SIF Sifco Industries Inc

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