SIFCO Industries, Inc. (NYSE American: SIF) today announced
financial results for its third quarter of fiscal 2020, which ended
June 30, 2020.
Third Quarter Results
- Net sales in the third quarter of fiscal 2020 increased 11.7%
to $27.8 million, compared with $24.9 million for the same period
in fiscal 2019.
- Net income for the third quarter of fiscal 2020 was $2.3
million, or $0.39 per diluted share, compared with net loss of $7.4
million, or $(1.32) per diluted share, in the third quarter of
fiscal 2019.
- EBITDA was $4.3 million in the third quarter of fiscal 2020,
compared with $(5.6) million in the third quarter of fiscal
2019.
- Adjusted EBITDA in the third quarter of fiscal 2020 was $2.8
million, compared with Adjusted EBITDA of $(0.5) million in the
third quarter of fiscal 2019.
Year to Date Results
- Net sales in the first nine months of fiscal 2020 increased
3.9% to $84.5 million, compared with $81.3 million for the same
period in fiscal 2019.
- Net income in the first nine months of fiscal 2020 was $4.2
million, or $0.72 per diluted share, compared with net loss of $9.9
million, or $(1.78) per diluted share in the first nine months of
fiscal 2019.
- EBITDA was $10.3 million in the first nine months of fiscal
2020, compared with EBITDA of $(4.2) million in the first nine
months of fiscal 2019.
- Adjusted EBITDA in the first nine months of fiscal 2020 was
$8.0 million, compared with Adjusted EBITDA of $(0.2) million in
the first nine months of fiscal 2019.
Net income, EBITDA and Adjusted EBITDA results for the third
quarter and nine months ended June 30, 2020 include higher margins
due to productivity improvements as well as insurance recoveries in
connection with a fire at the Company's facility in Orange,
California.
Other Highlights
CEO Peter W. Knapper stated, “The SIFCO team continued to focus
on safe work practices to isolate and prevent exposure to COVID-19.
These efforts have enabled us to continue to serve our customers
during an unprecedented interruption in economic activity. We are
proactively implementing cost and working capital controls so that
we can respond to these uncertain market conditions.
The restoration of our Orange, California facility remains on
schedule to complete in the fourth quarter. We continued to strive
to support our customers' schedules as we made significant progress
in completing the restoration at our Orange facility. With the
completion of the rebuild, we will be positioned well with growth
capacity available at all sites to meet both existing customer
needs as well as respond as our served markets rebound from the
pandemic.”
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. For a discussion of such risk factors and
uncertainties, see Item 1A, "Risk Factors" in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2020
and other reports file by the Company with the Securities &
Exchange Commission.
The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020 and Annual Report on Form 10-K for the year
ended September 30, 2019 and other reports filed with the
Securities & 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,
2020
2019
2020
2019
Net sales
$
27,777
$
24,873
$
84,521
$
81,331
Cost of goods sold
23,628
23,486
70,771
75,119
Gross profit
4,149
1,387
13,750
6,212
Selling, general and administrative
expenses
2,864
3,481
10,393
11,375
Goodwill impairment
—
8,294
—
8,294
Amortization of intangible assets
408
411
1,224
1,239
Loss (gain) on disposal or impairment of
operating assets
55
—
98
(282
)
Gain on insurance proceeds received
(1,683
)
(3,304
)
(2,683
)
(4,468
)
Operating income (loss)
2,505
(7,495
)
4,718
(9,946
)
Interest income
—
(1
)
—
(3
)
Interest expense
183
230
697
838
Foreign currency exchange gain (loss),
net
12
(3
)
12
(4
)
Other loss (income), net
27
(15
)
(58
)
(50
)
Income (loss) before income tax (benefit)
expense
2,283
(7,706
)
4,067
(10,727
)
Income tax (benefit) expense
33
(336
)
(101
)
(816
)
Net income (loss)
$
2,250
$
(7,370
)
$
4,168
$
(9,911
)
Net income (loss) per share
Basic
$
0.40
$
(1.32
)
$
0.74
$
(1.78
)
Diluted
$
0.39
$
(1.32
)
$
0.72
$
(1.78
)
Weighted-average number of common shares
(basic)
5,676
5,571
5,656
5,556
Weighted-average number of common shares
(diluted)
5,807
5,571
5,768
5,556
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 substantial 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,
2020
2019
2020
2019
Net income (loss)
$
2,250
$
(7,370
)
$
4,168
$
(9,911
)
Adjustments:
Depreciation and amortization expense
1,845
1,896
5,576
5,735
Interest expense, net
183
229
697
835
Income tax (benefit)
33
(336
)
(101
)
(816
)
EBITDA
4,311
(5,581
)
10,340
(4,157
)
Adjustments:
Foreign currency exchange loss (gain), net
(1)
12
(3
)
12
(4
)
Other income, net (2)
27
(15
)
(58
)
(50
)
Loss (gain) on disposal and impairment of
assets (3)
55
—
98
(282
)
Gain on insurance proceeds received
(4)
(1,683
)
(3,304
)
(2,683
)
(4,468
)
Equity compensation (5)
37
(59
)
262
367
LIFO impact (6)
(5
)
154
(16
)
98
Goodwill impairment (7)
—
8,294
—
8,294
Adjusted EBITDA
$
2,754
$
(514
)
$
7,955
$
(202
)
(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.
(3)
Represents the difference between the
proceeds from the sale of operating equipment and the carrying
values shown on the Company’s books or asset impairment of
long-lived assets.
(4)
Represents the difference between the
insurance proceeds received for the damaged property and the
carrying values shown on the Company's books for the assets that
were damaged in the fire at the Orange location.
(5)
Represents the equity-based compensation
expense recognized by the Company under its 2016 Long-Term
Incentive Plan (as the amendment and restatement of, and successor
to, the 2007 Long-Term Incentive Plan) due to granting of awards,
awards not vesting and/or forfeitures.
(6)
Represents the change in the reserve for
inventories for which cost is determined using the last-in,
first-out (“LIFO”) method.
(7)
Represents non-cash charge of goodwill
impairment experienced at its reporting unit level.
Reference to the above activities can 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/20200806005860/en/
SIFCO Industries, Inc. Thomas R. Kubera, 216-881-8600
www.sifco.com
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