SIFCO Industries (NYSEAM) Q4 2017 earnings summary

Executive summary

• FY2017 brought operational restructuring and cost actions; revenue rose $2.3M YoY, pre-tax results and working capital improved, and adjusted EBITDA increased 57% to $6.2M.

• Headcount fell 19%; inventory declined 28%, receivables over 60 days past due fell 73%, and past-due backlog was reduced 67%.

Financial highlights

• Net sales rose 2.0% to $121.5M from $119.1M; gross profit increased 10.6% to $13.4M from $12.1M.

• Gross margin was 11.0%, up from 10.1%; cost of goods sold was $108.1M, or 89.0% of sales, versus $107.0M, or 89.9%.

• Operating loss was $11.5M versus $12.1M; net loss widened to $14.2M from $11.3M, while diluted loss per share increased to $2.59 from $2.07.

• Adjusted EBITDA, a non-GAAP measure, was $6.23M versus $3.98M; FY2017 included $5.0M of long-lived asset impairments, while FY2016 included $4.2M of goodwill impairment.

Outlook and guidance

• FY2018 focus remains on improved profitability and growth; Aerospace and Energy target markets were characterized as strong.

• FY2018 capital expenditures expected at $3.5M–$4.0M, mainly for production and product capability enhancements and operating cost reductions.

• Revenue recognition guidance adoption is planned for October 1, 2018; analysis continues on variable consideration and contracts that may require revenue recognition over time.