Core Insights - SIFCO Industries, Inc. (SIF) shares have increased by 68.7% since the earnings report for the quarter ended December 31, 2025, significantly outperforming the S&P 500 Index, which declined by 1.6% during the same period [1] Financial Performance - SIFCO reported net sales of $23.9 million for Q1 fiscal 2026, a 14.8% increase from $20.9 million in the same quarter last year [2] - The company achieved net income from continuing operations of $1.8 million, or $0.29 per diluted share, compared to a net loss of $2.4 million, or $(0.40) per diluted share, in the prior-year quarter [2] - EBITDA improved to $3.6 million from a loss of $0.8 million, while adjusted EBITDA rose to $3.9 million from a loss of $0.2 million a year earlier [2] Revenue Breakdown - Commercial revenue declined by 22.2% year over year to $8.7 million from $11.2 million, while military revenue increased by 57.3% year over year to $15.3 million from $9.7 million, indicating a shift towards defense programs [3] - Fixed-wing aircraft sales fell by 18.1% year over year, while rotorcraft revenue surged by 172.1%, driven by orders for programs like the UH-60 Black Hawk and CH-47 Chinook [4] - Commercial space revenue decreased by 53.1%, and energy components for power generation units dropped by 72.4%, whereas commercial product and other revenue rose by 138.7%, primarily due to munitions-related orders [4] Profitability and Cost Management - Gross profit increased to $5.2 million from $0.9 million in the prior-year quarter, attributed to higher throughput, favorable pricing, and an improved sales mix [5] - Cost of goods sold decreased by 5.9% to $18.8 million from $19.9 million, representing 78.4% of net sales compared to 95.6% in the previous year [5] - Selling, general, and administrative expenses fell by 6.8% to $2.6 million (11% of sales) from $2.8 million (13.6% of sales) [5] Balance Sheet and Liquidity - Operating cash flow turned positive at $8.1 million in Q1 fiscal 2026, compared to a use of $3.8 million in the prior-year period [6] - Cash and cash equivalents increased to $1.1 million as of December 31, 2025, from $0.5 million as of September 30, 2025 [6] - Total debt decreased to $2.9 million from $10.6 million at the end of fiscal 2025, partly due to significant reductions in revolver borrowings [6] Backlog and Market Outlook - Backlog stood at $139.5 million as of December 31, 2025, up from $121.9 million a year earlier, with recovery in aerospace markets cited as a key contributor [7] - Approximately $87.9 million of the remaining performance obligations are expected to be completed within the next 12 months [7] Management Commentary - Management attributed the improved financial performance to increased production throughput and lower fixed costs, noting strong demand and a stable order backlog across commercial and defense markets [8] - The shift towards military programs significantly influenced quarterly results, with military sales accounting for 63.8% of total net sales, up from 46.6% in the prior-year quarter [9] Future Investments - While SIFCO did not provide formal earnings guidance, it anticipates fiscal 2026 capital expenditures of $1 million to $2 million, primarily aimed at enhancing production capabilities and driving cost reductions [10] - Management expressed confidence that existing cash and available credit lines will be sufficient to fund operations and planned investments over the next 12 months [10] Strategic Developments - SIFCO completed the sale of its CBlade operations in October 2024, resulting in the cessation of its European manufacturing operations [11] - The first quarter of fiscal 2026 reflected no income from discontinued operations compared to $0.1 million in the prior-year quarter, highlighting SIF's focus on its core aerospace and defense forging business [11]