SIFCO Industries(US:SIF)2023-09-28 12:15Financial 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].