SIFCO Industries (NYSEAM) Q4 2015 earnings summary

Executive summary

• Fiscal 2015 brought a strategic shift toward aerospace and energy forging, including the C*Blade acquisition and expansion of commercial aerospace; restructuring, integration, and operating challenges weighed on results.

• Management targeted improved profitability in fiscal 2016 and beyond, citing strong target markets and investments in capabilities, systems, and controls.

Financial highlights

• FY2015 net sales fell 8.7% YoY to $109.3M from $119.7M; C*Blade contributed $6.0M after its July 1 acquisition.

• Gross profit declined 37.9% to $15.7M; gross margin was 14.4% vs. 21.2% in FY2014.

• Operating loss was $5.7M vs. operating income of $8.1M; net loss was $2.9M vs. net income of $5.0M.

• Net loss per diluted share was $0.53 vs. diluted EPS of $0.92; continuing-operations diluted loss per share was $0.66 vs. income of $1.03.

• Adjusted EBITDA was $8.7M vs. $17.6M; acquisition expenses, severance, equity compensation, inventory adjustments, and plant expansion costs were among FY2015 adjustments.

Outlook and guidance

• FY2016 capital expenditures were expected at $4.0M–$5.0M, primarily for production capabilities, cost reductions, and plant expansion.

• Backlog was $94.8M at September 30, 2015, including $78.1M scheduled for FY2016 delivery; orders may be modified or canceled and backlog may not indicate future sales.

• Management expected to remain within credit covenants through FY2016 and emphasized improving profitability in FY2016 and beyond.