[Executive Summary](index=1&type=section&id=Executive%20Summary) SIFCO Industries reported Q2 and H1 FY2025 results, highlighting strategic focus on margin improvement, increased throughput, and growing backlog [Announcement & Strategic Focus](index=1&type=section&id=Announcement%20%26%20Strategic%20Focus) SIFCO Industries announced Q2 and H1 FY2025 results, emphasizing margin improvement, throughput, and growing backlog despite Q2 raw material challenges - The second quarter focused on identifying opportunities for **margin improvement** and increasing **throughput** at both plants[4](index=4&type=chunk) - **Raw material sourcing challenges** negatively impacted Q2 sales, but year-to-date performance trends favorably[4](index=4&type=chunk) - The company's backlog grew to **$129.2 million**, reflecting strong ongoing demand for products[4](index=4&type=chunk) [Second Quarter Fiscal 2025 Financial Results](index=1&type=section&id=Second%20Quarter%20Results) SIFCO Industries reported a decrease in Q2 FY2025 net sales, an improved net loss, positive EBITDA, and a decline in Adjusted EBITDA [Key Financial Highlights (Q2)](index=1&type=section&id=Key%20Financial%20Highlights%20(Q2)) Q2 FY2025 saw decreased net sales, improved net loss from continuing operations, positive EBITDA, and a decline in Adjusted EBITDA Second Quarter Financial Highlights | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net sales | $19.0 million | $20.5 million | -7.3% | | Net loss from continuing operations | $(1.3) million | $(2.2) million | Improved | | Net loss from discontinued operations | $(0.1) million | $0.6 million | Decreased | | EBITDA | $0.4 million | $(0.2) million | Improved | | Adjusted EBITDA | $(0.2) million | $0.2 million | Decreased | [Consolidated Condensed Statements of Operations (Q2)](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20(Q2)) Q2 consolidated operations show decreased net sales, increased gross profit, and reduced operating and net loss from continuing operations Consolidated Condensed Statements of Operations (Q2) | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net sales | $19,027 | $20,515 | | Cost of goods sold | 17,457 | 19,021 | | Gross profit | 1,570 | 1,494 | | Selling, general and administrative expenses | 2,351 | 2,819 | | Operating loss | (781) | (1,329) | | Loss from continuing operations before income tax expense | (1,247) | (2,227) | | Loss from continuing operations | (1,322) | (2,232) | | (Loss) income from discontinued operations, net of tax | (70) | 642 | | Net loss | $(1,392) | $(1,590) | | Basic and diluted loss per share from continuing operations | $(0.22) | $(0.38) | | Basic and diluted (loss) earnings per share from discontinued operations | (0.01) | 0.11 | | Basic and diluted loss per share | $(0.23) | $(0.27) | [Non-GAAP Financial Measures (Q2)](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20(Q2)) Q2 FY2025 non-GAAP reconciliation shows positive EBITDA of **$370 thousand** and negative Adjusted EBITDA of **$(158) thousand** Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Q2) | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(1,392) | $(1,590) | | Less: (Loss) income from discontinued operations, net of tax | (70) | 642 | | Loss from continuing operations | (1,322) | (2,232) | | Adjustments: | | | | Depreciation and amortization expense | 1,189 | 1,180 | | Interest expense, net | 428 | 818 | | Income tax expense | 75 | 5 | | **EBITDA** | **370** | **(229)** | | Adjustments: | | | | (1) Foreign currency exchange loss (gain), net | 1 | (3) | | (2) Other expense, net | 37 | 85 | | (3) Gain on disposal of assets | — | 4 | | (4) Non-recurring severance expense adjustments | 3 | — | | (4) Equity compensation | 67 | 85 | | (5) Transaction-related expense adjustments | 1 | — | | (6) LIFO impact | (637) | 58 | | (7) IT incident costs, net | — | 24 | | (8) Strategic alternative expense | — | 132 | | **Adjusted EBITDA** | **$(158)** | **$156** | [First Half Fiscal 2025 Financial Results](index=1&type=section&id=First%20Half%20Results) SIFCO Industries reported increased H1 FY2025 net sales, significantly improved net loss, EBITDA, and Adjusted EBITDA [Key Financial Highlights (H1)](index=1&type=section&id=Key%20Financial%20Highlights%20(H1)) H1 FY2025 saw increased net sales, improved net loss from continuing operations, and substantial improvements in EBITDA and Adjusted EBITDA First Half Financial Highlights | Metric | H1 FY2025 | H1 FY2024 | Change | | :-------------------------------- | :--------- | :--------- | :----- | | Net sales | $39.9 million | $36.0 million | +10.9% | | Net loss from continuing operations | $(3.7) million | $(6.3) million | Improved | | Net income from discontinued operations | < $0.1 million | $1.3 million | Decreased | | EBITDA | $(0.4) million | $(2.7) million | Improved | | Adjusted EBITDA | $(0.4) million | $(1.7) million | Improved | [Consolidated Condensed Statements of Operations (H1)](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20(H1)) H1 consolidated operations show increased net sales and gross profit, significantly reducing operating and net loss from continuing operations Consolidated Condensed Statements of Operations (H1) | Metric (Thousands USD) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net sales | $39,910 | $35,989 | | Cost of goods sold | 37,412 | 35,040 | | Gross profit | 2,498 | 949 | | Selling, general and administrative expenses | 5,191 | 5,922 | | Operating loss | (2,693) | (4,977) | | Loss from continuing operations before income tax expense | (3,664) | (6,291) | | Loss from continuing operations | (3,744) | (6,302) | | (Loss) income from discontinued operations, net of tax | 36 | 1,289 | | Net loss | $(3,708) | $(5,013) | | Basic and diluted loss per share from continuing operations | $(0.62) | $(1.05) | | Basic and diluted (loss) earnings per share from discontinued operations | 0.01 | 0.21 | | Basic and diluted loss per share | $(0.61) | $(0.84) | [Non-GAAP Financial Measures (H1)](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20(H1)) H1 FY2025 non-GAAP reconciliation shows improved EBITDA to **$(397) thousand** and Adjusted EBITDA to **$(406) thousand** Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (H1) | Metric (Thousands USD) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net loss | $(3,708) | $(5,013) | | Less: (Loss) income from discontinued operations, net of tax | 36 | 1,289 | | Loss from continuing operations | (3,744) | (6,302) | | Adjustments: | | | | Depreciation and amortization expense | 2,370 | 2,412 | | Interest expense, net | 897 | 1,160 | | Income tax expense | 80 | 11 | | **EBITDA** | **(397)** | **(2,719)** | | Adjustments: | | | | (1) Foreign currency exchange loss (gain), net | (1) | 1 | | (2) Other expense, net | 75 | 154 | | (3) Gain on disposal of assets | — | 4 | | (4) Non-recurring severance expense adjustments | (19) | — | | (4) Equity compensation | 88 | 171 | | (5) Transaction-related expense adjustments | (16) | — | | (6) LIFO impact | (136) | 351 | | (7) IT incident costs, net | — | 23 | | (8) Strategic alternative expense | — | 320 | | **Adjusted EBITDA** | **$(406)** | **$(1,695)** | [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) SIFCO's balance sheet shows decreased total assets and current liabilities, alongside an increase in total shareholders' equity [Balance Sheet Summary](index=4&type=section&id=Balance%20Sheet%20Summary) As of March 31, 2025, total assets and current liabilities decreased, while total shareholders' equity increased Key Balance Sheet Items (Thousands USD) | Metric | March 31, 2025 | September 30, 2024 | Change | | :-------------------------------- | :------------- | :----------------- | :----- | | Total assets | $78,829 | $104,624 | Decreased | | Total current assets | $38,099 | $54,323 | Decreased | | Total current liabilities | $30,391 | $54,010 | Decreased | | Total shareholders' equity | $32,367 | $30,425 | Increased | - Current assets of discontinued operations decreased from **$15,967 thousand** to **$0**, reflecting completion of operations[10](index=10&type=chunk) - Current maturities of long-term debt increased from **$353 thousand** to **$3,089 thousand**, while Revolver balance decreased from **$20,142 thousand** to **$8,959 thousand**[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=1&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section defines and explains the rationale and limitations of SIFCO's non-GAAP financial measures, including management's approach [Definition and Rationale](index=5&type=section&id=Definition%20and%20Rationale) SIFCO uses non-GAAP measures like EBITDA and Adjusted EBITDA to supplement GAAP results and evaluate operating performance - **EBITDA** and **Adjusted EBITDA** are non-GAAP measures supplementing GAAP results[5](index=5&type=chunk)[11](index=11&type=chunk) - Management uses these measures to evaluate operating performance, debt servicing ability, and prospective acquisitions[12](index=12&type=chunk) [Limitations and Management's Approach](index=5&type=section&id=Limitations%20and%20Management%27s%20Approach) Non-GAAP measures have limitations, not reflecting interest, cash for assets, or taxes; management uses them with other GAAP measures - Neither **EBITDA** nor **Adjusted EBITDA** are GAAP financial performance measures and should not be considered in isolation[12](index=12&type=chunk)[13](index=13&type=chunk) - Limitations include not reflecting interest expense, cash requirements for asset replacement, amortization, or tax payments[15](index=15&type=chunk) - Management compensates by using other GAAP measures like net income/loss, net sales, and operating income/loss[13](index=13&type=chunk) [Additional Information](index=1&type=section&id=Additional%20Information) This section provides SIFCO's company profile, details on forward-looking statements, risk factors, and investor relations contacts [Company Profile](index=2&type=section&id=Company%20Profile) SIFCO Industries specializes in forgings and machined components for aerospace and energy, offering forging, heat-treating, coating, and machining - SIFCO Industries, Inc. produces **forgings** and **machined components**[8](index=8&type=chunk) - Primary markets served are **aerospace** and **energy**[8](index=8&type=chunk) - Processes and services include forging, heat-treating, coating, and machining[8](index=8&type=chunk) [Forward-Looking Statements & Risk Factors](index=1&type=section&id=Forward-Looking%20Language) Forward-looking statements are subject to risks and uncertainties; detailed risk factors are available in SEC filings like Form 10-K - Statements on financial results and future business development are forward-looking and subject to risks[6](index=6&type=chunk) - Potential risks include economic conditions, pandemics, competition, and other industry uncertainties[7](index=7&type=chunk) - Detailed risk factors are available in the Company's Annual Report on Form 10-K and other SEC filings[7](index=7&type=chunk) [Investor Relations & Footnotes](index=2&type=section&id=Contacts) This section provides SIFCO's contact information, SEC filing access, and explanations for non-GAAP adjustments - Company's SEC filings, including Form 10-K, are accessible via www.sifco.com or www.sec.gov[8](index=8&type=chunk) - Contact SIFCO Industries, Inc. via Jennifer Wilson at **216-881-8600**[17](index=17&type=chunk) - Footnotes define non-GAAP adjustments for foreign currency, other expense, asset disposal, severance, equity compensation, and more[17](index=17&type=chunk)

Part I. Financial Information This section presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated condensed financial statements and related notes for SIFCO Industries, Inc. for the periods ended March 31, 2025 and 2024 [Consolidated Condensed Statements of Operations](index=2&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss for the three and six months ended March 31, 2025 and 2024 **Three Months Ended March 31, 2025 vs. 2024 (Amounts in thousands)** | Metric | 2025 | 2024 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Net sales | $19,027 | $20,515 | $(1,488) | -7.25% | | Gross profit | $1,570 | $1,494 | $76 | 5.09% | | Operating loss | $(781) | $(1,329) | $548 | -41.23% | | Loss from continuing operations | $(1,322) | $(2,232) | $910 | -40.77% | | Net loss | $(1,392) | $(1,590) | $198 | -12.45% | | Basic and diluted loss per share | $(0.23) | $(0.27) | $0.04 | -14.81% | **Six Months Ended March 31, 2025 vs. 2024 (Amounts in thousands)** | Metric | 2025 | 2024 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Net sales | $39,910 | $35,989 | $3,921 | 10.90% | | Gross profit | $2,498 | $949 | $1,549 | 163.22% | | Operating loss | $(2,693) | $(4,977) | $2,284 | -45.89% | | Loss from continuing operations | $(3,744) | $(6,302) | $2,558 | -40.59% | | Net loss | $(3,708) | $(5,013) | $1,305 | -26.03% | | Basic and diluted loss per share | $(0.61) | $(0.84) | $0.23 | -27.38% | [Consolidated Condensed Statements of Comprehensive Income (Loss)](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income%20(Loss)) This statement presents the net loss and other comprehensive income or loss components for the three and six months ended March 31, 2025 and 2024 **Three Months Ended March 31, 2025 vs. 2024 (Amounts in thousands)** | Metric | 2025 | 2024 | Change | | :------------------------------------ | :------- | :------- | :----- | | Net loss | $(1,392) | $(1,590) | $198 | | Other comprehensive income (loss): | | | | | Foreign currency translation adjustment, net of tax | — | $(128) | $128 | | Retirement plan liability adjustment, net of tax | $22 | $43 | $(21) | | Comprehensive (loss) income | $(1,370) | $(1,675) | $305 | **Six Months Ended March 31, 2025 vs. 2024 (Amounts in thousands)** | Metric | 2025 | 2024 | Change | | :------------------------------------ | :------- | :------- | :------- | | Net loss | $(3,708) | $(5,013) | $1,305 | | Other comprehensive income (loss): | | | | | Reclassification of foreign translation adjustments to net loss | $5,554 | — | $5,554 | | Retirement plan liability adjustment, net of tax | $45 | $86 | $(41) | | Comprehensive (loss) income | $1,889 | $(4,801) | $6,690 | [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity as of March 31, 2025 and September 30, 2024 **As of March 31, 2025 vs. September 30, 2024 (Amounts in thousands)** | Metric | March 31, 2025 | September 30, 2024 | Change | % Change | | :----------------------------------- | :------------- | :----------------- | :----- | :------- | | Total current assets | $38,099 | $54,323 | $(16,224) | -29.87% | | Total assets | $78,829 | $104,624 | $(25,795) | -24.65% | | Total current liabilities | $30,391 | $54,010 | $(23,619) | -43.73% | | Total liabilities and shareholders' equity | $78,829 | $104,624 | $(25,795) | -24.65% | | Total shareholders' equity | $32,367 | $30,425 | $1,942 | 6.38% | [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) This statement outlines the cash inflows and outflows from operating, investing, and financing activities for the six months ended March 31, 2025 and 2024 **Six Months Ended March 31, 2025 vs. 2024 (Amounts in thousands)** | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :------- | :------- | :------- | | Net cash used for operating activities | $(970) | $(2,908) | $1,938 | | Net cash used for investing activities | $(263) | $(1,155) | $892 | | Net cash (used for) provided by financing activities | $(13,074) | $4,029 | $(17,103) | | Net cash provided by discontinued operations | $13,506 | $413 | $13,093 | | (Decrease) increase in cash and cash equivalents | $(801) | $379 | $(1,180) | | Cash and cash equivalents from continuing operations at end of period | $1,922 | $218 | $1,704 | [Consolidated Condensed Statements of Shareholders' Equity](index=8&type=section&id=Consolidated%20Condensed%20Statements%20of%20Shareholders'%20Equity) This statement details changes in the company's shareholders' equity components between September 30, 2024, and March 31, 2025 **Shareholders' Equity as of March 31, 2025 vs. September 30, 2024 (Amounts in thousands)** | Metric | March 31, 2025 | September 30, 2024 | Change | | :------------------------------------ | :------------- | :----------------- | :----- | | Common Shares (Amount) | $6,190 | $6,158 | $32 | | Additional Paid-In Capital | $11,796 | $11,775 | $21 | | Retained Earnings | $14,173 | $17,881 | $(3,708) | | Accumulated Other Comprehensive Income (Loss) | $208 | $(5,389) | $5,597 | | Total Shareholders' Equity | $32,367 | $30,425 | $1,942 | [Notes to Unaudited Consolidated Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures for the significant accounting policies and financial statement line items [Note 1. Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the foundational accounting principles and recent accounting pronouncements impacting the company's financial reporting - The Company's financial statements are consolidated and reflect the sale of its European operations (CBlade) in October 2024, with CBlade's results presented as discontinued operations retrospectively[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The U.S. dollar is the functional currency for all U.S. and non-operating non-U.S. subsidiaries. Prior to the CBlade sale, the Euro was the functional currency for other non-U.S. subsidiaries[23](index=23&type=chunk) - Recent accounting standards issued by FASB, ASU 2025-01 (Expense Disaggregation), ASU 2023-07 (Segment Reporting), and ASU 2023-09 (Income Tax Disclosures), are being assessed for their impact on the Company's financial statements, with ASU 2023-07 not anticipated to have a significant impact[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2. Discontinued Operations](index=11&type=section&id=Note%202.%20Discontinued%20Operations) This note details the sale of the company's European operations and its financial impact on the consolidated statements - The Company completed the sale of its European operations (CBlade S.p.A.) in October 2024 for approximately **$14.5 million cash**, net of transaction costs, to streamline operations and refocus on core aerospace forging business[35](index=35&type=chunk)[36](index=36&type=chunk) - The CBlade sale resulted in the recognition of a **$5.851 million cumulative translation adjustment loss** in the statement of operations, as European operations were substantially liquidated[37](index=37&type=chunk)[38](index=38&type=chunk) **Operating Results for Discontinued Operations (Amounts in thousands)** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $— | $6,028 | $622 | $11,606 | | Income from discontinued operations before income tax expense and gain on sale | $— | $685 | $214 | $1,376 | | (Loss) income from discontinued operations, net of tax | $(70) | $642 | $36 | $1,289 | [Note 3. Inventories](index=12&type=section&id=Note%203.%20Inventories) This note provides a breakdown of inventory components and valuation methods **Inventories, Net (Amounts in thousands)** | Category | March 31, 2025 | September 30, 2024 | | :---------------------- | :------------- | :----------------- | | Raw materials and supplies | $1,802 | $1,044 | | Work-in-process | $2,459 | $3,419 | | Finished goods | $1,937 | $1,767 | | Total inventories, net | $6,198 | $6,230 | - Approximately **40% of inventories** as of March 31, 2025, and **30%** as of September 30, 2024, are valued using the LIFO method. If FIFO were used for LIFO inventories, total inventories would be **$10,360 thousand higher** at March 31, 2025[40](index=40&type=chunk) [Note 4. Accumulated Other Comprehensive Income (Loss)](index=13&type=section&id=Note%204.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components of accumulated other comprehensive income or loss, including foreign currency translation adjustments **Components of Accumulated Other Comprehensive Income (Loss) (Amounts in thousands)** | Component | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Foreign currency translation adjustment | $— | $(5,554) | | Retirement plan liability adjustment, net of tax | $208 | $163 | | Interest rate swap agreement, net of tax | $— | $2 | | Total accumulated other comprehensive income (loss) | $208 | $(5,389) | - During the six months ended March 31, 2025, **$5,554 thousand** from foreign currency translation adjustment was reclassified to income from discontinued operations due to the CBlade disposition and liquidation of European operations[41](index=41&type=chunk) [Note 5. Leases](index=13&type=section&id=Note%205.%20Leases) This note presents information on lease expenses, lease assets, and lease liabilities **Total Lease Expense (Amounts in thousands)** | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three Months Ended March 31, | $445 | $431 | | Six Months Ended March 31, | $887 | $862 | **Lease Liabilities (Amounts in thousands)** | Category | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Total lease assets | $13,015 | $13,330 | | Total lease liabilities | $13,635 | $13,914 | | Weighted-average remaining lease term (Operating leases) | 11.3 years | 11.7 years | | Weighted-average discount rate (Operating leases) | 5.9% | 5.9% | [Note 6. Debt](index=15&type=section&id=Note%206.%20Debt) This note outlines the company's debt composition, new loan agreements, and compliance with loan covenants **Debt Composition (Amounts in thousands)** | Category | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Revolving credit agreement | $8,959 | $20,142 | | Term loan | $2,682 | $— | | Promissory note — related party | $— | $3,510 | | Total debt | $12,122 | $24,005 | | Total long-term debt | $74 | $— | - On October 17, 2024, the Company entered into a new Loan and Security Agreement providing a **$20 million revolving credit facility** and a **$3 million term loan**, maturing October 17, 2027. Proceeds were used to repay previous debt and for working capital[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - The Term Loan and Revolver are classified as current maturities due to a subjective acceleration clause related to collateral value. As of March 31, 2025, the Company was in compliance with all loan covenants and had **$2.595 million available** under the Revolver[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 7. Income Taxes](index=16&type=section&id=Note%207.%20Income%20Taxes) This note discusses the effective tax rate and factors contributing to its difference from the U.S. federal statutory rate - The effective tax rate for the first six months of fiscal 2025 was **(2.16)%**, a decrease from **(0.17)%** in the prior year, primarily due to changes in the jurisdictional mix of income[60](index=60&type=chunk) - The effective tax rate differs from the U.S. federal statutory rate mainly due to a valuation allowance against U.S. deferred tax assets and income in foreign jurisdictions taxed at different rates[60](index=60&type=chunk) [Note 8. Retirement Benefit Plans](index=17&type=section&id=Note%208.%20Retirement%20Benefit%20Plans) This note provides details on net periodic pension costs and cash contributions to defined benefit pension plans **Net Periodic Pension Cost (Amounts in thousands)** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Service cost | $43 | $45 | $87 | $90 | | Interest cost | $236 | $271 | $472 | $542 | | Expected return on plan assets | $(264) | $(260) | $(529) | $(521) | | Amortization of net loss | $22 | $43 | $45 | $86 | | Net periodic pension cost | $37 | $99 | $75 | $197 | - The Company made **$95 thousand** in cash contributions to its defined benefit pension plans during the first six months of fiscal 2025, compared to **$18 thousand** in the prior year[62](index=62&type=chunk) [Note 9. Stock-Based Compensation](index=17&type=section&id=Note%209.%20Stock-Based%20Compensation) This note outlines stock-based compensation grants, expense, and unrecognized compensation costs - During the first six months of fiscal 2025, the Company granted **47 time-based restricted shares** to non-employee directors and **10 time-based restricted shares** to key employees under the 2016 Plan[64](index=64&type=chunk)[65](index=65&type=chunk) **Stock-Based Compensation Expense (Amounts in thousands)** | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three Months Ended March 31, | $67 | $84 | | Six Months Ended March 31, | $88 | $171 | - As of March 31, 2025, there was **$273 thousand** of total unrecognized compensation cost related to performance and restricted shares, expected to be recognized over the next **1.2 years**[67](index=67&type=chunk) [Note 10. Revenue](index=17&type=section&id=Note%2010.%20Revenue) This note describes the company's primary product offerings and revenue breakdown by end market - The Company produces forged and machined components primarily for turbine engines (commercial, business, regional, military aircraft), airframe applications, industrial gas/steam turbine engines, and commercial space/semiconductor applications[68](index=68&type=chunk) **Revenue by End Market (Amounts in thousands)** | End Market | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Fixed wing aircraft | $14,381 | $10,080 | $27,226 | $20,019 | | Rotorcraft | $2,929 | $4,197 | $6,324 | $7,347 | | Commercial space | $593 | $4,027 | $3,041 | $5,360 | | Energy components for power generation units | $686 | $442 | $1,713 | $1,055 | | Commercial product and other revenue | $438 | $1,769 | $1,606 | $2,208 | | Total | $19,027 | $20,515 | $39,910 | $35,989 | - Approximately **57% of total net sales** for the six months ended March 31, 2025, were recognized over time due to continuous transfer of control to the customer, compared to **53%** in the prior year[72](index=72&type=chunk) [Note 11. Commitments and Contingencies](index=19&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal actions and its assessment of their materiality - The Company is involved in ordinary legal actions but does not believe any are material to its financial condition or results of operations. It maintains various liability insurance coverages[77](index=77&type=chunk) [Note 12. Related Party Transactions](index=19&type=section&id=Note%2012.%20Related%20Party%20Transactions) This note details the repayment of outstanding amounts under a secured subordinated loan from a related party - In October 2024, the Company repaid all outstanding amounts under its secured subordinated loan from Garnet Holdings, Inc. (GHI), a related party, including accrued paid-in-kind interest and fees totaling **$880 thousand** and **$150 thousand** respectively[78](index=78&type=chunk) [Note 13. Business Information](index=19&type=section&id=Note%2013.%20Business%20Information) This note provides updates on the company's collective bargaining agreements with its labor unions - The Company reached an agreement on a new Collective Bargaining Agreement (CBA) with IAM for its Cleveland bargaining unit 1, effective May 15, 2025. Negotiations are ongoing with IBB for the second bargaining unit, with a new agreement anticipated in Q3 fiscal 2025[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial performance, condition, liquidity, and capital resources for the periods presented - The Company primarily produces forgings and machined components for the aerospace and energy (A&E) and commercial space markets, operating under one business segment[83](index=83&type=chunk) - Higher net sales volumes are expected to result in greater operating income due to leveraging the fixed component of the cost structure[85](index=85&type=chunk) [A. Results of Operations](index=20&type=section&id=A.%20Results%20of%20Operations) This subsection analyzes the company's operational performance, including sales, gross profit, and net loss, for the periods presented [Overview](index=20&type=section&id=Overview) This overview describes the company's core manufacturing activities and key end markets - The Company manufactures forged components for turbine engines (commercial, business, military aircraft), airframe applications, industrial gas/steam turbine engines, and commercial space/semiconductor applications[86](index=86&type=chunk) [CBlade Sale](index=20&type=section&id=CBlade%20Sale) This section discusses the strategic sale of European operations and its impact on financial reporting - In October 2024, the Company sold its European operations (CBlade S.p.A.) to streamline operations and refocus on its core aerospace forging business. Financial statements have been retrospectively adjusted to present CBlade as discontinued operations[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) [Backlog of Orders](index=21&type=section&id=Backlog%20of%20Orders) This section provides an overview of the company's order backlog and its drivers **Backlog of Orders (Amounts in millions)** | Metric | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | Total backlog | $129.2 | $122.9 | | Anticipated to be complete within 12 months | $98.9 | N/A | - The increase in backlog is primarily attributed to recovery in the aerospace markets[90](index=90&type=chunk) [Three Months Ended March 31, 2025 compared with Three Months Ended March 31, 2024](index=21&type=section&id=Three%20Months%20Ended%20March%2031%2C%202025%20compared%20with%20Three%20Months%20Ended%20March%2031%2C%202024) This section analyzes the financial performance for the three-month period, highlighting changes in sales, gross profit, and operating loss **Net Sales by End Market (Amounts in millions)** | End Market | 2025 | 2024 | Increase/(Decrease) | | :------------------------------------ | :--- | :--- | :------------------ | | Fixed wing aircraft | $14.4 | $10.1 | $4.3 | | Rotorcraft | $2.9 | $4.2 | $(1.3) | | Commercial space | $0.6 | $4.0 | $(3.4) | | Energy components for power generation units | $0.7 | $0.4 | $0.3 | | Commercial product and other revenue | $0.4 | $1.8 | $(1.4) | | Total Net Sales | $19.0 | $20.5 | $(1.5) | - Net sales decreased by **$1.5 million** to **$19.0 million**, primarily due to delays in commercial space programs and timing of rotorcraft and munitions orders, partially offset by higher demand in fixed-wing aircraft[91](index=91&type=chunk) - Gross profit increased slightly by **$0.1 million** to **$1.6 million**, driven by lower COGS and a favorable product mix, despite decreased sales volume[93](index=93&type=chunk)[94](index=94&type=chunk) - SG&A expenses decreased by **$0.4 million** to **$2.4 million**, mainly due to lower employee-related expenses and reduced spending on cost reduction initiatives and legal/strategic alternative expenses[95](index=95&type=chunk) - Loss from continuing operations improved by **$1.0 million** to **$1.2 million**, attributed to gross margin improvements, lower SG&A, and reduced interest expense[98](index=98&type=chunk) [Six Months Ended March 31, 2025 compared with Six Months Ended March 31, 2024](index=22&type=section&id=Six%20Months%20Ended%20March%2031%2C%202025%20compared%20with%20Six%20Months%20Ended%20March%2031%2C%202024) This section analyzes the financial performance for the six-month period, detailing changes in sales, gross profit, and operating loss **Net Sales by End Market (Amounts in millions)** | End Market | 2025 | 2024 | Increase/(Decrease) | | :------------------------------------ | :--- | :--- | :------------------ | | Fixed wing aircraft | $27.2 | $20.0 | $7.2 | | Rotorcraft | $6.3 | $7.3 | $(1.0) | | Commercial space | $3.1 | $5.4 | $(2.3) | | Energy components for power generation units | $1.7 | $1.1 | $0.6 | | Commercial product and other revenue | $1.6 | $2.2 | $(0.6) | | Total Net Sales | $39.9 | $36.0 | $3.9 | - Net sales increased by **$3.9 million** to **$39.9 million**, primarily driven by higher demand in fixed-wing aircraft and growth in steam turbine markets, partially offset by declines in commercial space and rotorcraft[99](index=99&type=chunk) - Gross profit increased significantly by **$1.6 million** to **$2.5 million**, due to higher sales volume and a favorable product mix[101](index=101&type=chunk)[102](index=102&type=chunk) - SG&A expenses decreased by **$0.7 million** to **$5.2 million**, mainly due to lower general operating expenses, employee-related costs, and legal/strategic alternative costs[103](index=103&type=chunk) - Loss from continuing operations improved by **$2.6 million** to **$3.7 million**, attributed to higher sales volumes, improved gross margins, lower SG&A, and reduced interest expense[106](index=106&type=chunk) [Non-GAAP Financial Measures (EBITDA and Adjusted EBITDA)](index=23&type=section&id=Non-GAAP%20Financial%20Measures%20(EBITDA%20and%20Adjusted%20EBITDA)) This section provides a reconciliation and explanation of non-GAAP financial measures, EBITDA and Adjusted EBITDA - EBITDA and Adjusted EBITDA are non-GAAP measures used by management to evaluate operating performance and prospective acquisitions, but should not be considered in isolation[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) **EBITDA and Adjusted EBITDA Reconciliation (Amounts in thousands)** | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(1,392) | $(1,590) | $(3,708) | $(5,013) | | Loss from continuing operations | $(1,322) | $(2,232) | $(3,744) | $(6,302) | | EBITDA | $370 | $(229) | $(397) | $(2,719) | | Adjusted EBITDA | $(158) | $156 | $(406) | $(1,695) | [B. Liquidity and Capital Resources](index=24&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) This subsection discusses the company's cash position, liquidity requirements, and sources of capital [Overview of Liquidity and Capital Resources](index=24&type=section&id=Overview%20of%20Liquidity%20and%20Capital%20Resources) This overview outlines the company's cash and cash equivalents, primary liquidity needs, and funding sources **Cash and Cash Equivalents (Amounts in millions)** | Date | Amount | | :---------------- | :----- | | March 31, 2025 | $1.9 | | September 30, 2024 | $1.7 | - Primary liquidity requirements include working capital, capital expenditures, debt payments, and general corporate needs. Main sources are cash flows from operations and debt agreements[113](index=113&type=chunk) - The CBlade sale increased cash on hand, used to repay debt and for operational needs. While CBlade was a material contributor, the Company believes streamlined operations will support domestic growth and satisfy liquidity requirements[114](index=114&type=chunk)[115](index=115&type=chunk) [Operating Activities](index=25&type=section&id=Operating%20Activities) This section analyzes cash flows generated from or used in the company's core operating activities - Operating activities used **$970 thousand cash** in the first six months of fiscal 2025, primarily due to a **$3.744 million net operating loss** from continuing operations, partially offset by non-cash adjustments and working capital changes[116](index=116&type=chunk) - Operating activities used **$2.908 million cash** in the first six months of fiscal 2024, mainly due to a **$6.302 million net operating loss**, partially offset by non-cash adjustments and working capital changes, including a **$4.4 million increase in inventory**[117](index=117&type=chunk) [Investing Activities](index=25&type=section&id=Investing%20Activities) This section details cash flows related to the acquisition and disposal of long-term assets **Cash Used for Investing Activities (Amounts in millions)** | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Six Months Ended March 31, | $0.3 | $1.2 | - Capital expenditures for the remainder of fiscal 2025 are anticipated to be **$1.5 million to $2.0 million**, focused on enhancing production, product offerings, and reducing operating costs[118](index=118&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) This section examines cash flows from debt, equity, and dividend transactions **Cash Flows from Financing Activities (Amounts in millions)** | Period | 2025 | 2024 | | :-------------------------------- | :----- | :--- | | Six Months Ended March 31, | $(13.1) | $4.0 | - The year-over-year decrease in cash from financing activities was primarily due to higher repayments on the revolving credit line and debt refinancing during fiscal 2025[119](index=119&type=chunk) - The Company believes it has adequate cash/liquidity from expected cash flows and available funds under its loan and security agreement for domestic operations[121](index=121&type=chunk) [C. Recent Accounting Standards](index=26&type=section&id=C.%20Recent%20Accounting%20Standards) This subsection addresses the adoption and impact assessment of recently issued accounting standards - No recent accounting standards were adopted during the six months ended March 31, 2025[123](index=123&type=chunk) Part II. Other Information This section provides additional disclosures including controls and procedures, risk factors, and exhibits [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated by the CEO and CFO and concluded to be **effective at the reasonable assurance level** as of March 31, 2025[124](index=124&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection reports on any material changes to the company's internal control over financial reporting during the quarter - There were no material changes in the Company's internal controls over financial reporting during the most recent fiscal quarter[125](index=125&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the Company's 2024 Annual Report, specifically highlighting the potential adverse impact of recently announced U.S. tariffs on aluminum and steel on the Company's business, results of operations, financial position, and cash flows - New U.S. tariffs on aluminum and steel (**25% from 10%**, effective February 10, 2025) could adversely affect the Company's business by increasing product, component, and raw material costs[128](index=128&type=chunk)[129](index=129&type=chunk) - While the Company does not anticipate a material impact due to primarily U.S.-based production, these tariffs might necessitate renegotiating commercial agreements, increasing product prices, or altering supply procurement markets[130](index=130&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amendments to agreements, certifications from the CEO and CFO, and XBRL financial information - Key exhibits include amendments to the Share Purchase Agreement, Credit Agreement, Export Credit Agreement, and Subordination and Intercreditor Agreement, as well as the new Loan and Security Agreement dated October 17, 2024[132](index=132&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included pursuant to Rule 13a-14(a) / 15d-14(a) and 18 U.S.C. Section 1350[132](index=132&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report on behalf of SIFCO Industries, Inc. - The report was signed by George Scherff, Chief Executive Officer, and Jennifer Wilson, Chief Financial Officer, on May 15, 2025[136](index=136&type=chunk)

[Company Announcement & Overview](index=1&type=section&id=Company%20Announcement%20%26%20Overview) SIFCO Industries announced its Q1 FY2025 financial results, detailed its business, and provided forward-looking statements [Announcement Details](index=1&type=section&id=Announcement%20Details) SIFCO Industries, Inc. announced its first quarter fiscal year 2025 financial results for the period ended December 31, 2024 - SIFCO Industries, Inc. (NYSE American: SIF) reported its financial results for the first quarter of fiscal year 2025, ended December 31, 2024[1](index=1&type=chunk)[2](index=2&type=chunk) [Business Description & Forward-Looking Statements](index=1&type=section&id=Business%20Description%20%26%20Forward-Looking%20Statements) SIFCO Industries manufactures forgings and machined components for aerospace and energy markets, providing forward-looking statements with inherent risks and uncertainties - SIFCO Industries, Inc. primarily manufactures forgings and machined components for the aerospace and energy markets, offering processes including forging, heat treating, coating, and machining[6](index=6&type=chunk) - The company issued forward-looking statements, indicating future results may differ materially due to economic conditions, pandemics, and competition, advising review of 10-K risk factors[5](index=5&type=chunk) [First Quarter Fiscal 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202025%20Financial%20Highlights) This section summarizes key financial performance indicators and CEO commentary on operational focus and backlog growth [Key Financial Performance Indicators](index=1&type=section&id=Key%20Financial%20Performance%20Indicators) In Q1 FY2025, SIFCO's net sales grew significantly by 35.0%, while net loss from continuing operations narrowed, and both EBITDA and Adjusted EBITDA improved Key Financial Metrics Comparison for Q1 Fiscal Year 2025 | Metric | Q1 FY2025 (million USD) | Q1 FY2024 (million USD) | Year-over-Year Change (%) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Net Sales | 20.9 | 15.5 | +35.0% | | Net Loss from Continuing Operations | (2.4) | (4.1) | Improved | | Diluted Loss Per Share from Continuing Operations | (0.40) | (0.67) | Improved | | Net Income from Discontinued Operations | 0.1 | 0.6 | Decreased | | Diluted Earnings Per Share from Discontinued Operations | 0.02 | 0.10 | Decreased | | EBITDA | (0.8) | (2.5) | Improved | | Adjusted EBITDA | (0.2) | (1.9) | Improved | [CEO Commentary & Operational Focus](index=1&type=section&id=CEO%20Commentary%20%26%20Operational%20Focus) CEO George Scherff highlighted the quarter's focus on improving plant margins and efficiency, noting continued backlog growth indicating strong market demand - CEO George Scherff stated the first quarter focused on improving margins and production efficiency at both facilities[4](index=4&type=chunk) - The company's backlog continuously increased, reaching **$121.9 million**, indicating strong product demand[4](index=4&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the condensed consolidated statements of operations and balance sheets for the reporting period [Condensed Statements of Operations](index=2&type=section&id=Condensed%20Statements%20of%20Operations) In Q1 FY2025, net sales increased 35.0% to **$20.883 million**, gross profit turned positive at **$0.928 million** from a loss, and loss from continuing operations significantly narrowed Condensed Consolidated Statements of Operations (Unaudited, in thousands of USD) | Metric | For the Three Months Ended December 31, 2024 | For the Three Months Ended December 31, 2023 | | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net Sales | $20,883 | $15,474 | | Cost of Sales | 19,955 | 16,019 | | Gross Profit (Loss) | 928 | (545) | | Selling, General and Administrative Expenses | 2,840 | 3,103 | | Operating Loss | (1,912) | (3,648) | | Interest Expense, Net | 469 | 342 | | Foreign Currency Exchange (Gain) Loss, Net | (2) | 4 | | Other Expense, Net | 38 | 69 | | Loss from Continuing Operations Before Income Taxes | (2,417) | (4,063) | | Income Tax Expense | 5 | 6 | | Loss from Continuing Operations | (2,422) | (4,069) | | Income from Discontinued Operations, Net of Tax | 106 | 647 | | Net Loss | $(2,316) | $(3,422) | | Basic and Diluted Loss Per Share from Continuing Operations | $(0.40) | $(0.67) | | Basic and Diluted Earnings Per Share from Discontinued Operations | 0.02 | 0.10 | | Basic and Diluted Loss Per Share | $(0.38) | $(0.57) | | Weighted Average Common Shares Outstanding (Basic and Diluted) | 6,016 | 5,956 | [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) As of December 31, 2024, total assets were **$80.982 million**, a decrease from September 30, 2024, primarily due to discontinued operations divestiture, with cash increasing and liabilities and equity adjusting Condensed Consolidated Balance Sheets (Unaudited, in thousands of USD) | Metric | December 31, 2024 | September 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------- | :------------------- | | **ASSETS** | | | | Cash and Cash Equivalents | $3,143 | $1,714 | | Accounts Receivable, Net | 16,848 | 17,272 | | Contract Assets | 10,119 | 10,745 | | Inventories, Net | 5,683 | 6,230 | | Current Assets of Discontinued Operations | — | 15,967 | | **Total Current Assets** | **38,935** | **54,323** | | Property, Plant and Equipment, Net | 25,347 | 26,261 | | Operating Lease Right-of-Use Assets, Net | 13,132 | 13,326 | | Goodwill | 3,493 | 3,493 | | Non-Current Assets of Discontinued Operations | — | 6,864 | | **Total Assets** | **$80,982** | **$104,624** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Current Portion of Long-Term Debt, Net | $3,227 | $353 | | Revolving Credit Facility | 12,633 | 20,142 | | Accounts Payable | 8,820 | 11,574 | | Current Liabilities of Discontinued Operations | — | 10,058 | | **Total Current Liabilities** | **31,014** | **54,010** | | Long-Term Debt, Net | 85 | — | | Long-Term Operating Lease Liabilities, Net | 12,844 | 13,035 | | Pension Liability | 2,398 | 2,465 | | **Total Stockholders' Equity** | **33,676** | **30,425** | | **Total Liabilities and Stockholders' Equity** | **$80,982** | **$104,624** | [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP metrics, outlines their purpose and limitations, and reconciles them to GAAP net loss [Definition, Purpose, and Limitations](index=4&type=section&id=Definition%2C%20Purpose%2C%20and%20Limitations) The company uses EBITDA and Adjusted EBITDA as non-GAAP metrics to supplement GAAP results, assessing operational performance and debt serviceability, while acknowledging limitations such as not reflecting cash needs for interest, taxes, depreciation, and amortization - EBITDA refers to earnings (loss) from continuing operations before interest, taxes, depreciation, and amortization, with Adjusted EBITDA including specific further adjustments[10](index=10&type=chunk) - Management considers EBITDA and Adjusted EBITDA useful metrics for evaluating operational performance, debt serviceability, and potential acquisitions[11](index=11&type=chunk) - Limitations of non-GAAP metrics include not reflecting cash requirements for interest expense, tax payments, asset replacement, or amortization of intangible assets[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) [Reconciliation of Net Loss to EBITDA and Adjusted EBITDA](index=4&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20EBITDA%20and%20Adjusted%20EBITDA) The company provided a reconciliation of net loss to EBITDA and Adjusted EBITDA for Q1 FY2025, showing EBITDA improved from **($2.489 million)** to **($0.767 million)** and Adjusted EBITDA from **($1.851 million)** to **($0.248 million)** Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands of USD) | Metric | December 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------------- | :------------------- | | Net Loss | $(2,316) | $(3,422) | | Less: Income from Discontinued Operations, Net of Tax | 106 | 647 | | Loss from Continuing Operations | (2,422) | (4,069) | | **Adjustments:** | | | | Depreciation and Amortization Expense | 1,181 | 1,232 | | Interest Expense, Net | 469 | 342 | | Income Tax Expense | 5 | 6 | | **EBITDA** | **(767)** | **(2,489)** | | **Adjustments:** | | | | (1) Foreign Currency Exchange (Gain) Loss, Net | (2) | 4 | | (2) Other Expense, Net | 38 | 69 | | (3) Non-recurring Severance Adjustment | (22) | — | | (3) Equity Compensation | 21 | 86 | | (4) Transaction Related Expense Adjustment | (17) | — | | (5) LIFO Impact | 501 | 293 | | (6) IT Event Costs, Net | — | (1) | | (7) Strategic Alternatives Costs | — | 187 | | **Adjusted EBITDA** | **$(248)** | **$(1,851)** | [Footnotes for Non-GAAP Adjustments](index=5&type=section&id=Footnotes%20for%20Non-GAAP%20Adjustments) The company provided detailed footnotes for non-GAAP adjustments, explaining the nature of foreign currency exchange, other expenses, equity compensation, transaction-related fees, LIFO impact, IT event costs, and strategic alternatives costs - Footnotes explain adjustments such as foreign currency exchange gains or losses arising from functional currency and transaction currency rate changes[13](index=13&type=chunk)[16](index=16&type=chunk) - Other expenses refer to miscellaneous non-operating income or expenses, such as pension costs or grant income[16](index=16&type=chunk) - Non-recurring severance adjustments and equity compensation relate to equity incentive expenses under the 2016 plan and executive severance[16](index=16&type=chunk) - Transaction-related expense adjustments are associated with legal fee credits from an unsuccessful acquisition of another company[16](index=16&type=chunk) - LIFO impact represents changes in inventory reserves determined using the Last-In, First-Out (LIFO) method[16](index=16&type=chunk) - IT event costs refer to incremental information technology costs (and credits) related to cybersecurity incidents and insurance claim losses[16](index=16&type=chunk) - Strategic alternatives costs refer to expenses associated with evaluating strategic alternatives[16](index=16&type=chunk) [General Information](index=5&type=section&id=General%20Information) This section provides essential contact information for the company [Contacts](index=5&type=section&id=Contacts) The company provides contact information for investors and the public - Contact: Jennifer Wilson, Phone: 216-881-8600, Company Website: www.sifco.com[16](index=16&type=chunk)

Financial Performance - Net sales for the first three months of fiscal 2025 increased by $5.4 million to $20.9 million, compared to $15.5 million in the same period of fiscal 2024[81]. - Aerospace components sales for fixed wing aircraft increased by $2.9 million to $12.8 million, while commercial space products increased by $1.1 million to $2.5 million year-over-year[81]. - Cost of goods sold (COGS) increased by $3.9 million, or 24.6%, to $20.0 million, representing 95.6% of net sales during the first three months of fiscal 2025[83]. - Gross profit improved by $1.5 million to $0.9 million in the first three months of fiscal 2025, compared to a gross loss of $0.5 million in the same period of fiscal 2024[84]. - Loss from continuing operations was $2.4 million in the first three months of fiscal 2025, an improvement from a loss of $4.1 million in the same period of fiscal 2024[89]. - Adjusted EBITDA for the first three months of fiscal 2025 was $(248) thousand, an improvement from $(1,851) thousand in the same period of fiscal 2024[93]. Operational Changes - The company sold its European operations in October 2024 to streamline operational synergies and refocus on its core aerospace forging business[77]. - The sale of the CBlade manufacturing operations has ceased future contributions from that business, impacting overall cash flows[96]. Cash Flow and Liquidity - As of December 31, 2024, cash and cash equivalents were $3.1 million, up from $1.7 million as of September 30, 2024[94]. - The company used $3.8 million of cash in operating activities during the first three months of fiscal 2025, primarily due to a net operating loss of $2.4 million[99]. - Cash provided by financing activities was $9.2 million in the first three months of fiscal 2025, compared to $2.6 million in the same period of fiscal 2024[102]. - The company believes existing cash will be sufficient to finance operations and planned capital expenditures over the next 12 months[98]. - The company reported a cash flow usage of $1.5 million in the first three months of fiscal 2024, primarily due to a net operating loss of $4.1 million[100]. - The company anticipates that cash flows from operations may be used to pay down outstanding debt amounts[103]. - The tightening of the credit market could negatively impact the company's ability to obtain additional debt financing[104]. - The company has no off-balance sheet arrangements that could materially affect its financial condition as of December 31, 2024[95]. Capital Expenditures - Capital expenditures for the first three months of fiscal 2025 were $0.1 million, with total anticipated capital expenditures for the fiscal year expected to be between $1.5 million and $2.0 million[101]. Taxation - The effective tax rate for the first three months of fiscal 2025 was (0.21)%, compared to (0.15)% for the same period in fiscal 2024[88]. Backlog - The company's total backlog as of December 31, 2024, was $121.9 million, an increase from $104.8 million as of December 31, 2023, with $90.1 million expected to be completed within the next 12 months[80].

Core Viewpoint - Zacks Investment Research has initiated coverage of SIFCO Industries, assigning a "Neutral" recommendation amid a mixed outlook for the company, which is making progress in the aerospace and energy sectors despite industry challenges [1] Company Overview - SIFCO Industries, based in Cleveland, OH, manufactures forgings, sub-assemblies, and machined components primarily for the aerospace and energy markets, specializing in forging, heat-treating, chemical processing, and machining services [2] Financial Performance - SIFCO Industries reported a 20.5% revenue increase in fiscal 2024, reaching $79.6 million, driven by strength in its aerospace and energy segments [3] - The company achieved positive adjusted EBITDA of $0.8 million in fiscal 2024, recovering from a $2.6 million loss in fiscal 2023 [3] Growth Drivers - Key factors for future growth include a strong backlog of $114.4 million at the end of fiscal 2024, up from $97.4 million the previous year, providing revenue visibility [4] - In fiscal 2025, $85 million of this backlog is scheduled for delivery, positioning the company to benefit from ongoing demand in defense and commercial aerospace [4] - SIFCO's niche expertise in high-quality forgings and components is expected to capitalize on industry trends [4] Market Positioning - SIFCO Industries' stock has underperformed compared to industry peers and the broader market over the past year, with valuation metrics reflecting investor caution regarding the company's financial health and future profitability [6] - The company's financial risks and operational challenges are currently limiting near-term upside unless sustained profitability improvements and stronger cash flow generation are demonstrated [6] Strategic Considerations - The company faces supply chain disruptions and rising labor costs, which continue to pressure profitability [5] - Higher debt costs and intense competition in the aerospace components market are additional challenges [5] - The lack of presence in next-generation aviation technologies is a concern for potential investors [5]

Financial Performance - Net sales for fiscal 2024 were $82.0 million, an increase from $27.4 million in fiscal 2023, driven by higher demand in the commercial space market[103]. - The net loss for fiscal 2024 was $8.6 million, an improvement from a net loss of $10.5 million in fiscal 2023, attributed to higher sales volumes and improved gross margins[106]. - Gross profit increased by $2.6 million to $6.0 million in fiscal 2024, with a gross margin of 7.5%, up from 5.1% in fiscal 2023[104]. - Operating loss decreased to $(5.150) million in 2024 from $(9.003) million in 2023, reflecting a reduction of approximately 42%[143]. - Net loss for the year ended September 30, 2024, was $(5.383) million, compared to $(8.692) million in 2023, showing a decrease of approximately 38.5%[144]. - Basic loss per share from continuing operations improved to $(1.44) in 2024 from $(1.77) in 2023, a positive change of about 18.6%[143]. - Comprehensive loss for the year ended September 30, 2024, was $(4.112) million, compared to $(6.659) million in 2023, indicating a reduction of approximately 38.2%[144]. Assets and Liabilities - Total current assets increased to $54,323 million as of September 30, 2024, up from $41,474 million in the previous year, representing a growth of 31%[1]. - Total assets reached $104,624 million, compared to $96,281 million as of September 30, 2023, indicating an increase of 9%[1]. - Total current liabilities rose to $54,010 million, up from $41,239 million, reflecting a 31% increase year-over-year[1]. - Shareholders' equity decreased to $30,425 million from $34,335 million, a decline of 11%[1]. - The company’s pension liability was recorded at $282 million as of September 30, 2024, down from $313 million in 2023, reflecting a decrease of approximately 10%[207]. Cash Flow and Financing - Cash and cash equivalents increased to $1.7 million at September 30, 2024, compared to $21 thousand at September 30, 2023[110]. - Cash provided by financing activities was $6.3 million in fiscal 2024, up from $4.9 million in fiscal 2023, primarily due to higher proceeds from a related party promissory note and funds drawn from the revolving credit facility[112]. - The Company expects to increase cash on hand from the sale of CBlade manufacturing operations, which will be used to repay outstanding debt and for general operational needs[110]. - The Company believes existing cash will be sufficient to finance operations and planned capital expenditures over the next 12 months, but may seek additional funding through equity or debt financing[110]. - Cash flows used in operating activities amounted to $2,648,000, a decrease from $3,760,000 in the previous year[176]. Operational Risks - The company relies on a limited number of direct and indirect customers, which could pose risks to business operations[32]. - Supply chain disruptions due to reliance on third-party suppliers could adversely affect the company's ability to meet customer demands and impact financial results[57]. - The tightening of credit markets could negatively impact the company's ability to obtain additional debt financing on favorable terms, affecting financial position and cash flows[39]. - The company has experienced cybersecurity threats that could lead to operational stoppages and increased operational costs, despite ongoing efforts to enhance cybersecurity controls[33]. - The company is subject to extensive procurement regulations related to U.S. government contracts, which could increase compliance costs and impact operating margins[31]. Business Developments - The company completed the sale of its CBlade forging and manufacturing business in October 2024, and the success of initiatives to streamline operations post-sale remains uncertain[63]. - The company sold its European operations in October 2024 to streamline operations and refocus on its core aerospace forging business[102]. - The company has contracts for programs where the period of performance may exceed one year, and future levels of defense spending by the U.S. government are uncertain, which could adversely impact sales and cash flow[31]. Tax and Valuation - The effective tax rate in fiscal 2024 was (0.4)%, compared to (0.2)% in fiscal 2023, due to changes in jurisdictional mix of income[75]. - The Company maintained a valuation allowance on U.S. deferred tax assets due to a cumulative loss position, while a $0.7 million valuation allowance was fully released for CBlade due to its cumulative income position[130]. - The Company performed its annual goodwill impairment test as of July 31, 2024, with no impairment charge identified for the Cleveland reporting unit[120]. - The Company identified indicators of impairment for the Orange, California asset group, necessitating a Step 2 test of recoverability[140].

Financial Performance - Net sales for Q4 2024 increased by 14% to $21.7 million, compared to $19.0 million in Q4 2023[13] - Net loss from continuing operations for Q4 2024 was $1.9 million, or $(0.33) per diluted share, an improvement from a net loss of $3.2 million, or $(0.53) per diluted share, in Q4 2023[13] - EBITDA for Q4 2024 was $0.8 million, compared to $(1.5) million in Q4 2023[13] - Net sales for fiscal 2024 increased by 20% to $79.6 million, compared to $66.1 million in fiscal 2023[14] - Net loss from continuing operations for fiscal 2024 was $8.6 million, or $(1.44) per diluted share, compared to a net loss of $10.5 million, or $(1.77) per diluted share, in fiscal 2023[14] - The company reported a net loss of $5.4 million for fiscal 2024, an improvement from a net loss of $8.7 million in fiscal 2023[18] - Basic loss per share from continuing operations improved to $(1.44) in fiscal 2024 from $(1.77) in fiscal 2023[18] Customer Demand - Customer backlog grew to $114.4 million at the end of fiscal 2024, indicating strong demand for the company's solutions[15] Adjusted EBITDA - Adjusted EBITDA for fiscal 2024 was $0.8 million, compared to $(2.6) million in fiscal 2023[14] - Adjusted EBITDA for the three months ended September 30, 2023, was $786,000, an improvement from a loss of $1,270,000 in the same quarter last year[21] Quarterly Performance - Net loss for the three months ended September 30, 2023, was $443,000, compared to a loss of $3,102,000 for the same period in 2022[21] - Loss from continuing operations decreased to $1,878,000 for the three months ended September 30, 2023, from $3,218,000 in the prior year[21] Expenses - Depreciation and amortization expense for the three months ended September 30, 2023, was $1,178,000, slightly down from $1,247,000 in the previous year[21] - Interest expense, net, increased to $1,015,000 for the three months ended September 30, 2023, compared to $319,000 in the same period last year[21] - Income tax expense for the three months ended September 30, 2023, was $497,000, up from $148,000 in the prior year[21] Discontinued Operations - Total income from discontinued operations for the three months ended September 30, 2023, was $1,435,000, compared to $116,000 in the same period last year[21] Non-Recurring Expenses - The company incurred a non-recurring severance expense of $435,000 during the year ended September 30, 2023[21] LIFO Impact - The company experienced a LIFO impact of $862,000 for the year ended September 30, 2023, compared to a negative impact of $305,000 in the previous year[21]

SIFCO Industries, Inc. ("SIFCO") Announces Second Quarter Fiscal 2024 Financial Results Cleveland - SIFCO Industries, Inc. (NYSE American: SIF) today announced financial results for its second quarter of fiscal 2024, which ended March 31, 2024. Second Quarter Results Year to Date Results Other Highlights CEO Peter W. Knapper stated, "EBITDA, at $926k, turned positive for the quarter as we ramp up deliveries. Our backlog continued to grow and stands at $137.8 million. We are pleased with the progress and con ...

Financial Performance - Net sales for the first six months of fiscal 2024 increased by $7.1 million to $47.6 million, compared to $40.5 million in the same period of fiscal 2023[89] - Commercial net sales accounted for 64.3% of total net sales in the first six months of fiscal 2024, up from 53.1% in the same period of fiscal 2023[90] - Net sales for the second quarter of fiscal 2024 increased by $7.4 million to $26.6 million, compared to $19.2 million in the same period of fiscal 2023[99] - Commercial net sales were 65.5% of total net sales in the second quarter of fiscal 2024, up from 59.0% in the comparable period of fiscal 2023[100] Cost and Profitability - Cost of goods sold increased by $6.6 million, or 17.5%, to $44.1 million, representing 92.7% of net sales in the first six months of fiscal 2024[91] - Gross profit increased by $0.5 million to $3.5 million in the first six months of fiscal 2024, with a gross profit margin of 7.3%[92] - Gross profit for the second quarter of fiscal 2024 increased by $1.0 million to $2.7 million, with a gross profit margin of 10.3%[102] Expenses and Losses - Selling, general and administrative expenses decreased to $6.8 million, or 14.3% of net sales, from $7.1 million, or 17.6% of net sales in the same period of fiscal 2023[93] - Net loss for the first six months of fiscal 2024 was $5.0 million, consistent with the net loss in the same period of fiscal 2023[98] - Net loss for Q2 fiscal 2024 was $1.6 million, a reduction from a net loss of $2.4 million in Q2 fiscal 2023, attributed to higher sales volume and gross margin improvements[107] EBITDA and Operational Performance - EBITDA for Q2 fiscal 2024 was $926,000, compared to a loss of $374,000 in Q2 fiscal 2023, indicating improved operational performance[111] - Adjusted EBITDA for Q2 fiscal 2024 was $1.3 million, significantly up from $34,000 in Q2 fiscal 2023, reflecting better cost management and revenue generation[111] Cash Flow and Liquidity - Cash and cash equivalents increased to $0.7 million at March 31, 2024, up from $0.4 million at September 30, 2023, indicating improved liquidity[116] - Operating activities used $5.3 million of cash in the first six months of fiscal 2024, primarily due to a net operating loss of $5.0 million[117] - Cash used for investing activities was $3.1 million in the first six months of fiscal 2024, mainly for short-term investments and capital expenditures[119] - Cash provided by financing activities was $8.8 million in the first six months of fiscal 2024, compared to $0.8 million in the same period of fiscal 2023, showing increased financing activity[120] Financing and Capital Expenditures - The Company obtained a bond for approximately $2.2 million with a seven-year term and a second loan for approximately $1.1 million for working capital purposes during the first six months of fiscal 2024[121] - The Company anticipates total capital expenditures for fiscal 2024 to be within the range of $3.0 million to $3.5 million, focusing on enhancing production capabilities[119] Market Conditions and Risks - The credit and capital markets experienced significant volatility during the pandemic, impacting the ability to obtain additional debt financing[126] - Tightening of the credit market and standards could negatively affect financing terms compared to the existing Credit Agreement[126] - Capital market uncertainty may hinder the company's ability to secure equity financing due to its market capitalization and status as a smaller reporting company[126] Accounting Standards - Recent accounting standards adopted and not yet adopted are detailed in the company's Annual Report on Form 10-K for the year ended September 30, 2023[127] Backlog - Total backlog as of March 31, 2024, was $137.8 million, up from $96.7 million a year earlier, with $105.3 million expected to be completed within the next 12 months[88]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-5978 SIFCO Industries, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 970 East 64th Street, Cleveland Ohio 441 ...