What is the timeline for revenue recognition from this contract, and how does it align with the 2026 production start date?

Revenue‑recognition timing: Under ASC 606, Sypris will likely recognize revenue as it satisfies its performance obligations—i.e., when the power‑supply modules are manufactured, tested, and delivered to the missile program. Because production is slated to start in 2026, the bulk of the billings and corresponding revenue will flow from that year onward, spreading over the multi‑year production run that the contract will entail. Any upfront milestone payments or engineering‑service fees received before 2026 would be recorded as contract liability and amortized against future performance, so the near‑term impact on the income statement should be modest.

Alignment with the 2026 start‑up: The contract’s revenue stream therefore dovetails with the company’s 2026 earnings outlook. Analysts can anticipate a stepped‑up contribution to Sypris’ FY 2026 and FY 2027 top‑line, potentially lifting earnings per share by a few cents depending on the size of the award—information the market does not currently have but can infer from the company’s historical contract margins (typically 15‑20 %). This timing also means that the stock may not see an immediate price rally; instead, the catalyst will be the first quarterly earnings that reflect the production ramp‑up.

Trading implications:

- Short‑term: The news is a positive catalyst, but without disclosed dollar values the market reaction will be muted. Consider a modest long‑position (e.g., 2‑3 % of portfolio) with a target price that reflects a 5‑10 % earnings uplift in 2026‑27.

- Medium‑term: Watch FY 2026 guidance updates and the first earnings release that includes production revenue. A beat on that guidance could trigger a sharper upside, while a delay in the 2026 start‑up would be a red flag.

- Risk management: Keep an eye on defense‑budget trends and any potential export‑control or classified‑program delays, as these could compress the anticipated revenue timeline. A stop‑loss just below the recent support level (≈ $12.5) would protect against a broader sector pullback.