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Sifco Industries Inc. has a market cap of $85.8 million; its shares were traded at around $16.401 with a P/E ratio of 16.2 and P/S ratio of 1. Hedge Fund Gurus that owns SIF: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns SIF: Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.
Highlight of Business Operations: Net sales in the first quarter of fiscal 2011 increased 0.4% to $21.4 million, compared with $21.3 million in the comparable period in fiscal 2010. Net income in the first quarter of fiscal 2011 was $1.2 million, compared with $2.0 million in the comparable period in fiscal 2010. On December 10, 2010, through its wholly-owned subsidiary, TWF Acquisition, LLC – now known as T&W Forge, LLC (“T&W Forge”), the Company completed the purchase of the forging business and substantially all related operating assets from T&W Forge, Inc. (“TWF”).
The ACM Group’s selling, general and administrative expenses increased $0.2 million to $1.2 million, or 7.4% of net sales, in the first quarter of fiscal 2011, compared with $1.0 million, or 6.2% of net sales, in the comparable period in fiscal 2010. The increase in selling, general and administrative expenses is principally due to (i) increased depreciation and consulting costs related to the recently implemented company-wide management information system and (ii) $0.1 million amortization of intangible assets related to the acquisition of TWF, partially offset by (iii) lower variable selling expenses as a result of lower net sales.
The ACM Group’s backlog as of December 31, 2010 was $89.9 million, compared with $71.2 million as of September 30, 2010. At December 31, 2010, $73.1 million of the total backlog was scheduled for delivery over the next twelve months. $15.6 million of the ACM Group’s backlog as of December 31, 2010 is attributable to the recent acquisition of TWF. All orders are subject to modification or cancellation by the customer with limited charges. Delivery lead times for certain raw materials (e.g. aerospace grades of steel and titanium alloy) continue to lengthen due to increased demand and the ACM
Cash and cash equivalents decreased $10.4 million to $8.3 million at December 31, 2010 from $18.7 million at September 30, 2010, while short-term investments remained at $3.0 million at December 31, 2010. At December 31, 2010, $5.9 million of the Company’s cash and cash equivalents are in the possession of its non-U.S. subsidiaries. Distributions from the Company’s non-U.S. subsidiaries to the Company may be subject to statutory restriction, adverse tax consequences or other limitations.
The Company’s operating activities provided $2.1 million of cash in the first quarter of fiscal 2011 compared with $2.4 million of cash provided by operating activities in the first quarter of fiscal 2010. The $2.1 million of cash provided by operating activities in first quarter of fiscal 2011 was primarily due to (i) net income of $1.2 million, (ii) $0.6 million from the impact of such non-cash items as depreciation and amortization expense, deferred taxes and LIFO expense; (iii) a $1.1 million reduction in accounts receivable, (iv) a $0.7 million reduction in inventories and (v) a $0.6 million decrease in refundable income taxes. These items were partially offset by a $2.0 million decrease in accounts payable and accrued expenses. These changes in the components of working capital do not take into consideration the impact of the opening balance sheet related to the acquisition of TWF and were due primarily to factors resulting from normal business conditions of the Company, including (i) the relative timing of collections from customers and (ii) the relative timing of payments to suppliers and tax authorities.
Capital expenditures were $0.6 million in the first quarter of fiscal 2011 compared with $1.9 million in the comparable fiscal 2010 period. Capital expenditures during the first quarter of fiscal 2011 consist of $0.6 million by the ACM Group and less than $0.1 million by both the ASC Group and Repair Group. In addition to the $0.7 million expended during the first quarter of fiscal 2011, $0.7 million has been committed as of December 31, 2010. The Company anticipates that total fiscal 2011 capital expenditures will be within the range of $4.0 to $5.0 million and will relate principally to the expansion of the ACM Group’s production capabilities.
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