SIFCO Industries, Inc. (NYSE:SIF)

CLEVELAND--(BUSINESS WIRE)--SIFCO Industries, Inc. (NYSE Amex: SIF) today announced that the Board of Directors declared a special cash dividend of $.20 per common share, payable November 16, 2012 to shareholders of record at the close of business on November 2, 2012.

Michael S. Lipscomb, Chief Executive Officer, commented, "Our Board of Directors continue to support SIFCO’s aggressive strategic growth plans, while at the same time supporting our shareholders with a liquid return on their investment in the form of an annual $.20 per share dividend. For the second year in a row SIFCO has improved performance driven in part by our latest acquisition, Quality Aluminum Forge, exceeding expectations at both the sales and earnings level. T&W Forge, our fiscal year 2011 acquisition, continues to exceed expectations in both sales and earnings as well. The SIFCO Board felt that the increased enterprise value resulting from these two acquisitions plus the cash dividend was a very strong reward for the shareholders. Again, the Board is committed to a continuing evaluation of the annual dividend and equally supportive of value creating growth."

Third Quarter 2012 Results

• Net sales increased 7.2% in the third quarter of fiscal 2012 to $31.0 million, compared with $28.9 million in the comparable period in fiscal 2011.
• Net income for the third quarter of fiscal 2012 was $2.4 million, or $0.46 per diluted share, compared with net income of $2.1 million, or $0.39 per diluted share for the comparable fiscal 2011 period.
• EBITDA in the third quarter of fiscal 2012 was $5.1 million, or 16.6% of net sales, compared with $4.0 million, or 13.7% of net sales, in the comparable period in fiscal 2011.
• Adjusted EBITDA in the third quarter of fiscal 2012 was $5.6 million, or 18.2% of net sales, compared with $4.3 million, or 15.0% of net sales, in the comparable period in fiscal 2011.

Second Quarter 2012 Results

• Net sales increased 27.1% in the second quarter of fiscal 2012 to $34.1 million, compared with $26.8 million in the comparable period in fiscal 2011.
• Net income for the second quarter of fiscal 2012 was $1.7 million, or $0.32 per diluted share, compared with a net income of $2.0 million, or $0.38 per diluted share for the comparable fiscal 2011 period.
• EBITDA in the second quarter of fiscal 2012 was $4.4 million, or 13.0% of net sales, compared with $4.4 million, or 16.5% of net sales, in the comparable period in fiscal 2011.
• Adjusted EBITDA in the second quarter of fiscal 2012 was $5.3 million, or 15.7% of net sales, compared with $4.9 million, or 18.1% of net sales, in the comparable period in fiscal 2011.

Premium alert sent to members this morning.

In our premium email alert yesterday morning we discussed our disappointment with GeoSpecial Sifco Ind. (NYSE AMEX:SIF) first quarter 2012 results:

"On a negative note, one of our GeoSpecials reported weak first quarter numbers, something that has not occurred for one of our GeoSpecials for some time now. See SIF first quarter financial results. We are awaiting the release of the 10Q to perform more due diligence on what went wrong in the quarter."

Hidden Clue reveals that the 2012 first financial results were strong:

After further due diligence and reading through the 10Q filed in yesterday's trading session, it turns out the quarter was weak, as we originally assumed. We noticed that the 2012 first quarter SG&A expense included an intangible asset amortization charge of $815,000 vs. $57,000 in the 2011 comparable quarter. The charge was due to an increase in customer relation expenses in connection with a 2011 acquisition. The GeoTeam, as well as most savvy investors, would add back this charge to derive a Non-GAAP/adjusted EPS figure. Performing this calculation would translate into Non-GAAP EPS of $0.32 as opposed to the reported number of $0.22 and would equate to 39% EPS growth for the quarter. The 2012 second quarter revenues were also negatively impacted by some temporary inventory adjustments from one if its customers.

We will continue to code SIF as a GeoSpecial. However, we are mildly concerned about the upcoming 2012 vs. 2011 second quarter comparison. SIF reported $0.38 in last year's second quarter. We do anticipate that the acquisition consummated in 2012 will be fully integrated into operations during SIF's fiscal 2012 second quarter ending March. However, we are not sure if SIF will be able to obtain 30% EPS growth during the 2012 second quarter. The company provided limited commentary in the first quarter 2012 press release, making it hard for us to accurately gauge the potential for second quarter EPS.

We will contact the company and urge them to issue Non-GAAP financials in upcoming press releases. We normally view the decline in SIF shares as a buying opportunity, but will be cautious because of the tough second quarter 2012 comp and the fact the company is not being overly transparent in its press releases. We still hold shares in SIF and do believe they will regain strength as confusion over the first quarter results abates.

In other news, GeoSpecials Taro Pharmaceuticals Ind (PINK:TAROF) and Aceto (NASDAQ:ACET) reported strong earnings.

Also, Sed Intl Holdings (NYSE AMEX:SED) reported a huge quarter on a temporary increase in margins.  Interphase (NASDAQ:INPH) reported a dismal quarter. For more details see The GeoTeam's U.S. Earnings Beats/Misses section of our blog. (password GEOTEAM)

Disclosures: Long SIF; Initiated Long trading positions in TAROF, SED; Initiated Short Trading position in INPH

First Quarter 2012 Results

• Net sales increased 33.2% in the first quarter of fiscal 2012 to $28.5 million, compared with $21.4 million in the same period a year ago.
• Net income for the first quarter of fiscal 2012 was $1.2 million, or $0.22 per diluted share, compared with net income of $1.2 million, or $0.23 per diluted share, in the comparable fiscal 2011 period.

In the first quarter of fiscal 2012:

• Forged Components Group (“Forge Group”) net sales were $22.7 million, compared with $15.7 million in the comparable 2011 period. The Forge Group’s results for the first quarter of fiscal year 2012 include the results of Quality Aluminum Forge, LLC from October 28, 2011, the date of the acquisition of this business.
• Turbine Components Services and Repair Group net sales decreased by $0.4 million, to $2.0 million, compared with $2.4 million in the comparable 2011 period.
• Applied Surface Concepts Group net sales increased $0.5 million, to $3.8 million, compared with $3.3 million in the comparable 2011 period.

This is a review of our SIF GeoNugget.

GeoNuggets® - Quick Check List Highlighting Undiscovered Opportunities

On November 28, 2011 we coded SIF as a GeoSpecial @ $19.25 (via a premium member email).

Sifco Industries (NYSE AMEX:SIF)

Company Description: engaged in the production and sale of a variety of metalworking processes, services and products produced primarily to the specific design requirements of its customers.

Data Ended 12/7/11

• Price = $18.84
• Trailing EPS = $1.40
• GeoTeam fiscal 2012 EPS Estimate= $2.00
• P/E based on Fully-Taxed Trailing EPS = 13.45
• P/E based on Fully-Taxed GeoTeam fiscal 2012 EPS Estimate= 9.42

Criteria Check List

SIF Meets 8 out of 10 of our most important GeoBargain/Special® Requirements

(Very Important note: Investors should be aware that SIF's operations could be negatively impacted by U.S. government defense budget cuts. Conservative investors may want to see how the U.S. debt ceiling play out before considering this story)

	Requirement	Comments
	Recent 52-week High(generally within 3 months)	Reached a high of $20.05 on 11/21/2011
	Strong EPS Growth Rate	As of 2011year end
Yes	> 30% EPS Growth Rate	4th Qtr. 2011 EPS increased 57.7% Year end 2011 EPS grew 40%
Yes	GeoPowerRanking (GPR); Number of consecutive quarters that EPS is expected to grow at least 30%.	3
	10% Revenue Growth	4th Qtr. 2011 revenue increased 34% Year end 2011revenues increased 28%

To see more requirements, reasons for optimism, as well as potential valuation, see the rest of our December 7, 2011 GeoNugget.

 Full Year 2011 Results

• Net sales increased 28.9% in fiscal 2011 to $107.4 million, compared with $83.3 million in fiscal 2010.
• Net income in fiscal 2011 was $7.4 million, or $1.40 per diluted share, compared with net income of $5.4 million, or $1.00 per diluted share, in fiscal 2010.

• Forged Component Group net sales increased by $22.0 million, or 35.5%, to $84.1 million, compared with $62.1 million in fiscal 2010;
• Turbine Component Services and Repair Group net sales increased by $0.1 million, or 1.3%, to $9.0 million, compared with $8.9 million in fiscal 2010; and
• Applied Surface Concepts Group net sales increased by $2.0 million, or 15.7%, to $14.2 million, compared with $12.2 million in fiscal 2010.

CLEVELAND--(BUSINESS WIRE)--SIFCO Industries, Inc. (NYSE Amex: SIF) (“SIFCO”) announces the acquisition of the business and related assets of GEL industries, Inc. (DBA Quality Aluminum Forge) (“QAF”), an aerospace component supplier located in Orange, California. The QAF business is principally known as a supplier of precision forged and machined aerospace components for use on a broad range of both commercial and military aircraft models. QAF is a supplier to both the aerospace OEM and aerospace aftermarket segments. The transaction, which includes essentially all of the operating assets and liabilities of QAF, closed on October 28, 2011. This acquisition enhances SIFCO’s product offering by adding a new metal capability and increasing the company’s finish machining capability in both of its main market segments - aerospace and energy. The acquisition also continues SIFCO’s move toward a higher commercial content in its revenue base. Under SIFCO’s ownership, substantially all of the management team and employees of the acquired business will continue to serve its customer base.

SIFCO Chief Executive Officer, Michael S. Lipscomb, said: “I am very pleased to announce the acquisition of the QAF business. This is SIFCO’s second major addition within the past 12 months and has again added an immediately accretive business to the core of our strategic focus. QAF will enhance our near term financial performance and will also add aluminum forging and machining capability to SIFCO’s broad offerings in the commercial aerospace and energy markets. QAF is a leading supplier of precision aluminum forged and machined components to the commercial aerospace market, which is at the heart of SIFCO’s core business. This acquisition, along with the recent addition of a 5,000 ton forging press in our Cleveland operation, will enable SIFCO to supply a much larger size range of forged aluminum products than has been the case at QAF in the past. SIFCO is looking forward to the successful integration of QAF and welcomes our new employees, customers and suppliers to the SIFCO family.”

CLEVELAND--(BUSINESS WIRE)--SIFCO Industries, Inc. (NYSE Amex: SIF) today announced financial results for its fiscal 2011 third quarter, which ended June 30, 2011. Net income for the third quarter of fiscal 2011 was $2.1 million, or $0.39 per diluted share, compared with a net income of $1.0 million, or $0.18 per diluted share for the comparable fiscal 2010 period.

Net sales increased 48.2% in the third quarter of fiscal 2011 to $28.9 million, compared with $19.5 million for the same period a year ago. The results for the third quarter include the results of T&W Forge, which was acquired on December 10, 2010. In the third quarter of fiscal 20010:

• Aerospace Component Manufacturing Group net sales increased by $8.8 million, or 61.6%, to $23.1 million, compared with $14.3 million in the comparable 2010 period;
• Turbine Component Services and Repair Group net sales were $2.0 million in both the third quarter of fiscal 2011 and in the comparable 2010 period; and
• Applied Surface Concepts Group net sales increased by $0.5 million, or 17.3%, to $3.7 million, compared with $3.2 million for the comparable 2010 period.

Net income for the first nine months of fiscal 2011 was $5.3 million, or $0.99 per diluted share, compared with net income of $4.0 million, or $0.75 per diluted share, for the comparable fiscal 2010 period.

Net sales increased 27.0% in the first nine months of fiscal 2011 to $77.1 million, compared with $60.7 million for the same period a year ago. The results for the first nine months of fiscal 2011 include the results of T&W Forge, which was acquired on December 10, 2010. In the first nine months of fiscal 2011:

• Aerospace Component Manufacturing Group net sales increased by $14.3 million, or 31.6%, to $59.5 million, compared with $45.2 million in the comparable 2010 period;
• Turbine Component Services and Repair Group net sales increased by $0.4 million, or 6.8%, to $7.0 million, compared with $6.6 million for the comparable 2010 period; and
• Applied Surface Concepts Group net sales increased by $1.7 million, or 18.8%, to $10.6 million, compared with $8.9 million for the comparable 2010 period.

Cleveland, Ohio—December 14, 2010—SIFCO Industries, Inc. (NYSE Amex: SIF) (“SIFCO”) announces the acquisition of the forging business and related assets from T&W Forge, Inc. (“TWF”), located in Alliance, Ohio. The TWF forging business provides forged components on various brands and sizes of industrial gas turbine engines. The business is principally known for serving various industrial gas turbine engine manufacturers with high quality forged components manufactured in multiple alloys. The transaction, which includes essentially all of the operating assets and liabilities of TWF, closed on December 10, 2010. This acquisition substantially enhances SIFCO’s offering of forged components beyond the aerospace market. Under SIFCO’s ownership, management and employees of the acquired business will continue to serve its customer base.

SIFCO Chief Executive Officer, Michael S. Lipscomb said: “I am very pleased to announce the acquisition of TWF. This immediately accretive acquisition will not only enhance our near term financial performance but will also expand our business into the complementary power generation market. TWF is a leading supplier of under 500 lb. forged components to the power generation market. SIFCO’s acquisition of TWF is in the heart of our core business and continues the strategy of refocusing the company, which included the completion of the divestiture of our large engine component repair business in 2007. This acquisition, along with the recent addition of a 35,000 lb. forging hammer cell will enable SIFCO to supply both the aerospace and power generation markets with a much larger range of products types and sizes than has been the case at either company in the past. SIFCO is looking forward to the successful integration of TWF and welcomes our new employees, customers and suppliers to the SIFCO family”.