SIFCO Industries, Inc. (“SIFCO”) Announces First Quarter Fiscal 2024 Financial Results
- None.
- None.
Insights
The reported decrease in net sales by 1.2% for SIFCO Industries, Inc. indicates a slight contraction in revenue, which may be a sign of market challenges or increased competition. The expansion of the company's backlog to $130.1 million, however, suggests a robust future demand for their products. This backlog growth could potentially translate into future revenue, which would be a positive sign for investors. The increase in inventory by $3.6 million is a strategic move to align production with anticipated customer demands, but it also represents an increase in working capital which could impact cash flows. Monitoring the turnover of this inventory will be essential to assess the efficiency of the company's supply chain management.
Furthermore, the widening net loss from $(0.44) to $(0.57) per diluted share year-over-year could raise concerns about the company's profitability and cost management strategies. The deterioration in both EBITDA and Adjusted EBITDA suggests that operational challenges are affecting the company's bottom line. Investors would benefit from a closer examination of the company's cost structure and any one-time expenses that might have contributed to these results.
The financial results of SIFCO Industries, Inc. are indicative of the broader trends and dynamics within the industry. The slight decline in net sales could reflect sector-specific headwinds or a general economic downturn. The increase in backlog, however, is a positive indicator of customer confidence and a potential increase in market share. It is important to compare these results with industry peers to understand whether these trends are company-specific or indicative of broader market conditions.
Analysts would also consider the impact of new product development activities mentioned by the CEO. While these activities are essential for long-term growth, they can also lead to increased expenses in the short term. The company's ability to convert its increased backlog into revenue without further eroding margins will be crucial for its financial health.
The financial results from SIFCO Industries, Inc. must be contextualized within the current economic environment. The contraction in net sales could be symptomatic of macroeconomic pressures such as reduced industrial demand or supply chain disruptions. The increased backlog is a positive sign, but it is essential to understand the economic factors that could affect the company's ability to deliver on this demand, such as labor shortages or raw material price volatility.
Additionally, the reported increase in inventory levels could be a hedge against potential supply chain issues but may also reflect an anticipation of inflationary pressures on input costs. The ability of SIFCO to navigate these economic challenges while managing its inventory and backlog effectively will be critical to its financial stability and growth prospects.
First Quarter Results
-
Net sales in the first quarter of fiscal 2024 decreased
1.2% to$21.1 million $21.3 million -
Net loss for the first quarter of fiscal 2024 was
$3.4 million $(0.57) $2.6 million $(0.44) -
EBITDA was
$(1.4) million $(0.7) million -
Adjusted EBITDA in the first quarter of fiscal 2024 was
$(0.8) million $(0.1) million
Other Highlights
CEO Peter W. Knapper stated, “Our first quarter was dominated by new product development activities. Our backlog continues to increase, now at
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
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
|
||||||
|
|
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,
|
|
September 30,
|
||||
|
(unaudited) |
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
3,236 |
|
|
$ |
368 |
|
Receivables, net of allowance for doubtful accounts of |
|
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 |
|
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
- 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 |
|
(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 |
|
(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/
SIFCO Industries, Inc.
Thomas R. Kubera, 216-881-8600
www.sifco.com
Source: SIFCO Industries, Inc.
FAQ
What were SIFCO Industries, Inc.'s (SIF) net sales for Q1 of fiscal 2024?
What was SIFCO Industries, Inc.'s (SIF) net loss for Q1 of fiscal 2024?
What was the EBITDA for SIFCO Industries, Inc. (SIF) in Q1 of fiscal 2024?
What was the Adjusted EBITDA for SIFCO Industries, Inc. (SIF) in Q1 of fiscal 2024?
What was the backlog amount mentioned in the PR for SIFCO Industries, Inc. (SIF)?
