Executive Summary

Q3 revenue declined 19.5% YoY to $28.7M on tariff-driven demand reductions in transportation markets and the conversion of certain Mexico shipments to value‑add only; diluted EPS was $0.02 vs $0.02 YoY as a $2.5M gain from a sale‑leaseback offset an operating loss .
Electronics orders remained robust: YTD orders +65%, lifting Electronics backlog +14% since year‑end; Energy product backlog rose 59% vs year‑end, supported by demand from electronic warfare/communications and LNG infrastructure tied to rising AI data center power needs .
Mix, material availability, and out‑of‑sequence manufacturing pressured margins (company gross margin 7.1%, down from 16.8% YoY); operating loss of $(1.74)M vs +$1.73M YoY .
Management expects a challenging environment into early 2026 given tariffs and macro uncertainty, with revenue headwinds from inventory drawdowns and sub‑maquiladora conversion partly offset by a strong Electronics backlog and Energy orders; formal 2025 guidance remains withdrawn since May .

What Went Well and What Went Wrong

What Went Well

Electronics demand/awards: “Orders rise 65% YTD for Sypris Electronics” with follow‑on awards in subsea communications and a missile system modernization; production extends through 2026 .
Energy market momentum: Energy backlog +59% since year‑end; management highlighted LNG project activity and AI‑driven power demand as incremental opportunities .
Non‑operating gain: Completed Louisville sale‑leaseback, generating ~$2.9M proceeds and recognizing a $2.5M gain, which supported positive EPS despite operating loss .

What Went Wrong

Tariff/regulatory headwinds: Transportation‑related demand fell meaningfully; tariff concerns and regulatory uncertainty drove supply chain inventory drawdowns and reduced volumes .
Margin compression: Company gross margin fell to 7.1% (vs 16.8% YoY) on lower volumes and unfavorable mix; Electronics gross margin 6.9% vs 14.3% YoY; Technologies 7.5% vs 18.8% YoY .
Operational inefficiencies: Material availability issues caused delivery delays and out‑of‑sequence manufacturing at Electronics, increasing costs and reducing efficiency, also cited in Q2 .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$35.657	$31.426	$28.672
Diluted EPS ($)	$0.02	$(0.09)	$0.02
Operating Income ($USD Millions)	$1.729	$(1.441)	$(1.738)
Net Income ($USD Millions)	$0.390	$(2.051)	$0.517
Gross Profit ($USD Millions)	$5.979	$2.584	$2.051
Gross Margin %	16.8% (calc from rev/GP)	8.2% (calc)	7.1% (calc)
Net Income Margin %	1.1% (calc)	-6.5% (calc)	1.8% (calc)

Notes: Margins calculated from company‑reported revenue and gross profit/net income .

Segment breakdown

Segment	Metric	Q3 2024	Q2 2025	Q3 2025
Sypris Technologies	Revenue ($M)	$19.469	$14.097	$11.534
	Gross Profit ($M)	$3.661	$2.143	$0.870
	Gross Margin %	18.8%	15.2%	7.5%
Sypris Electronics	Revenue ($M)	$16.188	$17.329	$17.138
	Gross Profit ($M)	$2.318	$0.441	$1.181
	Gross Margin %	14.3%	2.5%	6.9%

KPIs and balance sheet highlights

KPI	Q1 2025	Q2 2025	Q3 2025
Electronics Orders Growth	Backlog >$80M; program funding secured	Orders +110% to $47M; backlog +26% vs YE	YTD orders +65%; Electronics backlog +14% vs YE
Energy Backlog	Backlog up 32.8% vs YE (Tech energy)	Energy backlog +26% vs YE	Energy backlog +59% vs YE
Cash & Equivalents ($M)	$6.624	$6.352	$8.443
Sale‑leaseback Proceeds/Gain	—	—	$2.9M proceeds; $2.5M gain recognized
Net cash from operations (YTD)	$(5.534)M (Q1)	$(4.435)M (H1)	$(4.613)M (9M)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$125–$135M (3/27/25)	Guidance withdrawn (5/14/25)	Withdrawn
Gross Margin Expansion	FY2025	+150–175 bps (3/27/25)	Guidance withdrawn (5/14/25)	Withdrawn
Gross Profit Growth	FY2025	+10–15% (3/27/25)	Guidance withdrawn (5/14/25)	Withdrawn
Revenue Commentary	Near‑term (Q2–Q3)	—	Anticipate decline due to inventory drawdowns and sub‑maquiladora conversion; backlog/orders to partially offset	Qualitative caution maintained

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript was available in our document set.

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs & regulatory uncertainty	Monitoring tariff impacts; conversion of Mexico shipments to value‑add only; caution on vehicle end‑markets	Tariffs drove demand decline in transportation markets; continued uncertainty and supply chain inventory drawdowns	Worsening near term
Supply chain/material availability	Electronics delays and out‑of‑sequence manufacturing, margin pressure	Persisting; delays and inefficiencies continue to weigh on margins	Persistent headwind
Electronics demand/backlog	Backlog >$80M; funding secured for key programs	YTD orders +65%; subsea/missile follow‑on awards; production through 2026	Positive demand
Energy market	Elevated orders/backlog; LNG/AI power demand supportive	Energy backlog +59% vs YE; macro tailwinds reiterated	Improving
Mexico operations	Sub‑maquiladora arrangements reduce recognized revenue vs 2024	Ongoing conversion contributes to revenue decline	Continuing impact
Guidance posture	2025 guidance withdrawn due to macro/tariff uncertainty	No reinstatement; qualitative caution reiterated	Cautious stance

Management Commentary

“The past few months have been demanding, as we navigate the impact of tariffs on the economy and our customers… we continue to focus on operational excellence to drive the timely and efficient execution of the rapidly growing demand at Sypris Electronics.” — CEO Jeffrey T. Gill .
“We have experienced a meaningful decrease in demand from customers in some of our transportation‑related markets… We believe that this drawdown is nearing an end; however, we expect the replenishment cycle to take hold as we move through the coming year.” — CEO .
“Additional opportunities for growth may exist with new global projects to meet increasing LNG demand, including support for the projected steep increase in electricity demand from AI‑related data centers.” — CEO .
“We expect the challenging operating environment to continue into the first part of next year… we anticipate a decline in revenue due to inventory drawdowns and the conversion of certain shipments from Mexico to the U.S. into a value‑add only sub‑maquiladora basis…” — CEO .

Q&A Highlights

No Q3 2025 earnings call transcript or Q&A was available in our corpus to extract analyst themes or management clarifications.

Estimates Context

Wall Street consensus: S&P Global consensus estimates for Q3 2025 were not available in the database for EPS or revenue; only actual revenue was recorded. As a result, we cannot quantify a beat/miss vs consensus for Q3 2025. Values retrieved from S&P Global.* [GetEstimates: Q3 2025 shows actual only]
Implication: Absent consensus, the market will likely focus on operating quality (operating loss vs positive EPS aided by one‑time gain), margin trajectory, and order/backlog momentum as proxies for forward expectations .

Key Takeaways for Investors

Quality of earnings mixed: EPS positive on a $2.5M sale‑leaseback gain while core operations posted a $(1.74)M operating loss; watch for normalization of “other income” next quarter .
Margin trough risk persists: Company gross margin fell to 7.1% on volume/mix and Electronics inefficiencies; recovery depends on supply chain normalization and program execution .
Demand signals constructive: Electronics YTD orders +65% and Energy backlog +59% vs YE provide visibility through 2026, but timing of conversion to revenue remains a swing factor .
Tariff/macro headwinds weighing on Transportation: Technologies revenue and margins compressed; management expects inventory replenishment cycle to start through next year—key monitor for sequential recovery .
Liquidity/working capital: Cash $8.4M; YTD operating cash flow $(4.6)M; inventory down vs YE as drawdowns proceed—execution on backlog with disciplined WC will be important .
Guidance posture: Formal FY25 guidance remains withdrawn; qualitative outlook cautious near term. Stock may trade on incremental orders/awards and any signs of margin recovery or tariff relief .

Appendix: Additional Detail

Segment dynamics Q3 2025: Technologies revenue $11.5M with gross margin 7.5% (vs 18.8% YoY) on lower volume/mix and sub‑maquiladora impact; Electronics revenue $17.1M with gross margin 6.9% (vs 14.3% YoY) amid material‑driven inefficiencies .
Prior quarter context Q2 2025: Revenue $31.4M; diluted EPS $(0.09); Electronics margin 2.5% on delays; Technologies margin 15.2%; outlook called for modest decline from sub‑maquiladora and cyclical vehicle downturn .
Initial 2025 guidance (3/27) and withdrawal (5/14): $125–$135M revenue and +150–175 bps GM expansion were withdrawn due to tariff macro uncertainty; no reinstatement as of Q3 .

Citations:

Q3 2025 8‑K press release and financial statements .
Q2 2025 8‑K press release and financials .
Q1 2025 8‑K press release .
3/27/25 8‑K (initial 2025 guidance) .

*Values retrieved from S&P Global.

SYPRIS SOLUTIONS INC (SYPR)·Q3 2025 Earnings Summary