What changed in this filing

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Item 1. Financial Statements

2025-02-14 compared with 2024-08-12 · 236 added, 354 removed, 277 unchanged (68% of the section changed)

3 unchanged sentences

Consolidated Condensed Statements of Operations

(Unaudited, Amounts in thousands, except per share data)

(Amounts in thousands, except per share data)

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net sales $ 20,883 $ 15,474

Cost of goods sold 19,955 16,019

Gross profit 4,534 3,478 7,997 6,459

Gross profit (loss) 928 ( 545 )

Selling, general and administrative expenses 2,840 3,103

Amortization of intangible assets 40 63 121 187

(Gain) loss on disposal of operating assets — ( 3 ) 3 —

Operating profit (loss) 1,344 30 ( 2,066 ) ( 4,245 )

Operating loss ( 1,912 ) ( 3,648 )

Interest expense, net 469 342

1 unchanged sentence

Other expense, net 38 69

Income (loss) before income tax expense 128 ( 599 ) ( 4,787 ) ( 5,462 )

Loss from continuing operations before income tax expense ( 2,417 ) ( 4,063 )

Income tax expense 5 6

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Net income (loss) per share

Basic $ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

Diluted $ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

Loss from continuing operations ( 2,422 ) ( 4,069 )

Income from discontinued operations, net of tax 106 647

Net loss $ ( 2,316 ) $ ( 3,422 )

Basic and diluted earnings (loss) per share:

Basic and diluted loss per share from continuing operations $ ( 0.40 ) $ ( 0.67 )

Basic and diluted earnings per share from discontinued operations 0.02 0.10

Basic and diluted loss per share $ ( 0.38 ) $ ( 0.57 )

Weighted-average number of common shares (basic) 6,016 5,956

4 unchanged sentences

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited, Amounts in thousands)

(Amounts in thousands)

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Net loss $ ( 2,316 ) $ ( 3,422 )

Other comprehensive income (loss):

Foreign currency translation (loss) gain, net of tax ( 73 ) 20 52 436

Foreign currency translation adjustment, net of tax 5,554 253

Retirement plan liability adjustment, net of tax 23 43

9 unchanged sentences

Cash and cash equivalents $ 3,143 $ 1,714

Short-term investments 1,713 —

Receivables, net of allowance for credit losses of $ 152 and $ 117 , respectively

4 unchanged sentences

Prepaid expenses and other current assets 3,129 2,382

Current assets of discontinued operations — 15,967

Total current assets 38,935 54,323

1 unchanged sentence

Operating lease right-of-use assets, net 13,132 13,326

Intangible assets, net 161 278

Goodwill 3,493 3,493

Other assets 75 357

Noncurrent assets of discontinued operations — 6,864

Total assets $ 80,982 $ 104,624

1 unchanged sentence

Current liabilities:

Current maturities of long-term debt $ 6,116 $ 3,820

Current maturities of long-term debt, net of unamortized debt issuance costs $ 3,227 $ 353

Promissory note — related party

3 unchanged sentences

Contract liabilities 2,384 2,879

Accrued liabilities (Related party is $ 880 at June 30, 2024 and $ 0 at September 30, 2023)

Accrued liabilities (related party — nil and $ 880 , respectively)

Current liabilities of discontinued operations — 10,058

Total current liabilities 31,014 54,010

Long-term debt, net of current maturities, net of unamortized debt issuance costs 3,620 2,457

Long-term debt, net of current maturities 85 —

Long-term operating lease liabilities, net of short-term 12,844 13,035

2 unchanged sentences

Other long-term liabilities 746 645

Noncurrent liabilities of discontinued operations — 3,890

Shareholders’ equity:

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

0 shares issued and outstanding at June 30, 2024 and September 30, 2023

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

issued and outstanding shares 6,180 at June 30, 2024 and 6,105 at September 30, 2023

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

zero shares issued and outstanding at December 31, 2024 and September 30, 2024

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

issued and outstanding shares 6,147 at December 31, 2024 and 6,158 at September 30, 2024

Additional paid-in capital 11,778 11,775

Retained earnings 15,565 17,881

Accumulated other comprehensive loss ( 6,423 ) ( 6,660 )

Accumulated other comprehensive income (loss) 186 ( 5,389 )

Total shareholders’ equity 33,676 30,425

5 unchanged sentences

(Unaudited, Amounts in thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net loss $ ( 2,316 ) $ ( 3,422 )

Adjustments to reconcile net loss to net cash used for operating activities:

Income from discontinued operations, net of tax 106 647

Loss from continuing operations ( 2,422 ) ( 4,069 )

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

Depreciation and amortization 1,181 1,232

Amortization of debt issuance costs 37 11

Loss on disposal of operating assets 3 —

Loss on insurance proceeds received for non-property claim — 60

LIFO effect 501 293

1 unchanged sentence

Inventory valuation accounts 320 392

Interest added to promissory note - related party (paid-in-kind) 216 —

Other short-term liabilities 7 —

Other long-term liabilities 56 42

7 unchanged sentences

Accounts payable ( 2,772 ) 86

Accrued liabilities ( 778 ) ( 140 )

Contract liabilities ( 495 ) 1,675

Other accrued liabilities 372 ( 253 )

Accrued income and other taxes 105 252

Accrued income tax and other — 1

Net cash used for operating activities ( 3,809 ) ( 1,503 )

Cash flows from investing activities:

Proceeds from disposal of operating assets 1 13

Capital expenditures ( 109 ) ( 482 )

Purchase of short-term investments ( 2,395 ) —

Maturity of short-term investments 648 —

Net cash used for investing activities ( 3,790 ) ( 1,892 )

Net cash provided by (used for) investing activities ( 109 ) ( 482 )

Cash flows from financing activities:

Proceeds from long-term debt 2,183 —

Payments on long-term debt — ( 55 )

Proceeds from term loan 3,000 —

Payments on term loan ( 100 ) —

Proceeds from revolving credit agreement 35,025 23,413

1 unchanged sentence

Payment of debt issuance costs ( 203 ) ( 147 )

Principal payments on capital lease obligations ( 10 ) —

Proceeds from promissory note — related party — 3,000

Short-term debt borrowings 7,652 4,459

Short-term debt repayments ( 5,141 ) ( 3,965 )

Repayments of promissory note and related fees — related party ( 4,417 ) —

Net cash (used for) provided by financing activities ( 9,239 ) 2,570

Cash flows from discontinued operations:

Net cash used for operating activities ( 57 ) ( 664 )

Net cash provided by (used for) investing activities 13,313 ( 14 )

Net cash provided by financing activities 356 2,898

Increase (decrease) in cash and cash equivalents 1,346 ( 691 )

Effects of exchange rate changes on cash and cash equivalents ( 35 ) 33

Net cash provided by discontinued operations 13,577 2,253

Increase in cash and cash equivalents 420 2,838

Cash and cash equivalents at the beginning of the period 2,723 368

Effect of exchange rate changes on cash and cash equivalents ( 17 ) 115

Cash and cash equivalents at the end of the period $ 1,696 $ 598

Supplemental disclosure of cash flow information of operations:

Cash and cash equivalents from discontinued operations at the end of the period — 2,599

Cash and cash equivalents from continuing operations at the end of the period $ 3,143 $ 607

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc.

and Subsidiaries

Supplemental Disclosure of Cash Flow Information

(Unaudited, Amounts in thousands)

Three Months Ended

Cash paid during the year:

Cash paid for interest $ ( 389 ) $ ( 326 )

Cash paid for income taxes, net $ ( 197 ) $ ( 16 )

Non-cash investing activities:

Non-cash investing and financing activities:

Additions to property, plant & equipment — incurred but not yet paid

Non-cash financing activities:

Debt issuance cost due at maturity - related party $ 1,030 $ —

Debt issuance costs — incurred but not yet paid

Accrued guaranty fees — related party

Origination fees capitalized to promissory note principal — related party

Interest added to promissory note — related party (paid-in-kind)

4 unchanged sentences

(Unaudited, Amounts in thousands )

Nine Months Ended

June 30, 2024

Common Additional

Capital Retained

Earnings Accumulated

Comprehensive

Shareholders’

Shares Amount

Balance - September 30, 2023 6,105 $ 6,105 $ 11,626 $ 23,264 $ ( 6,660 ) $ 34,335

Comprehensive (loss) income — — — ( 4,940 ) 237 ( 4,703 )

Performance and restricted share expense — — 243 — — 243

Share transactions under equity-based plans 75 75 ( 124 ) — — ( 49 )

Balance - June 30, 2024 6,180 $ 6,180 $ 11,745 $ 18,324 $ ( 6,423 ) $ 29,826

Three Months Ended

March 31, 2024

Common Additional

Capital Retained

Earnings Accumulated

Comprehensive

Shareholders’

Shares Amount

Balance - March 31, 2024 6,190 $ 6,190 $ 11,663 $ 18,252 $ ( 6,449 ) $ 29,656

Comprehensive loss — — — 72 26 98

Performance and restricted share expense — — 72 — — 72

Share transactions under equity-based plans ( 10 ) ( 10 ) 10 — — —

Balance - June 30, 2024 6,180 $ 6,180 $ 11,745 $ 18,324 $ ( 6,423 ) $ 29,826

Nine Months Ended

June 30, 2023

Common Additional

December 31, 2024

Common Shares Additional

Capital Retained

Earnings Accumulated

Comprehensive

Comprehensive Income (Loss) Total

Shareholders’

Shares Amount

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

Balance at September 30, 2024 6,158 $ 6,158 $ 11,775 $ 17,881 $ ( 5,389 ) $ 30,425

Comprehensive (loss) income — — — ( 2,316 ) 5,575 3,259

1 unchanged sentence

Share transactions under equity-based plans ( 11 ) ( 11 ) ( 17 ) — — ( 28 )

Balance - June 30, 2023 6,107 $ 6,107 $ 11,541 $ 26,366 $ ( 7,951 ) $ 36,063

Balance at December 31, 2024 6,147 $ 6,147 $ 11,778 $ 15,565 $ 186 $ 33,676

Three Months Ended

June 30, 2023

Common Additional

December 31, 2023

Common Shares Additional

Capital Retained

3 unchanged sentences

Shares Amount

Balance - March 31, 2023 6,108 $ 6,108 $ 11,455 $ 27,000 $ ( 8,124 ) $ 36,439

Balance at September 30, 2023 6,105 $ 6,105 $ 11,626 $ 23,264 $ ( 6,660 ) $ 34,335

Comprehensive (loss) income — — — ( 3,422 ) 296 ( 3,126 )

1 unchanged sentence

Share transactions under equity-based plans 55 55 ( 104 ) — — ( 49 )

Balance - June 30, 2023 6,107 $ 6,107 $ 11,541 $ 26,366 $ ( 7,951 ) $ 36,063

Balance at December 31, 2023 6,160 $ 6,160 $ 11,609 $ 19,842 $ ( 6,364 ) $ 31,247

See notes to unaudited consolidated condensed financial statements.

8 unchanged sentences

All significant intercompany accounts and transactions have been eliminated in consolidation.

The United States ("U.S.") dollar is the functional currency for all of the Company’s operations in the U.S.

and its non-operating subsidiaries.

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

The functional currency for the Company's other non-U.S.

subsidiaries is the Euro.

In October 2024, the Company sold its European operations in order to streamline operational synergies and refocus on its core aerospace forging business.

SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”) pursuant to which it sold 100 % of the share capital of C Blade S.p.A.

Forging & Manufacturing, an Italian joint stock company and wholly-owned subsidiary of the Company (“CBlade”), for cash consideration.

As a result of the sale transaction, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of CBlade presented as discontinued operations.

All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation.

Refer to Note 2 — Discontinued Operations .

dollar is the functional currency for all of the Company’s operations in the United States (“U.S.”) and its non-operating, non-U.S.

subsidiaries.

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

Prior to the sale of CBlade, the functional currency for the Company’s other non-U.S.

subsidiaries was the Euro;

the Company no longer has active operations in Europe.

Assets and liabilities are translated into U.S.

1 unchanged sentence

Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the unaudited consolidated condensed financial statements.

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal 2023 Annual Report on Form 10-K.

The year-end consolidated condensed balance sheet contained in these financial statements was derived from the audited financial statements and disclosures required by accounting principles generally accepted in the U.S.

2 unchanged sentences

Accounting Policies

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company's Annual Report on Form 10-K for the year ended September 30, 2023.

Short-term Investments

In general, short-term investments have a maturity of three months to one year at the date of purchase.

Short-term investments classified as held-to-maturity are recorded at cost, which approximates fair value.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment.

Unbilled receivables are reflected under contract assets on the consolidated condensed balance sheets.

The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets.

The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures.

The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers.

Allowance for credit losses:

Three Months Ended

June 30, 2024 Nine Months Ended

June 30, 2024

Opening allowance for credit losses $ ( 131 ) $ ( 242 )

Changes in estimate 5 104

Write-offs 2 14

Recoveries — —

Total allowance for credit losses $ ( 124 ) $ ( 124 )

Net Income (Loss) per Share

The Company’s net income (loss) per basic share has been computed based on the weighted-average number of common shares outstanding.

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s 2024 Annual Report.

Net Loss per Share

The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding.

During a period of net loss, zero restricted and performance shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive.

2 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Loss from continuing operations $ ( 2,422 ) ( 4,069 )

Income from discontinued operations, net of tax 106 647

Net loss $ ( 2,316 ) $ ( 3,422 )

Weighted-average common shares outstanding (basic and diluted) 6,016 5,956

Effect of dilutive securities:

Restricted shares 78 — — —

Performance shares 18 — — —

Weighted-average common shares outstanding (diluted) 6,105 5,940 5,991 5,925

Net income (loss) per share – basic:

$ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

Net income (loss) per share – diluted:

$ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

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

Continuing operations $ ( 0.40 ) $ ( 0.67 )

Discontinued operations 0.02 0.10

Net loss per share $ ( 0.38 ) $ ( 0.57 )

Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 149 249

Going Concern

In accordance with ASU 2014-15, " Presentation of Financial Statements—Going Concern (Subtopic 205-40) ("ASC 205-40") ", the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.

This evaluation requires management to perform two steps.

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 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 condensed 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 condensed 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 continues to evaluate available financial alternatives, including obtaining acceptable alternative financing and the sale of its Maniago location.

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 Agreement.

See Note 7 , Debt and Note 14 , Subsequent Events.

Recent Accounting Standards Adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments" and subsequent updates.

ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The new guidance will replace the current incurred loss approach with an expected loss model.

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).

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

instruments with similar risk characteristics should be grouped together when estimating expected credit losses.

ASU 2016-13 does not prescribe a specific method to make the estimate, so its application will require significant judgment.

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 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 did not have an impact to the Company's results within the consolidated condensed statements of operations and financial condition.

Recent Accounting Standards Not Yet Adopted

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 (the "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 condensed 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 into reportable 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 condensed 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 condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01 “ Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards ” (“ASU 2024-01”) clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance.

ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance.

Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption.

If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle.

The amendments in ASU 2024-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024.

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

In March 2024, the FASB issued ASU 2024-02 “ Codification Improvements ” (“ASU 2024-02”) amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification.

The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are

extraneous and not required to understand or apply the guidance.

Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities and is effective or fiscal years beginning after December 15, 2024.

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

Employee Retention Credit

Under the Employee Retention Credit ("ERC") program, 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 for refunds under the ERC program on January 23, 2024.

These submissions are still pending review and approval from the Internal Revenue Service ("IRS").

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.

For the three and nine months ended June 30, 2024, there was no income or expense recorded.

In the same periods of the prior year, 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 three and nine months ended June 30, 2023.

The Company received $ 1,246 of refunds on May 9, 2023 and recorded $ 526 in accounts receivable on the consolidated condensed balance sheets as of June 30, 2023.

Reclassification

Certain amounts in prior years have been reclassified to conform to the fiscal 2024 consolidated condensed statement presentation.

In fiscal 2024, the Company revised its classification within the consolidated condensed balance sheets by moving a prior year amount of $ 1,150 of contract liabilities from accrued liabilities to contract liabilities to conform to current period presentation.

The Company revised its classification within the consolidated condensed statements of cash flows by moving a prior year amount of $ 96 , of contract liabilities from other accrued liabilities to conform to current period presentation.

None applicable.

Reclassifications

Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications.

For the three months ended December 31, 2024, the Company revised its classification within the consolidated condensed statements of cash flows by moving the prior period amount for contract liabilities from accrued liabilities to contract liabilities to conform to current period presentation.

Discontinued Operations

The Company committed to the plan to sell CBlade in August 2024 in order to streamline operational synergies and refocus on its core aerospace forging entities.

On August 1, 2024, the Company’s Board of Directors approved and authorized the execution of a share purchase agreement (the “SPA”), under which SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into an agreement to sell 100 % of the share capital of CBlade to TB2 S.r.l.

(the “Buyer”) at an enterprise value of € 20,000 , less debt, for cash consideration of € 13,800 in net equity value at closing, subject to adjustments for changes in working capital and certain other items (the “CBlade Sale”).

The Company determined that CBlade met the criteria for classification as assets held for sale and discontinued operations upon the aforementioned events, and, based on the significance of the disposed operations (i.e., strategic shift), CBlade represented discontinued operations upon classification of the CBlade assets and liabilities as held for sale.

In October 2024, upon regulatory approval, the Company completed the sale of CBlade and received cash consideration of approximately $ 14,586 , net of transaction costs of $ 352 .

The Company does not expect to have any significant continuing involvement with CBlade after the sale.

All operating activities prior to the disposal date were included in the Company's financial statements separately as discontinued operations, including income before income tax provision, gain from the sale CBlade (i.e., cash proceeds received less net assets transferred), and the release of accumulated other comprehensive income (loss) attributable to the Company's European operations.

Due to the CBlade Sale, the Company ceased manufacturing operations within the European market, as CBlade represented the last remaining facility in this region.

Prior to the transaction, CBlade was directly owned by SIFCO Irish Holdings Inc., a wholly-owned subsidiary of the Company incorporated in Ireland (“Irish Holdings”), which historically acted as the holding company for the Company's international operations.

With the disposal of CBlade, the Company determined that its European operations represented a substantially complete liquidation.

Therefore, $ 5,851 of cumulative translation adjustment loss attributable to these operations (related to Irish Holdings) was recognized in the statement of operations as a component of the gain on sale of discontinued operations upon the loss of a controlling financial interest in CBlade, which represented in excess of 90 % of the assets of the Company's European operations.

The principal components of the assets and liabilities related to discontinued operations classified as held for sale as of September 30, 2024 were as follows:

September 30, 2024

Current assets:

Cash and cash equivalents $ 1,009

Short-term investments 1,114

Receivables, net 6,259

Inventories, net 6,185

Prepaid expenses and other current assets 1,400

Total current assets 15,967

Property, plant and equipment, net 6,625

Other long-term assets 239

Total assets of discontinued operations $ 22,831

Current liabilities:

Current maturities of long-term debt $ 3,843

Accounts payable 2,770

Accrued and other current liabilities 3,445

Total current liabilities 10,058

Long-term debt, net 3,536

Other long-term liabilities 354

Total liabilities of discontinued operations $ 13,948

A summary of the operating results for the discontinued operations is as follows:

Three Months Ended

Net sales $ 622 $ 5,578

Cost of sales 348 4,297

Interest expense, net 15 88

Income from discontinued operations before income tax expense and gain on sale 214 691

Income tax expense from discontinued operations 166 44

Gain on sale of discontinued operations before income tax expense 58 —

Income tax expense on gain from sale of discontinued operations — —

Income from discontinued operations, net of tax $ 106 $ 647

Inventories consist of:

5 unchanged sentences

For a portion of the Company’s inventory, cost is determined using the last-in, first-out (“LIFO”) method.

Approximately 31 % and 19 % of the Company’s inventories at June 30, 2024 and September 30, 2023, respectively, use the LIFO method.

Approximately 37 % and 30 % of the Company’s inventories as of December 31, 2024 and September 30, 2024, respectively, use the LIFO method.

An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs existing at that time.

Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs.

Because the actual results may vary from these estimates, the annual results may differ from interim results as they are subject to adjustments based on the differences between the estimates and the actual results.

Because the actual results may vary from these estimates, the annual results may differ

from interim results as they are subject to adjustments based on the differences between the estimates and the actual results.

The first-in, first-out (“FIFO”) method is used for the remainder of the inventories, which are stated at the lower of cost or net realizable value (“NRV”).

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $ 10,460 and $ 9,634 higher than reported at June 30, 2024 and September 30, 2023, respectively.

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $ 10,997 and $ 10,496 higher than reported as of December 31, 2024 and September 30, 2024, respectively.

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

The Company estimates net realizable value, excess and obsolescence and shrink reserves for its inventory based upon historical experience, historical and projected sales trends and the age of inventory on hand.

As of June 30, 2024 and September 30, 2023, our inventory valuation allowances were $ 3,849 and $ 4,049 , respectively.

Long-lived Assets

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 for indicators of impairment to determine if further testing is necessary.

In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange, California ("Orange") location, triggered a recoverability test.

The results indicated that the long-lived assets were recoverable and did not require further review for impairment.

The Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired.

In the third quarter of fiscal 2024, the Company evaluated potential triggering events and determined interim testing was not required.

Accumulated Other Comprehensive Loss

As of December 31, 2024 and September 30, 2024, our inventory valuation allowances were $ 3,054 and $ 2,733 , respectively.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

2024 September 30,

Foreign currency translation loss, net of tax $ ( 5,875 ) $ ( 5,927 )

Foreign currency translation adjustment $ — $ ( 5,554 )

Retirement plan liability adjustment, net of tax 186 163

1 unchanged sentence

Total accumulated other comprehensive loss $ 186 $ ( 5,389 )

During the three months ended December 31, 2024, the Company reclassified $ 5,554 from foreign currency translation adjustment to income from discontinued operations in the consolidated condensed statements of operations concurrent with the disposition of the CBlade and the substantially complete liquidation of operations in Europe.

The components of lease expense were as follows:

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Finance lease expense:

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The following table presents the impact of leasing on the consolidated condensed balance sheet.

Classification in the consolidated condensed balance sheets June 30,

Classification in the consolidated condensed balance sheets December 31,

2024 September 30,

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Supplemental cash flow and other information related to leases were as follows:

2024 June 30,

Three Months Ended

Other Information

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Right-of-use assets obtained in exchange for new lease liabilities:

Finance leases 139 —

Operating leases 81 —

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Operating leases 5.9 % 5.9 %

Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:

Future minimum lease payments under non-cancellable leases as of December 31, 2024 were as follows:

Finance Leases Operating Leases

Year ending September 30,

2024 (excluding the nine months ended June 30, 2024) $ 16 $ 420

2025 36 1,696

Remainder of 2025 $ 37 $ 1,239

2026 50 1,662

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Revolving credit agreement $ 12,633 $ 20,142

Foreign subsidiary borrowings, net of unamortized debt issuance cost 9,722 5,771

Term loan, net of unamortized debt issuance costs of $ 83 and nil , respectively

Promissory note — related party

Finance lease obligations 130 —

unamortized debt issuance cost - (Related party is $ 387 )

Other, net of unamortized debt issuance costs $ 0 and $( 9 ), respectively

Other 360 353

Total debt 15,945 24,005

Less — current maturities

Total long-term debt $ 3,620 $ 2,457

Credit Agreement and Security Agreement

On November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement (the "Eighth Amendment") with JPMorgan Chase Bank, N.A.

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.

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 on December 21, 2023.

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 Mark J.

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 $ 3,000 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.

The Company entered into the Tenth Amendment (the "Tenth Amendment") to the Credit Agreement and the Fifth Amendment (the "Fifth Amendment") to the Export Credit Agreement with its lender on May 21, 2024.

The Tenth and Fifth Amendments amend the Credit Agreement and the Export Credit Agreement to, among other things, to:

(i) increase the Revolving Commitment, less the Availability Block, if applicable, (y) the Borrowing Base, and (z) in combination with the Export Revolving Loans under the Export Credit Agreement, (i) $ 18,000 through September 30, 2023, (ii) $ 19,000 from and including October 1, 2023 through May 14, 2024, and (iii) $ 22,000 thereafter until, and reducing to zero and terminating on, the Maturity Date;

(ii) modify the definition of Borrowing Base Reserves to $ 1,500 or such other amount, if any, as may be determined in writing by the Lender in its Permitted Discretion (which may be by email from the Lender);

and (iii) required the execution and delivery of the First Amendment of the Silk Guaranty discussed below.

The total collateral at June 30, 2024 and September 30, 2023 was $ 24,576 and $ 21,089 , respectively, and the revolving commitment was $ 26,000 and $ 30,000 , respectively.

Total availability at June 30, 2024 and September 30, 2023 was $ 2,912 and $ 2,830 , respectively, which exceeds both the collateral and total commitment threshold.

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

Since the availability exceeded the $ 1,500 reserve minimum as of June 30, 2024 and September 30, 2023, no covenant calculations were required.

The Company had a letter of credit balance of $ 1,970 as of June 30, 2024 and September 30, 2023, respectively.

The revolving credit agreement (or "revolver"), as amended, has a rate based on SOFR plus a 2.75 % spread, which was 8.2 % at June 30, 2024 and a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at September 30, 2023.

The Export Credit Agreement as amended has a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at June 30, 2024 and a rate based on SOFR plus a 1.75 % spread, which was 7.2 % at September 30, 2023.

The Company also has a commitment fee of 0.50 % under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Debt issuance costs - revolver

The Company incurred new debt issuance costs of $ 117 in the first quarter of fiscal 2024 as it pertains to the new amendments entered into, which are included in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $ 81 at June 30, 2024.

The Company previously had debt issuance costs of $ 86 , which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $ 86 and $ 78 at June 30, 2024 and September 30, 2023, respectively.

Subordinated Promissory Note and Guaranty

The Company, in connection with the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc.

("GHI"), a California corporation owned and controlled by Mark J.

Silk ("Silk") (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 included in the carrying value of the promissory note, 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.

The Subordinated Promissory note carrying value was $ 3,366 and $ 0 at June 30, 2024 and September 30, 2023, respectively.

The Subordinated Promissory Note interest rate was 14 % and 0 % at June 30, 2024 and September 2023, respectively.

The Ninth Amendment was also subject to the satisfaction of certain conditions, including, but not limited to, the execution and delivery by 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 (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $ 760 , which was included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities.

The Tenth Amendment was subject to the execution and delivery of the First Amendment of the Guaranty and an amendment to the Fee Letter, which required the borrowers to pay Silk an incremental fee of $ 120 in consideration for his agreement to execute and deliver the First Amendment to the Guaranty.

Guaranty fees were included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities and become due and payable on the maturity date.

Foreign subsidiary borrowings in USD

Foreign debt consists of:

2024 September 30,

Term loan, net of unamortized debt issuance cost $( 79 ) and $ 0 , respectively

( 15,860 ) ( 24,005 )

Short-term borrowings 4,708 1,862

Factor 321 616

Total debt $ 9,722 $ 5,771

Less – current maturities ( 6,157 ) ( 3,386 )

Total long-term debt $ 85 $ —

Receivables pledged as collateral $ 2,710 $ 1,247

Interest rates on foreign borrowings are based on Euribor rates, which range from 0.5 % to 7.8 %.

The Company's Maniago, Italy ("Maniago") location obtained borrowings from two separate lending sources in the first quarter of fiscal 2024.

The first was a bond for $ 2,208 with repayment terms of seven years .

Under the terms of the borrowing, repayments are made semi-annually in the amount of $ 200 , beginning on June 29, 2024.

The proceeds from this loan are shown within cash and cash equivalents and short-term investments on the consolidated condensed balance sheets and will be used for capital investment.

A second loan with a term of 1 year, 6 months was obtained in the amount of $ 1,104 .

The proceeds from this loan were used for working capital purposes.

In the third quarter, the Company increased three of its credit and factoring lines with existing lenders to support working capital needs.

The Company factors receivables from one of its customers.

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

Loan and Security Agreement

On October 17, 2024, Company and Quality Aluminum Forge, LLC, a wholly-owned subsidiary of the Company (“QAF”, and together with the Company, the “Borrowers”), entered into a Loan and Security Agreement (the “Loan Agreement”) among the Company and QAF, as borrowers, Siena Lending Group LLC, as Lender (“Siena”), and each of the affiliates of the borrowers signatory to the Loan Agreement from time to time as guarantors.

The Loan Agreement provided for a senior secured revolving credit facility with a term of three years in an aggregate principal amount not to exceed $ 20,000 (the “Revolver”) and a term loan in the original principal amount of $ 3,000 (the “Term Loan”).

The Loan Agreement also provided for a $ 2,500 letter of credit sub-facility (the “Letter of Credit Sub-facility,” and collectively with the Revolver and the Term Loan, the “Credit Facility”).

The Credit Facility matures on October 17, 2027.

Proceeds of borrowings under the Credit Facility were used to repay amounts outstanding under the Company’s Credit Agreement, Security Agreement, and Export Credit Agreement dated August 8, 2018, as amended, and was also available for working capital, capital expenditures and other general corporate purposes.

These amounts included accrued paid-in-kind interest of $ 387 and fees under the guaranty agreement and subordinated promissory note with 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) of $ 1,030 .

Borrowings under the Revolver and the Letter of Credit Sub-facility will bear interest at an annual rate of 4.5 % plus the adjusted term SOFR (or, if the base rate is applicable, an annual rate of 3.5 % plus the base rate).

Borrowings under the Term Loan will bear interest at an annual rate of 5.5 % plus the adjusted term SOFR (or, if the base rate is applicable, 4.5 % plus the base rate) and shall be repaid in equal consecutive monthly installments of $ 50 commencing November 1, 2024, with the entire unpaid balance due and payable on the maturity date.

Letters of credit issued under the Letter of Credit Sub-facility will have a fee equal to 4.5 % plus adjusted term SOFR per annum of the face amount of such letter of credit.

The Letter of Credit Sub-facility requires the Company to maintain compensating balances in a money market account in support of any issuances.

The Company may withdraw funds from this account at its discretion;

however, availability under the Letter of Credit Sub-facility will be dependent upon the maintenance of such compensating balances.

As of December 31, 2024, the Company held $ 1,559 in compensating balances, which were included in cash and cash equivalents in the consolidated condensed balance sheets.

In consideration of the execution and delivery by Siena of the Loan Agreement, the Company agreed pursuant to the fee letter to pay a closing fee in the amount of $ 230 (of which $ 115 was paid on the closing date and $ 115 is payable on the first anniversary of the closing date, with the remaining amount (if any) of the closing fee to be paid in full on the maturity date).

The fee letter provides for a collateral monitoring fee in the amount of $ 126 , which fee shall be paid in installments as follows:

(a) equal payments of approximately $ 4 shall be payable on the closing date and on the first day of each month thereafter and (b) the remaining amount of such fee (if any) shall be paid in full on the maturity date.

In addition, an unused line fee accrues with respect to the unused amount of the Revolver at an annual rate of 0.5 %.

All fees that are payable in future installments or in full at maturity were recognized within accrued liabilities in the consolidated condensed balance sheets as of December 31, 2024.

Borrowings under the Credit Facility are secured by (a) a continuing first priority lien on and security interest in and to substantially all of the assets of the Company and other loan parties identified therein;

and (b) a continuing first priority pledge of the pledged equity.

The obligations of the Borrowers are guaranteed by each guarantor on the terms set forth in the Loan Agreement.

The Loan Agreement provides that the Company must maintain compliance with a minimum fixed charge coverage ratio, determined in accordance with the Loan Agreement.

The Loan Agreement also contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investment, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default for financings of this type.

Additionally, the Loan Agreement contains provisions for a lockbox arrangement and a subjective acceleration clause related to the appraised value of collateralized property, plant, and equipment;

hence, the Term Loan and the Revolver were each classified as current maturities of long-term debt in the consolidated condensed balance sheet as of December 31, 2024.

As of December 31, 2024, the Company was in compliance with all covenants under the Loan Agreement.

As of December 31, 2024, total availability under the Revolver was $ 3,859 , and no letters of credit were outstanding.

As of December 31, 2024 and September 30, 2024, the Company had effective interest rates of 9.6 % and 8.1 %, respectively, under its revolving credit agreements.

Debt issuance costs

As of December 31, 2024 and September 30, 2024, the Company had debt issuance costs related to its outstanding revolving credit agreements of $ 556 and $ 461 , respectively, which are included in the consolidated condensed balance sheets as a

deferred charge in other current assets, net of amortization of $ 31 and nil , respectively.

As of December 31, 2024, the Company had debt issuance costs related to the Term Loan of $ 83 , which are included net of debt in the consolidated condensed balance sheets, net of amortization of $ 6 .

In April 2019, the Company entered into an economic development loan in the amount of $ 864 with FirstEnergy Corporation (“FirstEnergy”) through its Ohio Electric Security Plan (“ESP”) in effect at that time (the “ED Loan”).

The ED Loan matures in five years and requires quarterly payments at an interest rate of zero percent per annum for the first twenty-four months and 2.0 % per annum for the remainder of the term.

Any unpaid balance after the initial term will convert to the U.S.

Prime Rate plus 1.0 %.

As of December 31, 2024 and September 30, 2024, the Company had outstanding balances under the ED Loan of $ 140 and $ 133 , respectively.

Beginning on October 1, 2019, FirstEnergy invoiced the Company on a quarterly basis and payments were made accordingly.

However, in light of recent difficulties experienced by FirstEnergy, the Company has not received invoices (or other requests for payment) since its October 2023 payment, and all attempts at correspondence with FirstEnergy have gone unanswered.

Due to the lack of communication with the lender, the Company has been unable to make the remaining three installment payments and consider the outstanding balance a potential contingent cash payment under the ED Loan until a formal letter of forgiveness or other determination is received.

The Company will continue efforts to resolve this obligation in the near future.

While we expect to meet the standards for full forgiveness of the ED Loan, there is no assurance that we will be granted such forgiveness.

City of Cleveland

In May 2019, the Company entered into a vacant property initiative loan agreement with the City of Cleveland in the amount of $ 180 at an annual interest rate of 3.6 % to construct a die storage building near our Cleveland, OH facility (the “VPI Loan”).

The VPI Loan matures in five years with a final balloon payment of all outstanding principal and interest and is forgivable in full contingent upon the Company creating a minimum number of new jobs and maintaining minimum employment levels during the term of the loan.

As of both December 31, 2024 and September 30, 2024, the Company had amounts outstanding under the VPI Loan of $ 220 .

Due to the effects of the worldwide pandemic, the Company experienced declines in demand for its products and sales, which hindered the Company's ability to grow its workforce and maintain it at or above the required levels.

The Company is currently in discussions with the City of Cleveland for forgiveness of the VPI Loan under extenuating circumstances beyond the Company's control.

Until a final determination is made by the City of Cleveland, the Company has not made payments on the VPI Loan, which may become payable in full if forgiveness is not approved.

The Company will continue efforts to resolve this obligation in the near future.

While we expect to meet the standards for full forgiveness of the VPI Loan, there is no assurance that we will be granted such forgiveness.

For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations.

This estimated effective rate is used in providing for income taxes on a year-to-date basis.

The Company’s effective tax rate through the first nine months of fiscal 2024 was ( 3.2 )%, compared with ( 2.3 )% for the same period of fiscal 2023.

The Company’s effective tax rate through the first three months of fiscal 2025 was ( 0.21 )%, compared with ( 0.15 )% for the same period of fiscal 2024.

The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2025 compared with the same period of fiscal 2024.

4 unchanged sentences

The Company is subject to income taxes in the U.S.

federal jurisdiction, Ireland, Italy, and various state and local jurisdictions.

As of the third quarter of fiscal 2024, the Company maintains a full valuation allowance on the net deferred tax assets in the U.S., Ireland and Italy.

federal jurisdiction, Ireland, and various state and local jurisdictions.

Retirement Benefit Plans

2 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Service cost $ 43 $ 17

2 unchanged sentences

Amortization of net loss 23 43

Settlement cost 60 78 60 78

Net periodic pension cost $ 38 $ 69

During the nine months ended June 30, 2024 and 2023, the Company made $ 32 and $ 13 in cash contributions, and $ 87 and $ 0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans.

During the three months ended December 31, 2024 and 2023, the Company made $ 42 and $ 9 in cash contributions, and zero and $ 86 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans.

The Company anticipates making $ 240 in cash contributions to fund its defined benefit pension plans for the balance of fiscal 2025, and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal 2025.

3 unchanged sentences

The Company has outstanding equity awards under the Company’s 2007 Long-Term Incentive Plan (the “2007 Plan”) and the Company’s 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the “2016 Plan”), and awards performance and restricted shares under the 2016 Plan.

In the first nine months of fiscal 2024, the Company granted 120 shares under the 2016 Plan to certain key employees.

The awards were split into two tranches, comprised of 46 performance-based shares and 74 time-based restricted shares, with a grant date fair value of $ 3.60 per share.

In the first three months of fiscal 2025, the Company granted 10 time-based restricted shares under the 2016 Plan to certain key employees with a grant date fair value of $ 4.14 per share.

The awards vest over three years .

There were 66 shares forfeited during the nine month period ended June 30, 2024.

In the first nine months of fiscal 2024, the Company granted its non-employee directors 39 restricted shares under the 2016 Plan, with a grant date fair value of $ 3.08 per share, which vest over one year .

One award for 38 restricted shares vested in January 2024.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 327 shares that remain available for award at June 30, 2024.

There were 30 shares forfeited during the three months ended December 31, 2024.

No performance-based shares were granted during the three months ended December 31, 2024

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 405 shares that remain available for award as of December 31, 2024.

If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to a maximum of 150 % of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was $ 243 and $ 292 during the first nine months of fiscal 2024 and 2023, respectively.

As of June 30, 2024, there was $ 421 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

Stock-based compensation expense under the 2016 Plan was $ 21 and $ 86 during the first three months of fiscal 2025 and 2024, respectively, within selling, general and administrative expense on the consolidated condensed statements of operations.

As of December 31, 2024, there was $ 172 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

The Company expects to recognize this cost over the next 1.2 years.

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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 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.

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.

Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

2 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Commercial revenue $ 11,157 $ 7,662

3 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

Net Sales 2024 2023 2024 2023

Aerospace components for:

1 unchanged sentence

Rotorcraft 3,394 3,150

Commercial space 2,448 1,333

Energy components for power generation units 1,028 613

1 unchanged sentence

Total $ 20,883 $ 15,474

The following table represents revenue by geographic region based on the Company's selling operation locations:

Three Months Ended

June 30, Nine Months Ended

Net Sales 2024 2023 2024 2023

North America $ 21,987 $ 15,391 $ 57,975 $ 47,037

Europe 7,272 6,462 18,879 15,357

Total $ 29,259 $ 21,853 $ 76,854 $ 62,394

In addition to the disaggregated revenue information provided above, approximately 39 % and 47 % of total net sales for the nine months ended June 30, 2024 and 2023, 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.

All revenue based on selling locations originated from the Company’s U.S.

In addition to the disaggregated revenue information provided above, approximately 53 % and 57 % of total net sales for the three months ended December 31, 2024 and 2023, 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

The following table contains a roll forward of contract assets and contract liabilities for the period beginning October 1, 2023 and ended June 30, 2024 compared to period beginning October 1, 2022 and ended June 30, 2023:

2024 June 30,

The following table contains a roll forward of contract assets and contract liabilities for the periods presented:

2024 December 31,

Contract assets — beginning balance

$ 10,745 $ 10,091

Additional revenue recognized over-time 10,713 9,184

1 unchanged sentence

Contract assets — ending balance

2024 June 30,

$ 10,119 $ 10,949

2024 December 31,

Contract liabilities — beginning balance

$ 2,879 $ 731

Payments received in advance of performance obligations 440 1,675

1 unchanged sentence

Contract liabilities — ending balance $ 2,384 $ 2,406

Accounts receivable were $ 16,515 and $ 20,197 at September 30, 2022 and June 30, 2023, respectively.

There were no impairment losses recorded on contract assets as of June 30, 2024 and September 30, 2023.

Accounts receivable were $ 15,638 and $ 12,421 as of September 30, 2023 and December 31, 2023, respectively.

There were no material impairment losses recorded on contract assets as of December 31, 2024 and September 30, 2024.

Remaining performance obligations

As of June 30, 2024, the Company has $ 139,203 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months .

As of December 31, 2024, the Company has $ 121,900 of remaining performance obligations (including contract assets), the majority of which are anticipated to be completed within the next twelve months .

Commitments and Contingencies

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

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, identified compromised information, and notified those impacted in accordance with state and federal requirements.

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 a benefit of $ 605 to selling, general, and administrative expenses in the third quarter of fiscal 2024 due to credit of third party restoration fees related to last year's cybersecurity incident.

The Company recorded expense of $ 1,209 to selling, general, and administrative expenses and recorded costs of $ 60 to other expense (income), net related to loss on insurance recovery in the nine months ended June 30, 2023.

At June 30, 2024 and September 30, 2023, the Company recorded $ 197 and $ 965 , respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.

In the normal course of business, the Company may be involved in ordinary, routine legal actions.

The Company cannot reasonably estimate future costs, if any, related to these matters;

however, it does not believe any such matters are material to its financial condition or results of operations.

The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations;

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

Related Party Transactions

On December 21, 2023, the Company entered into the Ninth Amendment and Fourth Amendment with its lender incurring a secured subordinated loan from GHI, in the original principal amount of $ 3,000 .

GHI is controlled by Mr.

Silk, a member of the Board of Directors of the Company and considered a related party.

The Company has recorded interest expense of $ 110 and $ 216 for the three and nine month periods ending June 30, 2024, which was included in the consolidated condensed balance sheets in the Promissory note - related party line.

Additionally, Mr.

Silk provided a Guaranty in favor of the Lender pursuant to which Mr.

Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement.

As part of the Guaranty and Promissory Note, the Company will pay GHI fees of $ 880 and $ 150 , respectively, and has paid $ 30 of legal costs.

The Company has a total of $ 397 deferred financing costs related to the Guaranty and Subordinated Promissory Note, which was included in the consolidated condensed balance sheets in current maturities of long-term, net of $ 663 amortization.

In October 2024, the Company repaid all amounts outstanding under its 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 , as well as accrued paid-in-kind interest.

As part of the guaranty and subordinated promissory note with GHI, the Company paid fees of $ 880 and $ 150 , respectively.

See Note 6 — Debt for further information.

Subsequent Events

On August 1, 2024, the Company's Board of Directors approved, and management executed, a Share Purchase Agreement ("SPA") with TB2 S.r.l.

("Buyer"), under which the Buyer agreed to acquire 100 % of the share capital of the Company’s Maniago, Italy location (C Blade S.p.A.

Forging & Manufacturing).

The SPA, among other things, is contingent upon meeting customary conditions, delivering required documents, and obtaining governmental authorization under the Golden Power rules of Italian law.

Additionally, the SPA is subject to a Material Adverse Condition (“MAC”) clause.

The Company committed to the plan to sell in August 2024, and the Maniago location is considered as held and used as of June 30, 2024.

The Company expects to consummate the sale in the fourth quarter of fiscal 2024, however, the Company cannot provide assurances that all closing conditions will be satisfied.

Maniago's total assets were $ 23,657 and total liabilities were $ 16,498 on the consolidated condensed balance sheets at June 30, 2024.

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-Q

Item 1. Financial Statements