Telecommunications

[May 15, 2012]

Sypris Reports First Quarter Results

Sypris Solutions, Inc. (Nasdaq/NM: SYPR) today reported financial results for its first quarter ended April 1, 2012.

HIGHLIGHTS

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• Revenue and gross profit increased 27% and 54%, respectively, from the first quarter of last year.
• Earnings increased to $0.27 per diluted share, up from $0.10 per share for the prior year period.
• Gross margin increased to 13.0%, up 230 basis points from 10.7% in the first quarter of 2011 and up from 10.4% sequentially.
• Profit conversion on incremental revenue growth for the Industrial Group exceeded 20% on a year-over-year basis and 16% sequentially.
• Orders for the Company's Aerospace and Defense business increased 30% when compared to the prior year period.
• Subsequent to quarter end, the Company announced a new alliance with BlackRidge Technology to develop the next generation of network defense technology for government customers.

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The Company reported revenue of $96.5 million for the first quarter compared to $75.8 million for the prior year period. The Company reported net income of $5.3 million, or $0.27 per diluted share, for the first quarter compared to $2.1 million, or $0.10 per share, for the prior year period.

Pretax income from continuing operations of $6.5 million for the quarter ended April 1, 2012, included a gain of $2.6 million in connection with the sale of idle assets and a foreign currency translation loss of $0.6 million. Pretax income from continuing operations of $2.9 million for the quarter ended April 3, 2011, included a gain of $3.0 million in connection with the settlement regarding volumes with one of its customers.

"Our Industrial Group continued to show progress during the quarter, with revenue, margins and income increasing on a year-over-year and sequential basis," said Jeffrey T. Gill, president and chief executive officer. "We expect the improved cost profile and strong operational performance of this business to make a material contribution to the growth and profitability of the Company throughout the coming year.

"Orders in our Aerospace and Defense business increased 30% during the period when compared to the first quarter of 2011, following a 23% year over year increase in the fourth quarter of last year. And while the periods used for comparison reflect the lack of Department of Defense funding that impacted our order stream historically, we believe that the current trend in new bookings over the past six months provides important support for this business."

The Industrial Group

Revenue for our Industrial Group increased 39% to $82.5 million in the first quarter compared to $59.6 million for the prior year period, primarily as a result of increased demand from customers in the commercial vehicle and trailer markets. Gross profit for the quarter increased 93% to $9.9 million, or 12.0% of revenue, compared to $5.1 million, or 8.6% of revenue for the same period in 2011, reflecting the positive conversion associated with the increase in revenue and supply chain productivity.

The Electronics Group

Revenue for our Electronics Group was $13.9 million in the first quarter compared to $16.3 million in the prior year period, but up 23% sequentially from the fourth quarter of 2011. Gross profit for the quarter was $2.6 million, or 18.6% of revenue, compared to $3.0 million, or 18.5% of revenue for the same period in 2011, and up sequentially from $0.5 million, or 4.5% of revenue, from the fourth quarter of 2011.

Outlook

Mr. Gill added, "We will continue to concentrate on the daily execution of our business. We expect to see strong comparable period growth in the top line of our Industrial Group going forward, as recently announced contracts add additional volume. For our Electronics Group, we are planning for a progressive recovery in shipments and margins for this business segment as we move throughout the coming year.

"We believe that the Company is well-positioned and our team is focused on delivering improved operational and financial results during the year. We will do so through a relentless focus on execution at every level of our organization."

Sypris Solutions is a diversified provider of outsourced services and specialty products. The Company performs a wide range of manufacturing, engineering, design and other technical services, typically under multi-year, sole-source contracts with corporations and government agencies in the markets for truck components and assemblies and aerospace and defense electronics. For more information about Sypris Solutions, visit its Web site at www.sypris.com.

Each "forward-looking statement" herein is subject to serious risks and should not be relied upon, as detailed in our most recent Form 10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently believe that such risks also include: declining revenues in our aerospace and defense business lines as we transition from legacy products and services into new market segments and technologies; dependence on, recruitment or retention of key employees; reliance on major customers or suppliers, especially in the automotive or aerospace and defense electronics sectors; U.S. government spending on products and services that our Electronics Group provides, including the timing of budgetary decisions; our ability to develop new products and programs within the Electronics Group; cyber security threats and disruptions; potential impairments, non-recoverability or write-offs of goodwill, assets or deferred costs, including capitalized pre-contract costs related to the development of a replacement for certain aerospace and defense products; potential liabilities associated with discontinued operations, including post-closing indemnifications or claims related to business or asset dispositions; our inability to successfully launch or sustain new or next generation programs or product features, especially in accordance with budgets or committed delivery schedules; the costs of compliance with our auditing, regulatory or contractual obligations; regulatory actions or sanctions (in each case including FCPA, OSHA and Federal Acquisition Regulations, among others); inventory valuation risks including obsolescence, shrinkage, theft, overstocking or underbilling; pension valuation, health care or other benefit costs; labor relations; strikes; union negotiations; changes in licenses, security clearances, or other legal rights to operate, manage our work force or import and export as needed; breakdowns, relocations or major repairs of machinery and equipment; changes or delays in government or other customer budgets, funding or programs; potential weaknesses in internal controls over financial reporting and enterprise risk management; the cost, efficiency and yield of our operations and capital investments, including working capital, production schedules, cycle times, scrap rates, injuries, wages, overtime costs, freight or expediting costs; disputes or litigation, involving customer, supplier, lessor, landlord, creditor, stockholder, product liability or environmental claims; the costs and supply of debt, equity capital, or insurance; fees, costs or other dilutive effects of refinancing, compliance with covenants; cost and availability of raw materials such as steel, component parts, natural gas or utilities; volatility of our customers' forecasts, financial conditions, market shares, product requirements or scheduling demands; adverse impacts of new technologies or other competitive pressures which increase our costs or erode our margins; failure to adequately insure or to identify environmental or other insurable risks; revised contract prices or estimates of major contract costs; risks of foreign operations; currency exchange rates; war, terrorism, or political uncertainty; unanticipated or uninsured disasters, losses or business risks; inaccurate data about markets, customers or business conditions; or unknown risks and uncertainties.

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included in this press release, the company has provided information regarding profit conversion on incremental revenue, which is a non-GAAP financial measure.

Profit conversion on incremental revenue is defined as the change in gross profit as a percentage of the change in net revenue. Management uses this non-GAAP measure in planning and forecasting for future periods.

This non-GAAP measure should not be considered a substitute for our reported results prepared in accordance with GAAP.

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