Sypris Reports First Quarter Results

Reaffirms 2018 Growth and Margin Expansion Guidance

LOUISVILLE, Ky.–(BUSINESS WIRE)–$SYPR–Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial
results for its first quarter ended April 1, 2018. Sypris Solutions has
completed several strategic initiatives in order to better align its
cost structure and diversify the CompanyÔÇÖs book of business, both in
terms of customers and markets. As a result, the Company has stabilized
its revenue base and is positioned to achieve attractive top-line growth
in 2018, along with higher gross profit and a return to profitable
operations.

HIGHLIGHTS

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• The CompanyÔÇÖs first quarter revenue increased 9.7% compared to the
  prior-year quarter, while gross margin improved to 10.2%, up from a
  negative 3.0% last year.
• Revenue for Sypris Technologies increased 13.7% during the quarter
  compared to the prior-year period, reflecting the impact of new
  contract awards and positive market conditions.
• Gross margin for Sypris Technologies improved to 14.5% for the
  quarter, up from a negative 5.0% for the prior-year period, and
  increased 320 basis points sequentially from the fourth quarter of
  2017, reflecting significantly lower operating costs and improved mix.
• Orders for Sypris Electronics increased 84.1% during the quarter
  compared to the same period in 2017. Revenue was unchanged on a
  year-over-year basis and down sequentially, reflecting the short-term
  impact on sales from the delay in the receipt of certain electronic
  components.
• During the quarter, the Company announced new contract awards for
  Sypris Electronics for the production of electronic assemblies for use
  in munition dispensing systems and global undersea communications
  projects.
• The Company reaffirmed its financial guidance for the year, with
  revenue forecast to be in the range of $90.0-$96.0 million for 2018,
  representing top-line growth of 13.0% at the midpoint on a
  year-over-year basis, with gross profit forecast to be in the range of
  15.0%-17.0% of revenue. As a result, the Company expects to be
  profitable for the year.

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ÔÇ£We are pleased to report that the gross margin and adjusted operating
income of Sypris Technologies increased for the second consecutive
quarter, reflecting the benefits of our previously announced cost
reduction efforts and our work to target more strategic marketing
opportunities,ÔÇØ commented Jeffrey T. Gill, president and chief executive
officer. ÔÇ£With all of our cost reduction programs now complete, we can
look forward to the full impact of these actions rolling into our 2018
results, with further meaningful improvements in gross margin expected
to be reported during the balance of the year.

ÔÇ£The financial results of Sypris Electronics continued to be affected
during the first quarter by materials availability, which resulted in
lower shipment levels than were otherwise planned. Importantly, we
expect to see progressively higher levels of shipments sequentially
through 2018, with a full recovery to normal deliveries during the
second half of the year.

ÔÇ£As noted in our fourth quarter update, electronic component shortages
and extensive lead-time issues are currently prevalent in the
electronics manufacturing industry. We are continuing to work with our
customers to qualify alternative components and/or suppliers to mitigate
the impact on our business and expedite shipments to our customers. The
majority of our aerospace and defense programs require specific
components or components that are sole-sourced to specific suppliers;
therefore, the resolution of supplier constraints requires coordination
with our customers or the end-users of the products.

ÔÇ£We continue to see strong demand in each of our primary markets to
support our revenue outlook for the balance of the year. The combination
of our expected revenue growth and lower fixed manufacturing overhead
costs, driven by our cost reduction actions, will contribute to our
return to profitability for 2018,ÔÇØ Mr. Gill added.

Concluding, Mr. Gill said, ÔÇ£With the closure of the Broadway Plant, we
have taken 450,000 square feet out of our operating footprint, our SG&A
expense will continue to decline as a percentage of revenue, and our
customer base and markets served are resilient, growing and are
considerably more diversified than at any point in our history. We have
substantially improved the CompanyÔÇÖs competitiveness.ÔÇØ

First Quarter Results

The Company reported revenue of $19.9 million for the first quarter
compared to $18.2 million for the prior-year period. Additionally, the
Company reported a net loss of $1.8 million, or $0.09 per share,
compared to a loss of $3.3 million, or $0.16 per share, for the
prior-year period. The results for the quarter ended April 1, 2018,
include a gain of $0.3 million from the sale of excess equipment by
Sypris Technologies and costs of $0.5 million related to preparing the
Broadway facility for sale or other use. Results for the quarter ended
April 2, 2017, include a gain of $2.4 million from the sale of excess
equipment by Sypris Technologies, a foreign exchange translation loss of
$0.4 million and severance and relocation costs of $1.0 million related
to the Broadway transition. Excluding the gains on sales of equipment,
severance and relocation costs and foreign exchange translation loss,
the net loss for the quarter ended April 1, 2018 and April 2, 2017,
would have been $1.6 million and $4.3 million, respectively.

Sypris Technologies

Revenue for Sypris Technologies was $14.5 million in the first quarter
compared to $12.8 million for the prior-year period, primarily
reflecting an increase in demand from customers in the oil and gas,
automotive and commercial vehicle industries. Gross profit for the
quarter was $2.2 million, or 14.5% of revenue, compared to a loss of
$0.6 million, or a negative 5.0% of revenue, for the same period in
2017. Gross profit was positively affected by the increase in volume and
productivity improvements realized following the transfer of production
from our Broadway Plant, which was completed as of the end of 2017.

Sypris Electronics

Revenue for Sypris Electronics was flat at $5.4 million in the first
quarter of 2018 compared to the prior year-period. Revenue for the
quarter was affected by shortages of certain electronic components and
extensive lead-time issues in the electronics manufacturing industry.
Gross profit for the quarter was a loss of $0.1 million, compared to a
profit of $0.1 million for the prior-year period, primarily reflecting
changes in revenue mix.

Outlook

Commenting on the future, Mr. Gill added, ÔÇ£Our markets are poised to
provide Sypris with the opportunity for healthy, double-digit revenue
growth during 2018. New contract awards and market expansion are
expected to occur in each of our targeted markets for energy,
automotive, commercial vehicle and aerospace and defense products.

ÔÇ£Third-party forecasts for the Class 8 commercial vehicle market
indicate production will be up over 30% in 2018 compared to 2017. The
energy market continues to benefit from increased demand and higher oil
prices. The National Defense Authorization Act for Fiscal Year 2018
provides nearly $700 billion in funding for the U.S. Department of
Defense, which is expected to support program growth and market
expansion for Aerospace and Defense participants during the coming year.
And from a cost standpoint, we expect to benefit from significantly
lower fixed overhead and production costs at Sypris Technologies, as
well as from the elimination of severance and other expenses.

ÔÇ£As a result, we are pleased to reaffirm our guidance for 2018, with
full-year revenue and gross margin expected to be in the range of
$90.0-$96.0 million and 15.0%-17.0%, respectively. Revenue and gross
margin for the first six months of 2018 are forecast to be in the range
of $43.0-$45.0 million and 13.0%-15.0%, respectively, while revenue and
gross margin for the second half of the year are forecast to be in the
range of $47.0-$51.0 million and 16.0%-18.0%, respectively.

ÔÇ£Taking a closer look at the first half of 2018, we are forecasting
consolidated revenue and gross margin for the second quarter of
$23.0-$25.0 million and 16.0%-18.0%, respectively. Sypris Technologies
is expected to generate revenue and gross margin of $16.0-$17.0 million
and 18.0%-21.0%, respectively, for the quarter, while revenue and gross
margin for Sypris Electronics is forecast to be in the range of
$7.0-$8.0 million and 10.0%-12.0%, respectively.

ÔÇ£We expect selling, general and administrative spending to be in the
range of 13.0%-14.5% of revenue for the full year, subject to actual top
line performance. The net result is that we expect to return to
profitability on a consolidated basis for 2018.ÔÇØ

Sypris Solutions is a diversified provider of truck components, oil and
gas pipeline components and aerospace and defense electronics. The
Company performs a wide range of manufacturing services, often under
multi-year, sole-source contracts. For more information about Sypris
Solutions, visit its Web site at www.sypris.com.

Forward Looking Statements

This press release contains ÔÇ£forward-lookingÔÇØ statements within
the meaning of the federal securities laws. Forward-looking
statements include our plans and expectations of future financial and
operational performance. Each forward-looking statement
herein is subject to risks and uncertainties, as detailed in our most
recent Form 10-K and Form 10-Q and other SEC filings. Briefly, we
currently believe that such risks also include the following: our
estimated EBITDA and cash flows includes significant gains and proceeds
from the anticipated sale of certain equipment, but there can be no
assurances that such sales will be achieved as planned; our failure to
return to profitability on a timely basis, which would cause us to
continue to use existing cash resources or other assets to fund
operating losses; the cost, quality, timeliness, efficiency and yield of
our operations and capital investments, including working capital,
production schedules, cycle times, scrap rates, injuries, wages,
overtime costs, tariffs, freight or expediting costs; our failure to
successfully migrate to a more diversified base of customers in the
commercial vehicle markets who place high strategic value on our
innovation, flexibility and lean manufacturing capabilities, including
the targeted increase in sales of our Tube Turns® energy-related
products; cost and availability of raw materials such as steel,
component parts (especially electronic components), natural gas or
utilities; inventory valuation risks including excessive or obsolescent
valuations or price erosions of raw materials or component parts on
hand; breakdowns, relocations or major repairs of machinery and
equipment, especially in our Toluca Plant; our failure to successfully
complete final contract negotiations with regard to our announced
contract ÔÇ£orders,ÔÇØ ÔÇ£winsÔÇØ or ÔÇ£awardsÔÇØ; dependence on, retention or
recruitment of key employees; disputes or litigation involving supplier,
customer, employee, creditor, stockholder, product liability or
environmental claims; volatility of our customersÔÇÖ forecasts, scheduling
demands and production levels which negatively impact our operational
capacity and our effectiveness to integrate new customers or suppliers,
and in turn cause increases in our inventory and working capital levels;
the fees, costs and supply of, or access to, debt, equity capital, or
other sources of liquidity; potential impairments, non-recoverability or
write-offs of assets or deferred costs; the costs of compliance with our
auditing, regulatory or contractual obligations; regulatory actions or
sanctions; changes in licenses, security clearances, or other legal
rights to operate, manage our work force or import and export as needed;
labor relations; strikes; union negotiations; pension valuation, health
care or other benefit costs; potential weaknesses in internal controls
over financial reporting and enterprise risk management; our inability
to patent or otherwise protect our inventions or other intellectual
property from potential competitors; our reliance on third party vendors
and sub-suppliers; adverse impacts of new technologies or other
competitive pressures which increase our costs or erode our margins;
U.S. government spending on products and services that Sypris
Electronics provides, including the timing of budgetary decisions; risks
of foreign operations; currency exchange rates; war, terrorism, or
political uncertainty; cyber security threats and disruptions; failure
to adequately insure or to identify environmental or other insurable
risks; unanticipated or uninsured disasters, losses or business risks;
inaccurate data about markets, customers or business conditions; or
unknown risks and uncertainties.

Note: The balance sheet at December 31, 2017, has been derived from the
audited consolidated financial statements at that date but does not
include all information and footnotes required by accounting principles
generally accepted in the United States for a complete set of financial
statements.

Contacts

Sypris Solutions, Inc.
Anthony C. Allen, 502-329-2000
Chief
Financial Officer