SIFCO Industries, Inc. (NYSE American: SIF) today announced
financial results for its third quarter of fiscal 2023, which ended
June 30, 2023.
Third Quarter Results
- Net sales in the third quarter of fiscal 2023 increased 1.9% to
$21.9 million, compared with $21.4 million for the same period in
fiscal 2022.
- Net loss for the third quarter of fiscal 2023 was $0.6 million,
or $(0.11) per diluted share, compared with net loss of $2.7
million, or $(0.46) per diluted share, in the third quarter of
fiscal 2022.
- EBITDA was $1.3 million in the third quarter of fiscal 2023,
compared with $(0.9) million in the third quarter of fiscal
2022.
- Adjusted EBITDA in the third quarter of fiscal 2023 was $1.9
million, compared with Adjusted EBITDA of $(0.7) million in the
third quarter of fiscal 2022.
Year to Date Results
- Net sales in the first nine months of fiscal 2023 decreased
4.4% to $62.4 million, compared with $65.3 million for the same
period in fiscal 2022.
- Net loss for the first nine months of fiscal 2023 was $(5.6)
million, or $(0.94) per diluted share, compared with net loss of
$(2.7) million, or $(0.47) per diluted share, in the first nine
months of fiscal 2022.
- EBITDA was $0.3 million in the first nine months of fiscal
2023, compared with $2.5 million in the first nine months of fiscal
2022.
- Adjusted EBITDA in the first nine months of fiscal 2023 was
$1.8 million, compared with Adjusted EBITDA of ($1.8) million in
the first nine months of fiscal 2022.
Other Highlights
CEO Peter W. Knapper stated, “We are pleased that with this
filing we are now back to current with SEC requirements and nearly
recovered from the cyber event we experienced at the end of Q1. As
of June 30, backlog increased year over year $69.4M to $122.8M,
reflecting improvements in the markets that we serve as well as new
wins for the business. We remain focused on serving our customers
as we profitably grow our business.”
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, 2022 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.
Third Quarter ended June
30,
(Amounts in thousands, except per
share data)
(Unaudited)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Net sales
$
21,853
$
21,454
$
62,394
$
65,269
Cost of goods sold
18,375
21,080
55,935
63,427
Gross profit
3,478
374
6,459
1,842
Selling, general and administrative
expenses
3,388
2,821
10,517
9,037
Amortization of intangible assets
63
62
187
252
Gain on disposal of operating assets
(3
)
—
—
(2
)
Operating income (loss)
30
(2,509
)
(4,245
)
(7,445
)
Interest expense, net
305
146
919
453
Gain on debt extinguishment
—
—
—
(5,106
)
Foreign currency exchange loss (gain),
net
1
(7
)
11
2
Other expense (income), net
323
23
287
(45
)
Loss before income tax benefit
(599
)
(2,671
)
(5,462
)
(2,749
)
Income tax expense (benefit)
35
(3
)
128
(29
)
Net loss
$
(634
)
$
(2,668
)
$
(5,590
)
$
(2,720
)
Net loss per share
Basic
$
(0.11
)
$
(0.46
)
$
(0.94
)
$
(0.47
)
Diluted
$
(0.11
)
$
(0.46
)
$
(0.94
)
$
(0.47
)
Weighted-average number of common shares
(basic)
5,940
5,840
5,925
5,827
Weighted-average number of common shares
(diluted)
5,940
5,840
5,925
5,827
Consolidated Condensed Balance
Sheets
(Amounts in thousands, except per
share data)
(Unaudited)
June 30, 2023
September 30, 2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
598
$
1,174
Receivables, net of allowance for doubtful
accounts of $137 and $111, respectively
20,197
16,515
Contract assets
9,019
10,172
Inventories, net
10,610
8,969
Refundable income taxes
97
97
Prepaid expenses and other current
assets
1,176
1,851
Total current assets
41,697
38,778
Property, plant and equipment, net
37,387
39,272
Operating lease right-of-use assets,
net
14,567
15,167
Intangible assets, net
333
477
Goodwill
3,493
3,493
Other assets
79
79
Total assets
$
97,556
$
97,266
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt
$
5,394
$
4,379
Revolver
14,948
11,163
Short-term operating lease liabilities
847
792
Accounts payable
11,469
10,387
Accrued liabilities
6,173
5,868
Total current liabilities
38,831
32,589
Long-term debt, net of current maturities,
net of unamortized debt issuance costs
2,994
3,508
Long-term operating lease liabilities, net
of short-term
14,203
14,786
Deferred income taxes, net
—
137
Pension liability
4,789
4,812
Other long-term liabilities
676
744
Shareholders’ equity:
Serial preferred shares, no par value,
authorized 1,000 shares
—
—
Common shares, par value $1 per share,
authorized 10,000 shares; issued and outstanding shares 6,107 at
June 30, 2023 and 6,040 at September 30, 2022
6,107
6,040
Additional paid-in capital
11,541
11,387
Retained earnings
26,366
31,956
Accumulated other comprehensive loss
(7,951
)
(8,693
)
Total shareholders’ equity
36,063
40,690
Total liabilities and shareholders’
equity
$
97,556
$
97,266
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
Nine Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net loss
$
(634
)
$
(2,668
)
$
(5,590
)
$
(2,720
)
Adjustments:
Depreciation and amortization expense
1,623
1,590
4,820
4,800
Interest expense, net
305
146
919
453
Income tax expense (benefit)
35
(3
)
128
(29
)
EBITDA
1,329
(935
)
277
2,504
Adjustments:
Foreign currency exchange loss (gain), net
(1)
1
(7
)
11
2
Other expense (income), net (2)
295
(46
)
149
(114
)
Gain on disposal of assets (3)
(3
)
—
—
(2
)
Gain on extinguishment of debt (4)
—
—
—
(5,106
)
Equity compensation (5)
85
4
292
309
Pension settlement expense (6)
78
69
78
69
LIFO impact (7)
(73
)
202
(272
)
586
IT incident costs, net (8)
182
—
1,269
—
Strategic alternative expense (9)
29
—
29
—
Adjusted EBITDA
$
1,923
$
(713
)
$
1,833
$
(1,752
)
(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 and foreign energy tax credits.
(3)
Represents the difference between
the proceeds from the sale of operating equipment and the carrying
value shown on the Company's books or asset impairment of
long-lived assets.
(4)
Represents the gain on
extinguishment of debt and interest for the amount forgiven by the
SBA as it relates to the PPP loan.
(5)
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.
(6)
Represents expense incurred by
its defined benefit pension plans related to settlement of pension
obligations.
(7)
Represents the change in the
reserve for inventories for which cost is determined using the
last-in, first-out (“LIFO”) method.
(8)
Represents incremental
information technology costs as it relates to the cybersecurity
incident and loss on insurance recovery.
(9)
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/20230927066644/en/
SIFCO Industries, Inc. Thomas R. Kubera, 216-881-8600
www.sifco.com
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