Shares of SIFCO Industries, Inc. (SIF Quick QuoteSIF - Free Report) have declined 4.5% since the company reported its earnings for the second quarter and the first half of fiscal 2025, lagging behind the S&P 500 Index’s 0.4% gain during the same period. Despite the post-earnings slump, the stock has surged 21.8% over the past month, outperforming the S&P 500’s 12.1% rise, reflecting recent investor optimism despite short-term pressures.

SIF’s Revenue and Earnings Overview

For the quarter ended March 31, 2025, SIFCO Industries reported net sales of $19 million, a 7.3% decline from $20.5 million in the prior-year period. The decrease was primarily due to raw material sourcing issues that constrained output. Despite the sales drop, SIF narrowed its net loss from continuing operations to $1.3 million, or $(0.22) per diluted share, versus a loss of $2.2 million, or $(0.38) per share, in the same quarter last year. The total net loss for the quarter was $1.4 million, narrower than the $1.6 million loss posted a year ago.

On a half-year basis, SIFCO Industries’ performance improved. Net sales climbed 10.9% to $39.9 million from $35.9 million in the year-ago period. The company also reduced its net loss from continuing operations to $3.7 million, or $(0.62) per diluted share, from $6.3 million, or $(1.05) per share, last year. Including discontinued operations, the total net loss for the first six months was $3.7 million compared with $5 million a year earlier.

SIFCO Industries’ Profitability and Operational Metrics

Gross profit for the second quarter of fiscal 2025 rose 5.1% to $1.6 million from $1.5 million despite the decline in top-line revenues. However, selling, general and administrative (SG&A) expenses dropped 16.6% to $2.4 million from $2.8 million, helping reduce operating losses. The operating loss for the quarter stood at $0.8 million, narrower than $1.3 million a year ago.

For the first half, gross profit improved to $2.5 million from $0.9 million, and SG&A expenses decreased 12.3% to $5.2 million from $5.9 million. Consequently, the operating loss narrowed to $2.7 million from $4.9 million.

SIF’s EBITDA and Adjusted EBITDA Trends

EBITDA for the fiscal second quarter improved to $0.4 million against a loss of $0.2 million in the prior year. However, adjusted EBITDA showed a different trend, swinging to a loss of $0.2 million from a positive $0.2 million in the prior-year quarter. The decline in adjusted EBITDA was primarily due to the unfavorable LIFO inventory adjustment of $(0.6) million in the quarter.

For the six-month period, EBITDA came in at $(0.4) million versus $(2.7) million last year, while adjusted EBITDA improved to a loss of $(0.4) million from $(1.7) million previously.

SIFCO Industries’ Management Commentary

CEO George Scherff emphasized operational improvement as a focus in the quarter, noting that while sales were hit by raw material sourcing challenges, throughput and margin-enhancing initiatives were prioritized. Scherff also highlighted positive momentum in SIF’s order book, with backlog reaching $129.2 million, reflecting solid demand from the aerospace and energy markets.

Factors Behind SIF’s Financial Results

SIFCO Industries’ quarterly decline in revenues primarily stemmed from raw material shortages that hindered production volumes. Despite this, cost controls, particularly lower SG&A expenses and interest costs, helped cushion the bottom line. Interest expenses dropped 47.7% to $0.4 million from $0.8 million in the prior-year quarter, reflecting either reduced debt or lower borrowing costs.

Additionally, depreciation and amortization costs remained relatively stable, which aided EBITDA growth. Improved gross margins and reduced losses from continuing operations point to improved internal efficiency, even as external challenges persist.

The significant year-over-year improvement in first-half results was underpinned by a rebound in sales volumes and a stronger contribution from core operations. Discontinued operations had a minimal impact this year compared to a sizeable benefit in fiscal 2024.

Current assets fell to $38.1 million as of March 31, 2025 from $54.3 million as of Sept. 30, 2024, largely due to the removal of discontinued operations-related line items. The balance sheet also showed a significant reduction in SIFCO Industries’ revolving credit facility balance, which declined to $8.9 million from $20.1 million, suggesting meaningful deleveraging. Shareholders’ equity increased to $32.4 million from $30.4 million, primarily due to positive adjustments in accumulated other comprehensive income, partially offsetting retained earnings erosion.

SIFCO Industries’ Guidance

SIFCO Industries did not provide specific financial guidance for upcoming quarters. However, the growing backlog was cited as a leading indicator of sustained demand, suggesting cautious optimism about future revenues. Management did not quantify expectations or provide adjusted earnings targets.

SIF’s Other Developments

The financials reflected the full impact of previously completed divestitures. Current and non-current assets and liabilities of discontinued operations, which were notable in the prior fiscal year, were zero as of March 31, 2025. This confirms the completion of a major restructuring effort aimed at refocusing the business on its core forging and machining operations. No new acquisitions or divestitures were announced during the quarter.