SIFCO Industries, Inc. (NYSE American: SIF) today announced financial
results for its second quarter of fiscal 2019, which ended March 31,
2019.
Results for the Second Quarter
-
Net sales in the second quarter of fiscal 2019 decreased 1.5% to $27.4
million, compared with $27.8 million for the same period in fiscal
2018.
-
Net loss for the second quarter of fiscal 2019 was $1.3 million, or
$(0.23) per diluted share, compared with net loss of $2.0 million, or
$(0.37) per diluted share, in the second quarter of fiscal 2018.
-
EBITDA was $1.0 million in the second quarter of fiscal 2019 compared
with $0.5 million in the second quarter of fiscal 2018.
-
Adjusted EBITDA in the second quarter of fiscal 2019 was breakeven
compared with Adjusted EBITDA of $0.5 million in the second quarter of
fiscal 2018.
Results for the Year to Date
-
Net sales in the first six months of fiscal 2019 increased 8.5% to
$56.5 million, compared with $52.0 million for the same period in
fiscal 2018.
-
Net loss in the first six months of fiscal 2019 was $2.5 million, or
$(0.46) per diluted share, compared with net loss of $2.9 million, or
$(0.53) per diluted share in the first six months of fiscal 2018.
-
EBITDA was $1.4 million in the first six months of fiscal 2019
compared with $2.0 million in the first six months ended of fiscal
2018.
-
Adjusted EBITDA in the first six months of fiscal 2019 was $0.3
million compared with Adjusted EBITDA of $0.4 million in the first six
months of fiscal 2018.
CEO Peter W. Knapper stated, "As previously communicated, much of the
second quarter was spent on supporting our customers to minimize the
impact by the fire at our Orange, California manufacturing facility. We
will have full capability back in place once the refurbished 2500T press
is on line there. It is in cycle test now and is expected to be in
service later this month. The site rebuild is also progressing. While
this event did adversely impact this quarter's results, we continue to
grow backlog and de-lever through debt reduction. Further, our current
results to do not reflect expected insurance recoveries related to
business interruption coverage as we are still working through the
calculation with our insurer. Separately, our Cleveland, Ohio
manufacturing facility commissioned a new 1250 ton press in support of
our growth at this facility. SIFCO is now well capitalized for current
operations."
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, 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, 2018 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.
|
|
|
|
|
|
|
SIFCO Industries, Inc.
|
|
Second Quarter Ended March 31
|
|
(Amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net sales
|
|
$
|
27,392
|
|
|
$
|
27,794
|
|
|
$
|
56,458
|
|
|
$
|
52,044
|
|
|
Cost of goods sold
|
|
25,304
|
|
|
25,265
|
|
|
51,633
|
|
|
47,487
|
|
|
Gross profit
|
|
2,088
|
|
|
2,529
|
|
|
4,825
|
|
|
4,557
|
|
|
Selling, general and administrative expenses
|
|
3,784
|
|
|
3,861
|
|
|
7,894
|
|
|
7,933
|
|
|
Amortization of intangible assets
|
|
413
|
|
|
433
|
|
|
828
|
|
|
858
|
|
|
Gain on disposal or impairment of operating assets
|
|
—
|
|
|
(29
|
)
|
|
(282
|
)
|
|
(1,429
|
)
|
|
Gain on insurance proceeds received for damaged property
|
|
(1,164
|
)
|
|
—
|
|
|
(1,164
|
)
|
|
—
|
|
|
Operating loss
|
|
(945
|
)
|
|
(1,736
|
)
|
|
(2,451
|
)
|
|
(2,805
|
)
|
|
Interest income
|
|
(1
|
)
|
|
(14
|
)
|
|
(2
|
)
|
|
(29
|
)
|
|
Interest expense
|
|
315
|
|
|
436
|
|
|
607
|
|
|
886
|
|
|
Foreign currency exchange gain, net
|
|
(1
|
)
|
|
(43
|
)
|
|
(1
|
)
|
|
(80
|
)
|
|
Other income, net
|
|
(34
|
)
|
|
(80
|
)
|
|
(35
|
)
|
|
(396
|
)
|
|
Loss before income tax expense (benefit)
|
|
(1,224
|
)
|
|
(2,035
|
)
|
|
(3,020
|
)
|
|
(3,186
|
)
|
|
Income tax expense (benefit)
|
|
34
|
|
|
3
|
|
|
(480
|
)
|
|
(237
|
)
|
|
Net loss
|
|
$
|
(1,258
|
)
|
|
$
|
(2,038
|
)
|
|
$
|
(2,540
|
)
|
|
$
|
(2,949
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.23
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.53
|
)
|
|
Diluted
|
|
$
|
(0.23
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares (basic)
|
|
5,561
|
|
|
5,535
|
|
|
5,548
|
|
|
5,519
|
|
|
Weighted-average number of common shares (diluted)
|
|
5,561
|
|
|
5,535
|
|
|
5,548
|
|
|
5,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 to EBITDA
and Adjusted EBITDA:
|
Dollars in thousands
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net loss
|
|
$
|
(1,258
|
)
|
|
$
|
(2,038
|
)
|
|
$
|
(2,540
|
)
|
|
$
|
(2,949
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
1,910
|
|
|
2,128
|
|
|
3,840
|
|
|
4,319
|
|
|
Interest expense, net
|
|
314
|
|
|
422
|
|
|
605
|
|
|
857
|
|
|
Income tax expense (benefit)
|
|
34
|
|
|
3
|
|
|
(480
|
)
|
|
(237
|
)
|
|
EBITDA
|
|
1,000
|
|
|
515
|
|
|
1,425
|
|
|
1,990
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange (gain), net (1)
|
|
(1
|
)
|
|
(43
|
)
|
|
(1
|
)
|
|
(80
|
)
|
|
Other income, net (2)
|
|
(34
|
)
|
|
(80
|
)
|
|
(35
|
)
|
|
(396
|
)
|
|
Gain on disposal and impairment of assets (3)
|
|
—
|
|
|
(29
|
)
|
|
(282
|
)
|
|
(1,429
|
)
|
|
Gain on insurance proceeds received for damaged property (4)
|
|
(1,164
|
)
|
|
—
|
|
|
(1,164
|
)
|
|
—
|
|
|
Equity compensation (5)
|
|
190
|
|
|
47
|
|
|
426
|
|
|
242
|
|
|
LIFO impact (6)
|
|
(19
|
)
|
|
63
|
|
|
(57
|
)
|
|
115
|
|
|
Adjusted EBITDA
|
|
$
|
(28
|
)
|
|
$
|
473
|
|
|
$
|
312
|
|
|
$
|
442
|
|
|
(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, which
previously consisted of rental income from the Company's Irish
subsidiary (through first quarter 2018 when the building was sold).
Included in fiscal 2018 was grant income that was realized that
relates to the Company's Irish subsidiary.
|
|
(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 on 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.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190510005474/en/
Copyright Business Wire 2019