What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-01-02 compared with 2022-12-23 · 363 added, 258 removed, 937 unchanged (40% of the section changed)

1 unchanged sentence

Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID :

Report of Independent R egistered Public Acc ounting Firm (PCAOB ID :

Report of Indep endent Registered Public Accounting Firm (PCAOB ID :

Consolidated Statements of Operations

4 unchanged sentences

Notes to Consolidated Financial Statements

1 Report provided in connection with audited financial statements for fiscal year ended 2023.

2 Report provided in connection with audited financial statements for fiscal year ended 2022.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of SIFCO Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SIFCO Industries, Inc.

and its subsidiaries (the Company) as of September 30, 2023, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements and financial statement schedule included under Item 15(a) (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has debt maturing in October 2024 and an alternate financing arrangement has yet to be executed.

This raises substantial doubt about the Company’s ability to continue as a going concern.

Management's plans in regard to this matter are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the

financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company’s goodwill balance was $3.5 million at September 30, 2023 and is recorded at the Cleveland, Ohio (“Cleveland”) reporting unit.

At July 31, 2023, the Company performed its annual goodwill impairment test by performing a quantitative analysis in lieu of a qualitative analysis and concluded there was no impairment of goodwill.

The fair value of the Cleveland

reporting unit for the goodwill impairment assessment is estimated utilizing a combination of income (discounted cash flow method) and market valuation (market comparable method) approaches.

The income approach involves using cash flow projections developed by management to calculate discounted cash flows, the sum of which is subject to certain adjustments to estimate the business enterprise value.

The market approach involves performing research on guideline public companies that are similar in nature to the Company to develop an appropriate valuation multiple to estimate the business enterprise value.

The estimated fair values determined by the income approach and market approach are then weighted to estimate the fair value of the Cleveland reporting unit.

Significant judgment is required to forecast future cash flows, determine the discount rate applicable to the Cleveland reporting unit, select the appropriate guideline public companies and determine the appropriate market multiples from those guideline public companies.

We identified the Company’s annual goodwill impairment test for the Cleveland reporting unit as a critical audit matter because of the significant assumptions management used in its annual impairment test, including the revenue growth rates and margin percentages used in the projected cash flows, the determination of the discount rate applicable to the reporting unit, the identification of comparable guideline public companies and the determination of the appropriate market multiples.

Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions have on the accounting estimate.

Our audit procedures related to the Company’s annual goodwill impairment test included the following, among others:

We tested the underlying data used by management in its model for completeness and accuracy.

We developed an independent estimate of the Cleveland reporting unit’s fair value under both the income and market valuation approaches using publicly available market data for the Cleveland reporting unit’s industry and compared our independent estimate to management’s estimate of fair value.

We utilized our valuation specialists to assist in the following procedures, among others:

Testing the reasonableness of the discount rate by comparing the inputs used by management to publicly available market data.

Evaluating the comparability of the guideline public companies identified by management based upon publicly available market data.

Corroborating the market multiples selected by the Company by comparing them publicly available market data.

Evaluating the appropriateness of the valuation models used by management and testing their mathematical accuracy.

/s/ RSM US LLP

We have served as the Company's auditor since 2023.

Cleveland, Ohio

December 29, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of SIFCO Industries, Inc.

(an Ohio corporation) and subsidiaries (the “Company”) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the two years in the period ended September 30, 2022 and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of SIFCO Industries, Inc.

(an Ohio corporation) and subsidiaries (the “Company”) as of September 30, 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the year then ended, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit

matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Recoverability of long-lived assets at Orange, California

As described further in Note 1 to the financial statements, the Company reviews the carrying value of its long-lived assets when events and circumstances indicate a triggering event has occurred.

This review is performed using estimates of future undiscounted cash flows.

If the carrying value of a long-lived asset or asset group is greater than the estimated undiscounted future cash flows, the long-lived asset or asset group is considered impaired and an impairment charge is recorded for the amount by which the carrying value exceeds its fair value.

We identified the recoverability of long-lived assets at Orange, California as a critical audit matter.

The principal considerations for our determination that the recoverability of long-lived assets at Orange, California is a critical audit matter are the high degree of auditor judgement necessary in evaluating certain inputs and assumptions made by management in the undiscounted cash flow analysis.

Those assumptions include forecasted revenue and EBITDA and estimated sale price of the asset group at the end of the useful life, which contribute significantly to the undiscounted cash flows of the asset group.

Our audit procedures related to the analysis included the following, among others.

• We obtained an understanding of and evaluated the design of controls relating to management’s recoverability of long-lived assets analysis, including controls over the determination of the undiscounted cash flows of the asset group and review controls over the reasonableness of key inputs and assumptions.

• We assessed the reasonableness of the methodologies and significant inputs used to estimate the future cash flows of the asset group, including the revenue and EBITDA growth rates.

• We assessed the reasonableness of the estimated sale value of the asset group at the end of the useful life.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2002.

We served as the Company’s auditor from 2002 to 2023.

Cleveland, Ohio

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Cost of goods sold 79,492 85,757

Gross (loss) profit ( 1,855 ) 11,205

Gross profit (loss) 7,530 ( 1,855 )

Selling, general and administrative expenses 14,029 11,909

Amortization of intangible assets 233 313

(Gain) loss on disposal or impairment of operating assets ( 7 ) 209

Gain on insurance recoveries — ( 2,397 )

Loss (gain) on disposal of operating assets 1 ( 7 )

Operating loss ( 6,733 ) ( 14,070 )

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Other expense, net 443 59

(Loss) before income tax benefit ( 9,683 ) ( 1,965 )

Income tax benefit ( 43 ) ( 1,222 )

Loss before income tax expense (benefit) ( 8,533 ) ( 9,683 )

Income tax expense (benefit) 159 ( 43 )

Net loss $ ( 8,692 ) $ ( 9,640 )

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Net loss $ ( 8,692 ) $ ( 9,640 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment, net of tax $ 0 and $ 0 , respectively

( 837 ) ( 102 )

Retirement plan liability adjustment, net of tax $ 0 and $ 0 , respectively

Interest rate swap agreement adjustment, net of tax $ 0 and $ 0 , respectively

Comprehensive (loss) income $ ( 9,254 ) $ 3,646

Other comprehensive loss:

Foreign currency translation adjustment, net of tax 268 ( 837 )

Retirement plan liability adjustment, net of tax 1,768 1,211

Interest rate swap agreement adjustment, net of tax ( 3 ) 12

Comprehensive loss $ ( 6,659 ) $ ( 9,254 )

See notes to consolidated financial statements.

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Long-term operating lease liabilities, net of short-term 14,020 14,786

Deferred income taxes 137 158

Deferred income taxes, net 142 137

Pension liability 3,417 4,812

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Serial preferred shares, no par value, authorized 1,000 shares;

0 shares issued and outstanding at September 30, 2023 and 2022

Common shares, par value $ 1 per share, authorized 10,000 shares;

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Net (loss) $ ( 8,692 ) $ ( 9,640 )

Adjustments to reconcile net (loss) to net cash provided by operating activities:

Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities:

Depreciation and amortization 6,404 6,348

Amortization of debt issuance costs 44 40

(Gain) loss on disposal of operating assets or impairment of operating assets ( 7 ) 209

Gain on insurance proceeds received for damaged property — ( 2,397 )

(Gain) loss on disposal of operating assets 1 ( 7 )

Loss on insurance proceeds received for damaged property 60 —

Gain on extinguishment of debt — ( 5,106 )

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Accrued income tax and other 153 ( 27 )

Net cash provided by operating activities 298 3,892

Net cash (used in) provided by operating activities ( 1,363 ) 298

Cash flows from investing activities:

Insurance proceeds received for damaged property — 4,101

Proceeds from disposal of property, plant and equipment 20 7

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Repayments of short-term debt borrowings ( 6,642 ) ( 3,894 )

Payments for debt issuance costs — ( 45 )

Net cash provided by (used for) financing activities 3,734 ( 3,111 )

Net cash provided by financing activities 2,881 3,734

Increase (decrease) in cash and cash equivalents ( 916 ) 840

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Balance - September 30, 2021 5,987 $ 11,118 $ 41,596 $ ( 9,079 ) $ 49,622

Comprehensive income (loss) — — ( 743 ) 4,389 3,646

Comprehensive (loss) income — — ( 9,640 ) 386 ( 9,254 )

Performance and restricted share expense — 428 — — 428

1 unchanged sentence

Balance - September 30, 2022 6,040 11,387 31,956 ( 8,693 ) 40,690

Comprehensive income (loss) — — ( 9,640 ) 386 ( 9,254 )

Comprehensive (loss) income — — ( 8,692 ) 2,033 ( 6,659 )

Performance and restricted share expense — 375 — — 375

9 unchanged sentences

SIFCO Industries, Inc.

and its subsidiaries are engaged in the production of forgings and machined components primarily in the Aerospace and Energy ("A&E") market.

The Company’s operations are conducted in a single business segment, "SIFCO" or the "Company."

Impact of COVID-19 & Other Factors

The lingering impact and residual effects of the coronavirus ("COVID-19") pandemic, along with other factors, such as ongoing geopolitical tensions, have created strains on supply chains, and general economic conditions.

While the exact timing and pace of recovery in our markets continues to be indeterminable, there are indications that commercial air travel is steadily recovering in certain areas.

While the long-term outlook remains positive given the nature of the industry, there continues to be uncertainty with the respect to when commercial air traffic will return to pre-COVID-19 levels.

Given the fluidity of the situation, it is still unclear how lasting and deep the ongoing economic impacts of COVID-19 will last.

During fiscal 2022, the effects of COVID-19 continued to have an impact on the Company’s results of operations.

The Company has been impacted by delays in receiving orders and obtaining materials required to produce certain products.

As sales volumes have fluctuated, the Company has taken measures to reduce costs by furloughing certain of its employees from time to time at one of its plant locations.

Additionally, our operations are subject to global economic and geopolitical risks.

For example, while the Company does not have a presence in these regions, the ongoing conflict between Russia and Ukraine has impacted economic activity as well as the availability and price of raw materials and energy.

The Company continues to actively monitor these factors and find ways to mitigate the impact on its operations.

and its subsidiaries are engaged in the production of forgings and machined components primarily in the Aerospace and Energy ("A&E"), Defense and Commercial Space markets.

The Company’s operations are conducted in a single business segment, "SIFCO" or the "Company." SIFCO operates from multiple locations.

SIFCO manufacturing facilities are located in Cleveland, Ohio ("Cleveland");

Orange, California ("Orange");

and Maniago, Italy ("Maniago").

Cybersecurity Incident

During fiscal 2023, the Company’s domestic operations were impacted by the Cybersecurity Incident ("Cyber Incident") which resulted in production delays and delayed shipments due to information access limitations.

The Company has since completed data recovery and restoration from the cyber incident.

See Note 11 , Commitments and Contingencies.

PRINCIPLES OF CONSOLIDATION

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dollar is the functional currency for all the Company’s U.S.

operations and its non-operating subsidiaries.

operations and its non-operating non-U.S.

subsidiaries.

For these operations, all gains and losses from completed currency transactions are included in income.

2 unchanged sentences

Assets and liabilities are translated into U.S.

dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange.

dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange which approximate the rates in effect at the date of the transaction.

Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity.

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The Company writes off accounts receivable when they become uncollectible.

In fiscal 2022 $ 53 of accounts receivable were written off against the allowance for doubtful accounts, while in fiscal 2021 $ 9 of accounts receivable were recovered against the allowance for doubtful accounts.

Bad debt benefit totaled $ 3 and $ 91 in fiscal 2022 and fiscal 2021, respectively.

In fiscal 2023 $ 16 of accounts receivable were written off against the allowance for doubtful accounts, while $ 53 were written off in fiscal 2022.

Bad debt expense totaled $ 143 in fiscal 2023 and was a $ 3 benefit in fiscal 2022.

Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S.

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In fiscal 2023, 12 % of the Company’s consolidated net sales were from one of its largest customers;

and 23 % of the Company's consolidated net sales were from the two largest customers and their direct subcontractors, which individually accounted for 12 % and 11 %, of consolidated net sales, respectively.

In fiscal 2021, 20 % of the Company’s consolidated net sales were from two of its largest customers;

and 38 % of the Company's consolidated net sales were from three of the largest customers and their direct subcontractors which individually accounted for 17 %, 11 %, and 10 %, of consolidated

and 32 % of the Company's consolidated net sales were from the three largest customers and their direct subcontractors, which individually accounted for 12 %, 10 % and 10 %, of consolidated net sales, respectively.

In fiscal 2022, 11 % of the Company’s consolidated net sales were from one of its largest customers;

and 23 % of the Company's consolidated net sales were from two of the largest customers and their direct subcontractors which individually accounted for 12 %, and 11 %, of consolidated net sales, respectively.

Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2023 and 2022.

At September 30, 2023, one of the Company’s largest customers had an outstanding net accounts receivable balance of 11 % of the total net accounts receivable;

and one of the largest customers and their direct subcontractors collectively had an outstanding net accounts receivable which accounted for 13 % of total net accounts receivable.

At September 30, 2022, three of the Company’s largest customers had outstanding net accounts receivable that were 15 %, 11 % and 10 %, respectively of the total net accounts receivable;

and four of the largest customers and their direct subcontractors collectively had outstanding net accounts receivable which accounted for 15 %, 11 %, 11 % and 10 %, respectively of total net accounts receivable.

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

net sales, respectively.

Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2022 and 2021.

At September 30, 2022, three of the Company’s largest customers had outstanding net accounts receivable balances that were 15 %, 11 % and 10 %, respectively of the total net accounts receivable;

At September 30, 2021, none of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% or more of total net accounts receivable;

and one of the largest customers and their direct subcontractors had outstanding net accounts receivable which accounted for 17 %, of total net accounts receivable, respectively.

The Company performs ongoing credit evaluations of its customers’ financial conditions.

performs ongoing credit evaluations of its customers’ financial conditions.

The Company believes its allowance for doubtful accounts is sufficient based on the credit exposures outstanding at September 30, 2023.

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Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion.

In order to accurately reflect inventory, the Company wrote down inventory to realizable value of $ 1,538 and $ 325 for years ended September 30, 2022 and 2021, respectively.

In order to accurately reflect inventory, the Company wrote down inventory to realizable value, and accrued reserves of $ 669 and $ 1,538 as of September 30, 2023 and 2022, respectively.

The Company writes down inventory for obsolete and excess inventory each quarter and requires at a minimum that the write down be established based on an analysis of the age of the inventory.

1 unchanged sentence

Specific obsolescence and excess write down requirements may arise due to technological or market changes or based on cancellation of an order.

The Company did not have a significant write down for obsolete and excess inventory for the years ended September 30, 2022 and 2021.

In order to accurately reflect the value of inventory, the Company wrote down inventory for obsolete and excess inventory, and accrued reserves of $ 3,380 and $ 3,546 as of September 30, 2023 and 2022.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost.

Property, plant and equipment are stated at cost net of accumulated depreciation.

Depreciation is generally computed using the straight-line method.

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Depreciation expense was $ 6,170 and $ 6,035 in fiscal 2023 and 2022, respectively.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

ASSET IMPAIRMENT

LONG-LIVED ASSET IMPAIRMENT

The Company reviews the carrying value of its long-lived assets ("asset groups"), when events and circumstances indicate a triggering event has occurred.

A triggering event is a change in circumstances that indicates the carrying value of the asset group may not be recoverable.

This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets.

Under the Accounting Standard Codification ("ASC") 360 ("Topic 360"), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

The Company continuously monitors potential triggering events to determine if further testing is necessary.

In the first, second, third and fourth quarters, the Company evaluated triggering events and did not identify any indicators that the asset groups might be impaired.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company continuously monitors triggers to determine if further testing is necessary.

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The results indicated that the long-lived assets, right-of-use assets and definite lived intangible assets were recoverable and did not require further review for impairment.

The Company continuously monitors triggers to determine if further testing is necessary.

In the fourth quarter, further assessment was necessary as certain qualitative factors, such as, operating results, historical and forecasted market conditions and projected undiscounted future cash flows triggered a recoverability test on its Orange location.

The results indicated that the long-lived assets, right-of-use assets and definite lived intangible assets were recoverable and did not require further review for impairment.

GOODWILL AND INTANGIBLE ASSETS

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However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

See Note 3, Goodwill and Intangibles Assets , of the consolidated financial statements for further discussion of the July 31, 2022 and 2021 annual impairment test results.

See Note 3, Goodwill and Intangibles Assets , for further discussion of the July 31, 2023 and 2022 annual impairment test results.

The Company monitors for triggering events outside of the annual impairment assessment date and no potential triggers were identified through September 30, 2023.

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Intangible assets are amortized over their useful lives ranging from one year to ten years .

Identifiable intangible assets assessment for impairment is evaluated when events and circumstances warrant such a review, as noted within Note 1, Summary of Significant Accounting Policies - Asset Impairment, of the consolidated financial statements.

Identifiable intangible assets assessment for impairment is evaluated when events and circumstances warrant such a review, as noted within Note 1, Summary of Significant Accounting Policies - Long-Lived Asset Impairment for further discussion.

NET LOSS PER SHARE

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The dilutive effect is as follows:

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

September 30,

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Weighted-average common shares outstanding (basic and diluted) 5,929 5,830

Net (loss) income per share – basic and diluted:

Net loss per share – basic and diluted:

$ ( 1.47 ) $ ( 1.65 )

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A contract exists when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied.

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As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided.

The determination of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided.

The Company elected to use the cost to cost input method of progress based on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts.

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Revenues are recorded proportionally as costs are incurred.

When the criteria to recognize revenue over time are not met, revenue is recognized at point in time.

Under this method, transferring control of the good or service to the customer satisfies the performance obligation to recognize revenue at a point in time.

Transfer of control is satisfied when the Company has the right to present for payment and/or the customer has legal title, physical possession, significant risks and rewards of ownership and/or accepted the asset.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods.

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The Company has elected to recognize incremental costs incurred to obtain contracts, which primarily represent commissions paid to third party sales agents where the amortization period would be less than one year, as selling, general and administrative expenses in the consolidated statements of operations as incurred.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company elected a practical expedient under Topic 606 to not adjust the promised amount of consideration for the effects of any significant financing component where the Company expects, at contract inception, that the period between when the Company transfers a promised good to a customer and when the customer pays for that good will be one year or less.

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The amount of consideration to which the Company expects to be entitled in exchange for the goods is not generally subject to significant variations.

The Company elected to recognize the cost of freight and shipping when control of the products has transferred to the customer as an expense in cost of goods sold on the consolidated statements of operations, because those are costs incurred to fulfill the promise recognized, not a separate performance obligation.

The Company elected to recognize the cost of freight and shipping after control of the products has transferred to the customer as an expense in cost of goods sold on the consolidated statements of operations, because those are costs incurred to fulfill the promise recognized, not a separate performance obligation.

To the extent certain freight and shipping fees are charged to customers, the Company recognizes the amounts charged to customers as revenues and the related costs as an expense in cost of goods sold when control of the related products has transferred to the customer.

3 unchanged sentences

Therefore, the effect of a contract modification on the transaction price and the Company's measure of progress for the performance obligation to which it relates is generally recognized on a prospective basis.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Contract Balances

Contract assets on the consolidated balance sheets are recognized when a good is transferred to the customer and the Company does not have the contractual right to bill for the related performance obligations.

Contract assets on the consolidated balance sheets are recognized when control is transferred to the customer over-time and the Company does not have the contractual right to bill for the related performance obligations.

In these instances, revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time.

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Lease expense for operating leases is recognized on a straight-line basis over the lease term, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition.

EMPLOYEE RETENTION CREDIT

Under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the Employee Retention Credit ("ERC") is a refundable payroll tax credit for businesses and tax-exempt organizations that were affected during the COVID-19 pandemic.

Eligible businesses, both for-profit and not-for-profit, that experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts in any quarter (more than 50% decrease in 2020 from 2019, and more than 20% in 2021) could receive a quarterly refundable payroll tax credit.

The Company, with reasonably assured qualification, submitted and received approval for refunds under the ERC program.

As no authoritative guidance exists under U.S.

GAAP for reporting ERCs, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as other income or netting the credit against related expense.

The Company recorded a gross benefit of $ 1,772 , which represented $ 1,688 claimed as refund and $ 84 in interest income.

The ERC was recognized as a reduction in other manufacturing and selling, general and administrative expenses and allocated to the financial statement categories from which the payroll taxes were originally incurred.

The Company recorded benefits to cost of goods sold of $ 1,452 , selling, general and administrative expense of $ 236 and interest income $ 84 , respectively and recorded selling, general and administrative expense of $ 354 for professional fees related to the tax credit in the consolidated condensed statements of operations during the twelve months ended September 30, 2023.

IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, " Income Taxes (ASC 740) – Simplifying the Accounting for Income Taxes ," which is intended to reduce complexity in the accounting for income taxes while maintaining or improving the usefulness of information provided to financial statement users.

The guidance amends certain existing provisions under ASC 740 to address a number of distinct items.

The Company adopted ASU 2019-12 effective October 1, 2021.

Adoption of the amendments in this ASU did not have an impact to the Company's results of operations and financial condition.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS

4 unchanged sentences

The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit.

Upon initial recognition of the exposure, the expected credit loss model requires entities to estimate the credit losses expected over the life of an exposure (or pool of exposures).

Upon initial recognition of the exposure, the expected credit loss model requires entities to estimate the credit losses expected

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

over the life of an exposure (or pool of exposures).

The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments.

2 unchanged sentences

ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815) , and Leases (Topic 842) ," which defers the effective date for public filers that qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Because SIFCO is considered a SRC, the Company does not need to implement this standard until October 1, 2023.

The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results within the consolidated statements of operations and financial condition.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which is intended to provide temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

This ASU, along with recently issued ASU 2021-01, which further clarifies the scope of Topic 848, is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022.

ASU 2020-04 was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022.

The Company has not applied any optional expedients and exceptions to date, and will continue to evaluate the impact of the guidance and whether it will apply the optional expedients and exceptions.

However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years.

Because SIFCO is considered a SRC, this ASU is effective for the Company beginning October 1, 2023.

The effect of adopting this ASU is not expected to have a material impact to the Company's results within the consolidated statements of operations and financial condition.

In July 2023, the FASB issued ASU 2023-03, “ Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718) ”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No.

120, among other things.

The ASU does not provide any new guidance so there is no transition or effective date associated with it.

The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" , that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280.

ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations.

The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses.

Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments.

For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources.

ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances.

The amendments in ASU 2023-07 do not change or remove those disclosure requirements.

The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements.

The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, " Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" .

ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

Early adoption is permitted.

A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

USE OF ESTIMATES

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Research and development expenses were nominal in fiscal 2023 and 2022.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

DEBT ISSUANCE COSTS

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The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows:

Foreign currency translation adjustment, net of income tax benefit of $ 0 and $ 0 , respectively

$ ( 6,196 ) $ ( 5,359 )

Net retirement plan liability adjustment, net of income tax benefit of $( 3,758 ) and $( 3,758 ), respectively

( 2,509 ) ( 3,720 )

Interest rate swap agreement, net of income tax benefit of $ 0 and $ 0 , respectively

Foreign currency translation adjustment, net of income tax $ ( 5,928 ) $ ( 6,196 )

Net retirement plan liability adjustment, net of income tax ( 741 ) ( 2,509 )

Interest rate swap agreement, net of income tax 9 12

Total accumulated other comprehensive loss $ ( 6,660 ) $ ( 8,693 )

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive loss, net of tax:

1 unchanged sentence

Balance at September 30, 2021 ( 5,359 ) ( 3,720 ) — ( 9,079 )

Other comprehensive income (loss) before reclassifications ( 102 ) 3,371 — 3,269

Other comprehensive (loss) income before reclassifications ( 837 ) 527 12 ( 298 )

Amounts reclassified from accumulated other comprehensive loss — 684 684

Net current-period other comprehensive income (loss) ( 102 ) 4,491 — 4,389

Net current-period other comprehensive (loss) income ( 837 ) 1,211 12 386

Balance at September 30, 2022 ( 6,196 ) ( 2,509 ) 12 ( 8,693 )

13 unchanged sentences

(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost.

See Note 8, Retirement Benefit Plans , of the consolidated financial statements for further information.

See Note 8, Retirement Benefit Plans for further discussion.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company files a consolidated U.S.

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The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company's policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses.

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Goodwill and intangible assets are valued using Level 3 inputs.

Defined benefit plans can be valued using Level 1, Level 2, Level 3 or a combination of Level 1, 2 and 3 inputs.

See Note 8, Retirement Benefit Plans for further discussion.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

SHARE-BASED COMPENSATION

6 unchanged sentences

First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern.

Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt.

This evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.

Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists or that its plans alleviate the substantial doubt that was

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Second, if management concludes that substantial doubt is raised, management is required to consider whether its plans that are not yet fully implemented are probable of both being implemented and effective in alleviating that doubt.

In the event substantial doubt is raised, disclosures in the notes to the consolidated financial statements of management’s plans and management’s conclusion as to whether the substantial doubt exists or has been alleviated are required.

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

This step shall not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.

The Company has debt maturing in October 2024.

As a result of this condition, there is substantial doubt about the Company’s ability to continue as a going concern.

The Company is evaluating available financial alternatives, including obtaining acceptable alternative financing.

The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreements.

See Note 5 , Debt and Subsequent Event and Note 14 , Subsequent Events.

RECLASSIFICATIONS

Certain amounts in prior years have been reclassified to conform to the 2022 consolidated statement presentation.

In fiscal 2022, the Company revised its classification within the Consolidated Statement of Cash Flows by moving a prior year amount of $ 325 of inventories from changes in operating assets and liabilities to adjustments to reconcile net loss to net cash provided by operating activities as this item is non-cash and is not a part of operating assets and liabilities.

Inventories at September 30 consist of:

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If the FIFO method had been used for the entire Company, inventories would have been $ 9,634 and $ 9,939 higher than reported at September 30, 2023 and 2022, respectively.

LIFO expense was $ 729 in fiscal 2022 and $ 924 in fiscal 2021.

LIFO benefit was $ 305 in fiscal 2023 and expense of $ 729 in fiscal 2022.

In fiscal 2023, results showed a reduction of inventory resulting in liquidations of LIFO inventory quantities.

The estimated liquidation of LIFO inventory quantities results in a projected increase in cost of goods sold of approximately $ 180 during fiscal 2022.

The estimated liquidation of LIFO inventory quantities results in a projected increase in cost of goods sold of $ 1,476 during fiscal 2023.

These inventories were carried in prior periods at the then prevailing costs, which were accurate at the time, but differ from the current manufacturing cost and/or material costs.

There was $ 180 of LIFO liquidation in fiscal 2022.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

For the portion of the Company's inventory not valued at LIFO, inventory is valued at FIFO and stated at the lower of cost or net realizable value.

The Company wrote down inventory to net realizable value by $ 1,538 and $ 325 for the years ended September 30, 2022 and 2021, respectively.

The Company did not have a significant write down for obsolete and excess inventory for the years ended September 30, 2022 and 2021.

The Company recorded an inventory reserve to adjust to net realizable value of $ 669 and $ 1,538 as of September 30, 2023 and 2022, respectively.

The Company recorded an inventory reserve to adjust for obsolete and excess inventory of $ 3,380 and $ 3,546 as of September 30, 2023 and 2022.

The allocation of production costs to inventory are based on a normal range of capacity in production.

1 unchanged sentence

As a result, the Company recorded idle cost of $ 2,149 and $ 3,087 for years ended September 30, 2023 and 2022, respectively.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Goodwill and Intangible Assets

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Fiscal year 2025 119

Fiscal year 2025 106

Fiscal year 2026 —

Fiscal year 2027 —

Goodwill is not amortized, but is subject to an annual impairment test.

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The methodology for determining fair values was consistent for the periods presented.

2022 and 2021 Annual Goodwill Impairment Tests

SIFCO performed its annual impairment test as of July 31, 2022 and 2021, respectively, for the Cleveland, Ohio ("Cleveland") reporting unit.

Results determined that the fair value of the reporting unit exceeded the carrying value at each assessment date.

As a result, no impairment was required as of September 30, 2022 and 2021, respectively.

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

Goodwill is expected to be deductible for tax purposes.

2023 and 2022 Annual Goodwill Impairment Tests

SIFCO performed its annual impairment test as of July 31, 2023 and 2022, respectively, for the Cleveland, Ohio ("Cleveland") reporting unit which is the only reporting unit that carries goodwill.

Results determined that the fair value of the reporting unit exceeded the carrying value at each assessment date.

As a result, no impairment was required as of September 30, 2023 and 2022, respectively.

Goodwill is deductible for tax purposes.

Changes in the net carrying amount of goodwill were as follows:

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Total accrued liabilities $ 6,477 $ 5,868

Debt and Subsequent Event

Debt at September 30 consists of:

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subsidiaries.

The Credit Agreement (as amended by Fifth Amendment (the "Fifth Amendment") described below), consists of a senior secured revolving credit facility with a maximum borrowing of $ 28,000 .

The revolving commitment through the Export Credit Agreement, as amended, which lends amounts to the Company on foreign receivables is $ 7,000 .

The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $ 10,000 upon consent of the Lender (as defined below) or upon additional lenders joining the Credit Agreement.

The Credit Agreement and the Export Agreement were amended on February 19, 2021, when the Company and certain of its subsidiaries (collectively, the "borrowers") entered into the Fifth Amendment to the Credit Agreement and the First Amendment (the "First Amendment") to the Export Credit Agreement, in each case, with JPMorgan Chase Bank, N.A., a national banking association, (the "Lender").

The combined maximum borrowings remain unchanged at $ 35,000 ;

however the maximum borrowing under the Credit Agreement was decreased to $ 28,000 (from $ 30,000 ) and the revolving commitment through the Export Agreement was increased to $ 7,000 (from $ 5,000 ).

The Fifth Amendment, among other things, extended the maturity date from August 6, 2021 to February 19, 2024.

The Credit Agreement (as amended by Seventh Amendment (the "Seventh Amendment") described below), consists of a senior secured revolving credit facility with a maximum borrowing of $ 23,000 .

The revolving commitment through the Export Credit which lends amounts to the Company on foreign receivables is $ 7,000 .

The Credit Agreement and the Export Agreement were amended on August 9, 2023, when the Company and certain of its subsidiaries (collectively, the "borrowers") entered into the Seventh Amendment to the Credit Agreement and the Third Amendment (the "Third Amendment") to the Export Credit Agreement, in each case, with JPMorgan Chase Bank, N.A., a national banking association, (the "Lender").

The combined maximum borrowings was reduced to $ 30,000 (from $ 35,000 );

and the maximum borrowing under the Credit Agreement was

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

The Credit Agreement and the Export Credit Agreement were amended on March 23, 2022, when the Company entered into the Sixth Amendment to the Credit Agreement and the Second Amendment to the Export Agreement with its Lender.

The Sixth Amendment, among other things, (i) revised the fixed coverage ratio to exclude the first $ 1,500 of unfunded capital expenditures through April 20, 2023, (ii) increased the letter of credit sub-limit from $ 2,000 to $ 3,000 , (iii) modified the reference rate from the London interbank offered rate ("LIBOR") to SOFR and (iv) revised the property, plant and equipment component of the borrowing base under the Credit Agreement.

The Second Amendment amends the Export Credit Agreement to replace the reference rate from LIBOR to SOFR.

decreased to $ 23,000 (from $ 28,000 ) and the revolving commitment through the Export Agreement remained unchanged at $ 7,000 .

The Seventh Amendment amends the Credit Agreement to, among other things, (i) advanced the loan maturity date to December 31, 2023;

(ii) provided a waiver of Existing Defaults and concludes the forbearance period as described under the Forbearance Agreement dated April 28, 2023;

(iv) the aggregate outstanding principal balance of the Revolving Exposure under the ABL Credit Agreement and Export Revolving Loan may not at any time exceed the lesser of Revolving Commitment, less the Availability Block, if applicable, the Borrowing Base, and in combination with the Export Revolving Loan under the Export Credit Agreement to $ 18,000 through September 30, 2023 and $ 19,000 thereafter;

(v) the Reserves under the Borrowing Base in the ABL Credit Agreement were reduced to $ 1,500 through September 30, 2023 and $ 2,000 thereafter.

The Third Amendment amends the Export Credit Agreement to (i) modified the loan maturity date to December 31, 2023 and (ii) provided waiver of Existing Defaults and concludes the forbearance period as described under the Forbearance Agreement dated April 28, 2023.

Lender’s agreement was subject to satisfaction of certain post closing deliverables, including:

(i) one or more proposed term sheets which provide for the refinancing of all of the Obligations, in each case in an amount sufficient to repay the Obligations in full, by no later than September 19, 2023;

(ii) a Confidential Information Memorandum ("CIM"), by no later than September 20, 2023;

and (iii) a duly executed term sheet providing for the refinancing of all of the Obligations in an amount sufficient to repay the Obligations in full, by no later than October 8, 2023.

The Credit Agreement contains affirmative and negative covenants and events of defaults.

Prior to the Fifth Amendment, the Credit Agreement required the Company to maintain a fixed charge coverage ratio ("FCCR") of 1.1 :1.0 any time the availability is equal to or less than 12.5 % of the revolving commitment.

However, the Fifth Amendment provides that the Company will not permit the fixed charge coverage ratio to be less than 1.1 to 1.0 as of the last day of any calendar month;

Prior to the Seventh Amendment, the Credit Agreement required the Company to maintain a fixed charge coverage ratio ("FCCR") to be less than 1.1 to 1.0 as of the last day of any calendar month;

provided that the fixed charge coverage ratio will not be tested unless (i) a default has occurred and is continuing, (ii) when the combined availability was less than or equal to the greater of (x) 10 % of the lesser of the combined commitments or (y) 10 % of the combined borrowing base, and $ 2,000 , for three or more business days in any consecutive 30 day period.

However, the Seventh Amendment provides that the Company will not permit the fixed charge coverage ratio to be less than 1.1 to 1.0 as of the last day of any calendar month;

provided that the fixed charge coverage ratio will not be tested unless availability falls below the Reserves under the Borrowing Base in the ABL Credit Agreement of $ 1,500 .

On November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement (the "Eighth Amendment") with its Lender.

The Eighth Amendment, among other things, reduced the Reserves under the Borrowing Base in the Credit Agreement to $ 1,500 , or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion.

See Note 14 , Subsequent Event for further discussion.

On December 21, 2023, the Company entered into the Ninth Amendment (the "Ninth Amendment") to the Credit Agreement and the Fourth Amendment (the "Fourth Amendment") to the Export Credit Agreement with its lender.

The Ninth Amendment amends the Credit Agreement to, among other things, to:

(i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk (Mr.

Silk is a member of the Board of Directors of the Company and considered a related party) of the Subordinated Loan Documents, and the receipt by borrowers of $ 3,000 in immediately available funds on the Ninth Amendment Effective Date;

(ii) delay the maturity date from December 31, 2023 to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms of the Credit Agreement;

(iii) reduce the Revolving Commitment to $ 19,000 from $ 23,000 ;

(iv) modify the definition of Borrowing Base to mean, at any time, the sum of (a) 85 % of Eligible Accounts at such time, plus (b) the lesser of (1) 70 % of Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time and (2) the product of 85 % multiplied by the NOLV Percentage identified in the most recent inventory appraisal ordered by the Lender multiplied by Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time, minus (c) Reserves of $ 1,500 , increasing on the first day of each month by $ 250 , commencing on May 1, 2024 and continuing until (and including) August 1, 2024, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion (which may be by email from the Lender), plus (d) the PP&E Component;

(v) modify the Applicable Margin schedule to reflect the following applicable rates:

2.75 % (CBFR REVSOFR30), 0.25 % (CBFR Spread (CB Floating Rate)), 2.75 % (SOFR Spread), and 0.50 % (Commitment Fee Rate);

and (vi) amend and restate subsection (l) of the Reporting Schedule to require, by the 17th day of every month, the delivery of a rolling 13 week cash flow forecast in form acceptable to Lender, which must include a projected to actual results comparison for the week then ended and on a cumulative basis from the beginning of the cash flow forecast.

The Fourth Amendment of the Export Credit Agreement, to, among other things, to:

(i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk of the Subordinated Loan Documents, and the receipt by borrowers of $ 3.0 million in immediately available funds on the Ninth Amendment Effective Date;

and (ii) delay the maturity date to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms thereof.

See Note 14 , Subsequent Event for further discussion.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Seventh Amendment provides that the Company maintains the Reserves under the Borrowing Base in the ABL Credit Agreement at $ 1,500 .

In the event of a default, the Company may not be able to access the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.

The total collateral at September 30, 2022 and September 30, 2021 was $ 22,711 and $ 25,370 , respectively and the revolving commitment was $ 35,000 for both periods.

The total collateral at September 30, 2023 and September 30, 2022 was $ 21,089 and $ 22,711 , respectively and the revolving commitment was $ 30,000 and $ 35,000 , respectively.

Total availability at September 30, 2023 and September 30, 2022 was $ 2,830 and $ 9,403 , respectively, which exceeds both the collateral and total commitment threshold.

Since the availability was greater than the 10.0 % of the revolving commitment as of September 30, 2022 and 10.0 % of the revolving commitment at September 30, 2021, the FCCR calculation was not required.

The Company's letters of credit balance was $ 1,970 and $ 1,800 as of September 30, 2022 and 2021, respectively.

Borrowings will bear interest at the Lender's established domestic rate or SOFR, plus the applicable margin as set forth in the Sixth Amendment.

The revolver has a rate based on SOFR plus 2.25 % spread, which was 4.86 % at September 30, 2022 and a rate based on LIBOR plus 1.75 % spread, which was 1.84 % at September 30, 2021.

The Export Credit Agreement has a rate based on SOFR plus 1.75 % spread, which was 4.36 % at September 30, 2022 and a rate based on LIBOR plus 1.25 % spread, which was 1.3 % at September 30, 2021, respectively.

Since the availability exceeded the Reserves minimum of $ 1,500 as of September 30, 2023 and 10.0 % of the revolving commitment at September 30, 2022, the FCCR calculation was not required.

The Company's letters of credit balance was $ 1,970 for both periods.

Borrowings will bear interest at the Lender's established domestic rate or SOFR, plus the applicable margin as set forth in the Seventh Amendment.

The revolver has a rate based on SOFR plus 2.25 % spread, which was 7.68 % at September 30, 2023 and a rate based on SOFR plus 2.25 % spread, which was 4.86 % at September 30, 2022.

The Export Credit Agreement has a rate based on SOFR plus 1.75 % spread, which was 7.18 % at September 30, 2023 and a rate based on SOFR plus 1.75 % spread, which was 4.36 % at September 30, 2022, respectively.

The Company also has a commitment fee of 0.25 % under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Subordinated Promissory Note and Guarantee

The Company, in connection with and as a condition to the agreement by JPMorgan Chase Bank, N.A.

to consummate the transactions contemplated by the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J.

Silk (“GHI”) (Mr.

Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $ 3,000 (the “Subordinated Loan”) on the terms and subject to the conditions of a Subordinated Secured Promissory Note (the “Subordinated Promissory Note”).

The obligations of borrowers under the Subordinated Loan mature on October 4, 2024.

Interest accrues on the then-outstanding principal amount at a rate of 14 % per annum and shall be paid in kind (and not in cash) by capitalization as additional principal ("PIK Interest") each six-month period after the date hereof in arrears.

The Company agreed to pay to Mr.

Silk a fully earned and non-refundable fee in an amount equal to $ 150 , which fee shall be due and payable in full on, and subject to the occurrence of the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof.

Borrower’s obligations under the Subordinated Promissory Note are secured by a first priority lien, subject to any liens granted to Lender as described in the Subordination Agreement, on all of borrowers’ accounts, deposit accounts, contract rights, documents, equipment, general intangibles, instruments, inventory, investment property, commercial tort claims, all other goods and personal property whether tangible or intangible and wherever located, and all proceeds of the foregoing.

See Note 13, Related Party Transactions and Note 14 , Subsequent Event .

The Ninth Amendment, was also subject to including, but not limited to, the execution and delivery by Mark.

Silk, a member of the Board of Directors of the Company (“Silk”), of a Guaranty Agreement (the “Guaranty”) in favor of Lender pursuant to which Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement.

The Fee Letter requires the borrowers to pay Silk a fee in an amount equal to $ 760 (the “Guaranty Fee”) in consideration for his agreement to execute and deliver the Guaranty.

The Guaranty Fee becomes due and payable on the maturity date.

See Note 13 , Related Party Transactions and Note 14 , Subsequent Event .

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Foreign subsidiary borrowings

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To assist with the preservation of liquidity and uncertainty of COVID-19, subsequent to September 30, 2020, Maniago finalized with certain lenders a deferment of payments ranging between 6 to 12 months which has been reflected within the future minimum payment schedule.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company factors receivables from one of its customers.

The Maniago location factors receivables from one of its customers.

The factoring programs are uncommitted, whereby the Company offers receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution.

1 unchanged sentence

The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated balance sheets.

The Maniago location obtained borrowings from two separate lenders in fiscal 2022.

The Maniago location did not obtain any new borrowings in fiscal 2023.

In fiscal 2022, the location obtained borrowings from two separate lenders.

The first loan agreement was entered into in October 2021, in the amount of $ 1,200 with a repayment term of six years .

5 unchanged sentences

The proceeds of these loans were used for working capital purposes.

Payments on debt under foreign debt and other debt (excluding finance lease obligations, see Note 10, Leases , of the consolidated financial statements) over the next 5 years are as follows:

Payments on debt under foreign debt and other debt (excluding finance lease obligations, see Note 10, Leases ) over the next 5 fiscal years are as follows:

Minimum debt payments

Thereafter 44

Total Minimum long-term debt payments $ 7,715

2024 $ 20,047

Total minimum debt payments $ 22,433

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Debt issuance costs

6 unchanged sentences

As of September 30, 2023 and 2022 the PPP loan balance was $ 0 and $ 0 , respectively.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armored military vehicles;

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Total $ 87,022 $ 83,902

In addition to the disaggregating revenue information provided above, approximatel y 56 % and 65 % of total net sales as of September 30, 2022 and 2021, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized as a point in time.

In addition to the disaggregating revenue information provided above, approximately 46 % and 56 % of total net sales as of September 30, 2023 and 2022, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

Contract Balances

Generally, payment is due shortly after the shipment of goods.

Generally, payment is due upon the shipment of goods.

For performance obligations recognized at a point in time, a contract asset is not established as the billing and revenue recognition occur at the same time.

For performance obligations recognized over time, a contract asset is established for revenue that is recognized prior to billing and shipment.

For performance obligations recognized

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

over time, a contract asset is established for revenue that is recognized prior to billing and shipment.

Upon shipment and billing, the value of the contract asset is reversed and accounts receivable is recorded.

2 unchanged sentences

If the satisfaction of the performance obligation is point in time, the contract liability reverses upon shipment.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following table contains a roll forward of contract assets and contract liabilities for the period ended September 30, 2023 and 2022:

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As of September 30, 2023 and 2022, the Company has $ 89,591 and $ 81,852 , respectively, of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months .

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The components of loss before income tax benefit are as follows:

The components of loss before income tax provision (benefit) are as follows:

September 30,

2 unchanged sentences

Loss before income tax benefit $ ( 8,533 ) $ ( 9,683 )

Income tax benefit consist of the following:

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Income tax provision (benefit) consist of the following:

September 30,

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state and local 3 3

( 61 ) ( 1,296 )

Total deferred tax benefit ( 48 ) ( 1,288 )

Income tax benefit $ ( 43 ) $ ( 1,222 )

The income tax benefit in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:

Total deferred tax provision (benefit) 5 ( 48 )

Income tax provision (benefit) $ 159 $ ( 43 )

The income tax provision (benefit) in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:

September 30,

(Loss) before income tax benefit $ ( 9,683 ) $ ( 1,965 )

Income tax (benefit) at U.S.

Loss before income tax provision (benefit) $ ( 8,533 ) $ ( 9,683 )

Income tax provision (benefit) at U.S.

federal statutory rates ( 1,792 ) ( 2,033 )

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Valuation allowance 2,363 3,198

Prior year tax adjustments — ( 1,115 )

Income tax benefit $ ( 43 ) $ ( 1,222 )

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which includes a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases after December 31, 2022, and several tax incentives to promote clean energy.

The Company does not believe this legislation will have a material impact on the Company’s consolidated financial statements and will continue to assess the implications.

Income tax provision (benefit) $ 159 $ ( 43 )

SIFCO Industries, Inc.

30 unchanged sentences

A valuation allowance has been recorded against the deferred tax assets related to the foreign tax credit carryforwards, U.S.

general business credits, and U.S.

general business credits, interest expense carryforward, and U.S.

Federal tax loss carryforwards.

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Settlement cost 108 208

Net pension expense for defined benefit plans $ 78 $ 529

Net pension expense for defined benefit plans (non-operating expense) $ 440 $ 78

SIFCO Industries, Inc.

15 unchanged sentences

Plan assets at end of year $ 17,194 $ 17,937

Underfunded status at end of year $ ( 3,463 ) $ ( 4,858 )

As shown within the above table, there was a decrease in the benefit obligation of $ 2,138 to $ 20,657 at September 30, 2023 compared with $ 22,795 at September 30, 2022.

22 unchanged sentences

Notes to Consolidated Financial Statements - (Continued)

The Company holds investments in pooled separate accounts and common/collective trusts, in which the fair value of assets of the underlying funds are determined in the following ways:

The Company held investments in pooled separate accounts and common/collective trusts prior to February 2023, in which the fair value of assets of the underlying funds are determined in the following ways:

equity securities are comprised of domestic equities that are priced using the closing price of the applicable nationally recognized stock exchange, as provided by industry standard vendors such as Interactive Data Corporation.

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◦ Included as part of the U.S.

bond funds, are private placement funds, for which fair market value is not always commercially available, the fair value of these investments is primarily determined using a discounted cash flow model, which utilizes a discount rate based upon the average of spread surveys collected from private-market intermediaries who are active in both primary and secondary transactions, and takes into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements.

bond funds, was a private placement funds, for which fair market value is not always commercially available, the fair value of these investments is primarily determined using a discounted cash flow model, which utilizes a discount rate based upon the average of spread surveys collected from private-market intermediaries who are active in both primary and secondary transactions, and takes into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements.

bond funds are comprised of international fixed income securities.

2 unchanged sentences

As permitted under relevant securities laws, securities in this type of fund are valued initially at cost and thereafter adjusted for amortization of any discount or premium.

During fiscal 2023, the Company transferred its investments to a new custodian.

The Company held investments in mutual funds and money market funds, in which the fair value of assets of the underlying funds are determined in the following ways:

• Mutual funds are valued at the daily closing price as reported by the fund.

Mutual funds held are open-ended mutual funds that are registered with the Securities and Exchange Commission.

These funds are required to publish their daily net asset value (“NAV”) and to transact at that price.

The mutual funds held by the Plan are deemed to be actively traded.

• Money market funds are valued at NAV, which approximates fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

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September 30, 2023 Asset

Amount Level 2 Level 3

Amount Level 1

equity securities:

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Diversified emerging markets 272 272

Global equity securities 577 577

debt securities:

1 unchanged sentence

Intermediate term bond 5,676 5,676

High inflation bond 78 78 —

Multi-sector bond 2,044 2,044

Stable value:

Short-term bonds 359 359 —

Cash or money market 1,849 1,849

Total plan assets at fair value $ 17,194 $ 17,194

62 unchanged sentences

The next four quarterly installments are recorded in accrued liabilities of the consolidated balance sheet.

The Company's withdrawal from the multi-employer plan was to mitigate the risks associated with such type of plan.

Subsequent to the withdrawal, the remaining risk to the Company is the potential occurrence of a "mass withdrawal" of all participating employers within three years of the Company's withdrawal date, in which case the Company could be assessed additional withdrawal liability.

Defined Contribution Plans

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Any such awards are exercisable no later than ten years from the date of grant.

The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the granting of such award.

The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200 % of the initial target number of performance shares

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200 % of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives.

awarded, depending on the level of the Company’s achievement of its financial performance objectives.

Beginning in fiscal 2020, the maximum shares that may be achieved was reduced to 150 % of target.

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2027 21 1,702

2027 19 1,680

Thereafter — 12,740

8 unchanged sentences

however, it is possible that the Company’s future operating results could be affected by future costs of litigation.

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), was a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco.

Avco also sued Arconic, Inc.

(“Arconic”), which was the raw material supplier.

The lawsuit has been resolved in a manner satisfactory to all parties pursuant to a confidential settlement agreement for an immaterial amount, and the case was dismissed on October 14, 2021.

The Company was a defendant in a purported class action lawsuit filed in the Superior Court of California, County of Orange, which was filed in August 2017, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations;

failure to maintain required wage records and furnish accurate wage statements;

and unfair competition.

A settlement has been reached and the Company received preliminary court approval on July 13, 2020, following a brief delay caused by COVID-19 closures and restrictions.

Class action notices were sent at the end of September 2020 and there were no objections to the settlement.

On February 4, 2021, the court issued a tentative ruling to grant final approval.

The final approval was granted and the previously recorded liability of $ 315 was paid on March 29, 2021.

In fiscal 2021, the insurance claim related to the fire on December 26, 2018 at the Orange location was finalized with the Company's insurance carrier.

The Company completed the restoration of the final two of the six presses damaged in the fire at the end of the third quarter of fiscal 2021.

The restoration of the building structure was completed as of September 30, 2021.

On December 30, 2022, the Company became aware of a cyber security issue involving unauthorized access to the Company's system.

The Company immediately began an investigation and engaged cyber security experts to assist with the assessment of the incident and to help determine what data was impacted.

The Company's investigation uncovered that the threat actor had gained access to certain areas of the Company's systems on or about December 27, 2022.

With the assistance of outside cyber security experts, the Company located and closed the unauthorized access to our systems and identified compromised information, and notified those impacted in accordance with state and federal requirements.

The Company undertook a number of other measures to demonstrate our continued support and commitment to data privacy and protection and coordinated with law enforcement.

The Company maintains $ 3,000 of cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cyber Incident.

The Company recorded costs of $ 60 to other expense (income), net of $ 3,000 insurance recovery and $ 1,215 to selling, general and administrative expense in the twelve months ended September 30, 2023, resulting in net IT incident costs of $ 1,275 in the twelve months ended September 30, 2023.

The Company received the $ 3,000 of insurance proceeds on February 20, 2023.

At September 30, 2023, the Company recorded $ 965 related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.

The Company has incurred, and may continue to incur, certain expenses related to this attack, including expenses associated with additional remediation measures.

The Company will accrue these costs as incurred.

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

Having finalized the claim with its insurance carrier, cash proceeds of $ 4,548 were received in fiscal 2021.

As noted in the table below, $ 3,001 was recognized within the consolidated statements of operations.

The Company has business interruption insurance coverage, of which $ 546 of the amount received was reflected within the cost of goods line within the consolidated statement of operations.

Balance sheet (Other receivables):

September 30, 2020 $ 1,547

Cash received ( 4,548 )

Capital expenditures (equipment) 2,397

Other expenses 58

Business interruption 546

September 30, 2021 $ —

The following table reflects how the proceeds received impacted the consolidated statements of operations as of September 30, 2021:

September 30, 2021

Balance without insurance proceeds Insurance recoveries Balance with insurance proceeds

Cost of goods sold $ 88,990 $ ( 604 ) $ 88,386

Gain on insurance recoveries $ — $ ( 2,397 ) $ ( 2,397 )

(Loss) before income tax benefit $ ( 4,966 ) $ ( 3,001 ) $ ( 1,965 )

The following table demonstrates the total settlement amount since December 26, 2018:

Property & damage ** $ 20,364

Extra expense & mitigation expense 4,404

Business interruption 2,932

**$ 3,640 of total was directed to the landlord of the property for the restoration of the building in response to the fire damage that occurred in 2018 as prescribed by the lease arrangement.

Business Information

The Company identifies itself as one reportable segment, SIFCO, which is a manufacturer of forgings and machined components for the A&E markets.

The Company identifies itself as one operating segment, SIFCO, which is a manufacturer of forgings and machined components for the A&E markets.

Geographic net sales are based on location of customer.

3 unchanged sentences

Net sales to unaffiliated customers located in various Asian countries accounted for 7 % and 6 % of consolidated net sales in fiscal 2023 and 2022, respectively.

Substantially all of the Company's operations and identifiable assets are located within the United States with the exception of its non-U.S.

Other North American countries represent 6 % and 3 % of consolidated net sales in fiscal 2023 and 2022, respectively.

The majority of the Company's operations and identifiable assets are located within the United States with the exception of its non-U.S.

subsidiary located in Maniago, Italy.

The identifiable assets for the Company's foreign subsidiaries as of September 30, 2022 were $ 15,219 compared with $ 19,586 as of September 30, 2021.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The identifiable assets for the Company's foreign subsidiaries as of September 30, 2023 were $ 16,460 , or 17 % of total assets, compared with $ 15,219 , of 16 % of total assets, as of September 30, 2022.

Long-Lived Assets

12 unchanged sentences

The Maniago location is party to the National Collective Agreement in Metalworking, which was renewed in February 2021.

Related Party Transactions

On December 21, 2023, the Company entered into the Ninth Amendment to the Credit Agreement and Fourth Amendment to the Export Credit agreement with its lender incurring a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J.

Silk (“GHI”), in the original principal amount of $ 3,000 (Mr.

Silk is a member of the Board of Directors of the Company and considered a related party) and Mr.

Silk delivered a personal guaranty in favor of the Company’s senior lender of certain Company indebtedness under the Credit Agreement and the Export Credit Agreement.

See Note 5, Debt and Subsequent Event for further information.

Subsequent Events

The Company is not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements.

The Company has evaluated subsequent events through December 29, 2023, the date the financial statements were available to be issued, and has determined that the following subsequent events require disclosure in the financial statements.

On November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement with its lender which reduced the Reserves under the Borrowing Base in the Credit Agreement to $ 1,500 , or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion.

See Note 5 , Debt and Subsequent Event for more information.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

On December 21, 2023, the Company entered into the Ninth Amendment to the Credit Agreement and the Fourth Amendment to the Export Credit Agreement with its lender.

The Ninth Amendment amends the Credit Agreement to, among other things, (i) reduce the Revolving Credit Agreement to $ 19,000 , (ii) modifies the loan maturity date to October 4, 2024;

(iii) incurred a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J.

Silk (“GHI”) of $ 3,000 (iv) full personal guarantee from Mr.

(v) maintains the Reserves under the Borrowing Base in the ABL Credit Agreement at $ 1,500 , increasing on the first day of each month by $ 250 , commencing on May 1, 2024 and continuing until (and including) August 1, 2024, or such a lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion;

(vi) modify the Applicable Margin schedule to reflect the following applicable rates to 2.75 % (CBFR REVSOFR30), 0.25 % (CBFR Spread (CB Floating Rate)), 2.75 % (SOFR Spread), and 0.50 % (Commitment Fee Rate) The Fourth Amendment of the Export Credit Agreement, which lends amounts to the Company on foreign receivables remained unchanged at $ 7,000 million, and extends the loan maturity date to October 4, 2024.

See Note 5 , Debt and Subsequent Event for further information.

On December 21, 2023, the Company issued a Subordinated Secured Promissory Note (the “Subordinated Promissory Note”) in the original principal amount of $ 3,000 , on the terms and subject to the conditions of:

(a) a Subordinated Secured Promissory Note in the original principal amount of $ 3,000 issued by borrowers to GHI, (b) a Subordination and Intercreditor Agreement (the “Subordination Agreement”) by and among borrowers, GHI and Lender, and (c) a Side Letter by and among borrowers and Mark J.

Silk (the “Fee Letter,” and together with the Subordinated Promissory Note and Subordination Agreement, the “Subordinated Loan Documents”).

Interest accrues at a rate of 14 % per annum.

See Note 5, Debt and Subsequent Event for further information.

SIFCO Industries, Inc.

and Subsidiaries

Valuation and Qualifying Accounts

26 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data