Shares of SIFCO Industries, Inc. (SIF Quick QuoteSIF - Free Report) have lost 8.2% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 Index’s 1.4% gain over the same time frame. Over the past month, the stock lost 1.1% against the S&P 500’s 1.5% rise.

SIF’s Earnings Snapshot

For the fourth quarter of fiscal 2025 (ended Sept. 30, 2025), SIFCO’s net sales rose 5.3% year over year to $22.8 million from $21.7 million. Loss from continuing operations narrowed to $0.5 million, or $(0.08) per diluted share, from a loss of $1.4 million, or $(0.24) per diluted share, a year earlier. Discontinued operations contributed income of $0.1 million, or $0.01 per diluted share, compared with $1.0 million, or $0.16 per diluted share, in the prior-year quarter, resulting in a total net loss of $429,000 million versus $443,000 million a year ago. EBITDA was $1.1 million, down 15.7% from $1.3 million, while adjusted EBITDA increased 41.4% to $1.8 million from $1.3 million in the year-ago quarter.

For the full fiscal year, results were stronger. Net sales increased 6.5% to $84.8 million from $79.6 million. Loss from continuing operations improved sharply to $0.9 million, or $(0.15) per diluted share, from a loss of $8.6 million, or $(1.44) per diluted share, in fiscal 2024. EBITDA swung to a positive $5.9 million from a loss of $0.7 million a year ago, underscoring a meaningful improvement in operating performance. Adjusted EBITDA surged to $5.7 million in fiscal 2025 from $0.8 million in fiscal 2024.

SIFCO’s Other Key Business Metrics

Profitability measures showed mixed movement in the quarter. Gross profit declined 5.6% to $2.2 million from $2.3 million despite higher sales, indicating some margin pressure on a GAAP basis. However, adjusted EBITDA improved meaningfully, reflecting the impact of add-backs and operational adjustments.

Gross profit for fiscal 2025 rose 76.9% to $10.6 million from $5.9 million in the prior year, lifting gross margin to 12.5% from 7.5%, aided by higher volumes and improved pricing and cost controls. Selling, general and administrative (SG&A) expenses declined 6.6% to $10.4 million from $11.1 million, reflecting lower employee-related costs and the absence of certain one-time items recorded in fiscal 2024. Operating income was $0.2 million against an operating loss of $5.2 million a year earlier, highlighting the impact of margin expansion and expense discipline.

SIFCO’s annual revenue mix also shifted across end markets. Fixed-wing aircraft revenue increased $9.6 million to $51.4 million in fiscal 2025 from $41.8 million in fiscal 2024, while Rotorcraft sales were essentially flat at $17.1 million compared with $17.3 million. Commercial space revenue declined sharply by $8.2 million to $5 million in fiscal 2025 from $13.2 million in fiscal 2024, which management attributed to reduced procurement activity and one key customer scaling back orders to manage excess inventory. Energy components rose $0.7 million to $2.5 million from $1.8 million, while commercial products and other revenue increased $3.3 million to $8.8 million from $5.5 million, driven largely by the timing of orders tied to munitions programs.

Commercial net sales were 43.5% of total net sales and military net sales were 56.5% of total net sales in fiscal 2025, compared with 52.4% and 47.6%, respectively, in fiscal 2024.

SIF’s Management Commentary

Management emphasized progress on margin improvement and demand trends. Chief Executive Officer George Scherff noted that sales increased in both the fiscal fourth quarter and full year, supported by strong demand in military and commercial aerospace markets. He also highlighted continued focus on cost reduction, selective price increases and scaling production to meet customer needs. SIF reported a backlog of $119.2 million at the end of fiscal 2025, up from $114.4 million a year earlier, which management views as supportive of near-term production activity.

Factors Influencing SIFCO’s Headline Numbers

Several factors shaped the year-over-year improvement in fiscal 2025. Higher sales volumes and improved gross margins were supported by an Employee Retention Credit (ERC) benefit totaling $3 million in cost of goods sold and an additional $0.5 million benefit recorded in SG&A. SIFCO also incurred about $0.8 million in legal and professional fees tied to the ERC submission process, partially offsetting the SG&A benefit. Compared with fiscal 2024, the year also benefited from lower employee-related expenses due to reduced headcount and deferred backfilling of certain positions.

Below operating income, interest expense declined 45.3% as average debt balances fell during the year. SIF also recorded a gain from the City of Cleveland loan forgiveness. Overall, management attributed the improved loss from continuing operations to higher sales volumes, margin improvement, lower SG&A, lower interest expense and the net ERC benefit of $3.3 million.

SIF’s Guidance

SIFCO did not provide formal quantitative guidance for fiscal 2026. However, management expressed confidence in demand trends across its core aerospace and defense markets and indicated a focus on increasing production levels to support customer requirements in the upcoming year.

SIFCO anticipates fiscal 2026 capital expenditures in the range of $1 million to $2 million, primarily aimed at improving production capabilities, expanding product offerings and achieving operating cost efficiencies.

SIFCO’s Other Developments

A major structural change affecting comparability is the prior sale of SIFCO’s European operations. In October 2024, the company sold its Italian forging and manufacturing business (CBlade) as part of a strategy to streamline operations and refocus on its core aerospace forging business. As a result, CBlade has been presented as discontinued operations in fiscal 2025 and fiscal 2024, and historical statements were retrospectively adjusted to reflect this presentation.

No new acquisitions or major restructuring initiatives were announced during the quarter beyond this previously completed transaction.