit for the second quarter was $2.0 million, down from $2.6 million in the prior year.
• Operating loss for the second quarter was $2.5 million, compared to $1.4 million in the prior year.
• Cash and cash equivalents were $5.9 million as of July 5, 2026, down from $6.8 million as of December 31, 2025.
• Inventory net was $50.5 million as of July 5, 2026, down from $52.5 million as of December 31, 2025.
• Total liabilities were $93.5 million as of July 5, 2026, compared to $90.0 million as of December 31, 2025.
• Total stockholders' equity was $11.7 million as of July 5, 2026, down from $17.8 million as of December 31, 2025.
• Net cash used in operating activities for the six months ended July 5, 2026, was $0.5 million, compared to $4.4 million in the prior year.
• Net cash used in investing activities for the six months ended July 5, 2026, was $0.6 million, compared to $0.2 million in the prior year.
• Net cash provided by financing activities for the six months ended July 5, 2026, was $0.3 million, compared to $1.9 million in the prior year.

Guidance and Future Outlook

• Management expects the challenging operating environment to improve as the company moves through 2026.
• Backed by a robust backlog and recent program wins, management is optimistic that the balance of the year will reflect accelerating top-line growth and vastly improved operational performance.
• Sypris Electronics outlook for the balance of the year is poised for substantial additional growth driven by robust orders and improved material availability.
• Additional growth opportunities are expected from new global initiatives addressing rising LNG demand and the surge in electricity required by AI-related data centers.

Business Segments and Product Lines

• Sypris Technologies revenue increased 5.6% year-over-year to $14.9 million in the second quarter, driven by strong energy product sales and a rebound in the commercial vehicle market.
• Sypris Electronics revenue increased 15.4% sequentially to $15.5 million in the second quarter, though it decreased from $17.3 million in the prior-year period due to material availability issues and customer design changes.
• Orders for Sypris Electronics increased 54% sequentially, driven by satellite and deep space programs and subsea fiber-optic data network systems.
• Total company orders increased 25% sequentially.
• Energy product bookings increased 12% in the first half of 2026 compared to the prior-year period.
• Sypris Electronics is actively pursuing applications for its products in adjacent markets including carbon capture and defense applications.

Market and Competitive Landscape

• Geopolitical conflicts in the Middle East have accelerated demand for inventory replenishment and critical technology upgrades.
• The North American commercial vehicle market has transitioned into an extended expansion cycle reflecting increasing fleet profitability, accelerating freight rates, and rising infrastructure demand.
• Rising LNG demand and electricity requirements for AI-related data centers present new global initiatives for growth.

Risks and Challenges

• Material availability issues and temporary operational headwinds impacted performance during the first half of 2026.
• Material availability delays caused out-of-sequence manufacturing, increased costs, and decreased operational efficiency at Sypris Electronics.
• Customer design changes on certain new programs pushed out delivery dates for Sypris Electronics.
• Second quarter results included $2.1 million in abnormally high expenses for healthcare, unabsorbed overhead, foreign exchange variances, scrap charges, and accruals for excess and obsolete inventory.
• Six-month results included $4.5 million in increased expenses for healthcare, unabsorbed overhead, foreign exchange variances, scrap charges, and accruals for excess and obsolete inventory.
• Sypris Technologies gross profit was negatively impacted by a $0.5 million unfavorable impact from foreign currency exchange rates for its Mexican subsidiary.
• Sypris Electronics gross profit reflected $0.7 million in charges for excess and obsolete inventory.
• The company faces risks related to supply chain disruptions, raw material costs, tariffs, trade restrictions, and reliance on key customers and suppliers.
• Risks include potential government shutdowns, foreign currency fluctuations, cybersecurity threats, and product liability claims.

Management Commentary and Tone

• Jeffrey T. Gill, President and CEO, stated that Sypris Electronics is uniquely equipped to capitalize on current geopolitical dynamics due to its advanced production capabilities and strong market position.
• Management noted they are actively resolving material availability and operational challenges to unlock full earnings potential going forward.
• Management expressed optimism regarding the balance of the year despite the challenging operating environment.

Other Key Points

• The company reported no dividends declared per common share for the quarter or six-month period.
• Sypris Solutions serves critical infrastructure sectors including energy, space, communications, defense, transport, chemical, and water globally through North American operations.
• The company holds a working capital line of credit of $500,000 and a note payable to a related party of $12.0 million ($2.0 million current, $9.9 million non-current) as of July 5, 2026.
• The company has a loan payable of $1.1 million ($0.2 million current, $0.9 million non-current) as of July 5, 2026.
• The company incurred $1.5 million in depreciation and amortization and $1.1 million in provision for excess and obsolete inventory during the six months ended July 5, 2026.
• Capital expenditures were $0.6 million for the six months ended July 5, 2026.