SIFCO Industries, Inc. (NYSE American: SIF) today announced
financial results for its second quarter of fiscal 2024, which
ended March 31, 2024.
Second Quarter Results
- Net sales in the second quarter of fiscal 2024 increased 37.9%
to $26.5 million, compared with $19.2 million for the same period
in fiscal 2023.
- Net loss for the second quarter of fiscal 2024 was $(1.6)
million, or $(0.26) per diluted share, compared with net loss of
$(2.4) million, or $(0.40) per diluted share, in the second quarter
of fiscal 2023.
- EBITDA was $0.9 million in the second quarter of fiscal 2024,
compared with $(0.4) million in the second quarter of fiscal
2023.
- Adjusted EBITDA in the second quarter of fiscal 2024 was $1.3
million, compared with Adjusted EBITDA of $0.0 million in the
second quarter of fiscal 2023.
Year to Date Results
- Net sales in the first six months of fiscal 2024 increased
17.4% to $47.6 million, compared with $40.5 million for the same
period in fiscal 2023.
- Net loss for the first six months of fiscal 2024 was $(5.0)
million, or $(0.84) per diluted share, compared with net loss of
$(5.0) million, or $(0.84) per diluted share, in the first six
month of fiscal 2023.
- EBITDA was $(0.5) million in the first six month of fiscal
2024, compared with $(1.1) million in the first six months of
fiscal 2023.
- Adjusted EBITDA in the first six month of fiscal 2024 was $0.5
million, compared with Adjusted EBITDA of ($0.1) million in the
first six months of fiscal 2023.
Other Highlights
CEO Peter W. Knapper stated, “EBITDA, at $926k, turned positive
for the quarter as we ramp up deliveries. Our backlog continued to
grow and stands at $137.8 million. We are pleased with the progress
and continue to focus on customer satisfaction.
Use of Non-GAAP Financial Measures
The Company uses certain non-GAAP measures in this release.
EBITDA and Adjusted EBITDA are non-GAAP financial measures and are
intended to serve as supplements to results provided in accordance
with accounting principles generally accepted in the United States.
SIFCO Industries, Inc. believes that such information provides an
additional measurement and consistent historical comparison of the
Company’s performance. A reconciliation of the non-GAAP financial
measures to the most directly comparable GAAP measures is available
in this news release.
Forward-Looking Language
Certain statements contained in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements
relating to financial results and plans for future business
development activities, and are thus prospective. Such
forward-looking statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ
materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions, concerns with
or threats of, or the consequences of, pandemics, contagious
diseases or health epidemics, including COVID-19, competition and
other uncertainties the Company, its customers, and the industry in
which they operate have experienced and continue to experience,
detailed from time to time in the Company’s Securities and Exchange
Commission filings.
The Company's Annual Report on Form 10-K for the year ended
September 30, 2023 and other reports filed with the Securities and
Exchange Commission can be accessed through the Company's website:
www.sifco.com, or on the Securities and Exchange Commission's
website: www.sec.gov.
SIFCO Industries, Inc. is engaged in the production of forgings
and machined components primarily for the aerospace and energy
markets. The processes and services include forging, heat-treating,
coating, and machining.
Second Quarter ended March 31,
(Amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31,
Six Months Ended
March 31,
2024
2023
2024
2023
Net sales
$
26,543
$
19,242
$
47,595
$
40,541
Cost of goods sold
23,816
17,522
44,132
37,560
Gross profit
2,727
1,720
3,463
2,981
Selling, general and administrative
expenses
3,208
3,849
6,789
7,129
Amortization of intangible assets
41
63
81
124
Gain on disposal of operating assets
3
14
3
3
Operating loss
(525
)
(2,206
)
(3,410
)
(4,275
)
Interest expense, net
963
339
1,393
614
Foreign currency exchange loss, net
3
12
7
9
Other expense, net
52
(218
)
105
(35
)
Loss before income tax expense
(1,543
)
(2,339
)
(4,915
)
(4,863
)
Income tax expense
47
28
98
93
Net loss
$
(1,590
)
$
(2,367
)
$
(5,013
)
$
(4,956
)
Net loss per share
Basic
$
(0.26
)
$
(0.40
)
$
(0.84
)
$
(0.84
)
Diluted
$
(0.26
)
$
(0.40
)
$
(0.84
)
$
(0.84
)
Weighted-average number of common shares
(basic)
6,009
5,940
5,983
5,918
Weighted-average number of common shares
(diluted)
6,009
5,940
5,983
5,918
Consolidated Condensed Balance
Sheets
(Amounts in thousands, except per share
data)
(Unaudited)
March 31, 2024
September 30,
2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
747
$
368
Short-term investments
1,730
—
Receivables, net of allowance for credit
losses of $131 and $242, respectively
23,125
20,196
Contract assets
9,976
10,091
Inventories, net
13,847
8,853
Refundable income taxes
84
84
Prepaid expenses and other current
assets
2,112
1,882
Total current assets
51,621
41,474
Property, plant and equipment, net
34,861
36,287
Operating lease right-of-use assets,
net
13,911
14,380
Intangible assets, net
203
278
Goodwill
3,493
3,493
Other assets
99
81
Total assets
$
104,188
$
95,993
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt
$
6,364
$
3,820
Promissory note - related party
3,256
—
Revolver
17,518
16,289
Short-term operating lease liabilities
894
869
Accounts payable
17,683
13,497
Accrued liabilities ($760 is related
party)
7,067
6,477
Total current liabilities
52,782
40,952
Long-term debt, net of current maturities,
net of unamortized debt issuance costs
4,075
2,457
Long-term operating lease liabilities, net
of short-term
13,561
14,020
Deferred income taxes, net
—
142
Pension liability
3,457
3,417
Other long-term liabilities
657
670
Shareholders’ equity:
Serial preferred shares, no par value,
authorized 1,000 shares; 0 shares issued and outstanding at March
31, 2024 and September 30, 2023
—
—
Common shares, par value $1 per share,
authorized 10,000 shares; issued and outstanding shares 6,190 at
March 31, 2024 and 6,105 at September 30, 2023
6,190
6,105
Additional paid-in capital
11,663
11,626
Retained earnings
18,252
23,264
Accumulated other comprehensive loss
(6,449
)
(6,660
)
Total shareholders’ equity
29,656
34,335
Total liabilities and shareholders’
equity
$
104,188
$
95,993
Non-GAAP Financial Measures
Presented below is certain financial information based on the
Company's EBITDA and Adjusted EBITDA. References to “EBITDA” mean
earnings (losses) from continuing operations before interest,
taxes, depreciation and amortization, and references to “Adjusted
EBITDA” mean EBITDA plus, as applicable for each relevant period,
certain adjustments as set forth in the reconciliations of net
income to EBITDA and Adjusted EBITDA.
Neither EBITDA nor Adjusted EBITDA is a measurement of financial
performance under generally accepted accounting principles in the
United States of America (“GAAP”). The Company presents EBITDA and
Adjusted EBITDA because management believes that they are useful
indicators for evaluating operating performance and liquidity,
including the Company’s ability to incur and service debt and it
uses EBITDA to evaluate prospective acquisitions. Although the
Company uses EBITDA and Adjusted EBITDA for the reasons noted
above, the use of these non-GAAP financial measures as analytical
tools has limitations. Therefore, reviewers of the Company’s
financial information should not consider them in isolation, or as
a substitute for analysis of the Company's results of operations as
reported in accordance with GAAP. Some of these limitations
include:
- Neither EBITDA nor Adjusted EBITDA reflects the interest
expense, or the cash requirements necessary to service interest
payments on indebtedness;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and neither EBITDA nor Adjusted EBITDA
reflects any cash requirements for such replacements;
- The omission of the amortization expense associated with the
Company’s intangible assets further limits the usefulness of EBITDA
and Adjusted EBITDA; and
- Neither EBITDA nor Adjusted EBITDA includes the payment of
taxes, which is a necessary element of operations.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered as measures of discretionary cash available to
the Company to invest in the growth of its businesses. Management
compensates for these limitations by not viewing EBITDA or Adjusted
EBITDA in isolation and specifically by using other GAAP measures,
such as net income (loss), net sales, and operating income (loss),
to measure operating performance. Neither EBITDA nor Adjusted
EBITDA is a measurement of financial performance under GAAP, and
neither should be considered as an alternative to net loss or cash
flow from operations determined in accordance with GAAP. The
Company’s calculation of EBITDA and Adjusted EBITDA may not be
comparable to the calculation of similarly titled measures reported
by other companies.
The following table sets forth a reconciliation of net loss to
EBITDA and Adjusted EBITDA:
Dollars in thousands
Three Months Ended
Six Months Ended
March 31,
March 31,
2024
2023
2024
2023
Net loss
$
(1,590
)
$
(2,367
)
$
(5,013
)
$
(4,956
)
Adjustments:
Depreciation and amortization expense
1,506
1,626
3,068
3,198
Interest expense, net
963
339
1,393
614
Income tax expense
47
28
98
93
EBITDA
926
(374
)
(454
)
(1,051
)
Adjustments:
Foreign currency exchange loss (gain), net
(1)
3
12
7
9
Other expense, net (2)
52
(328
)
105
(146
)
Gain on disposal of assets (3)
3
14
3
3
Equity compensation (4)
85
85
171
207
LIFO impact (5)
58
(461
)
351
(199
)
IT incident costs, net (6)
24
1,086
23
1,087
Strategic alternative expense (7)
133
—
321
—
Adjusted EBITDA
$
1,284
$
34
$
527
$
(90
)
(1)
Represents the gain or loss from
changes in the exchange rates between the functional currency and
the foreign currency in which the transaction is denominated.
(2)
Represents miscellaneous
non-operating income or expense, such as pension costs or grant
income (prior year included $0.1 million in loss on insurance
recovery, separately reclassed to IT incident costs, net line).
(3)
Represents the difference between
the proceeds from the sale of operating equipment and the carrying
value shown on the Company's books.
(4)
Represents the equity-based
compensation expense recognized by the Company under the 2016 Plan
due to granting of awards, awards not vesting and/or
forfeitures.
(5)
Represents the change in the
reserve for inventories for which cost is determined using the
last-in, first-out ("LIFO") method.
(6)
Represents incremental
information technology costs as it relates to the cybersecurity
incident and loss on insurance recovery (prior year balance
includes reclassed amount of $0.1 million from footnote two
above).
(7)
Represents expense related to
evaluation of strategic alternatives.
Reference to the above activities can be found in the
consolidated financial statements included in Item 8 of the
Company's Annual Report on Form 10-K.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509836901/en/
SIFCO Industries, Inc. Thomas R. Kubera, 216-881-8600
www.sifco.com
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