SIFCO Industries(SIF) - 2025 Q2 - Quarterly Results

Executive Summary SIFCO Industries reported Q2 and H1 FY2025 results, highlighting strategic focus on margin improvement, increased throughput, and growing backlog Announcement & Strategic Focus SIFCO Industries announced Q2 and H1 FY2025 results, emphasizing margin improvement, throughput, and growing backlog despite Q2 raw material challenges - The second quarter focused on identifying opportunities for margin improvement and increasing throughput at both plants[4] - Raw material sourcing challenges negatively impacted Q2 sales, but year-to-date performance trends favorably[4] - The company's backlog grew to $129.2 million, reflecting strong ongoing demand for products[4] Second Quarter Fiscal 2025 Financial Results SIFCO Industries reported a decrease in Q2 FY2025 net sales, an improved net loss, positive EBITDA, and a decline in Adjusted EBITDA Key Financial Highlights (Q2) Q2 FY2025 saw decreased net sales, improved net loss from continuing operations, positive EBITDA, and a decline in Adjusted EBITDA Second Quarter Financial Highlights | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net sales | $19.0 million | $20.5 million | -7.3% | | Net loss from continuing operations | $(1.3) million | $(2.2) million | Improved | | Net loss from discontinued operations | $(0.1) million | $0.6 million | Decreased | | EBITDA | $0.4 million | $(0.2) million | Improved | | Adjusted EBITDA | $(0.2) million | $0.2 million | Decreased | Consolidated Condensed Statements of Operations (Q2) Q2 consolidated operations show decreased net sales, increased gross profit, and reduced operating and net loss from continuing operations Consolidated Condensed Statements of Operations (Q2) | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net sales | $19,027 | $20,515 | | Cost of goods sold | 17,457 | 19,021 | | Gross profit | 1,570 | 1,494 | | Selling, general and administrative expenses | 2,351 | 2,819 | | Operating loss | (781) | (1,329) | | Loss from continuing operations before income tax expense | (1,247) | (2,227) | | Loss from continuing operations | (1,322) | (2,232) | | (Loss) income from discontinued operations, net of tax | (70) | 642 | | Net loss | $(1,392) | $(1,590) | | Basic and diluted loss per share from continuing operations | $(0.22) | $(0.38) | | Basic and diluted (loss) earnings per share from discontinued operations | (0.01) | 0.11 | | Basic and diluted loss per share | $(0.23) | $(0.27) | Non-GAAP Financial Measures (Q2) Q2 FY2025 non-GAAP reconciliation shows positive EBITDA of $370 thousand and negative Adjusted EBITDA of $(158) thousand Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Q2) | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(1,392) | $(1,590) | | Less: (Loss) income from discontinued operations, net of tax | (70) | 642 | | Loss from continuing operations | (1,322) | (2,232) | | Adjustments: | | | | Depreciation and amortization expense | 1,189 | 1,180 | | Interest expense, net | 428 | 818 | | Income tax expense | 75 | 5 | | EBITDA | 370 | (229) | | Adjustments: | | | | (1) Foreign currency exchange loss (gain), net | 1 | (3) | | (2) Other expense, net | 37 | 85 | | (3) Gain on disposal of assets | — | 4 | | (4) Non-recurring severance expense adjustments | 3 | — | | (4) Equity compensation | 67 | 85 | | (5) Transaction-related expense adjustments | 1 | — | | (6) LIFO impact | (637) | 58 | | (7) IT incident costs, net | — | 24 | | (8) Strategic alternative expense | — | 132 | | Adjusted EBITDA | $(158) | $156 | First Half Fiscal 2025 Financial Results SIFCO Industries reported increased H1 FY2025 net sales, significantly improved net loss, EBITDA, and Adjusted EBITDA Key Financial Highlights (H1) H1 FY2025 saw increased net sales, improved net loss from continuing operations, and substantial improvements in EBITDA and Adjusted EBITDA First Half Financial Highlights | Metric | H1 FY2025 | H1 FY2024 | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net sales | $39.9 million | $36.0 million | +10.9% | | Net loss from continuing operations | $(3.7) million | $(6.3) million | Improved | | Net income from discontinued operations | < $0.1 million | $1.3 million | Decreased | | EBITDA | $(0.4) million | $(2.7) million | Improved | | Adjusted EBITDA | $(0.4) million | $(1.7) million | Improved | Consolidated Condensed Statements of Operations (H1) H1 consolidated operations show increased net sales and gross profit, significantly reducing operating and net loss from continuing operations Consolidated Condensed Statements of Operations (H1) | Metric (Thousands USD) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net sales | $39,910 | $35,989 | | Cost of goods sold | 37,412 | 35,040 | | Gross profit | 2,498 | 949 | | Selling, general and administrative expenses | 5,191 | 5,922 | | Operating loss | (2,693) | (4,977) | | Loss from continuing operations before income tax expense | (3,664) | (6,291) | | Loss from continuing operations | (3,744) | (6,302) | | (Loss) income from discontinued operations, net of tax | 36 | 1,289 | | Net loss | $(3,708) | $(5,013) | | Basic and diluted loss per share from continuing operations | $(0.62) | $(1.05) | | Basic and diluted (loss) earnings per share from discontinued operations | 0.01 | 0.21 | | Basic and diluted loss per share | $(0.61) | $(0.84) | Non-GAAP Financial Measures (H1) H1 FY2025 non-GAAP reconciliation shows improved EBITDA to $(397) thousand and Adjusted EBITDA to $(406) thousand Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (H1) | Metric (Thousands USD) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net loss | $(3,708) | $(5,013) | | Less: (Loss) income from discontinued operations, net of tax | 36 | 1,289 | | Loss from continuing operations | (3,744) | (6,302) | | Adjustments: | | | | Depreciation and amortization expense | 2,370 | 2,412 | | Interest expense, net | 897 | 1,160 | | Income tax expense | 80 | 11 | | EBITDA | (397) | (2,719) | | Adjustments: | | | | (1) Foreign currency exchange loss (gain), net | (1) | 1 | | (2) Other expense, net | 75 | 154 | | (3) Gain on disposal of assets | — | 4 | | (4) Non-recurring severance expense adjustments | (19) | — | | (4) Equity compensation | 88 | 171 | | (5) Transaction-related expense adjustments | (16) | — | | (6) LIFO impact | (136) | 351 | | (7) IT incident costs, net | — | 23 | | (8) Strategic alternative expense | — | 320 | | Adjusted EBITDA | $(406) | $(1,695) | Consolidated Condensed Balance Sheets SIFCO's balance sheet shows decreased total assets and current liabilities, alongside an increase in total shareholders' equity Balance Sheet Summary As of March 31, 2025, total assets and current liabilities decreased, while total shareholders' equity increased Key Balance Sheet Items (Thousands USD) | Metric | March 31, 2025 | September 30, 2024 | Change | | :-------------------------------- | :------------- | :----------------- | :----- | | Total assets | $78,829 | $104,624 | Decreased | | Total current assets | $38,099 | $54,323 | Decreased | | Total current liabilities | $30,391 | $54,010 | Decreased | | Total shareholders' equity | $32,367 | $30,425 | Increased | - Current assets of discontinued operations decreased from $15,967 thousand to $0, reflecting completion of operations[10] - Current maturities of long-term debt increased from $353 thousand to $3,089 thousand, while Revolver balance decreased from $20,142 thousand to $8,959 thousand[10] Non-GAAP Financial Measures This section defines and explains the rationale and limitations of SIFCO's non-GAAP financial measures, including management's approach Definition and Rationale SIFCO uses non-GAAP measures like EBITDA and Adjusted EBITDA to supplement GAAP results and evaluate operating performance - EBITDA and Adjusted EBITDA are non-GAAP measures supplementing GAAP results[5][11] - Management uses these measures to evaluate operating performance, debt servicing ability, and prospective acquisitions[12] Limitations and Management's Approach Non-GAAP measures have limitations, not reflecting interest, cash for assets, or taxes; management uses them with other GAAP measures - Neither EBITDA nor Adjusted EBITDA are GAAP financial performance measures and should not be considered in isolation[12][13] - Limitations include not reflecting interest expense, cash requirements for asset replacement, amortization, or tax payments[15] - Management compensates by using other GAAP measures like net income/loss, net sales, and operating income/loss[13] Additional Information This section provides SIFCO's company profile, details on forward-looking statements, risk factors, and investor relations contacts Company Profile SIFCO Industries specializes in forgings and machined components for aerospace and energy, offering forging, heat-treating, coating, and machining - SIFCO Industries, Inc. produces forgings and machined components[8] - Primary markets served are aerospace and energy[8] - Processes and services include forging, heat-treating, coating, and machining[8] Forward-Looking Statements & Risk Factors Forward-looking statements are subject to risks and uncertainties; detailed risk factors are available in SEC filings like Form 10-K - Statements on financial results and future business development are forward-looking and subject to risks[6] - Potential risks include economic conditions, pandemics, competition, and other industry uncertainties[7] - Detailed risk factors are available in the Company's Annual Report on Form 10-K and other SEC filings[7] Investor Relations & Footnotes This section provides SIFCO's contact information, SEC filing access, and explanations for non-GAAP adjustments - Company's SEC filings, including Form 10-K, are accessible via www.sifco.com or www.sec.gov[8](index=8&type=chunk) - Contact SIFCO Industries, Inc. via Jennifer Wilson at 216-881-8600[17] - Footnotes define non-GAAP adjustments for foreign currency, other expense, asset disposal, severance, equity compensation, and more[17]