SIFCO Industries, Inc. (NYSE American: SIF) today announced
financial results for its fourth quarter and fiscal 2020, which
ended September 30, 2020.
Fourth Quarter and Fiscal 2020 Highlights
Results for the Fourth
Quarter
- Net sales in the fourth quarter of fiscal 2020 decreased 6.7%
to $29.1 million, compared with $31.1 million for the same period
in fiscal 2019.
- Net income for the fourth quarter of fiscal 2020 was $5.0
million, or $0.86 per diluted share, compared with $2.4 million, or
$0.43 per diluted share, in the fourth quarter of fiscal 2019.
- EBITDA was $6.9 million in the fourth quarter of fiscal 2020,
compared with $4.5 million in the fourth quarter of fiscal
2019.
- Adjusted EBITDA in the fourth quarter of fiscal 2020 was $4.3
million, compared with Adjusted EBITDA of $1.9 million in the
fourth quarter of fiscal 2019.
Results for the Fiscal Year
2020
- Net sales in fiscal 2020 increased 1.0% to $113.6 million,
compared with $112.5 million for the same period in fiscal
2019.
- Net income in fiscal 2020 was $9.2 million, or $1.59 per
diluted share, compared with a net loss of $7.5 million, or $(1.35)
per diluted share in fiscal 2019.
- EBITDA was $17.2 million in fiscal 2020, compared with EBITDA
of $0.4 million in the fiscal 2019.
- Adjusted EBITDA in fiscal 2020 was $12.2 million, compared with
Adjusted EBITDA of $1.7 million in fiscal 2019.
Net income, EBITDA and Adjusted EBITDA results for the fourth
quarter and fiscal year ended September 30, 2020 include higher
margins due to productivity improvements as well as insurance
recoveries in connection with the fire that occurred in fiscal 2019
at the Company's facility in Orange, California.
The fourth quarter saw the impact of COVID-19 on the commercial
aerospace industry and the continued disruption of global travel,
which resulted in a decline in the Company’s net sales. While the
Company experienced a growth in revenue in the military aerospace
market, the continuation of the pandemic has impacted the Company’s
customers’ orders for new aircraft in the commercial markets it
serves.
Other Highlights
CEO Peter W. Knapper stated, “2020 was an unprecedented year.
The COVID-19 outbreak and subsequent worldwide response has
impacted all of us personally and professionally. Through it all,
we focused on maintaining the health and safety of our team while
continuing to safely provide our customers with products, services
and expertise they needed from us during uncertain times. As the
effects of the pandemic weighed on the commercial aerospace market
in the year and is expected to continue to impact such segment, we
saw growth in our revenues from our support of the military
aerospace market.
“Operationally and financially, we saw benefits of the
consolidation completed over the last few years as well as our
continuous improvement journey. The year marked the first time
since fiscal 2014 that the business generated positive net income
for a full year, while also posting positive net income for 4 of
the last 5 quarters. All sites contributed to these improvements.
Our results enabled us to accelerate investment in our business,
allowing us to competitively support our current commitments as
well as respond to market opportunities as they arise.”
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 Annual
Report on Form 10-K for the quarter ended September 30, 2020 and
other reports filed by the Company with the Securities &
Exchange Commission.
The Company's Form 10-K for the year ended September 30, 2020
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.
Fiscal Year Ended September 30,
(Amounts in thousands, except per share
data)
Years Ended September
30,
2020
2019
Net sales
$
113,573
$
112,454
Cost of goods sold
93,611
101,817
Gross profit
19,962
10,637
Selling, general and administrative
expenses
14,022
15,274
Goodwill impairment
—
8,294
Amortization of intangible assets
1,497
1,648
Loss (gain) on disposal or impairment of
operating assets
174
(282
)
Gain on insurance recoveries
(5,874
)
(7,253
)
Operating income (loss)
10,143
(7,044
)
Interest expense, net
886
1,053
Foreign currency exchange loss (gain),
net
51
(7
)
Other expense, net
226
117
Income (loss) before income tax
benefit
8,980
(8,207
)
Income tax benefit
(211
)
(701
)
Net income (loss)
$
9,191
$
(7,506
)
Net income (loss) per share:
Basic
$
1.62
$
(1.35
)
Diluted
$
1.59
$
(1.35
)
Weighted-average number of common shares
(basic)
5,661
5,566
Weighted-average number of common shares
(diluted)
5,791
5,566
Quarter Ended September 30,
(Amounts in thousands, except per share
data)
Quarter Ended September
30,
2020
2019
Net sales
$
29,052
$
31,122
Gross profit
6,212
4,425
Net income
$
5,023
$
2,404
Net income per share:
Basic
$
0.89
$
0.43
Diluted
$
0.86
$
0.43
Non-GAAP Financial Measures
Presented below is certain financial information based on our
EBITDA and Adjusted EBITDA. References to “EBITDA” mean earnings
(losses) from 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:
(Dollars in thousands)
Fourth Quarter Ended
September 30,
Years Ended September
30,
2020
2019
2020
2019
Net income (loss)
$
5,023
$
2,404
$
9,191
$
(7,506
)
Adjustments:
Depreciation and amortization expense
1,804
1,789
7,380
7,525
Interest expense, net
189
218
886
1,053
Income tax benefit
(110
)
115
(211
)
(701
)
EBITDA
6,906
4,526
17,246
371
Adjustments:
Foreign currency exchange loss (gain), net
(1)
39
(2
)
51
(7
)
Other expense (income), net (2)
45
167
(13
)
117
Loss (gain) on disposal and impairment of
assets (3)
—
—
174
(282
)
Gain on insurance recoveries (4)
(3,115
)
(2,785
)
(5,874
)
(7,253
)
Equity compensation expense (5)
137
144
398
511
Pension settlement/curtailment benefit
(6)
239
—
239
—
LIFO impact (7)
6
(172
)
(10
)
(75
)
Goodwill impairment charge (8)
—
—
—
8,294
Adjusted EBITDA
$
4,257
$
1,878
$
12,211
$
1,676
(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 grant
income. Pension settlement costs was reclassed from this line to
Pension settlement/curtailment benefit. See Footnote 6.
(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, and referred to as
the "2016 Plan") due to granting of awards, awards not vesting
and/or forfeitures.
(6)
Represents expense incurred by a
defined benefit pension plan 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 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 this Annual Report on
Form 10-K.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201223005533/en/
SIFCO Industries, Inc. Thomas R. Kubera, 216-881-8600
www.sifco.com
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