EX-99.1 2 pressreleaseq22017.htm EXHIBIT 99.1 PRESS RELEASE Q2 2017 Exhibit


SIFCO Industries, Inc. (“SIFCO”) Announces
Second Quarter Fiscal 2017 Financial Results

Cleveland - SIFCO Industries, Inc. (NYSE MKT: SIF) today announced financial results for its second quarter of fiscal 2017, which ended March 31, 2017.
Second Quarter
•
Net sales from operations in the second quarter of fiscal 2017 increased 7.7% to $31.3 million, compared with $29.1 million in the second quarter of fiscal 2016.
•
Net loss for the second quarter of fiscal 2017 was $1.7 million, or ($0.30) per diluted share, compared with a loss of $0.3 million or ($0.05) per diluted share, in the second quarter of fiscal 2016.
•
Adjusted EBITDA in the second quarter of fiscal 2017 was $2.4 million compared with Adjusted EBITDA of $2.0 million in the second quarter of fiscal 2016.
•
Cash flow from operating activities for the second quarter of fiscal 2017 was $6.1 million, compared with cash flow from operating activities of $3.5 million in the second quarter of fiscal 2016.
•
Total debt was reduced $5.0 million in the second quarter of fiscal 2017, from $40.7 million at December 31, 2016 to $35.6 million at March 31, 2017.
First Six Months
•
Net sales from operations in the first six months of fiscal 2017 increased 11.6% to $62.8 million, compared with $56.2 million in the first six months of fiscal 2016.
•
Net loss for the first six months of fiscal 2017 was $4.3 million, or ($0.78), per diluted share, compared with a loss of $2.9 million, or ($0.53) per diluted share, in the first six months of fiscal 2016.
•
Adjusted EBITDA in the first six months of fiscal 2017 was $4.4 million compared with Adjusted EBITDA of $1.3 million in the first six months of fiscal 2016.
•
Cash flow from operating activities for the six months ended of fiscal 2017 was $5.3 million, compared with cash flow from operating activities of $11.8 million in the six months of fiscal 2016.
•
Total debt was reduced $3.0 million in the first six months of fiscal 2017, from $38.6 million at September 30, 2016 to $35.6 million at March 31, 2017.

President and CEO Peter W. Knapper stated, "In the second quarter, we've continued to execute on our plans to turn around our business. Our consolidation into a new facility in Orange, CA was completed in April. Getting past the disruption and costs inherent in a move of this significance is important to any operation. We have shown improvement in operations as we increased revenue while reducing inventory by $3.0 million in the first 6 months of fiscal 2017. We also reduced debt by $5.0 million this quarter. The new sales organization structure implemented earlier this year is uncovering new opportunities for our business and we will continue to focus on serving our customers, associates, and shareholders."

The Company's Form 10-K for the year ended September 30, 2016 can be accessed through its website: www.sifco.com, or on the Securities and Exchange Commission's website: www.sec.gov.

The Company is engaged in the production of forgings and machined components primarily in the Aerospace and Energy markets. The processes and services and services include heat-treating and machining. The Company operates under one segment.





Use of Non-GAAP Financial Measures
The Company uses certain non-GAAP measures in this release. Adjusted EBITDA is a non-GAAP financial measure and is intended to serve as a supplement 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.




























sifcologoa06.jpg
Second Quarter Ended March 31
(Amounts in thousands, expect per share data)
 
Three Months Ended 
 March 31,
 
Six Months Ended 
 March 31,
 
2017
 
2016
 
2017
 
2016
Net sales
$
31,302

 
$
29,075

 
$
62,776

 
$
56,237

Cost of goods sold
27,643

 
25,513

 
54,948

 
50,566

Gross profit
3,659

 
3,562

 
7,828

 
5,671

Selling, general and administrative expenses
4,396

 
3,130

 
9,699

 
8,750

Amortization of intangible assets
573

 
613

 
1,165

 
1,328

(Gain) loss on disposal of operating assets
—

 
30

 
(6
)
 
32

Operating loss
(1,310
)
 
(211
)
 
(3,030
)
 
(4,439
)
Interest income
(16
)
 
(22
)
 
(30
)
 
(32
)
Interest expense
541

 
436

 
1,219

 
845

Foreign currency exchange loss, net
12

 
20

 
17

 
34

Other income, net
(107
)
 
(107
)
 
(214
)
 
(214
)
Loss from operations before income tax expense (benefit)
(1,740
)
 
(538
)
 
(4,022
)
 
(5,072
)
Income tax expense (benefit)
(83
)
 
(239
)
 
244

 
(2,175
)
Net loss
$
(1,657
)
 
$
(299
)
 
$
(4,266
)
 
$
(2,897
)
 
 
 
 
 
 
 
 
Net loss per share
 
 
 
 
 
 
 
Basic
$
(0.30
)
 
$
(0.05
)
 
$
(0.78
)
 
$
(0.53
)
Diluted
$
(0.30
)
 
$
(0.05
)
 
$
(0.78
)
 
$
(0.53
)
 
 
 
 
 
 
 
 
Weighted-average number of common shares (basic)
5,479

 
5,464

 
5,473

 
5,458

Weighted-average number of common shares (diluted)
5,479

 
5,464

 
5,473

 
5,458




























Consolidated Condensed Balance Sheets
(Amounts in thousands, except share data)
 
March 31, 
 2017
 
December 31, 
 2016
 
September 30, 
 2016
 
(unaudited)
 
(unaudited)
 
 
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
1,356

 
$
1,019

 
$
471

Receivables, net of allowance for doubtful accounts of $423, $591, and $706, respectively
26,190

 
26,415

 
25,158

Inventories, net
25,449

 
27,247

 
28,496

Refundable income taxes
1,825

 
1,773

 
1,773

Prepaid expenses and other current assets
2,207

 
2,774

 
2,177

Total current assets
57,027

 
59,228

 
58,075

Property, plant and equipment, net
45,878

 
47,147

 
48,958

Intangible assets, net
9,801

 
10,322

 
11,138

Goodwill
11,349

 
11,221

 
11,748

Other assets
281

 
222

 
538

Total assets
$
124,336

 
$
128,140

 
$
130,457

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt
$
7,393

 
$
8,255

 
$
18,258

Revolving credit agreement
21,573

 
25,337

 
12,751

Accounts payable
15,418

 
13,206

 
14,520

Accrued liabilities
5,877

 
5,715

 
5,234

Total current liabilities
50,261

 
52,513

 
50,763

Long-term debt, net of current maturities
6,660

 
7,075

 
7,623

Deferred income taxes
2,836

 
2,944

 
2,929

Pension liability
8,010

 
8,101

 
8,341

Other long-term liabilities
465

 
396

 
431

Shareholders’ equity:
 
 
 
 
 
Serial preferred shares, no par value, authorized 1,000 shares
—

 
—

 
—

Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares – 5,599 at March 31, 2017, 5,529 at December 31, 2016 and 5,525 at September 30, 2016
5,599

 
5,529

 
5,525

Additional paid-in capital
9,470

 
9,353

 
9,219

Retained earnings
54,211

 
55,877

 
58,476

Accumulated other comprehensive loss
(13,176
)
 
(13,648
)
 
(12,850
)
Total shareholders’ equity
56,104

 
57,111

 
60,370

Total liabilities and shareholders’ equity
$
124,336

 
$
128,140

 
$
130,457












Consolidated Condensed Statements of Cash Flows

  (Unaudited, Amounts in thousands)
Six Months Ended 
 March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(4,266
)
 
$
(2,897
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
4,939

 
5,366

Amortization and write-off of debt issuance cost
328

 
72

(Gain) loss on disposal of operating assets
(6
)
 
32

LIFO expense (benefit)
225

 
(8
)
Share transactions under company stock plan
325

 
(642
)
Purchase price inventory adjustment
—

 
266

Other long-term liabilities
202

 
160

Deferred income taxes
32

 
(642
)
Changes in operating assets and liabilities:
 
 
 
Receivables
(1,245
)
 
6,439

Inventories
2,581

 
(375
)
Refundable taxes
(52
)
 
(1,374
)
Prepaid expenses and other current assets
322

 
(317
)
Other assets
243

 
315

Accounts payable
881

 
4,809

Other accrued liabilities
597

 
722

Accrued income and other taxes
167

 
(163
)
Net cash provided by operating activities of operations
5,273

 
11,763

Cash flows from investing activities:
 
 
 
Proceeds from disposal of operating assets
48

 
—

Capital expenditures
(964
)
 
(1,176
)
Net cash used for investing activities of operations
(916
)
 
(1,176
)
Cash flows from financing activities:
 
 
 
Payments on long term debt
(12,907
)
 
(2,561
)
Proceeds from revolving credit agreement
45,069

 
19,369

Repayments of revolving credit agreement
(36,247
)
 
(27,536
)
Payment of debt issue costs
(498
)
 
—

Short-term debt borrowings
2,330

 
1,450

Short-term debt repayments
(1,218
)
 
(1,047
)
Net cash used for financing activities of operations
(3,471
)
 
(10,325
)
Increase in cash and cash equivalents
886

 
262

Cash and cash equivalents at the beginning of the period
471

 
667

Effect of exchange rate changes on cash and cash equivalents
(1
)
 
23

Cash and cash equivalents at the end of the period
$
1,356

 
$
952

Supplemental disclosure of cash flow information of operations:
 
 
 
Cash paid for interest
$
(790
)
 
$
(736
)
Cash paid for income taxes, net
(55
)
 
(185
)













Consolidated Condensed Statements of Cash Flows
  (Unaudited, Amounts in thousands)
Quarter to date 
 March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(1,657
)
 
$
(299
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
2,424

 
2,588

Amortization and write-off of debt issuance cost
55

 
36

Loss on disposal of operating assets
—

 
32

LIFO expense (benefit)
118

 
(42
)
Share transactions under company stock plan
187

 
(959
)
Other long-term liabilities
200

 
96

Deferred income taxes
(157
)
 
(77
)
Changes in operating assets and liabilities:
 
 
 
Receivables
311

 
284

Inventories
1,763

 
(1,319
)
Refundable taxes
(52
)
 
(7
)
Prepaid expenses and other current assets
519

 
(466
)
Other assets
(59
)
 
12

Accounts payable
2,292

 
3,251

Other accrued liabilities
42

 
362

Accrued income and other taxes
75

 
(12
)
Net cash provided by operating activities of operations
6,061

 
3,480

Cash flows from investing activities:
 
 
 
Capital expenditures
(507
)
 
(438
)
Net cash used for investing activities of operations
(507
)
 
(438
)
Cash flows from financing activities:
 
 
 
Payments on long term debt
(684
)
 
(1,277
)
Proceeds from revolving credit agreement
15,447

 
15,669

Repayments of revolving credit agreement
(19,211
)
 
(17,706
)
Short-term debt borrowings
—

 
693

Short-term debt repayments
(764
)
 
(821
)
Net cash used for financing activities of operations
(5,212
)
 
(3,442
)
Increase (decrease) in cash and cash equivalents
342

 
(400
)
Cash and cash equivalents at the beginning of the period
1,019

 
1,337

Effect of exchange rate changes on cash and cash equivalents
(5
)
 
15

Cash and cash equivalents at the end of the period
$
1,356

 
$
952

Supplemental disclosure of cash flow information of operations:
 
 
 
Cash paid for interest
$
(421
)
 
$
(327
)
Cash paid for income taxes, net
(30
)
 
(23
)


















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,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(1,657
)
 
$
(299
)
 
$
(4,266
)
 
$
(2,897
)
Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization expense
2,424

 
2,588

 
4,939

 
5,366

Interest expense, net
525

 
414

 
1,189

 
813

Income tax expense (benefit)
(83
)
 
(239
)
 
244

 
(2,175
)
EBITDA
1,209

 
2,464

 
2,106

 
1,107

Adjustments:
 
 
 
 
 
 
 
Foreign currency exchange loss, net (1)
12

 
20

 
17

 
34

Other income, net (2)
(107
)
 
(107
)
 
(214
)
 
(214
)
(Gain) loss on disposal of operating assets (3)
—

 
30

 
(6
)
 
32

Inventory purchase accounting adjustments (4)
—

 
—

 
—

 
266

Equity compensation expense (5)
187

 
(810
)
 
345

 
(464
)
Acquisition transaction-related expenses (6)
—

 
(5
)
 
—

 
(94
)
LIFO impact (7)
118

 
(41
)
 
225

 
(8
)
Orange expansion (8)
931

 
210

 
1,883

 
387

Executive search (9)
—

 
224

 
—

 
224

Adjusted EBITDA
$
2,350

 
$
1,985

 
$
4,356

 
$
1,270


(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, primarily rental income from the Company's Irish subsidiary.
(3)
Represents the difference between the proceeds from the sale of operating equipment and the carrying value shown on the Company’s books.
(4)
Represents accounting adjustments to value inventory at fair market value associated with the acquisition of a business that was charged to cost of goods sold when the inventory was sold.
(5)
Represents the equity-based compensation benefit and expense recognized by the Company under its 2007 Long-term Incentive Plan due to granting of awards, awards not vesting and/or forfeitures.
(6)
Represents transaction-related costs such as legal, financial, tax due diligence expenses, valuation services costs, and executive travel that are required to be expensed as incurred.
(7)
Represents the increase in the reserve for inventories for which cost is determined using the last in, first out (“LIFO”) method.
(8)
Represents costs related to expansion of one of the plant locations that are required to be expensed as incurred.
(9)
Represents cost incurred for executive search as mentioned in its Form 8-K filing on March 18, 2016.

 
 
 
 
 

Contacts
SIFCO Industries, Inc.
Salvatore Incanno, 216-881-8600
www.sifco.com