SIFCO INDUSTRIES INC 10-K

Item 8. Financial Statements and Supplementary Data Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID : 34 ) ¹ Report of Independent Registered Public Accounting Firm (PCAOB ID : 49) ² Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Shareholders’ Equity Notes to Consolidated Financial Statements ¹ Report provided in connection with audited financial statements for fiscal year ended 2025. ² Report provided in connection with audited financial statements for fiscal year ended 2024. 25 Table of Contents 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 subsidiaries (the "Company") as of September 30, 2025, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for the year ended September 30, 2025, and the related notes and the schedule listed in the Index at 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, 2025, and the results of its operations and its cash flows for the year ended September 30, 2025, 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 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 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 provided 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. Revenue Recognition – Over time Revenue — Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description The Company recognizes revenue as they fulfil their performance obligations and transfer control of products to their customers. For products that have no alternative use and for which the Company has an enforceable right to payment (including a reasonable profit) throughout the production process, revenue is recognized over the contract term (“over time”). For contracts recognized over time, control transfer occurs incrementally during the Company’s production process as progress is made on fulfilling the performance obligation. The Company applies the cost-to-cost input method, which uses costs incurred to date relative to total estimated costs at completion to measure progress towards satisfying the Company’s performance obligations. The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs and profit for the performance obligation. As of September 30, 2025, over time revenue accounted for 62% of the Company’s year-to-date revenues. We identified revenue recognized over time as a critical audit matter because of the significant judgment necessary for management to estimate total contract costs and profit used to recognize revenue for over time contracts. Auditing management’s estimates of total contract costs and profit for performance obligations recognized over time required significant auditor judgment and an increased extent of effort to evaluate the reasonableness of management’s estimates. 26 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the recognition of revenue recognized over time included the following, among others: • We tested the mathematical accuracy of management's calculation of revenue recognized over time. • We performed a retrospective review comparing prior period assumptions to actual results in subsequent periods and conducted sensitivity analyses to evaluate the significance of potential effects on revenue recognition due to changes in management’s assumptions. • We selected a sample of contracts that included revenue recognized over time and performed the following: ◦ Evaluated whether the contracts were properly included in management’s calculation of revenue recognized over time based on the terms and conditions of each contract. ◦ Compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers. ◦ Tested the accuracy and completeness of the costs incurred to date for the performance obligation. ◦ Evaluated the reasonableness of the methodology used by management to estimate costs for each contract. ◦ Compared management’s estimates for the selected contracts to costs and profits of similar performance obligations, when applicable. • We evaluated management’s disclosures related to revenue recognized over time to assess their conformity with the appliable accounting policies and standards. /s/ Deloitte & Touche LLP Cleveland, Ohio December 22, 2025 We have served as the Company's auditor since 2025. 27 Table of Contents 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, 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year then ended, the related notes to the consolidated financial statements and the financial statement schedule included under Item 15(a) for the year ended September 31, 2024 (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, 2024, 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 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. 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. /s/ RSM US LLP We served as the Company’s auditor from 2023 to 2025. Cleveland, Ohio December 23, 2024, except for Note 13 as to which the date is December 22, 2025 28 Table of Contents SIFCO Industries, Inc. and Subsidiaries Consolidated Statements of Operations (Amounts in thousands, except per share data) Years Ended September 30, 2025 2024 Net sales $ 84,815 $ 79,633 Cost of goods sold 74,230 73,651 Gross profit 10,585 5,982 Selling, general and administrative expenses 10,395 11,128 Loss on disposal of operating assets 10 4 Operating income (loss) 180 ( 5,150 ) Interest expense, net 1,686 3,080 Gain on forgiven loan ( 220 ) — Foreign currency exchange loss (gain), net 3 ( 3 ) Other (income) expense, net ( 541 ) 362 Loss from continuing operations before income tax expense ( 748 ) ( 8,589 ) Income tax expense 185 37 Loss from continuing operations ( 933 ) ( 8,626 ) Income from discontinued operations, net of tax 204 3,243 Net loss $ ( 729 ) $ ( 5,383 ) Basic earnings (loss) per share: Basic loss per share from continuing operations $ ( 0.15 ) $ ( 1.44 ) Basic earnings per share from discontinued operations 0.03 0.54 Basic loss per share $ ( 0.12 ) $ ( 0.90 ) Diluted earnings (loss) per share: Diluted loss per share from continuing operations $ ( 0.15 ) $ ( 1.44 ) Diluted earnings per share from discontinued operations 0.03 0.54 Diluted loss per share $ ( 0.12 ) $ ( 0.90 ) Weighted-average number of common shares (basic) 6,055 5,996 Weighted-average number of common shares (diluted) 6,055 5,996 See notes to consolidated financial statements. 29 Table of Contents SIFCO Industries, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands) Years Ended September 30, 2025 2024 Net loss $ ( 729 ) $ ( 5,383 ) Other comprehensive income (loss): Foreign currency translation adjustment, net of tax 5,554 374 Retirement plan liability adjustment, net of tax 1,498 904 Interest rate swap agreement adjustment, net of tax ( 2 ) ( 7 ) Comprehensive income (loss) $ 6,321 $ ( 4,112 ) See notes to consolidated financial statements. 30 Table of Contents SIFCO Industries, Inc. and Subsidiaries Consolidated Balance Sheets (Amounts in thousands, except per share data) September 30, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 491 $ 1,714 Restricted cash 1,553 — Receivables, net of allowance for credit losses of $ 151 and $ 117 , respectively 16,103 17,272 Contract asset 10,560 10,745 Inventories, net 4,192 6,230 Prepaid expenses and other current assets 2,192 2,395 Current assets of discontinued operations — 15,967 Total current assets 35,091 54,323 Property, plant and equipment, net 21,794 26,261 Operating lease right-of-use assets, net 12,543 13,326 Goodwill 3,493 3,493 Other assets 473 357 Noncurrent assets of discontinued operations — 6,864 Total assets $ 73,394 $ 104,624 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current maturities of debt, net of unamortized debt issuance costs $ 2,592 $ 353 Promissory note — related party — 3,510 Revolver 7,969 20,142 Short-term operating lease liabilities 959 879 Accounts payable 5,796 11,574 Contract liabilities 1,784 2,879 Accrued liabilities (related party — nil and $ 880 , respectively) 3,140 4,615 Current liabilities of discontinued operations — 10,058 Total current liabilities 22,240 54,010 Long-term finance lease, net of short-term 51 — Long-term operating lease liabilities, net of short-term 12,230 13,035 Deferred income taxes, net 163 154 Pension liability 1,206 2,465 Other long-term liabilities 619 645 Noncurrent liabilities of discontinued operations — 3,890 Commitment and contingencies (Note 12 ) Shareholders’ equity: Serial preferred shares, no par value, authorized 1,000 shares; 0 shares issued and outstanding at September 30, 2025 and 2024 — — Common shares, par value $ 1 per share, authorized 10,000 shares; issued and outstanding shares 6,180 at September 30, 2025 and 6,158 at September 30, 2024 6,180 6,158 Additional paid-in capital 11,892 11,775 Retained earnings 17,152 17,881 Accumulated other comprehensive income (loss) 1,661 ( 5,389 ) Total shareholders’ equity 36,885 30,425 Total liabilities and shareholders’ equity $ 73,394 $ 104,624 See notes to consolidated financial statements. 31 Table of Contents SIFCO Industries, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Amounts in thousands) Years Ended September 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 729 ) $ ( 5,383 ) Income from discontinued operations, net of tax 204 3,243 Loss from continuing operations ( 933 ) ( 8,626 ) Adjustments to reconcile net loss to net cash (used for) provided by operating activities: Depreciation and amortization 5,020 4,784 Amortization of debt issuance costs 203 1,187 Loss on disposal of operating assets 10 4 Gain on forgiven loan ( 220 ) — Inventory valuation accounts 3,014 570 LIFO effect 401 862 Share transactions under employee stock plan 139 202 Deferred income taxes 9 12 Interest added to promissory note - related party (paid-in-kind) — 360 Interest incurred but not yet paid 15 40 Other expenses 115 240 Changes in operating assets and liabilities: Receivables 1,169 ( 1,634 ) Contract assets 186 ( 655 ) Inventories ( 1,377 ) ( 2,971 ) Refundable income taxes — 71 Prepaid expenses and other current assets 266 ( 1,181 ) Other assets 296 11 Accounts payable ( 6,051 ) 1,457 Accrued liabilities ( 1,210 ) 516 Contract liabilities ( 1,094 ) 2,147 Accrued income tax and other 169 ( 44 ) Net cash provided by (used for) operating activities 127 ( 2,648 ) Cash flows from investing activities: Capital expenditures ( 484 ) ( 1,989 ) Net cash used for investing activities ( 484 ) ( 1,989 ) Cash flows from financing activities: Proceeds from term note 3,000 — Repayments of term note ( 550 ) ( 61 ) Proceeds from promissory note - related party — 3,000 Repayments of promissory note and related fees - related party ( 4,030 ) — Proceeds from revolving credit agreement 99,756 95,945 Repayments of revolving credit agreement ( 111,928 ) ( 92,093 ) Payments for debt issuance costs ( 203 ) ( 461 ) Principal payments on finance leases ( 42 ) — Net cash (used for) provided by financing activities ( 13,997 ) 6,330 32 Table of Contents Cash flows from discontinued operations: Net cash provided by operating activities 5 1,373 Net cash provided by (used for) investing activities 14,358 ( 1,411 ) Net cash provided by financing activities 356 1,081 Effects of exchange rate changes on cash and cash equivalents ( 35 ) ( 381 ) Net cash provided by discontinued operations 14,684 662 Increase in cash, cash equivalents and restricted cash 330 2,355 Cash, cash equivalents and restricted cash at beginning of year 1,714 368 Less cash and cash equivalents of discontinued operations at the end of the year — ( 1,009 ) Cash, cash equivalents and restricted cash from continuing operations at end of year $ 2,044 $ 1,714 See notes to consolidated financial statements. SIFCO Industries, Inc. and Subsidiaries Supplemental Disclosure of Cash Flow Information (Amounts in thousands) Years Ended September 30, 2025 2024 Cash paid during the year: Cash paid for interest $ ( 1,870 ) $ ( 1,468 ) Cash paid for income tax, net ( 16 ) ( 19 ) Non-cash financing activities: Debt issuance costs - incurred but not yet paid 115 — Accrued guaranty fees - related party — 880 Origination fees capitalized to promissory note principal - related party — 150 Interest added to promissory note - related party (paid-in-kind) — 360 See notes to consolidated financial statements. 33 Table of Contents SIFCO Industries, Inc. and Subsidiaries Consolidated Statements of Shareholders’ Equity (Amounts in thousands ) Common Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders’ Equity Balance - October 1, 2023 6,105 $ 11,626 $ 23,264 $ ( 6,660 ) $ 34,335 Comprehensive (loss) income — — ( 5,383 ) 1,271 ( 4,112 ) Performance and restricted share expense — 250 — — 250 Share transactions under employee stock plans 53 ( 101 ) — — ( 48 ) Balance - September 30, 2024 6,158 $ 11,775 $ 17,881 $ ( 5,389 ) $ 30,425 Comprehensive (loss) income — — ( 729 ) 7,050 6,321 Performance and restricted share expense — 173 — — 173 Share transactions under employee stock plans 22 ( 56 ) — — ( 34 ) Balance - September 30, 2025 6,180 $ 11,892 $ 17,152 $ 1,661 $ 36,885 See notes to consolidated financial statements. 34 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Amounts in thousands, except per share data) 1. Summary of Significant Accounting Policies A. DESCRIPTION OF BUSINESS SIFCO Industries, Inc. 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”). 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 CBlade 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 planned sale transaction, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of CBlade presented as assets held for sale and discontinued operations, respectively. All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Discontinued Operations . B. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The U.S. dollar is the functional currency for all the Company’s U.S. operations and its non-operating, non-U.S. subsidiaries. For these operations, all gains and losses from completed currency transactions are included in income. Prior to the sale of CBlade, the functional currency was the Euro. 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 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 income (loss) in the consolidated statements of shareholders’ equity. C. CASH, CASH EQUIVALENTS AND RESTRICTED CASH The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. Restricted cash primarily represents collateral for outstanding letters of credit that support normal business transactions. A substantial majority of the Company’s cash, cash equivalents and restricted cash balances exceed federally insured limits as of September 30, 2025 and 2024. D. 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 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. Receivables are presented net of allowance for credit losses of $ 151 and $ 117 at September 30, 2025 and 2024, respectively. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible. In fiscal 2025, $ 68 of accounts receivable were written off against the allowance for credit losses, while $ 30 were written off in fiscal 2024. Bad debt expense of $ 102 and a benefit of $ 90 was recorded in fiscal 2025 and 2024, respectively. 35 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) E. CONCENTRATIONS OF CREDIT RISK 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. based companies. In fiscal 2025, 18 % of the Company’s consolidated net sales were from one of its largest customers; and 34 % of the Company’s consolidated net sales were from the two largest customers and their direct subcontractors, which individually accounted for 18 %, and 16 %, of consolidated net sales, respectively. In fiscal 2024, the Company had one customer who accounted for 15 % of the Company’s consolidated net sales; and 41 % of the Company’s consolidated net sales were from three of the largest customers and their direct subcontractors, which each individually accounted for 15 %, 15 % and 11 % of consolidated net sales. Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2025 and 2024. At September 30, 2025, there was one customer of the Company with net accounts receivable balances representing greater than 10% of the total net accounts receivable at 17 %; and two of the largest customers and their direct subcontractors collectively had an outstanding net accounts receivable which accounted for 36 % of total net accounts receivable. At September 30, 2024, there was no customer of the Company with net accounts receivable balances representing greater than 10 % of the total net accounts receivable; and two of the largest customers and their direct subcontractors collectively had an outstanding net accounts receivable which accounted for 22 % of total net accounts receivable. F. INVENTORY VALUATION For a portion of the Company’s inventory, cost is determined using the last-in, first-out (“LIFO”) method. For approximately 40 % and 30 % of the Company’s inventories at September 30, 2025 and 2024, respectively, the LIFO method is used to value the Company’s inventories. The first-in, first-out (“FIFO”) method is used to value the remainder of the Company’s inventories, which are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion. To reflect inventory at net realizable value, the Company recorded reserves of $ 3,164 and $ 705 as of September 30, 2025 and 2024, 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. In addition, if the Company identifies specific obsolescence, other than that identified by the aging criteria, an additional write down will be recognized. Specific obsolescence and excess write down requirements may arise due to technological or market changes or based on cancellation of an order. In order to accurately reflect the value of inventory, the Company wrote down inventory for obsolete and excess inventory, and accrued reserves of $ 2,755 and $ 2,028 as of September 30, 2025 and 2024. G. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation is generally computed using the straight-line method. Depreciation is provided in amounts sufficient to amortize the cost of the assets over their estimated useful lives. Depreciation provisions are based on estimated useful lives: (i) buildings, including building improvements - 5 to 40 years; (ii) machinery and equipment, including office and computer equipment - 3 to 20 years; (iii) software - 3 to 7 years (included in machinery and equipment); and (iv) leasehold improvements - 6 to 15 years range represent the remaining life or length of the lease, whichever is less (included in buildings). The Company’s property, plant and equipment assets by major asset class at September 30 consist of: 2025 2024 Property, plant and equipment: Land $ 469 $ 469 Buildings 13,167 13,514 Machinery and equipment 70,041 74,497 Total property, plant and equipment 83,677 88,480 Less: Accumulated depreciation 61,883 62,219 Property, plant and equipment, net $ 21,794 $ 26,261 Depreciation expense was $ 5,020 and $ 4,784 in fiscal 2025 and 2024, respectively. 36 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) H. 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. Fiscal 2025 and 2024 The Company continuously monitors potential triggering events to determine if further testing is necessary. In the first, second, third and fourth quarters of both fiscal 2025 and 2024, the Company evaluated triggering events. In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the 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 did not identify any indicators that the asset groups might be impaired in any of the other quarters assessed during fiscal 2025 and 2024. I. GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is subject to impairment testing if triggered in the interim, and if not, on an annual basis. The Company has selected July 31 as the annual impairment testing date. The first step of the goodwill impairment test compares the fair value of a reporting unit (as defined) with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired. 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 4 — Goodwill , for further discussion of the July 31, 2025 and 2024 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, 2025. Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog. 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. J. 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. In a period of net income, the net income per diluted share reflects the effect of the Company’s outstanding restricted shares and performance shares under the treasury stock method. During a period of net loss, no restricted shares and performance shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive. 37 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The dilutive effect is as follows: September 30, 2025 2024 Loss from continuing operations $ ( 933 ) ( 8,626 ) Income from discontinued operations, net of tax 204 3,243 Net loss $ ( 729 ) $ ( 5,383 ) Weighted-average common shares outstanding (basic and diluted) 6,055 5,996 Net earnings (loss) per share – basic and diluted: Continuing operations $ ( 0.15 ) $ ( 1.44 ) Discontinued operations 0.03 0.54 Net loss per share $ ( 0.12 ) $ ( 0.90 ) Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 143 238 K. REVENUE RECOGNITION The Company recognizes revenue using the five-step revenue recognition model in which it depicts the transfer of goods to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. The revenue standard also requires disclosure sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the cost to obtain or fulfill a contract. The Company recognizes revenue in the following manner using the five-step revenue recognition model. 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. Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company’s contracts are from purchase orders (“PO’s”), which continue to be recognized as of a point in time when products are shipped from the Company’s manufacturing facilities or at a later time when control of the products transfers to the customer. Under the revenue standard, the Company recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows: • Certain military contracts, which relate to the provisions of specialized or unique goods to the U.S. government with no alternative use, include provisions within the contract that are subject to the Federal Acquisition Regulation (“FAR”). The FAR provision allows the customer to unilaterally terminate the contract for convenience and requires the customer to pay the Company for costs incurred plus reasonable profit margin and take control of any work in process. • For certain commercial contracts involving customer-specific products with no alternative use, the contract may fall under the FAR clause provisions noted above for military contracts or may include certain provisions within their contract that the customer controls the work in process based on contractual termination clauses or restrictions of the Company’s use of the product and the Company possesses a right to payment for work performed to date plus reasonable profit margin. As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. 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. 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. 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. 38 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. An accounting policy election to exclude from transaction price was made for sales, value add, and other taxes the Company collects concurrent with revenue-producing activities when applicable. 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. The amount of consideration to which the Company expects to be entitled in exchange for the goods is not generally subject to significant variations. Contracts are occasionally modified to account for changes in contract specifications, requirements, and pricing. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Substantially all of the Company’s contract modifications are for goods that are distinct from the existing contract. 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. Contract Balances 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. Amounts do not exceed their net realizable value. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer. L. LEASES The leasing standard requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the consolidated balance sheet, with the exception of short-term leases. The Company primarily leases its manufacturing buildings, specifically at its Orange location, as well as certain machinery and office equipment. The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration. Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability. Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated balance sheets. ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date and duration of the lease term in determining the present value of the future payments. 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. M. 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 available to eligible businesses and tax-exempt organizations impacted by the COVID-19 pandemic. Businesses qualified if they experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts (defined as a decline of more than 50% in any 2020 quarter compared to 2019, and more than 20% in 2021). The Company, with reasonably assured eligibility, submitted and received approval for ERC refunds. In the absence of specific U.S. GAAP on account for such credits, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance. Under IAS 20, the credit can be presented as other income or as a reduction of related expense. The company elected to reduce the expense categories in which the original payroll taxes were incurred. For the year ended September 30, 2025 the Company recognized a total gross benefit of $ 4,173 , consisting of $ 3,482 ERC refund and $ 690 in interest income. The credit was allocated as follows: • $ 2,971 to cost of goods ("COGS") 39 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) • $ 511 to selling, general and administrative expense ("SG&A"), and • $ 690 to other (income) expense , net. Additionally, the Company incurred $ 835 in professional fees related to the ERC, which was recorded in SGA expense. There was no income or expense recorded in the prior year, September 30, 2024. N. IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS AND LEGISLATION In November 2023, the FASB issued Accounting Standard Update (“ASU”) ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ”, which expands 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 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new ASU effective September 30, 2025. Adoption of this resulted in additional disclosure, but did not have an impact on the consolidated financial statements. See Note 13 - S egment Information. Legislation On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company concluded that the impact of the OBBBA on fiscal year 2025 consists only changes related to bonus depreciation and the results of such evaluations are reflected within the financial statements for the fiscal year-ended September 30, 2025. O. IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS Accounting Pronouncements - Issued and Not Effective 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. 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”), which 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 financial statements and related disclosures. In January 2025, the FASB issued ASU 2025-01, “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ” (“ASU 2025-01”). ASU 2025-01 outlines the effective date of ASU 2024-03, “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ” (“ASU 2024-03”), as the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. ASU 2024-03 requires both interim and annual disclosures pertaining to expense captions on the face of the income statement within continuing operations containing the following amounts: (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization, and (v) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. This disaggregated information will be required to be disclosed with other disaggregated amounts under other U.S. GAAP guidance, such as revenue and income taxes. Additionally, a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and total 40 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) selling expenses and a definition of such costs (in annual reporting periods only) should be disclosed. More granular information about cost of sales and selling, general, and administrative expenses (“SGA”) would assist a reader of the Company's consolidated financial statements in better understanding an entity’s cost structure and forecasting future cash flows. The amendments in ASU 2024-03 should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact of this standard on our consolidated financial statements and related disclosures. P. USE OF ESTIMATES Accounting principles generally accepted in the U.S. require management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the period in preparing these financial statements. Actual results could differ from those estimates. Q. RESEARCH AND DEVELOPMENT Research and development costs are expensed as they are incurred. There was no research and development expenses incurred in fiscal 2025 and 2024. R. DEBT ISSUANCE COSTS Debt issuance costs are capitalized and amortized over the life of the related debt. Amortization of debt issuance costs is included in interest expense in the consolidated statements of operations. S. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows: 2025 2024 Foreign currency translation adjustment, net of income tax $ — $ ( 5,554 ) Net retirement plan liability adjustment, net of income tax 1,661 163 Interest rate swap agreement, net of income tax — 2 Total accumulated other comprehensive income (loss) $ 1,661 $ ( 5,389 ) The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive income (loss), net of tax: Foreign Currency Translation Adjustment Retirement Plan Liability Adjustment Interest Rates Swap Adjustment Accumulated Other Comprehensive (Loss) Income Balance at September 30, 2023 ( 5,928 ) ( 741 ) 9 ( 6,660 ) Other comprehensive income (loss) before reclassifications 374 701 ( 7 ) 1,068 Amounts reclassified from accumulated other comprehensive loss — 203 — 203 Net current-period other comprehensive income (loss) 374 904 ( 7 ) 1,271 Balance at September 30, 2024 ( 5,554 ) 163 2 ( 5,389 ) Other comprehensive income before reclassifications — 1,408 — 1,408 Amounts reclassified from accumulated other comprehensive income (loss) 5,554 90 ( 2 ) 5,642 Net current-period other comprehensive income (loss) 5,554 1,498 ( 2 ) 7,050 Balance at September 30, 2025 $ — $ 1,661 $ — $ 1,661 41 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The following table reflects the changes in accumulated other comprehensive income (loss) related to the Company for September 30, 2025 and 2024: Amount reclassified from accumulated other comprehensive income (loss) Details about accumulated other comprehensive income (loss) components 2025 2024 Affected line item in the Consolidated Statement of Operations Amortization of Retirement plan liability: Net actuarial gain $ 1,498 $ 844 (1) Settlements/curtailments — 60 (1) 1,498 904 Total before taxes — — Income tax expense $ 1,498 $ 904 Net of taxes (1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 9 — Retirement Benefit Plans for further discussion. T. INCOME TAXES The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s Irish subsidiaries also file tax returns in their respective jurisdiction. The Company provides deferred income taxes for the temporary difference between the financial reporting basis and tax basis of the Company’s assets and liabilities. Such taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deductible temporary differences result principally from recording certain expenses in the financial statements in excess of amounts currently deductible for tax purposes. Taxable temporary differences result principally from tax depreciation in excess of book depreciation. The Company evaluates for uncertain tax positions taken at each balance sheet date. 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 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. The Company maintains a valuation allowance against its deferred tax assets when management believes it is more likely than not that all or a portion of a deferred tax asset may not be realized. Changes in valuation allowances are recorded in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. In assessing all available positive and negative evidence available as of the fourth quarter of fiscal 2025, based on the weight of positive evidence, primarily related to the cumulative income position, the Company has concluded that it is more-likely-than-not that the deferred tax assets for domestic entities will not be realized. Therefore, the Company maintains a valuation allowance against the full balance of their deferred tax assets, aside from those with indefinite lives. The Tax Cut and Jobs Act (the “Act”) includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein minimum taxes are imposed on foreign income in excess of a deemed return on the tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate. The Company has elected to account for GILTI as a component of tax expense in the period in which the Company is subject to the rules. U. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: 42 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Level 1 - Quoted market prices in active markets for identical assets or liabilities Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 - Unobservable inputs that are not corroborated by market data A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The book value of cash equivalents, accounts receivable, and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of debt is considered to approximate the fair value based on the borrowing rates currently available to us for loans with similar terms and maturities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in goodwill, other intangible assets and long-lived assets impairment analysis, the valuation of acquired intangibles and in the valuation of assets held for sale. 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 9 — Retirement Benefit Plans for further discussion. V. SHARE-BASED COMPENSATION Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period). Share-based compensation includes expense related to restricted shares and performance shares issued under the Company’s 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan”). The Company recognizes share-based compensation within selling, general, and administrative expense and, where applicable, cost of goods sold, respectively, and adjusts for any forfeitures as they occur. 2. 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 management executed 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”) totaling 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 upon the aforementioned events, and, based on the significance of the disposed operations (i.e., strategic shift), CBlade represented discontinued operations upon the classification of the CBlade assets and liabilities as held for sale. In October 2024, upon regulatory approval, the Company completed the CBlade Sale and received cash consideration of approximately $ 14,408 , net of transaction costs of $ 530 . 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. 43 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The principal components of the assets and liabilities related to discontinued operations classified as held for sale for the periods presented were as follows: September 30, 2024 ASSETS 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 Operating lease right-of-use assets, net 113 Intangible assets, net 126 Total assets held for sale $ 22,831 LIABILITIES Current liabilities: Current maturities of long-term debt $ 3,843 Short-term operating lease liabilities 40 Accounts payable 2,770 Accrued liabilities 3,405 Total current liabilities 10,058 Long-term debt, net 3,536 Long-term operating lease liabilities 71 Deferred income taxes, net 1 Pension liability 282 Total liabilities held for sale $ 13,948 A summary of the operating results for the discontinued operations is as follows: Years Ended September 30, 2025 2024 Net sales $ 622 $ 24,705 Cost of sales 348 18,868 Interest expense net 15 507 Income from discontinued operations before income tax provision 214 3,132 Loss on sale of discontinued operations before income tax benefit ( 11 ) — Income tax benefit ( 1 ) ( 111 ) Income from discontinued operations, net of tax $ 204 $ 3,243 A summary of the cash flows for the discontinued operations is as follows: Years Ended September 30, 2025 2024 Net cash provided by operating activities from discontinued operations $ 5 $ 1,373 Net cash provided by (used for) investing activities from discontinued operations 14,358 ( 1,411 ) Net cash provided by financing activities of discontinued operations 356 1,081 Effects of exchange rate changes on cash and cash equivalents ( 35 ) ( 381 ) 44 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) 3. Inventories, net Inventories at September 30 consist of: 2025 2024 Raw materials and supplies $ 1,416 $ 1,044 Work-in-process 1,325 3,419 Finished goods 1,451 1,767 Total inventories $ 4,192 $ 6,230 If the FIFO method had been used for the entire Company, inventories would have been $ 10,897 and $ 10,496 higher than reported at September 30, 2025 and 2024, respectively. LIFO expense was $ 401 and $ 862 in fiscal 2025and 2024, respectively. Results showed a reduction of inventory resulting in liquidations of LIFO inventory quantities in fiscal 2024. The estimated liquidation of LIFO inventory quantities results in a projected increase in cost of goods sold of nil and $ 610 during fiscal 2025 and 2024, respectively. 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. The allocation of production costs to inventory are based on a normal range of capacity in production. The amount of cost allocated to each unit of production is not increased as a consequence of low production or idle capacity. As a result, the Company recorded idle cost within cost of goods sold line within the Statements of Operations in amount of $ 992 and $ 1,412 for the years ended September 30, 2025 and 2024, respectively. 4. Goodwill Goodwill is not amortized, but is subject to an annual impairment test. The Company tests its goodwill for impairment on July 31, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. Factors that would necessitate an interim goodwill impairment assessment include a sustained decline in the Company’s stock price, prolonged negative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results. The Company uses a fair value measurement approach which combines the income (discounted cash flow method) and market valuation (market comparable method) techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparable, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions (Level 3 inputs). Although the Company believes its assumptions are reasonable, actual results may vary significantly and may expose the Company to material impairment charges in the future. The methodology for determining fair values was consistent for the periods presented. 2025 and 2024 Annual Goodwill Impairment Tests SIFCO performed its annual impairment test as of July 31, 2025 and 2024, 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, 2025 and 2024, respectively. As of September 30, 2025 and 2024, the Company had goodwill of $ 3,493 . Total accumulated goodwill impairment losses for the Company were $ 4,164 at September 30, 2025. There were no impairment losses recorded during fiscal 2024. 5. Accrued Liabilities Accrued liabilities at September 30 consist of: 2025 2024 Accrued employee compensation and benefits $ 1,139 $ 1,407 Accrued workers’ compensation 201 303 Other accrued liabilities (related party — nil and $ 880 , respectively) 1,800 2,905 Total accrued liabilities $ 3,140 $ 4,615 45 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) 6. Debt Debt at September 30 consists of: 2025 2024 Revolving credit agreement $ 7,969 $ 20,142 Term loan, net of unamortized debt issuance costs of $ 50 and nil , respectively 2,400 — Finance lease obligations 97 — Promissory note — related party — 3,510 Other debt 146 353 Total debt 10,612 24,005 Less – current maturities ( 10,561 ) ( 24,005 ) Total long-term debt $ 51 $ — Loan and Security Agreement On October 17, 2024, the 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 an interest rate 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 September 30, 2025, the Company held $ 1,553 in compensating balances, which were included in restricted cash in the consolidated 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 September 30, 2025. 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. 46 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The Loan Agreement includes a springing financial covenant requiring the Company to maintain a minimum fixed charge coverage ratio (“FCCR”), in accordance with the Loan Agreement, once the availability block has been released. The Loan agreement contains a $ 2,000 availability block that reduces the borrowing base until the later of the (i) the first anniversary date of the closing date and (ii) date on which the Company achieves a FCCR of at least 1.05 to 1.00, measure on a trailing twelve-month basis, at which point the block will be eliminated. The Loan Agreement further includes 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 balance sheet as of September 30, 2025. As of September 30, 2025, the availability block remained in place; therefore, the FCCR was not required to be tested. As of September 30, 2025, total availability under the Revolver was $ 6,738 , and no letters of credit were outstanding. As of September 30, 2025 and September 30, 2024, the Company had effective interest rates of 9.8 % and 8.1 %, respectively, under its revolving credit agreements. Prior to the refinancing, the Company maintained an asset-based credit facility and export credit facility (together, the "prior Credit Facilities") with JPMorgan Chase Bank, N.A. The prior Credit Facilities were secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67 % of the stock of its first-tier non-U.S. subsidiaries. During fiscal 2024, the Company entered into a series of amendments to the prior Credit Facilities that, among other things, modified availability levels, borrowing base reserves, covenant thresholds, and extended the maturity to November 6, 2024. In connection with these amendments, the Company also incurred a $ 3,000 secured subordinated loan from GHI, a corporation owned and controlled by Mark J. Silk (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), which bore interest at 14 % per annum payable in kind (and not in cash) by capitalization as additional principal (“PIK Interest”) each six-month period after the date hereof in arrears, and for which certain guarantee and amendment fees were incurred. These obligations were secured on a subordinated basis. As of September 30, 2024, the prior Credit Facilities provided a combined revolving commitment of $ 26,000 , subject to borrowing base limitations and minimum reserve requirements. Total availability at September 30, 2024 was $ 2,055 . Availability exceeded required thresholds at each balance sheet date, and therefore covenant testing was not required. Outstanding letters of credit totaled $ 1,970 . All obligations under the prior Credit Facilities and the related subordinated loan were fully repaid and terminated in October 2024 in connection with the Company’s refinancing. Related debt issuance costs were fully amortized as of September 30, 2024. These prior-year facilities are presented for comparative purposes only. Debt issuance costs As of September 30, 2025 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 balance sheets as a deferred charge in other current assets, net of amortization of $ 170 and nil , respectively. As of September 30, 2025, 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 $ 33 . Other First Energy 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 September 30, 2025 and 2024, the Company had outstanding balances under the ED Loan of $ 147 and $ 133 , respectively. Beginning on October 1, 2019, FirstEnergy invoiced the Company on a quarterly basis and payments were made accordingly. The Company has not received an invoice from FirstEnergy since October 2023, and attempts to contact the lender have been unsuccessful. 47 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) 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. Under the terms of the agreement, the VPI loan was eligible for full forgiveness contingent upon the Company achieving specified job creation and maintaining minimum employment levels during the term of the loan. Due to the effects of the COVID-19 pandemic on demand for the Company's products, the Company experienced reduced workforce and did not maintain levels at or above the required levels. The Company requested for forgiveness of the VPI loan based on the extenuating circumstances. As of September 30, 2025, the Company obtained forgiveness of the VPI Loan from the City of Cleveland. As a result the Company derecognized the outstanding principal and accrued interest and recorded the corresponding gain forgiven loan in the consolidated statements of operations. As of September 30, 2025 and 2024, the Company's amounts outstanding under the VPI Loan was nil and $ 220 , respectively. 7. Revenue 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; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) other commercial applications. The following table represents a breakout of total revenue by customer type: Years Ended September 30, 2025 2024 Commercial revenue $ 36,928 $ 41,759 Military revenue 47,887 37,874 Total $ 84,815 $ 79,633 The following table represents revenue by the various components: Years Ended September 30, 2025 2024 Aerospace components for: Fixed wing aircraft $ 51,379 $ 41,847 Rotorcraft 17,069 17,255 Commercial space 5,029 13,200 Energy components for power generation units 2,491 1,821 Commercial products and other revenue 8,847 5,510 Total $ 84,815 $ 79,633 All revenue based on selling locations originated from the Company’s U.S. operations. In addition to the disaggregating revenue information provided above, approximately 62 % and 54 % of total net sales as of September 30, 2025 and 2024, 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 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. Upon shipment and billing, the value of the contract asset is reversed and accounts receivable is recorded. In circumstances where prepayments are required and payment is made prior to satisfaction of performance obligations, a contract liability is established. If the satisfaction of the performance obligation occurs over time, the contract liability is reversed over the course of production. If the satisfaction of the performance obligation is point in time, the contract liability reverses upon shipment. 48 Table of Contents 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 years ended September 30, 2025 and 2024: Contract assets - Ending balance, September 30, 2023 $ 10,091 Additional revenue recognized over-time 42,697 Less amounts billed to the customers ( 42,043 ) Contract assets - Ending balance, September 30, 2024 $ 10,745 Additional revenue recognized over-time 52,785 Less amounts billed to the customers ( 52,970 ) Contract assets - Ending balance, September 30, 2025 $ 10,560 Contract liabilities - Ending balance, September 30, 2023 $ ( 731 ) Payments received in advance of performance obligations ( 5,737 ) Performance obligations satisfied 3,589 Contract liabilities - Ending balance, September 30, 2024 $ ( 2,879 ) Payments received in advance of performance obligations ( 3,773 ) Performance obligations satisfied 4,868 Contract liabilities - Ending balance, September 30, 2025 $ ( 1,784 ) Accounts receivable, net were $ 16,103 , $ 17,272 , $ 15,638 as of September 30, 2025, 2024, and 2023, respectively. During the year ended September 30, 2025, management determined there were certain contracts met the criteria for loss recognition, a loss contract reserve of $ 325 was recorded. No such reserve was required in the prior year. 2024, respectively. Remaining performance obligations As of September 30, 2025 the Company's total backlog was $ 119,214 , of which $ 87,336 is anticipated to be completed within the next twelve months , and the remaining thereafter. As of September 30, 2024, the Company has $ 85,019 of remaining performance obligations, the majority of which were anticipated to be completed within twelve months of that date. 8. Income Taxes The components of income (loss) before income tax provision are as follows: Years Ended September 30, 2025 2024 U.S. $ ( 1,369 ) $ ( 8,309 ) Non-U.S. 621 ( 280 ) Loss before income tax provision $ ( 748 ) $ ( 8,589 ) 49 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Income tax provision consists of the following: Years Ended September 30, 2025 2024 Current income tax provision (benefit): U.S. federal $ — $ 70 U.S. state and local 9 1 Non-U.S. 167 ( 46 ) Total current tax provision 176 25 Deferred income tax provision: U.S. federal 9 10 U.S. state and local — 2 Total deferred tax provision 9 12 Income tax provision $ 185 $ 37 The income tax provision in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows: Years Ended September 30, 2025 2024 Loss before income tax provision $ ( 748 ) $ ( 8,589 ) Income tax provision (benefit) at U.S. federal statutory rates ( 157 ) ( 1,804 ) Tax effect of: Foreign rate differential 150 ( 4 ) Permanent items ( 2 ) 59 State and local income taxes 9 4 Federal tax credits ( 226 ) ( 241 ) Valuation allowance 400 1,943 Other 11 80 Income tax provision $ 185 $ 37 50 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Deferred tax assets and liabilities at September 30 consist of the following: 2025 2024 Deferred tax assets: Net U.S. operating loss carryforwards $ 8,369 $ 9,407 Net non-U.S. operating loss carryforwards 639 629 Employee benefits 324 849 Inventory reserves 546 — Allowance for credit losses 36 28 Intangibles — 296 Foreign tax credits 1,215 1,724 Other tax credits 2,227 2,175 Other 2,211 1,908 Total deferred tax assets $ 15,567 $ 17,016 Deferred tax liabilities: Depreciation ( 4,307 ) ( 5,308 ) Inventory reserves — ( 573 ) Prepaid expenses ( 517 ) ( 338 ) Intangibles ( 245 ) — Other ( 9 ) ( 51 ) Total deferred tax liabilities $ ( 5,078 ) $ ( 6,270 ) Net deferred tax assets 10,489 10,746 Valuation allowance ( 10,652 ) ( 10,900 ) Net deferred tax liabilities $ ( 163 ) $ ( 154 ) At September 30, 2025, the Company has a non-U.S. tax loss carryforward of approximately $ 5,458 related to the Company’s non-operating subsidiary. The Company’s non-operating subsidiary ceased operations in 2007 and therefore, a valuation allowance has been recorded against the deferred tax asset related to the Irish tax loss carryforward because it is unlikely that such operating loss can be utilized unless the Irish subsidiary resumes operations. The non-operating and Italian tax loss carryforwards do not expire. The Company has $ 1,215 of foreign tax credit carryforwards that are subject to expiration in fiscal 2026-2028, $ 2,215 of U.S. general business tax credits that are subject to expiration in 2035-2045, $ 2,248 of interest expense carryforward that do not expire, $ 670 of capital loss carryforward that expires in 2030, and $ 32,943 of U.S. Federal tax loss carryforwards with $ 4,643 subject to expiration in fiscal 2037 and $ 28,300 that do not expire. A valuation allowance has been recorded against the deferred tax assets related to the foreign tax credit carryforwards, U.S. general business credits, interest expense carryforward, and U.S. Federal tax loss carryforwards. The valuation allowance decreased during fiscal 2025 related to $ 116 in amounts charged to expense less $ 364 of reductions charged to other accounts. The valuation allowance increased during fiscal 2024 related to $ 2,000 in amounts charged to expense less $ 212 of reductions charged to other accounts. In addition, the Company has $ 12 of U.S. state tax credit carryforwards subject to expiration in fiscal 2029 and $ 30,151 of U.S. state and local tax loss carryforwards subject to expiration in fiscal 2026-2044. The U.S. state tax credit carryforwards and U.S. state and local tax loss carryforwards have been fully offset by a valuation allowance. The Company reported liabilities for uncertain tax positions, excluding any related interest and penalties, of $ 22 for both fiscal 2025 and 2024. If recognized, $ 22 of the fiscal 2025 uncertain tax positions would impact the effective tax rate. As of September 30, 2025, the Company had accrued interest of $ 19 and recognized $ 1 for interest and penalties in operations. The Company classifies interest and penalties on uncertain tax positions as income tax expense. A summary of activity related to the Company’s uncertain tax position is as follows: 51 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) 2025 2024 Balance at beginning of year $ 22 $ 22 Decrease due to lapse of statute of limitations — — Balance at end of year $ 22 $ 22 The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy and various states and local jurisdictions. The Company believes it has appropriate support for its federal income tax returns . The Company is no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2022, state and local income tax examinations for fiscal years prior to 2019, or non-U.S. income tax examinations by tax authorities for fiscal years prior to 2009. The Company does not record deferred taxes on the undistributed earnings of its non-U.S. subsidiaries as it does not expect the temporary differences related to those unremitted earnings to reverse in the foreseeable future. In October 2024, the Company sold 100 % of the share capital of CBlade for cash consideration. No material tax resulted from the sale. The only non-U.S subsidiaries the Company has are the two Ireland non-operating entities and as of September 30, 2025, the Company’s Ireland subsidiaries had accumulated deficits of approximately $ 2 . 9. Retirement Benefit Plans Defined Benefit Plans The Company and certain of its subsidiaries sponsor three defined benefit pension plans covering some of its employees. The Company’s funding policy for its defined benefit pension plans is based on an actuarially determined cost method allowable under Internal Revenue Service regulations. One of the defined benefit pension plans covers non-union employees of the Company’s U.S. operations who were hired prior to March 1, 2003. Benefit accruals ceased in March 2003. A second defined benefit plan covered employees at a business location that closed in December 2013, at which time benefits accruals ceased. The third defined pension plan covers one of the Company’s union groups at the Cleveland location. Benefits accruals under this plan ceased in March 2020, when the then-current union disclaimed all interest in the bargaining unit. Curtailment occurred; however, there was no impact to consolidated financial statements. A new union was certified and the collective bargaining agreement was finalized in December 2021, at which time it was agreed that the defined benefit plan would be frozen and retirement benefits are to be provided through a defined contribution plan. The Company uses a September 30 measurement date for its U.S. defined benefit pension plans. Net pension expense, benefit obligations and plan assets for the Company-sponsored defined benefit pension plans consist of the following: Years Ended September 30, 2025 2024 Service cost $ 174 $ 181 Interest cost 944 1,072 Expected return on plan assets ( 1,057 ) ( 1,046 ) Amortization of net loss 90 143 Settlement cost — 60 Net pension expense for defined benefit plans (non-operating expense) $ 151 $ 410 52 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The status of all defined benefit pension plans at September 30 is as follows: 2025 2024 Benefit obligations: Benefit obligations at beginning of year $ 20,888 $ 20,345 Service cost 174 181 Interest cost 944 1,072 Actuarial (gain) loss ( 898 ) 1,313 Benefits paid ( 1,874 ) ( 2,023 ) Benefit obligations at end of year $ 19,234 $ 20,888 Plan assets: Plan assets at beginning of year $ 18,376 $ 17,194 Actual return on plan assets 1,568 3,076 Employer contributions 332 129 Benefits paid ( 1,874 ) ( 2,023 ) Plan assets at end of year $ 18,402 $ 18,376 Underfunded status at end of year $ ( 832 ) $ ( 2,512 ) As shown within the above table, there was an decrease in the benefit obligation of $ 1,654 to $ 19,234 at September 30, 2025 compared with $ 20,888 at September 30, 2024. The primary drivers that attributed to the change pertained to increase in the discount rate used along with demographic changes. Plans in which Assets Exceed Benefit Obligations at September 30, Plans in which Benefit Obligations Exceed Assets at September 30, 2025 2024 2025 2024 Reconciliation of funded status: Plan assets in excess of (less than) projected benefit obligations $ 420 $ — $ ( 1,252 ) $ ( 2,512 ) Amounts recognized in accumulated other comprehensive income (loss): Net loss 1,459 — 642 3,599 Prior service cost — — — — Net amount recognized in the consolidated balance sheets $ 1,879 $ — $ ( 610 ) $ 1,087 Amounts recognized in the consolidated balance sheets are: Other assets $ 420 $ — $ — $ — Accrued liabilities — — ( 46 ) ( 47 ) Pension liability — — ( 1,206 ) ( 2,465 ) Accumulated other comprehensive income (loss) – pretax 1,459 — 642 3,599 Net amount recognized in the consolidated balance sheets $ 1,879 $ — $ ( 610 ) $ 1,087 Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans: Years Ended September 30, 2025 2024 Discount rate for liabilities 5.1 % 4.8 % Discount rate for expenses 4.9 % 5.7 % Expected return on assets 6.2 % 6.2 % 53 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The Company holds its 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. However, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement result. The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2025 and 2024: September 30, 2025 Asset Amount Level 1 U.S. equity securities: Large blend $ 3,499 $ 3,499 Large growth 1,712 1,712 Mid blend 861 861 Small growth 679 679 Non-U.S. equity securities: Foreign large blend 614 614 Diversified emerging markets 1,034 1,034 Global equity securities 826 826 U.S. debt securities: Intermediate term bond 4,977 4,977 Multi-sector bond 3,956 3,956 Stable value: Cash or money market 244 244 Total plan assets at fair value $ 18,402 $ 18,402 September 30, 2024 Asset Amount Level 1 U.S. equity securities: Large blend 3,796 3,796 Large growth 1,458 1,458 Mid blend 775 775 Small growth 633 633 Non-U.S. equity securities: Foreign large blend 770 770 Diversified emerging markets 338 338 Global equity securities 702 702 U.S. debt securities: Intermediate term bond 5,764 5,764 Multi-sector bond 3,697 3,697 Stable value: Cash or money market 443 443 Total plan assets at fair value $ 18,376 $ 18,376 54 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Investment objectives relative to the assets of the Company’s defined benefit pension plans are to (i) optimize the long-term return on the plans’ assets while assuming an acceptable level of investment risk; (ii) maintain an appropriate diversification across asset categories and among investment managers; and (iii) maintain a careful monitoring of the risk level within each asset category. Asset allocation objectives are established to promote optimal expected returns and volatility characteristics given the long-term time horizon for fulfilling the obligations of the Company’s defined benefit pension plans. Selection of the appropriate asset allocation for the plans’ assets was based upon a review of the expected return and risk characteristics of each asset category in relation to the anticipated timing of future plan benefit payment obligations. The Company has a long-term objective for the allocation of plan assets. However, the Company realizes that actual allocations at any point in time will likely vary from this objective due principally to (i) the impact of market conditions on plan asset values and (ii) required cash contributions to and distribution from the plans. The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the plans’ investments to vary around the objective without triggering a reallocation of the assets, as noted by the following: Percent of Plan Assets at September 30, Asset Allocation Range 2025 2024 U.S. equities 37 % 36 % 30 % to 70 % Non-U.S. equities 13 % 10 % 0 % to 20 % U.S. debt securities 49 % 52 % 20 % to 70 % Non-U.S. debt securities — % — % 0 % to 10 % Other securities 1 % 2 % 0 % to 60 % Total 100 % 100 % External consultants assist the Company with monitoring the appropriateness of the above investment strategy and the related asset mix and performance. To develop the expected long-term rate of return assumptions on plan assets, generally the Company uses long-term historical information for the target asset mix selected. Adjustments are made to the expected long-term rate of return assumptions when deemed necessary based upon revised expectations of future investment performance of the overall investments markets. The Company anticipates making approximately $ 447 in contributions to its defined benefit pension plans during fiscal 2026. The following defined benefit payment amounts are expected to be made in the future: Years Ending September 30, Projected Benefit Payments 2026 $ 2,168 2027 1,575 2028 1,547 2029 1,459 2030 1,567 2031-2035 6,878 Multi-Employer Plan One of the bargaining units previously participated in a multi-employer plan; however, as part of the ratification of a new collective bargaining agreement in December 2019, there was a provision to withdraw from the existing multi-employer plan effective December 31, 2019. The withdrawal resulted in a liability of $ 739 , which was recorded within the costs of goods sold line in fiscal 2020 of the consolidated statements of operations and is included in other long-term liabilities. The liability is payable in quarterly installments over the next 20 years. The next four quarterly installments are recorded in accrued liabilities of the consolidated balance sheet. Defined Contribution Plans Substantially all non-union U.S. employees of the Company and its U.S. subsidiaries are eligible to participate in the Company’s U.S. defined contribution plan. The Company makes non-discretionary, regular matching contributions to this plan equal to an amount that represents one hundred percent ( 100 %) of a participant’s deferral contribution up to one percent ( 1 %) of eligible compensation plus eighty percent ( 80 %) of a participant’s deferral contribution between one percent ( 1 %) and six percent ( 6 %) of eligible compensation. The Company’s regular matching contribution expense for its U.S. defined 55 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) contribution plan in fiscal 2025 and 2024 was $ 534 and $ 550 , respectively. This defined contribution plan provides that the Company may also make an additional discretionary matching contribution during those periods in which the Company achieves certain performance levels. The Company did not provide additional discretionary matching contributions in either fiscal 2025 and 2024. The Company sponsors two defined contribution plans for the Cleveland bargaining units that either withdrew from the multi-employer plan (union) pension plan or bargained to freeze the company-sponsored pension plan. Impacted employees were enrolled into one of two newly formed defined contribution plans. The Company makes a non-elective contribution equal to $ 1.50 or $ 1.25 per work, vacation, or holiday hour, up to a maximum of 40 hours per week. The Company’s non-elective contribution expense was $ 244 in fiscal 2025 and $ 228 in fiscal 2024. 10. Stock-Based Compensation The Company has awarded performance and restricted shares under the Company’s 2007 Long-Term Incentive Plan (“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”). The aggregate number of shares that may be awarded by the Company under the 2016 Plan is 1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. 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 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. With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. The Company is not recognizing compensation expense for three tranches of awards as it has concluded it is not probable that the performance criteria for those awards will be met. During each future reporting period, such expense may be subject to adjustment based upon the Company’s financial performance, which impacts the number of shares that it expects to vest upon the completion of a performance period. The performance shares were valued at the closing market price of the Company’s common shares on the date of grant. The vesting of such shares is determined at the end of the performance period. The Company has awarded restricted shares to certain of its directors, officers and other employees of the Company. The restricted shares were valued at the closing market price of the Company’s common shares on the date of grant, and such value was recorded as unearned compensation. The unearned compensation is being amortized ratably over the restricted stock vesting period of one ( 1 ) year or three ( 3 ) years. If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximatel y 375 sh ares that remain available for award at September 30, 2025. If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to the maximum of 200 % or 150 % of such target, then a fewer number of shares would be available for award. Stock-based compensation under the 2016 Plan was expense of $ 173 and $ 250 for fiscal 2025 and 2024 , respectively. As of September 30, 2025 , there was $ 117 of total unrecognized compensation cost rel ated to the performance and restricted shares awarded under the 2016 Plan. The Company expects to recognize this cost over the next year. 56 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) The following is a summary of activity related to performance and restricted shares: 2025 2024 Number of Shares Weighted Average Fair Value at Date of Grant Number of Shares Weighted Average Fair Value at Date of Grant Outstanding at beginning of year 185 $ 3.81 233 $ 4.65 Restricted shares awarded 57 3.78 113 3.42 Restricted shares earned ( 67 ) 4.67 ( 82 ) 3.62 Performance shares awarded — — 46 3.60 Awards forfeited ( 47 ) 3.32 ( 125 ) 5.07 Outstanding at end of year 128 $ 3.52 185 $ 3.81 11. Leases The components of lease expense were as follows: Years Ended September 30, 2025 2024 Lease expense Finance lease expense: Amortization of right-of use assets on finance leases $ 48 $ 7 Interest on lease liabilities 6 — Operating lease expense 1,664 1,639 Variable lease cost 57 78 Total lease expense $ 1,775 $ 1,724 The following table presents the impact of leasing on the consolidated balance sheet at September 30: Classification to the consolidated balance sheets 2025 2024 Assets: Finance lease assets Property, plant and equipment, net $ 95 $ 4 Operating lease assets Operating lease right-of-use assets, net 12,543 13,326 Total lease assets $ 12,638 $ 13,330 Current liabilities: Finance lease liabilities Current maturities of long-term debt $ 46 $ — Operating lease liabilities Short-term operating lease liabilities 959 879 Non-current liabilities: Finance lease liabilities Long-term finance lease, net of short-term 51 — Operating lease liabilities Long-term operating lease liabilities, net of short-term 12,230 13,035 Total lease liabilities $ 13,286 $ 13,914 57 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) Supplemental cash flow and other information related to leases were as follows: September 30, 2025 September 30, 2024 Other Information Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 1,664 $ 1,639 Operating cash flows from finance leases 5 — Financing cash flows from finance leases 42 — Right-of-use assets obtained in exchange for new lease liabilities: Finance leases $ 139 — Operating leases 204 — September 30, 2025 September 30, 2024 Weighted-average remaining lease term (years): Finance leases 2.1 0.0 Operating leases 10.8 11.7 Weighted-average discount rate: Finance leases 5.17 % — % Operating leases 5.95 % 5.93 % Future minimum lease payments under non-cancellable leases as of September 30, 2025 were as follows: Year ending September 30, Operating Leases 2026 $ 1,690 2027 1,711 2028 1,592 2029 1,534 2030 1,538 Thereafter 9,739 Total lease payments $ 17,804 Less: Imputed interest ( 4,615 ) Present value of lease liabilities $ 13,189 12. Commitments and Contingencies 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. On December 30, 2022, the Company experienced a cybersecurity incident involving unauthorized access to certain systems. The Company engaged cyber security external experts, remediated the issue, and notified affected individuals in accordance to applicable requirements. The Company maintains cybersecurity insurance coverage and received $ 627 of credits from a service provider in fiscal 2024 related to the incident. As of September 30, 2025, no amounts remained outstanding related to this matter and as of September 30, 2024, the Company had $ 197 , respectively, included within accounts payable on the consolidated balance sheets. All costs were recognized as incurred. 58 Table of Contents SIFCO Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Continued) 13. Segment Information The Company identifies itself as one operating segment, SIFCO, which is a manufacturer of forgings and machined components for the A&E markets. The Company's CODM is the Chief Executive Officer. The CODM has the ultimate decision-making authority for resource allocation and assessing the performance of the Company. As such, the CODM reviews the loss from continuing operations as a measure of segment profit or loss, as well as segment expense included in the below table, to evaluate operating performance, generate future operating plans and make strategic decisions. The CODM also uses these measures in monitoring plan versus actual results. The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets. Years Ended September 30, 2025 2024 Net sales $ 84,815 $ 79,633 Less: Cost of goods sold 74,230 73,651 Selling, general and administrative expenses 10,395 11,128 Other¹ 1,123 3,480 Loss from continuing operations $ ( 933 ) $ ( 8,626 ) ¹ Other items include loss on disposal of operating assets, interest expense, gain on forgiven loan, foreign currency exchange loss (gain), other (income) expense, and income tax expense. General Information Geographic net sales are based on location of customer. The United States of America is the single largest country for unaffiliated customer sales, accounting for 75 % and 77 % of consolidated net sales in fiscal 2025 and 2024, respectively. No other single country represents greater than 10% of consolidated net sales in fiscal 2025 and 2024. Net sales to unaffiliated customers located in various European countries accounted for 7 % and 8 % of consolidated net sales in fiscal 2025 and 2024, respectively. Net sales to unaffiliated customers located in various Asian countries accounted for 10 % and 8 % of consolidated net sales in fiscal 2025 and 2024, respectively. Other North American countries represent 6 % and 6 % of consolidated net sales in fiscal 2025 and 2024, respectively. All of the Company’s continuing operations and identifiable assets not held for sale are located within the United States. 2025 2024 Long-Lived Assets United States $ 38,303 $ 43,437 14. Related Party Transactions 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. 15. Subsequent Events The Company has evaluated subsequent events through December 22, 2025, and has determined that the following subsequent events require disclosure in the financial statements. The Company is a party to collective bargaining agreements (“CBA”) with certain employees within the Cleveland location. The second bargaining unit CBA expired on March 31, 2025. The Company continued to be in negotiations with unit 2, who continued to work under the terms of the expired CBA. Subsequent to year-end, the new CBA took effect on October 4, 2025 and contains similar terms and conditions as the expired CBA. 59 Table of Contents Schedule II SIFCO Industries, Inc. and Subsidiaries Valuation and Qualifying Accounts Years Ended September 30, 2025 and 2024 (Amounts in thousands) Balance at Beginning of Period Additions (Reductions) Charged to Expense Additions (Reductions) Charged to Other Accounts Deductions Balance at End of Period Year Ended September 30, 2025 Deducted from asset accounts Allowance for credit losses $ 117 $ 102 $ — $ ( 68 ) (a) $ 151 Inventory valuation accounts ¹ 2,733 3,014 5 167 (b) 5,919 Inventory LIFO reserve 10,496 401 — — 10,897 Deferred tax valuation allowance 10,900 116 ( 364 ) — 10,652 Accrual for estimated liability Workers’ compensation reserve 303 89 — ( 191 ) (c) 201 Year Ended September 30, 2024 Deducted from asset accounts Allowance for credit losses 237 ( 90 ) — ( 30 ) (a) 117 Inventory valuation accounts ¹ 2,164 489 — 80 (b) 2,733 Inventory LIFO reserve 9,634 862 — — 10,496 Deferred tax valuation allowance 9,112 2,000 ( 212 ) — 10,900 Accrual for estimated liability Workers’ compensation reserve 559 ( 49 ) — ( 207 ) (c) 303 Note: all historical amounts have been retrospectively adjusted to represent balances and activity from continuing operations. ¹ Inventory valuation accounts reflect the impact of excess and obsolete and net realizable value inventory write downs. (a) Accounts determined to be uncollectible, net of recoveries (b) Inventory sold or otherwise disposed (c) Payment of workers’ compensation claims Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.