[Company Announcement & Overview](index=1&type=section&id=Company%20Announcement%20%26%20Overview) SIFCO Industries announced its Q1 FY2025 financial results, detailed its business, and provided forward-looking statements [Announcement Details](index=1&type=section&id=Announcement%20Details) SIFCO Industries, Inc. announced its first quarter fiscal year 2025 financial results for the period ended December 31, 2024 - SIFCO Industries, Inc. (NYSE American: SIF) reported its financial results for the first quarter of fiscal year 2025, ended December 31, 2024[1](index=1&type=chunk)[2](index=2&type=chunk) [Business Description & Forward-Looking Statements](index=1&type=section&id=Business%20Description%20%26%20Forward-Looking%20Statements) SIFCO Industries manufactures forgings and machined components for aerospace and energy markets, providing forward-looking statements with inherent risks and uncertainties - SIFCO Industries, Inc. primarily manufactures forgings and machined components for the aerospace and energy markets, offering processes including forging, heat treating, coating, and machining[6](index=6&type=chunk) - The company issued forward-looking statements, indicating future results may differ materially due to economic conditions, pandemics, and competition, advising review of 10-K risk factors[5](index=5&type=chunk) [First Quarter Fiscal 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202025%20Financial%20Highlights) This section summarizes key financial performance indicators and CEO commentary on operational focus and backlog growth [Key Financial Performance Indicators](index=1&type=section&id=Key%20Financial%20Performance%20Indicators) In Q1 FY2025, SIFCO's net sales grew significantly by 35.0%, while net loss from continuing operations narrowed, and both EBITDA and Adjusted EBITDA improved Key Financial Metrics Comparison for Q1 Fiscal Year 2025 | Metric | Q1 FY2025 (million USD) | Q1 FY2024 (million USD) | Year-over-Year Change (%) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Net Sales | 20.9 | 15.5 | +35.0% | | Net Loss from Continuing Operations | (2.4) | (4.1) | Improved | | Diluted Loss Per Share from Continuing Operations | (0.40) | (0.67) | Improved | | Net Income from Discontinued Operations | 0.1 | 0.6 | Decreased | | Diluted Earnings Per Share from Discontinued Operations | 0.02 | 0.10 | Decreased | | EBITDA | (0.8) | (2.5) | Improved | | Adjusted EBITDA | (0.2) | (1.9) | Improved | [CEO Commentary & Operational Focus](index=1&type=section&id=CEO%20Commentary%20%26%20Operational%20Focus) CEO George Scherff highlighted the quarter's focus on improving plant margins and efficiency, noting continued backlog growth indicating strong market demand - CEO George Scherff stated the first quarter focused on improving margins and production efficiency at both facilities[4](index=4&type=chunk) - The company's backlog continuously increased, reaching **$121.9 million**, indicating strong product demand[4](index=4&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the condensed consolidated statements of operations and balance sheets for the reporting period [Condensed Statements of Operations](index=2&type=section&id=Condensed%20Statements%20of%20Operations) In Q1 FY2025, net sales increased 35.0% to **$20.883 million**, gross profit turned positive at **$0.928 million** from a loss, and loss from continuing operations significantly narrowed Condensed Consolidated Statements of Operations (Unaudited, in thousands of USD) | Metric | For the Three Months Ended December 31, 2024 | For the Three Months Ended December 31, 2023 | | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net Sales | $20,883 | $15,474 | | Cost of Sales | 19,955 | 16,019 | | Gross Profit (Loss) | 928 | (545) | | Selling, General and Administrative Expenses | 2,840 | 3,103 | | Operating Loss | (1,912) | (3,648) | | Interest Expense, Net | 469 | 342 | | Foreign Currency Exchange (Gain) Loss, Net | (2) | 4 | | Other Expense, Net | 38 | 69 | | Loss from Continuing Operations Before Income Taxes | (2,417) | (4,063) | | Income Tax Expense | 5 | 6 | | Loss from Continuing Operations | (2,422) | (4,069) | | Income from Discontinued Operations, Net of Tax | 106 | 647 | | Net Loss | $(2,316) | $(3,422) | | Basic and Diluted Loss Per Share from Continuing Operations | $(0.40) | $(0.67) | | Basic and Diluted Earnings Per Share from Discontinued Operations | 0.02 | 0.10 | | Basic and Diluted Loss Per Share | $(0.38) | $(0.57) | | Weighted Average Common Shares Outstanding (Basic and Diluted) | 6,016 | 5,956 | [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) As of December 31, 2024, total assets were **$80.982 million**, a decrease from September 30, 2024, primarily due to discontinued operations divestiture, with cash increasing and liabilities and equity adjusting Condensed Consolidated Balance Sheets (Unaudited, in thousands of USD) | Metric | December 31, 2024 | September 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------- | :------------------- | | **ASSETS** | | | | Cash and Cash Equivalents | $3,143 | $1,714 | | Accounts Receivable, Net | 16,848 | 17,272 | | Contract Assets | 10,119 | 10,745 | | Inventories, Net | 5,683 | 6,230 | | Current Assets of Discontinued Operations | — | 15,967 | | **Total Current Assets** | **38,935** | **54,323** | | Property, Plant and Equipment, Net | 25,347 | 26,261 | | Operating Lease Right-of-Use Assets, Net | 13,132 | 13,326 | | Goodwill | 3,493 | 3,493 | | Non-Current Assets of Discontinued Operations | — | 6,864 | | **Total Assets** | **$80,982** | **$104,624** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Current Portion of Long-Term Debt, Net | $3,227 | $353 | | Revolving Credit Facility | 12,633 | 20,142 | | Accounts Payable | 8,820 | 11,574 | | Current Liabilities of Discontinued Operations | — | 10,058 | | **Total Current Liabilities** | **31,014** | **54,010** | | Long-Term Debt, Net | 85 | — | | Long-Term Operating Lease Liabilities, Net | 12,844 | 13,035 | | Pension Liability | 2,398 | 2,465 | | **Total Stockholders' Equity** | **33,676** | **30,425** | | **Total Liabilities and Stockholders' Equity** | **$80,982** | **$104,624** | [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP metrics, outlines their purpose and limitations, and reconciles them to GAAP net loss [Definition, Purpose, and Limitations](index=4&type=section&id=Definition%2C%20Purpose%2C%20and%20Limitations) The company uses EBITDA and Adjusted EBITDA as non-GAAP metrics to supplement GAAP results, assessing operational performance and debt serviceability, while acknowledging limitations such as not reflecting cash needs for interest, taxes, depreciation, and amortization - EBITDA refers to earnings (loss) from continuing operations before interest, taxes, depreciation, and amortization, with Adjusted EBITDA including specific further adjustments[10](index=10&type=chunk) - Management considers EBITDA and Adjusted EBITDA useful metrics for evaluating operational performance, debt serviceability, and potential acquisitions[11](index=11&type=chunk) - Limitations of non-GAAP metrics include not reflecting cash requirements for interest expense, tax payments, asset replacement, or amortization of intangible assets[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) [Reconciliation of Net Loss to EBITDA and Adjusted EBITDA](index=4&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20EBITDA%20and%20Adjusted%20EBITDA) The company provided a reconciliation of net loss to EBITDA and Adjusted EBITDA for Q1 FY2025, showing EBITDA improved from **($2.489 million)** to **($0.767 million)** and Adjusted EBITDA from **($1.851 million)** to **($0.248 million)** Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands of USD) | Metric | December 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------------- | :------------------- | | Net Loss | $(2,316) | $(3,422) | | Less: Income from Discontinued Operations, Net of Tax | 106 | 647 | | Loss from Continuing Operations | (2,422) | (4,069) | | **Adjustments:** | | | | Depreciation and Amortization Expense | 1,181 | 1,232 | | Interest Expense, Net | 469 | 342 | | Income Tax Expense | 5 | 6 | | **EBITDA** | **(767)** | **(2,489)** | | **Adjustments:** | | | | (1) Foreign Currency Exchange (Gain) Loss, Net | (2) | 4 | | (2) Other Expense, Net | 38 | 69 | | (3) Non-recurring Severance Adjustment | (22) | — | | (3) Equity Compensation | 21 | 86 | | (4) Transaction Related Expense Adjustment | (17) | — | | (5) LIFO Impact | 501 | 293 | | (6) IT Event Costs, Net | — | (1) | | (7) Strategic Alternatives Costs | — | 187 | | **Adjusted EBITDA** | **$(248)** | **$(1,851)** | [Footnotes for Non-GAAP Adjustments](index=5&type=section&id=Footnotes%20for%20Non-GAAP%20Adjustments) The company provided detailed footnotes for non-GAAP adjustments, explaining the nature of foreign currency exchange, other expenses, equity compensation, transaction-related fees, LIFO impact, IT event costs, and strategic alternatives costs - Footnotes explain adjustments such as foreign currency exchange gains or losses arising from functional currency and transaction currency rate changes[13](index=13&type=chunk)[16](index=16&type=chunk) - Other expenses refer to miscellaneous non-operating income or expenses, such as pension costs or grant income[16](index=16&type=chunk) - Non-recurring severance adjustments and equity compensation relate to equity incentive expenses under the 2016 plan and executive severance[16](index=16&type=chunk) - Transaction-related expense adjustments are associated with legal fee credits from an unsuccessful acquisition of another company[16](index=16&type=chunk) - LIFO impact represents changes in inventory reserves determined using the Last-In, First-Out (LIFO) method[16](index=16&type=chunk) - IT event costs refer to incremental information technology costs (and credits) related to cybersecurity incidents and insurance claim losses[16](index=16&type=chunk) - Strategic alternatives costs refer to expenses associated with evaluating strategic alternatives[16](index=16&type=chunk) [General Information](index=5&type=section&id=General%20Information) This section provides essential contact information for the company [Contacts](index=5&type=section&id=Contacts) The company provides contact information for investors and the public - Contact: Jennifer Wilson, Phone: 216-881-8600, Company Website: www.sifco.com[16](index=16&type=chunk)

Financial Performance - Net sales for the first three months of fiscal 2025 increased by $5.4 million to $20.9 million, compared to $15.5 million in the same period of fiscal 2024[81]. - Aerospace components sales for fixed wing aircraft increased by $2.9 million to $12.8 million, while commercial space products increased by $1.1 million to $2.5 million year-over-year[81]. - Cost of goods sold (COGS) increased by $3.9 million, or 24.6%, to $20.0 million, representing 95.6% of net sales during the first three months of fiscal 2025[83]. - Gross profit improved by $1.5 million to $0.9 million in the first three months of fiscal 2025, compared to a gross loss of $0.5 million in the same period of fiscal 2024[84]. - Loss from continuing operations was $2.4 million in the first three months of fiscal 2025, an improvement from a loss of $4.1 million in the same period of fiscal 2024[89]. - Adjusted EBITDA for the first three months of fiscal 2025 was $(248) thousand, an improvement from $(1,851) thousand in the same period of fiscal 2024[93]. Operational Changes - The company sold its European operations in October 2024 to streamline operational synergies and refocus on its core aerospace forging business[77]. - The sale of the CBlade manufacturing operations has ceased future contributions from that business, impacting overall cash flows[96]. Cash Flow and Liquidity - As of December 31, 2024, cash and cash equivalents were $3.1 million, up from $1.7 million as of September 30, 2024[94]. - The company used $3.8 million of cash in operating activities during the first three months of fiscal 2025, primarily due to a net operating loss of $2.4 million[99]. - Cash provided by financing activities was $9.2 million in the first three months of fiscal 2025, compared to $2.6 million in the same period of fiscal 2024[102]. - The company believes existing cash will be sufficient to finance operations and planned capital expenditures over the next 12 months[98]. - The company reported a cash flow usage of $1.5 million in the first three months of fiscal 2024, primarily due to a net operating loss of $4.1 million[100]. - The company anticipates that cash flows from operations may be used to pay down outstanding debt amounts[103]. - The tightening of the credit market could negatively impact the company's ability to obtain additional debt financing[104]. - The company has no off-balance sheet arrangements that could materially affect its financial condition as of December 31, 2024[95]. Capital Expenditures - Capital expenditures for the first three months of fiscal 2025 were $0.1 million, with total anticipated capital expenditures for the fiscal year expected to be between $1.5 million and $2.0 million[101]. Taxation - The effective tax rate for the first three months of fiscal 2025 was (0.21)%, compared to (0.15)% for the same period in fiscal 2024[88]. Backlog - The company's total backlog as of December 31, 2024, was $121.9 million, an increase from $104.8 million as of December 31, 2023, with $90.1 million expected to be completed within the next 12 months[80].

Core Viewpoint - Zacks Investment Research has initiated coverage of SIFCO Industries, assigning a "Neutral" recommendation amid a mixed outlook for the company, which is making progress in the aerospace and energy sectors despite industry challenges [1] Company Overview - SIFCO Industries, based in Cleveland, OH, manufactures forgings, sub-assemblies, and machined components primarily for the aerospace and energy markets, specializing in forging, heat-treating, chemical processing, and machining services [2] Financial Performance - SIFCO Industries reported a 20.5% revenue increase in fiscal 2024, reaching $79.6 million, driven by strength in its aerospace and energy segments [3] - The company achieved positive adjusted EBITDA of $0.8 million in fiscal 2024, recovering from a $2.6 million loss in fiscal 2023 [3] Growth Drivers - Key factors for future growth include a strong backlog of $114.4 million at the end of fiscal 2024, up from $97.4 million the previous year, providing revenue visibility [4] - In fiscal 2025, $85 million of this backlog is scheduled for delivery, positioning the company to benefit from ongoing demand in defense and commercial aerospace [4] - SIFCO's niche expertise in high-quality forgings and components is expected to capitalize on industry trends [4] Market Positioning - SIFCO Industries' stock has underperformed compared to industry peers and the broader market over the past year, with valuation metrics reflecting investor caution regarding the company's financial health and future profitability [6] - The company's financial risks and operational challenges are currently limiting near-term upside unless sustained profitability improvements and stronger cash flow generation are demonstrated [6] Strategic Considerations - The company faces supply chain disruptions and rising labor costs, which continue to pressure profitability [5] - Higher debt costs and intense competition in the aerospace components market are additional challenges [5] - The lack of presence in next-generation aviation technologies is a concern for potential investors [5]

Financial Performance - Net sales for fiscal 2024 were $82.0 million, an increase from $27.4 million in fiscal 2023, driven by higher demand in the commercial space market[103]. - The net loss for fiscal 2024 was $8.6 million, an improvement from a net loss of $10.5 million in fiscal 2023, attributed to higher sales volumes and improved gross margins[106]. - Gross profit increased by $2.6 million to $6.0 million in fiscal 2024, with a gross margin of 7.5%, up from 5.1% in fiscal 2023[104]. - Operating loss decreased to $(5.150) million in 2024 from $(9.003) million in 2023, reflecting a reduction of approximately 42%[143]. - Net loss for the year ended September 30, 2024, was $(5.383) million, compared to $(8.692) million in 2023, showing a decrease of approximately 38.5%[144]. - Basic loss per share from continuing operations improved to $(1.44) in 2024 from $(1.77) in 2023, a positive change of about 18.6%[143]. - Comprehensive loss for the year ended September 30, 2024, was $(4.112) million, compared to $(6.659) million in 2023, indicating a reduction of approximately 38.2%[144]. Assets and Liabilities - Total current assets increased to $54,323 million as of September 30, 2024, up from $41,474 million in the previous year, representing a growth of 31%[1]. - Total assets reached $104,624 million, compared to $96,281 million as of September 30, 2023, indicating an increase of 9%[1]. - Total current liabilities rose to $54,010 million, up from $41,239 million, reflecting a 31% increase year-over-year[1]. - Shareholders' equity decreased to $30,425 million from $34,335 million, a decline of 11%[1]. - The company’s pension liability was recorded at $282 million as of September 30, 2024, down from $313 million in 2023, reflecting a decrease of approximately 10%[207]. Cash Flow and Financing - Cash and cash equivalents increased to $1.7 million at September 30, 2024, compared to $21 thousand at September 30, 2023[110]. - Cash provided by financing activities was $6.3 million in fiscal 2024, up from $4.9 million in fiscal 2023, primarily due to higher proceeds from a related party promissory note and funds drawn from the revolving credit facility[112]. - The Company expects to increase cash on hand from the sale of CBlade manufacturing operations, which will be used to repay outstanding debt and for general operational needs[110]. - The Company believes existing cash will be sufficient to finance operations and planned capital expenditures over the next 12 months, but may seek additional funding through equity or debt financing[110]. - Cash flows used in operating activities amounted to $2,648,000, a decrease from $3,760,000 in the previous year[176]. Operational Risks - The company relies on a limited number of direct and indirect customers, which could pose risks to business operations[32]. - Supply chain disruptions due to reliance on third-party suppliers could adversely affect the company's ability to meet customer demands and impact financial results[57]. - The tightening of credit markets could negatively impact the company's ability to obtain additional debt financing on favorable terms, affecting financial position and cash flows[39]. - The company has experienced cybersecurity threats that could lead to operational stoppages and increased operational costs, despite ongoing efforts to enhance cybersecurity controls[33]. - The company is subject to extensive procurement regulations related to U.S. government contracts, which could increase compliance costs and impact operating margins[31]. Business Developments - The company completed the sale of its CBlade forging and manufacturing business in October 2024, and the success of initiatives to streamline operations post-sale remains uncertain[63]. - The company sold its European operations in October 2024 to streamline operations and refocus on its core aerospace forging business[102]. - The company has contracts for programs where the period of performance may exceed one year, and future levels of defense spending by the U.S. government are uncertain, which could adversely impact sales and cash flow[31]. Tax and Valuation - The effective tax rate in fiscal 2024 was (0.4)%, compared to (0.2)% in fiscal 2023, due to changes in jurisdictional mix of income[75]. - The Company maintained a valuation allowance on U.S. deferred tax assets due to a cumulative loss position, while a $0.7 million valuation allowance was fully released for CBlade due to its cumulative income position[130]. - The Company performed its annual goodwill impairment test as of July 31, 2024, with no impairment charge identified for the Cleveland reporting unit[120]. - The Company identified indicators of impairment for the Orange, California asset group, necessitating a Step 2 test of recoverability[140].

Financial Performance - Net sales for Q4 2024 increased by 14% to $21.7 million, compared to $19.0 million in Q4 2023[13] - Net loss from continuing operations for Q4 2024 was $1.9 million, or $(0.33) per diluted share, an improvement from a net loss of $3.2 million, or $(0.53) per diluted share, in Q4 2023[13] - EBITDA for Q4 2024 was $0.8 million, compared to $(1.5) million in Q4 2023[13] - Net sales for fiscal 2024 increased by 20% to $79.6 million, compared to $66.1 million in fiscal 2023[14] - Net loss from continuing operations for fiscal 2024 was $8.6 million, or $(1.44) per diluted share, compared to a net loss of $10.5 million, or $(1.77) per diluted share, in fiscal 2023[14] - The company reported a net loss of $5.4 million for fiscal 2024, an improvement from a net loss of $8.7 million in fiscal 2023[18] - Basic loss per share from continuing operations improved to $(1.44) in fiscal 2024 from $(1.77) in fiscal 2023[18] Customer Demand - Customer backlog grew to $114.4 million at the end of fiscal 2024, indicating strong demand for the company's solutions[15] Adjusted EBITDA - Adjusted EBITDA for fiscal 2024 was $0.8 million, compared to $(2.6) million in fiscal 2023[14] - Adjusted EBITDA for the three months ended September 30, 2023, was $786,000, an improvement from a loss of $1,270,000 in the same quarter last year[21] Quarterly Performance - Net loss for the three months ended September 30, 2023, was $443,000, compared to a loss of $3,102,000 for the same period in 2022[21] - Loss from continuing operations decreased to $1,878,000 for the three months ended September 30, 2023, from $3,218,000 in the prior year[21] Expenses - Depreciation and amortization expense for the three months ended September 30, 2023, was $1,178,000, slightly down from $1,247,000 in the previous year[21] - Interest expense, net, increased to $1,015,000 for the three months ended September 30, 2023, compared to $319,000 in the same period last year[21] - Income tax expense for the three months ended September 30, 2023, was $497,000, up from $148,000 in the prior year[21] Discontinued Operations - Total income from discontinued operations for the three months ended September 30, 2023, was $1,435,000, compared to $116,000 in the same period last year[21] Non-Recurring Expenses - The company incurred a non-recurring severance expense of $435,000 during the year ended September 30, 2023[21] LIFO Impact - The company experienced a LIFO impact of $862,000 for the year ended September 30, 2023, compared to a negative impact of $305,000 in the previous year[21]

SIFCO Industries, Inc. ("SIFCO") Announces Second Quarter Fiscal 2024 Financial Results Cleveland - SIFCO Industries, Inc. (NYSE American: SIF) today announced financial results for its second quarter of fiscal 2024, which ended March 31, 2024. Second Quarter Results Year to Date Results Other Highlights CEO Peter W. Knapper stated, "EBITDA, at $926k, turned positive for the quarter as we ramp up deliveries. Our backlog continued to grow and stands at $137.8 million. We are pleased with the progress and con ...

Financial Performance - Net sales for the first six months of fiscal 2024 increased by $7.1 million to $47.6 million, compared to $40.5 million in the same period of fiscal 2023[89] - Commercial net sales accounted for 64.3% of total net sales in the first six months of fiscal 2024, up from 53.1% in the same period of fiscal 2023[90] - Net sales for the second quarter of fiscal 2024 increased by $7.4 million to $26.6 million, compared to $19.2 million in the same period of fiscal 2023[99] - Commercial net sales were 65.5% of total net sales in the second quarter of fiscal 2024, up from 59.0% in the comparable period of fiscal 2023[100] Cost and Profitability - Cost of goods sold increased by $6.6 million, or 17.5%, to $44.1 million, representing 92.7% of net sales in the first six months of fiscal 2024[91] - Gross profit increased by $0.5 million to $3.5 million in the first six months of fiscal 2024, with a gross profit margin of 7.3%[92] - Gross profit for the second quarter of fiscal 2024 increased by $1.0 million to $2.7 million, with a gross profit margin of 10.3%[102] Expenses and Losses - Selling, general and administrative expenses decreased to $6.8 million, or 14.3% of net sales, from $7.1 million, or 17.6% of net sales in the same period of fiscal 2023[93] - Net loss for the first six months of fiscal 2024 was $5.0 million, consistent with the net loss in the same period of fiscal 2023[98] - Net loss for Q2 fiscal 2024 was $1.6 million, a reduction from a net loss of $2.4 million in Q2 fiscal 2023, attributed to higher sales volume and gross margin improvements[107] EBITDA and Operational Performance - EBITDA for Q2 fiscal 2024 was $926,000, compared to a loss of $374,000 in Q2 fiscal 2023, indicating improved operational performance[111] - Adjusted EBITDA for Q2 fiscal 2024 was $1.3 million, significantly up from $34,000 in Q2 fiscal 2023, reflecting better cost management and revenue generation[111] Cash Flow and Liquidity - Cash and cash equivalents increased to $0.7 million at March 31, 2024, up from $0.4 million at September 30, 2023, indicating improved liquidity[116] - Operating activities used $5.3 million of cash in the first six months of fiscal 2024, primarily due to a net operating loss of $5.0 million[117] - Cash used for investing activities was $3.1 million in the first six months of fiscal 2024, mainly for short-term investments and capital expenditures[119] - Cash provided by financing activities was $8.8 million in the first six months of fiscal 2024, compared to $0.8 million in the same period of fiscal 2023, showing increased financing activity[120] Financing and Capital Expenditures - The Company obtained a bond for approximately $2.2 million with a seven-year term and a second loan for approximately $1.1 million for working capital purposes during the first six months of fiscal 2024[121] - The Company anticipates total capital expenditures for fiscal 2024 to be within the range of $3.0 million to $3.5 million, focusing on enhancing production capabilities[119] Market Conditions and Risks - The credit and capital markets experienced significant volatility during the pandemic, impacting the ability to obtain additional debt financing[126] - Tightening of the credit market and standards could negatively affect financing terms compared to the existing Credit Agreement[126] - Capital market uncertainty may hinder the company's ability to secure equity financing due to its market capitalization and status as a smaller reporting company[126] Accounting Standards - Recent accounting standards adopted and not yet adopted are detailed in the company's Annual Report on Form 10-K for the year ended September 30, 2023[127] Backlog - Total backlog as of March 31, 2024, was $137.8 million, up from $96.7 million a year earlier, with $105.3 million expected to be completed within the next 12 months[88]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-5978 SIFCO Industries, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 970 East 64th Street, Cleveland Ohio 441 ...

Revenue and Sales Performance - In fiscal 2023, commercial and military revenues accounted for 55.6% and 44.4% of total revenues, respectively, compared to 47.4% and 52.6% in fiscal 2022[16] - Net sales for fiscal 2023 increased by 3.7%, or $3.1 million, to $87.0 million compared to $83.9 million in fiscal 2022, driven by increased demand in the steam turbine power generation market[110] - Commercial net sales accounted for 55.6% of total net sales in fiscal 2023, up from 47.4% in fiscal 2022, with an increase of $8.6 million to $48.4 million[111] - Net sales for the year ended September 30, 2023, were $87,022,000, an increase of 2.66% from $83,902,000 in 2022[193] Financial Position and Performance - The net loss for fiscal 2023 was $8.7 million, a slight improvement from a net loss of $9.6 million in fiscal 2022, primarily due to increased volume and cost reductions[119] - Gross profit increased by $9.4 million to $7.5 million in fiscal 2023, resulting in a gross margin of 8.7%, compared to a loss of $1.9 million and a margin of (2.2%) in fiscal 2022[113] - Operating loss decreased to $6,733,000 in 2023 from $14,070,000 in 2022, reflecting better operational efficiency[193] - The comprehensive loss for the fiscal year 2023 was $6,659,000, compared to a loss of $9,254,000 in 2022, indicating an improvement of about 28.8%[206] Backlog and Orders - Total backlog as of September 30, 2023, increased to $120.1 million, up from $81.9 million as of September 30, 2022, with orders for delivery in fiscal 2024 rising to $89.6 million from $65.5 million in fiscal 2023[27] - As of September 30, 2023, the company's total backlog was $120.1 million, but there is uncertainty regarding the realization of these amounts due to potential order cancellations and modifications[49] Employee and Operational Changes - Approximately 348 full-time employees at the beginning of fiscal 2023 increased to approximately 368 by the end of fiscal 2023[29] - The company employed approximately 378 people as of September 30, 2023, facing competition for management and employees, which could lead to increased costs and operational disruptions[70] Supply Chain and Market Risks - SIFCO experienced increases in pricing for raw materials due to supply chain disruptions and inflationary pressures, which could affect customer demand and costs[19] - The company faces risks from supply chain disruptions, which could adversely affect sales, earnings, financial condition, and liquidity due to reliance on third-party suppliers for raw materials and components[57] - The defense budget in the United States varies yearly, impacting demand and build rates for military contracts[25] - Future levels of U.S. defense spending are uncertain and subject to congressional debate, which could materially affect the company's sales and operating profit[44] Cybersecurity and Operational Risks - The company is exposed to cybersecurity threats and information technology disruptions, which could lead to operational stoppages and increased costs[54] - The company experienced production delays and shipment issues due to a cybersecurity incident during fiscal 2023, which impacted domestic operations[210] - The company has completed data recovery and restoration following the cybersecurity incident, allowing for a return to normal operations[210] Financial Management and Liquidity - The company believes its cash on hand, along with operational cash flows and existing credit facilities, will provide sufficient liquidity for the foreseeable future, but this is subject to significant assumptions[73] - Cash and cash equivalents decreased to $0.4 million at September 30, 2023, down from $1.2 million at September 30, 2022[127] - The company has adequate cash/liquidity available to finance its operations, but future performance is subject to various economic and competitive factors[89] Regulatory and Compliance Issues - The company’s operations are certified under AS 9100D and/or ISO 9001:2015, ensuring compliance with quality standards[17] - The company is subject to income taxes in the United States, Italy, and Ireland, and changes in tax laws could materially affect profitability and cash flow[92] - The company is subject to extensive procurement regulations, and changes in these regulations could materially impact operating margins derived from government contracts[45] Strategic Vision and Market Position - SIFCO's strategic vision focuses on building a leading A&E company positioned for long-term, stable growth and profitability[15] - The company supplies components to the commercial space industry, which is rapidly evolving, presenting opportunities for increased market share[23] - The company operates under one business segment focused on producing forgings and machined components primarily for the Aerospace and Defense, Energy, and Commercial Space markets[105] Asset Management and Valuation - The company reported goodwill of $3.5 million and other intangible assets of $0.3 million, representing a total asset value of $96.5 million as of September 30, 2023[84] - Total assets decreased to $95,993,000 as of September 30, 2023, down from $97,266,000 in 2022[199] - The company has maintained its valuation allowance on U.S. deferred tax assets due to a cumulative loss position since fiscal 2016, continuing through fiscal 2023[167] Challenges and Future Outlook - The company may not be able to attract and retain qualified personnel, which could adversely affect its business and financial condition[51] - The cyclical nature of the aerospace and energy industries could lead to material adverse effects on the company's business due to fluctuations in demand[41] - Labor disruptions or shortages could lead to increased costs and operational challenges, particularly in unionized locations[70] - The company has debt maturing in October 2024, raising substantial doubt about its ability to continue as a going concern[177]

Financial Performance - Net sales for the first nine months of fiscal 2023 decreased by $2.9 million to $62.4 million, down from $65.3 million in the same period of fiscal 2022, primarily due to delayed shipments from a cybersecurity incident [82]. - Gross profit increased to $6.5 million in the first nine months of fiscal 2023, compared to $1.8 million in the same period of fiscal 2022, with a gross profit margin of 10.3% [86]. - Military net sales decreased by $7.8 million to $27.8 million in the first nine months of fiscal 2023, while commercial net sales increased by $4.9 million to $34.6 million [84]. - In the third quarter of fiscal 2023, net sales increased by 1.9% to $21.9 million, compared to $21.4 million in the same period of fiscal 2022 [92]. - Commercial net sales accounted for 59.9% of total net sales in the third quarter of fiscal 2023, up from 55.3% in the comparable period of fiscal 2022 [93]. - Net loss for the first nine months of fiscal 2023 was $5.6 million, compared to a net loss of $2.7 million in the same period of fiscal 2022 [91]. - Net loss decreased to $0.6 million in Q3 2023 from $2.7 million in Q3 2022, attributed to higher volume and net ERC benefit of $1.4 million [101]. - EBITDA for Q3 2023 was $1.3 million, compared to a loss of $0.9 million in Q3 2022, while Adjusted EBITDA was $1.9 million versus a loss of $0.7 million [105]. Cost Management - Cost of goods sold decreased by $7.5 million, or 11.8%, to $55.9 million, representing 89.7% of net sales in the first nine months of fiscal 2023 [85]. - Cost of goods sold was $18.4 million, or 84.1% of net sales, in Q3 2023, down from $21.1 million, or 98.3% of net sales, in Q3 2022 [95]. - Gross profit increased to $3.5 million in Q3 2023, compared to $0.4 million in Q3 2022, resulting in a gross margin of 15.9% versus 1.7% [96]. - Selling, general and administrative expenses rose to $3.4 million, or 15.5% of net sales, in Q3 2023, up from $2.8 million, or 13.1% of net sales, in Q3 2022 [97]. Cash Flow and Liquidity - Cash and cash equivalents were $0.6 million at June 30, 2023, down from $1.2 million at September 30, 2022 [107]. - Operating activities used $2.3 million of cash in the first nine months of fiscal 2023, primarily due to an increase in accounts receivable of $3.2 million [108]. - Cash used for investing activities was $1.9 million in the first nine months of fiscal 2023, compared to $2.5 million in the same period of fiscal 2022 [110]. - Cash provided by financing activities was $3.5 million in the first nine months of fiscal 2023, up from $1.6 million in the same period of fiscal 2022 [111]. - The Company had net borrowings to the revolver under the Credit Agreement of $3.8 million in the first nine months of fiscal 2023, compared to $1.2 million in the same period of fiscal 2022 [113]. - The Company believes it has adequate cash/liquidity to finance operations from expected cash flows and funds available under the Credit Agreement [120]. Debt and Financing - The Company entered into the Seventh Amendment to the Credit Agreement, reducing the Revolving Credit Agreement to $23.0 million and total revolving commitment to $30.0 million [118]. - The loan maturity date for both the Credit Agreement and Export Credit Agreement has been modified to December 31, 2023 [118]. - In fiscal year 2022, the Company secured new financing at its Maniago location to ensure sufficient liquidity [120]. - The credit and capital markets experienced significant volatility during the pandemic, which may impact the Company's ability to obtain additional debt financing [121]. - Capital market uncertainty and the Company's status as a smaller reporting company could negatively affect its ability to secure equity financing [121]. Market Conditions - Total backlog increased to $122.8 million as of June 30, 2023, compared to $69.4 million a year earlier, indicating a recovery in the aerospace and energy markets [80]. - The company faced ongoing challenges in the labor market and supply chain lead times, impacting operations and production schedules [78]. - The effective tax rate for the first nine months of fiscal 2023 was (2.3)%, compared to 1% for the same period in fiscal 2022, primarily due to changes in jurisdictional income mix [90].