SIFCO Industries, Inc. (NYSE American: SIF) today announced
financial results for its second quarter of fiscal 2021, which
ended March 31, 2021.
Second Quarter Results
- Net sales in the second quarter of fiscal 2021 decreased 18.6%
to $24.9 million, compared with $30.5 million for the same period
in fiscal 2020.
- Net loss for the second quarter of fiscal 2021 was $1.5
million, or ($0.26) per diluted share, compared with net income of
$3.3 million, or $0.57 per diluted share, in the second quarter of
fiscal 2020.
- EBITDA was $0.7 million in the second quarter of fiscal 2021,
compared with $5.4 million in the second quarter of fiscal
2020.
- Adjusted EBITDA in the second quarter of fiscal 2021 was $1.2
million, compared with Adjusted EBITDA of $4.5 million in the
second quarter of fiscal 2020.
Year to Date Results
- Net sales in the first six months of fiscal 2021 decreased
12.0% to $49.9 million, compared with $56.7 million for the same
period in fiscal 2020.
- Net income for the first six months of fiscal 2021 was $1.5
million, or $0.25 per diluted share, compared with net income of
$1.9 million, or $0.33 per diluted share, in the first six months
of fiscal 2020.
- EBITDA was $4.8 million in the first six months of fiscal 2021,
compared with $6.0 million in the first six months of fiscal
2020.
- Adjusted EBITDA in the first six months of fiscal 2021 was $3.1
million, compared with Adjusted EBITDA of $5.2 million in the first
six months of fiscal 2020.
Other Highlights
CEO Peter W. Knapper stated, "While our results for the quarter
reflect the pressures on the A&E markets caused by the COVID-19
pandemic, we are all thankful that the impacts of the pandemic are
finally showing signs of receding in many places in the world and
we are excited that commercial air travel is showing signs of
recovery. We continue to work with our customers as we navigate the
impacts on our markets together. Our focus on controlling costs and
managing working capital contributed to a $4.6 million reduction in
debt since the beginning of the fiscal year and we continue to
actively manage our costs in light of the continued uncertainty
around the shape and duration of the recovery in the industries we
serve.”
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, 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.
Second Quarter ended March 31,
(Amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended March
31,
Six Months Ended March
31,
2021
2020
2021
2020
Net sales
$
24,866
$
30,537
$
49,944
$
56,744
Cost of goods sold
22,123
24,260
43,278
47,143
Gross profit
2,743
6,277
6,666
9,601
Selling, general and administrative
expenses
3,596
3,321
7,423
7,529
Amortization of intangible assets
248
408
517
817
Loss on disposal of operating assets
—
41
—
41
Gain on insurance recoveries
—
(1,000
)
(2,495
)
(1,000
)
Operating income (loss)
(1,101
)
3,507
1,221
2,214
Interest expense
169
262
335
513
Foreign currency exchange loss (income),
net
14
(1
)
21
—
Other loss (income), net
42
25
103
(84
)
Income (loss) before income tax expense
(benefit)
(1,326
)
3,221
762
1,785
Income tax expense (benefit)
165
(39
)
(740
)
(134
)
Net income (loss)
$
(1,491
)
$
3,260
$
1,502
$
1,919
Net income (loss) per share
Basic
$
(0.26
)
$
0.57
$
0.26
$
0.34
Diluted
$
(0.26
)
$
0.57
$
0.25
$
0.33
Weighted-average number of common shares
(basic)
5,777
5,679
5,735
5,645
Weighted-average number of common shares
(diluted)
5,777
5,770
5,932
5,748
Consolidated Condensed Balance
Sheets
(Amounts in thousands, except per share
data)
(Unaudited)
March 31, 2021
September 30,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
311
$
427
Receivables, net of allowance for doubtful
accounts of $251 and $249, respectively
19,068
23,225
Other receivables
—
1,547
Contract assets
13,565
11,997
Inventories, net
15,568
15,569
Refundable income taxes
103
103
Prepaid expenses and other current
assets
1,959
2,338
Total current assets
50,574
55,206
Property, plant and equipment, net
44,448
44,201
Operating lease right-of-use assets,
net
16,405
17,021
Intangible assets, net
1,377
1,890
Goodwill
3,493
3,493
Other assets
89
137
Total assets
$
116,386
$
121,948
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt
$
9,783
$
7,144
Revolver
7,742
12,870
Short-term operating lease liabilities
796
991
Accounts payable
14,495
14,002
Accrued liabilities
6,368
8,290
Total current liabilities
39,184
43,297
Long-term debt, net of current
maturities
2,542
4,606
Long-term operating lease liabilities, net
of short-term
15,825
16,188
Deferred income taxes
616
1,400
Pension liability
9,764
10,165
Other long-term liabilities
747
769
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 5,989 at
March 31, 2021 and 5,916 at September 30, 2020
5,989
5,916
Additional paid-in capital
10,940
10,736
Retained earnings
43,841
42,339
Accumulated other comprehensive loss
(13,062
)
(13,468
)
Total shareholders’ equity
47,708
45,523
Total liabilities and shareholders’
equity
$
116,386
$
121,948
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 income
(loss) to EBITDA and Adjusted EBITDA:
Dollars in thousands
Three Months Ended
Six Months Ended
March 31,
March 31,
2021
2020
2021
2020
Net income (loss)
$
(1,491)
$
3,260
$
1,502
$
1,919
Adjustments:
Depreciation and amortization expense
1,905
1,875
3,730
3,731
Interest expense, net
169
262
335
513
Income tax expense (benefit)
165
(39)
(740)
(134)
EBITDA
748
5,358
4,827
6,029
Adjustments:
Foreign currency exchange loss (income),
net (1)
14
(1)
21
—
Other loss (income), net (2)
42
25
103
(84)
Loss on disposal of assets (3)
—
41
—
41
Gain on insurance recoveries (4)
—
(1,000)
(2,495)
(1,000)
Equity compensation (5)
150
70
293
225
LIFO impact (6)
207
(33)
335
(11)
Adjusted EBITDA
$
1,161
$
4,460
$
3,084
$
5,200
(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.
(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 the 2016 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.
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/20210506006058/en/
SIFCO Industries, Inc. Thomas R. Kubera, 216-881-8600
www.sifco.com
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