SIFCO Industries, Inc. (NYSE MKT: SIF) today announced financial
results for its fiscal year 2017 and fourth quarter, which ended
September 30, 2017.
Fiscal Year
- Net sales in fiscal 2017 increased 2.0%
to $121.5 million, compared with $119.1 million in fiscal
2016.
- Net loss for fiscal 2017 was $14.2
million, or $(2.59) per diluted share, compared with net loss of
$11.3 million, or $(2.07) per diluted share, in fiscal 2016.
- Adjusted EBITDA in fiscal 2017 was $6.2
million compared with Adjusted EBITDA of $4.0 million in fiscal
2016.
Fourth Quarter
- Net sales in the fourth quarter of
fiscal 2017 decreased 10.6% to $28.5 million, compared with $31.9
million in the fourth quarter of fiscal 2016.
- Net loss for the fourth quarter of
fiscal 2017 was $3.7 million, or $(0.68) per diluted share,
compared with a net loss of $7.4 million, or $(1.34) per diluted
share, in the fourth quarter of fiscal 2016.
- Adjusted EBITDA in the fourth quarter
of fiscal 2017 was a loss of $0.2 million compared with Adjusted
EBITDA of $1.4 million in the fourth quarter of fiscal 2016.
CEO Peter W. Knapper stated, “We continued to witness
significant change for SIFCO, due to our focus on improving the
Company's operational and financial performance. In fiscal 2017,
among other actions, we streamlined our operations, reorganized our
Sales team and continued to emphasize our enterprise-wide
priorities of 'Safety, Quality, and Delivery.' As a result of these
steps, SIFCO saw improved financial performance in pre-tax results,
Adjusted EBITDA and working capital improvements in fiscal 2017.
Our target markets, both Aerospace and Energy, remain strong and
SIFCO is committed to driving improved profitability and growth in
fiscal 2018 and forward."
Use of Non-GAAP Financial Measures
The Company uses certain non-GAAP measures in this release.
Adjusted EBITDA is a non-GAAP financial measure and is intended to
serve as a supplement 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, competition
and other uncertainties detailed from time to time in the Company's
Securities and Exchange Commission filings.
The Company's Form 10-K for the year ended September 30, 2017
can be accessed through its 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.
SIFCO Industries, Inc. Fiscal Year Ended September
30
(Amounts in thousands, except per share
data)
Fiscal Year Ended September 30,
2017 2016 Net sales
$ 121,458 $ 119,121 Cost of goods sold
108,094
107,039 Gross profit
13,364 12,082 Selling,
general and administrative expenses
17,773 17,359 Goodwill
impairment
— 4,164 Amortization of intangible assets
2,168 2,593 Loss on disposal or impairment of operating
assets
4,957 31 Operating loss
(11,534
) (12,065 ) Interest income
(56 ) (51 )
Interest expense
2,208 1,715 Foreign currency exchange loss,
net
47 33 Other income, net
(593 ) (429 ) Loss
from operations before income tax expense (benefit)
(13,140
) (13,333 ) Income tax expense (benefit)
1,069
(1,998 ) Net loss
$ (14,209 ) $ (11,335 )
Net loss per share: Basic
$ (2.59
) $ (2.07 ) Diluted
$ (2.59 ) $ (2.07 )
Weighted-average number of common shares (basic)
5,487 5,475 Weighted-average number of common shares
(diluted)
5,487 5,475
SIFCO Industries, Inc. Quarter Ended September
30
(Amounts in thousands, except per share
data)
Quarter Ended September 30, 2017
2016 Net sales
$ 28,515 $ 31,880 Gross profit
1,968 3,416 Net loss
$ (3,742 )
$ (7,388 ) Net loss per share Basic
$ (0.68
) $ (1.34 ) Diluted
$ (0.68 ) $ (1.34 )
SIFCO Industries, Inc.
(Amounts in thousands, except per share data)
September 30,
2017 2016
ASSETS
Current assets: Cash and cash equivalents
$ 1,399 $
471 Receivables, net of allowance for doubtful accounts of $330 and
$706, respectively
25,894 25,158 Inventories, net
20,381 28,496 Refundable income taxes
292 1,773
Prepaid expenses and other current assets
1,644 2,177
Current assets of business held for sale
2,524 —
Total current assets
52,134 58,075 Property, plant
and equipment, net
39,508 48,958 Intangible assets, net
6,814 11,138 Goodwill
12,170 11,748 Other assets
261 538 Total assets
$ 110,887
$ 130,457
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities: Current maturities of long-term debt
$
7,560 $ 18,258 Revolver
18,557 12,751 Accounts
payable
12,817 14,520 Accrued liabilities
6,791
5,234 Total current liabilities
45,725 50,763
Long-term debt, net of current maturities
5,151 7,623
Deferred income taxes
3,266 2,929 Pension liability
6,184 8,341 Other long-term liabilities
430 431
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 –
5,596 at September 30, 2017 and 5,525 at September 30, 2016
5,596 5,525 Additional paid-in capital
9,519 9,219
Retained earnings
44,267 58,476 Accumulated other
comprehensive loss
(9,251 ) (12,850 ) Total
shareholders’ equity
50,131 60,370 Total
liabilities and shareholders’ equity
$ 110,887
$ 130,457
Non-GAAP Financial Measures
Presented below is certain financial information based on our
EBITDA and Adjusted EBITDA. References to “EBITDA” mean earnings
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 it 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 profit (loss),
to measure operating performance. 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:
Fourth Quarter Ended Years Ended
(Dollars in thousands)
September 30, September 30,
2017
2016
2017 2016 Net loss
$ (3,742 )
$
(7,388
)
$ (14,209 ) $ (11,335 ) Adjustments:
Depreciation and amortization expense
2,462
2,745
9,988 10,766 Interest expense, net
512
432
2,152 1,664 Income tax expense (benefit)
258
1,226
1,069 (1,998 ) EBITDA
(510 )
(2,985
)
(1,000 ) (903 ) Adjustments: Foreign currency
exchange loss, net (1)
36
6
47 33 Other income, net (2)
(269 )
(107
)
(593 ) (429 ) (Gain)/loss on disposal of operating
assets (3)
—
(1
)
(3 ) 31 Inventory purchase accounting adjustments (4)
—
—
— 266 Equity compensation expense (income) (5)
(80
)
(238
)
404 (474 ) Pension settlement/curtailment (benefit) expense
(6)
(49 )
223
(48 ) 223 Acquisition transaction-related expenses
(7)
—
—
— (94 ) LIFO impact (8)
89
(338
)
293 (482 ) Orange expansion (9)
—
644
2,170 1,419 Executive search (10)
—
—
— 223 Asset impairment charges (11)
594
4,164
4,960 4,164 Adjusted EBITDA
$
(189 )
$
1,368
$ 6,230 $ 3,977 (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, primarily rental income from the
Company's Irish subsidiary. (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 accounting
adjustments to value inventory at fair market value associated with
the acquisition of a business that was charged to cost of goods
sold when the inventory was sold. (5) Represents the equity-based
compensation benefit and expense recognized by the Company under
its 2016 and 2007 Long-term Incentive Plan due to granting of
awards, awards not vesting and/or forfeitures. (6) Represents
expense (benefit) incurred by a defined benefit pension plan
related to settlement of pension obligations. (7) Represents
transaction-related costs such as legal, financial, tax due
diligence expenses, valuation services, costs, and executive travel
that are required to be expensed as incurred. (8) Represents the
increase (decrease) in the reserve for inventories for which cost
is determined using the last in, first out ("LIFO") method. (9)
Represents costs related to expansion of one of the plant locations
that are required to be expensed as incurred. (10) Represents costs
incurred for executive search fees as mentioned in its Form 8-K
filing on March 18, 2016.
(11)
Represents long-lived and definite-lived
intangible asset impairment from the Alliance reporting unit in
fiscal 2017 and goodwill impairment charge incurred at the Orange
reporting unit in fiscal 2016. See Note 1, Summary of Significant
Accounting Policies - Asset Impairment, and Note 3, Goodwill and
Intangible Assets, of the consolidated financial statements set
forth in the Company's Form 10-K for the year-ended September 30,
2017 for further discussion.
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version on businesswire.com: http://www.businesswire.com/news/home/20171220006116/en/
SIFCO Industries, Inc.Thomas R. Kubera,
216-881-8600www.sifco.com
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