UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – August 16, 2019
  
SIFCO Industries, Inc.
(Exact name of registrant as specified in its charter)
 

 
 
 
 
 
Ohio
 
1-5978
 
34-0553950
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
970 East 64th Street, Cleveland Ohio
 
44103
(Address of principal executive offices)
 
(ZIP Code)
Registrant’s telephone number, including area code: (216) 881-8600
N.A.
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Shares
 
SIF
 
NYSE American





Item 2.02
Results of Operations and Financial Condition.
On August 16, 2019, SIFCO Industries, Inc. (the "Company" or "SIFCO") issued a press release announcing its financial results for its third quarter ended June 30, 2019. A copy of this press release is furnished with this Report as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this item and in the accompanying exhibit shall not be deemed filed by SIFCO for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such information will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that SIFCO specifically incorporates it by reference.


Item 9.01
Financial Statements and Exhibits.

(d) Exhibits

99.1 Earnings Press Release dated August 16, 2019.

      


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
SIFCO Industries, Inc.
 
 
(Registrant)
 
 
Date:August 16, 2019
 
 
 
 
/s/ Thomas R. Kubera
 
 
Thomas R. Kubera
 
 
Chief Financial Officer
 
 
(Principal Financial Officer)
 
    


Exhibit


SIFCO Industries, Inc. (“SIFCO”) Announces
Third Quarter Fiscal 2019 Financial Results

Cleveland - SIFCO Industries, Inc. (NYSE American: SIF) today announced financial results for its third quarter of fiscal 2019, which ended June 30, 2019.
Results for the Third Quarter
•
Net sales in the third quarter of fiscal 2019 decreased 13.3% to $24.9 million, compared with $28.7 million for the same period in fiscal 2018.
•
Net loss for the third quarter of fiscal 2019 was $7.4 million, or $(1.32) per diluted share, compared with net loss of $1.5 million, or $(0.28) per diluted share, in the third quarter of fiscal 2018.
•
EBITDA was $(5.6) million in the third quarter of fiscal 2019 compared with $0.8 million in the third quarter of fiscal 2018.
•
Adjusted EBITDA in the third quarter of fiscal 2019 was $(0.5) million compared with Adjusted EBITDA of $1.7 million in the third quarter of fiscal 2018.
Results for the Year to Date
•
Net sales in the first nine months of fiscal 2019 increased 0.7% to $81.3 million, compared with $80.7 million for the same period in fiscal 2018.
•
Net loss in the first nine months of fiscal 2019 was $9.9 million, or $(1.78) per diluted share, compared with net loss of $4.5 million, or $(0.81) per diluted share in the first nine months of fiscal 2018.
•
EBITDA was $(4.2) million in the first nine months of fiscal 2019 compared with $2.8 million in the first nine months ended of fiscal 2018.
•
Adjusted EBITDA in the first nine months of fiscal 2019 was $(0.2) million compared with Adjusted EBITDA of $2.1 million in the first nine months of fiscal 2018.

CEO Peter W. Knapper stated, "The fire experienced at our Orange, California facility at the end of our first fiscal quarter 2019 continues to adversely impact our quarterly performance.  Excellent progress is being made on returning the site to full capacity, and we expect to have completed repairs by calendar year end.  We have entered a refurbished 2500 ton press into service, which returns us to full capability for our customers as we work to support their most urgent needs during the site rebuild.  We are making strides in working through the insurance recovery with our insurance provider, having collected $8.2 million in cash proceeds to date, of which $0.6 million was designated as business interruption coverage.

"We experienced a setback in our third quarter results, as a non-cash charge of $8.3 million was recorded due to a full write down of goodwill from one of the reporting units. Lastly, we experienced a delay in filing our third quarter results due to management working through a complex accounting matter, as such, requiring additional time in order to meet its financial reporting and disclosure obligations. The business as a whole continues focus on profitable growth, with firm backlog continuing to grow, previously at $94.1 million at the end of the second quarter 2019, now standing at $104.0 million at the end of the third quarter 2019."









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

The Company's Form 10-K for the year ended September 30, 2018 and other reports filed with the Securities & Exchange Commission can be accessed through the Company's website: www.sifco.com, or on the Securities and Exchange Commission's website: www.sec.gov.

SIFCO Industries, Inc. is engaged in the production of forgings and machined components primarily for the aerospace and energy markets. The processes and services include forging, heat-treating, coating, and machining.
























Third Quarter Ended June 30
(unaudited)
 
Three Months Ended 
 June 30,
 
Nine Months Ended 
 June 30,
 
2019
 
2018
 
2019
 
2018
Net sales
$
24,873

 
$
28,681

 
$
81,331

 
$
80,726

Cost of goods sold
23,486

 
25,402

 
75,119

 
72,889

Gross profit
1,387

 
3,279

 
6,212

 
7,837

Selling, general and administrative expenses
3,481

 
3,864

 
11,375

 
11,796

Goodwill impairment
8,294

 
—

 
8,294

 
—

Amortization of intangible assets
411

 
427

 
1,239

 
1,286

Loss (gain) on disposal or impairment of operating assets
—

 
357

 
(282
)
 
(1,071
)
Gain on insurance proceeds received
(3,304
)
 
—

 
(4,468
)
 
—

Operating loss
(7,495
)
 
(1,369
)
 
(9,946
)
 
(4,174
)
Interest income
(1
)
 
—

 
(3
)
 
(29
)
Interest expense
230

 
417

 
838

 
1,304

Foreign currency exchange gain, net
(3
)
 
(32
)
 
(4
)
 
(112
)
Other income, net
(15
)
 
(4
)
 
(50
)
 
(400
)
Loss before income tax benefit
(7,706
)
 
(1,750
)
 
(10,727
)
 
(4,937
)
Income tax benefit
(336
)
 
(218
)
 
(816
)
 
(456
)
Net loss
$
(7,370
)
 
$
(1,532
)
 
$
(9,911
)
 
$
(4,481
)
 
 
 
 
 
 
 
 
Net loss per share
 
 
 
 
 
 
 
Basic
$
(1.32
)
 
$
(0.28
)
 
$
(1.78
)
 
$
(0.81
)
Diluted
$
(1.32
)
 
$
(0.28
)
 
$
(1.78
)
 
$
(0.81
)
 
 
 
 
 
 
 
 
Weighted-average number of common shares (basic)
5,571

 
5,535

 
5,556

 
5,524

Weighted-average number of common shares (diluted)
5,571

 
5,535

 
5,556

 
5,524


Non-GAAP Financial Measures
Presented below is certain financial information based on the Company's EBITDA and Adjusted EBITDA. References to “EBITDA” mean earnings (losses) from continuing operations before interest, taxes, depreciation and amortization, and references to “Adjusted EBITDA” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and Adjusted EBITDA.

Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under generally accepted accounting principles in the United States of America (“GAAP”). The Company presents EBITDA and Adjusted EBITDA because management believes that they are useful indicators for evaluating operating performance and liquidity, including the Company’s ability to incur and service debt and it uses EBITDA to evaluate prospective acquisitions. Although the Company uses EBITDA and Adjusted EBITDA for the reasons noted above, the use of these non-GAAP financial measures as analytical tools has limitations. Therefore, reviewers of the Company’s financial information should not consider them in isolation, or as a substitute for analysis of the Company's results of operations as reported in accordance with GAAP. Some of these limitations include:
•
Neither EBITDA nor Adjusted EBITDA reflects the interest expense, or the cash requirements necessary to service interest payments on indebtedness;




•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements;
•
The omission of the substantial amortization expense associated with the Company’s intangible assets further limits the usefulness of EBITDA and Adjusted EBITDA; and
•
Neither EBITDA nor Adjusted EBITDA includes the payment of taxes, which is a necessary element of operations.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to the Company to invest in the growth of its businesses. Management compensates for these limitations by not viewing EBITDA or Adjusted EBITDA in isolation and specifically by using other GAAP measures, such as net income (loss), net sales, and operating income (loss), to measure operating performance. Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under GAAP, and neither should be considered as an alternative to net loss or cash flow from operations determined in accordance with GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA:
Dollars in thousands
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Net loss
$
(7,370
)
 
$
(1,532
)
 
$
(9,911
)
 
$
(4,481
)
Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization expense
1,896

 
2,160

 
5,735

 
6,479

Interest expense, net
229

 
417

 
835

 
1,275

Income tax (benefit)
(336
)
 
(218
)
 
(816
)
 
(456
)
EBITDA
(5,581
)
 
827

 
(4,157
)
 
2,817

Adjustments:
 
 
 
 
 
 
 
Foreign currency exchange gain, net (1)
(3
)
 
(32
)
 
(4
)
 
(112
)
Other income, net (2)
(15
)
 
(4
)
 
(50
)
 
(400
)
(Gain) loss on disposal and impairment of assets (3)
—

 
357

 
(282
)
 
(1,071
)
Gain on insurance proceeds received (4)
(3,304
)
 
—

 
(4,468
)
 
—

Equity compensation (5)
(59
)
 
186

 
367

 
428

LIFO impact (6)
154

 
184

 
98

 
299

Goodwill impairment (7)
8,294

 
—

 
8,294

 
—

Executive relocation costs (8)
—

 
145

 
—

 
145

Adjusted EBITDA
$
(514
)
 
$
1,663

 
$
(202
)
 
$
2,106

(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, which previously consisted of rental income from the Company's Irish subsidiary (through first quarter 2018 when the building was sold). Included in fiscal 2018 was grant income that was realized that relates to the Company's Irish subsidiary.
(3)
Represents the difference between the proceeds from the sale of operating equipment and the carrying values shown on the Company’s books or asset impairment of long-lived assets.
(4)
Represents the difference between the insurance proceeds received for the damaged property and the carrying values shown on the Company's books for the assets that were damaged in the fire at the Orange location.
(5)
Represents the equity-based compensation expense recognized by the Company under its 2016 Long-Term Incentive Plan (as the amendment and restatement of, and successor to, the 2007 Long-Term Incentive Plan) due to granting of awards, awards not vesting and/or forfeitures.
(6)
Represents the change in the reserve for inventories for which cost is determined using the last-in, first-out (“LIFO”) method.
(7)
Represents non-cash charge of goodwill impairment experienced at its reporting unit level.
(8)
Represents costs related to Executive relocation costs.







 
 
 
 
 
Contacts

SIFCO Industries, Inc.
Thomas R. Kubera, 216-881-8600
www.sifco.com