SIFCO Industries is a century-old Cleveland forger that sold its Italian energy-blade plant and is now trying to prove that a thinner, United States-only franchise can earn real money on military rotorcraft and munitions work. The third quarter did not settle that debate. Sales rose, the backlog expanded, and the adjusted operating proxy held, yet reported earnings slipped back to roughly break-even because a last-in, first-out inventory charge and the absence of last year's payroll-tax credit erased the comparison. The investment case turns on whether the mix that filled the book in the first half is durable enough to fund working capital without handing the cycle back to the lenders.
Nine-month sales reached $77 million. That is a clear step up from the year-ago stretch, and it was enough to swing continuing operations from a small loss to $4 million of profit. Rotorcraft and the commercial-other bucket did the heavy lifting, while fixed-wing, commercial space, and energy faded. Inventories more than doubled as the plants bought metal ahead of the book. Unrestricted cash at mid-year was $77000. A forger that finally makes money on the income statement can still starve if the backlog sits in work-in-process.
Adjusted earnings before interest, taxes, depreciation, and amortization, a non-GAAP operating proxy that adds back the inventory-reserve swing and other items, came in near $5 million for the quarter and $13 million for the nine months. Prior-year comparisons are polluted by the Employee Retention Credit, a pandemic payroll-tax refund that inflated last year's third quarter. The open question is whether the plants convert the $164 million backlog into cash over the next year without another inventory bulge, another last-in first-out charge, or a fade in munitions and rotorcraft mix. If conversion stalls, the multiple already prices a completed turnaround that the cash-flow statement has not yet confirmed.