SIFCO Industries (NYSEAM) Q4 2016 earnings summary

Executive summary

• FY16 described as disappointing: consolidation, Maniago integration and customer diversification drove significant unforeseen costs, while operational and financial improvement became the priority for FY17.

• Net sales rose 9.0% to $119.1 million, but gross profit fell and net loss widened to $11.3 million, including a $4.2 million goodwill impairment.

Financial highlights

• FY16 net sales were $119.1 million versus $109.3 million in FY15; cost of goods sold rose to $107.0 million from $93.6 million.

• Gross profit declined 23.2% to $12.1 million from $15.7 million; SG&A fell to $17.4 million from $19.2 million, partly reflecting the absence of prior-year acquisition and severance charges.

• Operating loss was $12.1 million versus $5.7 million; net loss was $11.3 million versus $2.9 million, and diluted loss per share was $2.07 versus $0.53.

• Continuing-operations operating cash flow was $12.3 million, compared with cash used of $1.3 million in FY15; year-end cash was $0.5 million.

Outlook and guidance

• FY17 capital expenditures expected at $7.0–$8.0 million, focused on production and product capabilities, operating cost reductions and plant expansion.

• California consolidation and Maniago integration were targeted for completion during FY17; improving operational and financial performance was identified as the focus.

• Aerospace and Energy end markets were characterized as strong; industrial gas turbine demand was expected flat near term with improved long-term OEM growth, while turbine maintenance, repair and overhaul demand was expected to remain strong.