SIFCO Industries, Inc. ("SIFCO") Announces First Quarter Fiscal 2024 Financial Results

Business Wire
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CLEVELAND, February 14, 2024--(BUSINESS WIRE)--SIFCO Industries, Inc. (NYSE American: SIF) today announced financial results for its first quarter of fiscal 2024, which ended December 31, 2023.

First Quarter Results

  • Net sales in the first quarter of fiscal 2024 decreased 1.2% to $21.1 million, compared with $21.3 million for the same period in fiscal 2023.

  • Net loss for the first quarter of fiscal 2024 was $3.4 million, or $(0.57) per diluted share, compared with net loss of $2.6 million, or $(0.44) per diluted share, in the first quarter of fiscal 2023.

  • EBITDA was $(1.4) million in the first quarter of fiscal 2024, compared with $(0.7) million in the first quarter of fiscal 2023.

  • Adjusted EBITDA in the first quarter of fiscal 2024 was $(0.8) million, compared with Adjusted EBITDA of $(0.1) million in the first quarter of fiscal 2023.

Other Highlights

CEO Peter W. Knapper stated, "Our first quarter was dominated by new product development activities. Our backlog continues to increase, now at $130.1 million. Inventory increased $3.6 million compared to prior year quarter as we increase production to meet our customer demands."

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.

First Quarter ended December 31,

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended
December 31,

2023

2022

Net sales

$

21,052

$

21,299

Cost of goods sold

20,316

20,038

Gross profit

736

1,261

Selling, general and administrative expenses

3,581

3,280

Amortization of intangible assets

40

61

Gain on disposal of operating assets

—

(11

)

Operating loss

(2,885

)

(2,069

)

Interest expense, net

430

275

Foreign currency exchange loss (gain), net

4

(3

)

Other expense, net

53

182

Loss before income tax expense

(3,372

)

(2,523

)

Income tax expense

50

66

Net loss

$

(3,422

)

$

(2,589

)

Net loss per share

Basic

$

(0.57

)

$

(0.44

)

Diluted

$

(0.57

)

$

(0.44

)

Weighted-average number of common shares (basic)

5,956

5,896

Weighted-average number of common shares (diluted)

5,956

5,896

Consolidated Condensed Balance Sheets

(Amounts in thousands, except per share data)

(Unaudited)

December 31,
2023

September 30,
2023

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

3,236

$

368

Receivables, net of allowance for doubtful accounts of $121 and $242, respectively

18,184

20,196

Contract assets

10,949

10,091

Inventories, net

12,430

8,853

Refundable income taxes

84

84

Prepaid expenses and other current assets

2,692

1,882

Total current assets

47,575

41,474

Property, plant and equipment, net

35,884

36,287

Operating lease right-of-use assets, net

14,152

14,380

Intangible assets, net

248

278

Goodwill

3,493

3,493

Other assets

131

81

Total assets

$

101,483

$

95,993

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Current maturities of long-term debt

$

4,085

$

3,820

Promissory note - related party

3,150

—

Revolver

16,061

16,289

Short-term operating lease liabilities

884

869

Accounts payable

14,832

13,497

Accrued liabilities

8,852

6,477

Total current liabilities

47,864

40,952

Long-term debt, net of current maturities, net of unamortized debt issuance costs

4,393

2,457

Long-term operating lease liabilities, net of short-term

13,799

14,020

Deferred income taxes, net

105

142

Pension liability

3,411

3,417

Other long-term liabilities

664

670

Shareholders’ equity:

Serial preferred shares, no par value, authorized 1,000 shares; 0 shares issued and outstanding at December 31, 2023 and September 30, 2023

—

—

Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 6,160 at December 31, 2023 and 6,105 at September 30, 2023

6,160

6,105

Additional paid-in capital

11,609

11,626

Retained earnings

19,842

23,264

Accumulated other comprehensive loss

(6,364

)

(6,660

)

Total shareholders’ equity

31,247

34,335

Total liabilities and shareholders’ equity

$

101,483

$

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

December 31,

2023

2022

Net loss

$

(3,422

)

$

(2,589

)

Adjustments:

Depreciation and amortization expense

1,562

1,571

Interest expense, net

430

275

Income tax expense

50

66

EBITDA

(1,380

)

(677

)

Adjustments:

Foreign currency exchange loss (gain), net (1)

4

(3

)

Other expense, net (2)

54

72

Gain on disposal of assets (3)

—

(11

)

Equity compensation (4)

86

122

LIFO impact (5)

293

262

IT incident costs, net (6)

(1

)

110

Strategic alternative expense (7)

187

—

Adjusted EBITDA

$

(757

)

$

(125

)

(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/20240214191250/en/

Contacts

SIFCO Industries, Inc.
Thomas R. Kubera, 216-881-8600
www.sifco.com

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