SIFCO Industries, Inc.’s (SIF) investors have been experiencing some short-term gains from the stock of late. Shares of the Cleveland, OH-based manufacturer of forgings, sub-assemblies and machined components (primarily serving the aerospace and energy or A&E markets) have gained 69.3% in the past three months compared with the industry’s 8.7% rise. The stock also outperformed the sector and the S&P 500’s 10.8% and 9.9% gains, respectively, in the same time frame.A major development of SIF in recent months ...

Core Insights - SIFCO Industries, Inc. has seen a significant stock price increase of 101.1% over the past three months, outperforming the industry and major indices [1][7] - The company reported strong third-quarter fiscal 2025 results, with notable improvements in profitability despite only a slight increase in sales, indicating effective cost control measures [2][12] - Demand for SIFCO's products remains robust, particularly in the aerospace and energy markets, although supply chain constraints still pose challenges [3][10] Financial Performance - SIFCO's operational initiatives have led to a structural turnaround, enhancing profitability through cost reductions and efficient production, resulting in improved cash generation [12] - The company has strengthened its financial position by reducing debt and improving liquidity, allowing for greater flexibility in operations and potential growth initiatives [13] - SIFCO's trailing 12-month EV/Sales ratio is 0.5X, significantly lower than the industry average of 11.3X, indicating potential for growth if it aligns more closely with market performance [15][18] Market Position - The aerospace sector's momentum is benefiting SIFCO, as demand from aircraft and defense customers continues to rise, supporting revenue growth and margin stability [10][11] - Despite challenges in the aerospace industry, including supply chain weaknesses and digitalization complexities, SIFCO's favorable share price movement suggests it may maintain positive market momentum [8] - Compared to peers like Optex Systems Holdings, Inc. and Park Aerospace Corp., SIFCO has outperformed in stock price appreciation, indicating strong market positioning [7][17]

Core Insights - SIFCO Industries, Inc. has seen a significant stock price increase of 21.5% since its earnings report for the year ended June 30, 2025, outperforming the S&P 500 Index, which experienced a 1.1% loss during the same period [1] - The company reported a notable turnaround in profitability, moving from a net loss of $0.9 million in the prior year to a net income of $3.3 million in the third quarter of fiscal 2025 [2][3] Financial Performance - In the third quarter of fiscal 2025, SIFCO's net sales increased by 0.5% to $22.1 million compared to $21.9 million a year ago [2] - For the first nine months of fiscal 2025, net sales rose by 6.9% year over year to $62 million from $57.9 million [3] - EBITDA surged to $5.3 million from $1.2 million a year earlier, while adjusted EBITDA increased to $4.4 million from $1.8 million [2] Profitability Metrics - Gross profit for the fiscal third quarter reached $5.9 million, a 117.4% increase from $2.7 million in the prior-year quarter, driven by a 15.9% reduction in the cost of goods sold [4] - Operating profit improved significantly to $3.3 million from $147,000 in the prior-year quarter [4] - The gross margin increased to 26.7% from 12.3% year over year, indicating enhanced production efficiency [7] Balance Sheet Overview - As of June 30, 2025, total assets were reported at $77.3 million, down from $104.6 million at the end of fiscal 2024, primarily due to discontinued operations and reduced receivables [5] - Shareholders' equity strengthened to $35.8 million from $30.4 million, supported by the current year's profitability [5] Management Insights - Management highlighted strong demand for SIFCO's forgings and machined components, particularly from aerospace and energy sectors, despite some ongoing supply chain constraints [6] - Favorable pricing discussions with customers are expected to continue into the fiscal fourth quarter, contributing to a positive outlook [8] Operational Factors - The improvement in profitability was achieved with only a marginal rise in sales, reflecting effective cost control measures [7] - Interest expenses decreased by 56.8% to $0.4 million from $0.9 million a year earlier, contributing to the overall financial improvement [7] Strategic Developments - No acquisitions, divestitures, or major restructuring actions were reported during the quarter, with minimal activity from discontinued operations in the current fiscal year [9]

[Company Overview](index=1&type=section&id=Company%20Overview) SIFCO Industries, Inc. announced Q3 and 9M FY2025 financial results, specializing in aerospace and energy forgings, with forward-looking statements subject to risks [Announcement of Financial Results](index=1&type=section&id=Announcement%20of%20Financial%20Results) SIFCO Industries, Inc. announced its financial results for the third quarter and first nine months of fiscal year 2025, which concluded on June 30, 2025 - SIFCO Industries, Inc. (NYSE American: SIF) announced financial results for its **third quarter and first nine months of fiscal 2025**, ended June 30, 2025[1](index=1&type=chunk) [Business Overview](index=2&type=section&id=Business%20Overview) SIFCO Industries, Inc. specializes in the production of forgings and machined components primarily for the aerospace and energy markets, utilizing processes such as forging, heat-treating, coating, and machining - SIFCO Industries, Inc. produces **forgings and machined components** primarily for the **aerospace and energy markets**[8](index=8&type=chunk) - The company's processes and services include forging, heat-treating, coating, and machining[8](index=8&type=chunk) [Forward-Looking Statements and Risk Factors](index=1&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially. Potential risks include economic conditions, pandemics, competition, and other factors detailed in the Company's SEC filings, particularly the Form 10-K - Statements in this press release are **forward-looking statements** subject to risks, uncertainties, and other factors that could cause actual results to differ materially[5](index=5&type=chunk) - Potential risks and uncertainties include, but are not limited to, economic conditions, concerns with or threats of pandemics, contagious diseases or health epidemics, and competition[5](index=5&type=chunk)[7](index=7&type=chunk) - Detailed risk factors and uncertainties are available in Item 1A, 'Risk Factors' of the Company's Annual Report on Form 10-K for the year ended September 30, 2024, and other SEC filings[7](index=7&type=chunk) [Third Quarter Fiscal 2025 Results](index=1&type=section&id=Third%20Quarter%20Fiscal%202025%20Results) SIFCO reported improved financial performance in Q3 FY2025, with slight sales growth, a turnaround to net income, and significant increases in EBITDA and Adjusted EBITDA [Key Financial Highlights (Q3)](index=1&type=section&id=Key%20Financial%20Highlights%20%28Q3%29) SIFCO reported a significant improvement in its third-quarter fiscal 2025 financial performance, with net sales slightly increasing and a substantial turnaround from a net loss to net income from continuing operations. Both EBITDA and Adjusted EBITDA saw considerable growth Third Quarter Fiscal 2025 Key Financial Highlights | Metric | Q3 FY2025 | Q3 FY2024 | Change (YoY) | | :--------------------------------- | :---------- | :---------- | :----------- | | Net Sales | $22.1 million | $22.0 million | +0.5% | | Net Income (Loss) from Continuing Operations | $3.3 million | $(0.9) million | Turnaround | | Diluted EPS from Continuing Operations | $0.54 | $(0.16) | Turnaround | | EBITDA | $5.3 million | $1.2 million | +341.7% | | Adjusted EBITDA | $4.4 million | $1.8 million | +144.4% | [Management Commentary (Q3)](index=1&type=section&id=Management%20Commentary%20%28Q3%29) Management noted strong demand for SIFCO's products in Q3, driven by increased end-user production. While raw material availability improved, some shipping constraints persisted. Favorable pricing discussions with customers contributed to positive trends in both sales and margins - Demand for SIFCO's products remained **strong** through the third quarter as end users increase production[4](index=4&type=chunk) - Raw material availability has improved, but some constraints continued to affect shipments during the period[4](index=4&type=chunk) - Favorable pricing discussions with customers are expected to continue into the fourth quarter, contributing to **positive sales and margin trends** in Q3[4](index=4&type=chunk) [First Nine Months Fiscal 2025 Results](index=1&type=section&id=First%20Nine%20Months%20Fiscal%202025%20Results) SIFCO's first nine months of FY2025 saw a 7.0% net sales increase, a significantly reduced net loss, and substantial improvements in EBITDA and Adjusted EBITDA [Key Financial Highlights (9M)](index=1&type=section&id=Key%20Financial%20Highlights%20%289M%29) For the first nine months of fiscal 2025, SIFCO experienced a 7.0% increase in net sales and significantly reduced its net loss from continuing operations compared to the prior year. Both EBITDA and Adjusted EBITDA showed substantial improvements, moving from negative or near-zero to positive figures First Nine Months Fiscal 2025 Key Financial Highlights | Metric | 9M FY2025 | 9M FY2024 | Change (YoY) | | :--------------------------------- | :---------- | :---------- | :----------- | | Net Sales | $62.0 million | $58.0 million | +7.0% | | Net Loss from Continuing Operations | $(0.4) million | $(7.2) million | Reduced Loss | | Diluted EPS from Continuing Operations | $(0.07) | $(1.20) | Reduced Loss | | EBITDA | $4.9 million | $(1.5) million | Turnaround | | Adjusted EBITDA | $4.0 million | $0.1 million | Significant Increase | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents SIFCO's consolidated statements of operations and balance sheets, highlighting improved profitability and changes in assets and liabilities due to discontinued operations [Consolidated Condensed Statements of Operations](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The consolidated statements of operations show a strong improvement in profitability for both the third quarter and the first nine months of fiscal 2025. Gross profit and operating profit significantly increased, leading to a net income in Q3 FY2025 compared to a net loss in Q3 FY2024, and a substantial reduction in net loss for the nine-month period Consolidated Condensed Statements of Operations (Q3 and 9M FY2025 vs FY2024) | Metric (in thousands) | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net sales | $22.1 million | $22.0 million | $62.0 million | $58.0 million | | Cost of goods sold | $16.2 million | $19.3 million | $53.6 million | $54.3 million | | Gross profit | $5.9 million | $2.7 million | $8.4 million | $3.7 million | | Operating profit (loss) | $3.3 million | $0.1 million | $0.6 million | $(4.8) million | | Income (loss) from continuing operations | $3.3 million | $(0.9) million | $(0.4) million | $(7.2) million | | Net income (loss) | $3.4 million | $0.1 million | $(0.3) million | $(4.9) million | | Basic and diluted EPS from continuing operations | $0.54 | $(0.16) | $(0.07) | $(1.20) | [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of June 30, 2025, SIFCO's total assets decreased significantly compared to September 30, 2024, primarily due to the reclassification of discontinued operations. Total liabilities also saw a substantial reduction, while total shareholders' equity increased, reflecting improved financial health Consolidated Condensed Balance Sheets (June 30, 2025 vs. September 30, 2024) | Metric (in thousands) | June 30, 2025 | September 30, 2024 | Change | | :------------------------------------ | :------------ | :----------------- | :----- | | Total current assets | $38.1 million | $54.3 million | $(16.2) million | | Current assets of discontinued operations | $0 | $16.0 million | $(16.0) million | | Total assets | $77.3 million | $104.6 million | $(27.3) million | | Total current liabilities | $25.6 million | $54.0 million | $(28.4) million | | Current liabilities of discontinued operations | $0 | $10.1 million | $(10.1) million | | Total liabilities and shareholders' equity | $77.3 million | $104.6 million | $(27.3) million | | Total shareholders' equity | $35.8 million | $30.4 million | +$5.4 million | - The decrease in total assets and liabilities is largely due to the **reclassification of discontinued operations** to zero as of June 30, 2025[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the purpose and limitations of non-GAAP measures like EBITDA and Adjusted EBITDA, along with their reconciliation to GAAP net income [Definition and Purpose](index=5&type=section&id=Definition%20and%20Purpose) SIFCO uses non-GAAP measures like EBITDA and Adjusted EBITDA as supplements to GAAP results. Management believes these measures are useful indicators for evaluating operating performance, including debt servicing ability, and for evaluating prospective acquisitions - **EBITDA** represents earnings (losses) from continuing operations before interest, taxes, depreciation, and amortization[11](index=11&type=chunk) - **Adjusted EBITDA** is EBITDA plus specific adjustments detailed in the reconciliations[11](index=11&type=chunk) - Management considers these non-GAAP measures useful for evaluating **operating performance**, debt servicing ability, and prospective acquisitions[12](index=12&type=chunk) [Limitations of Non-GAAP Measures](index=5&type=section&id=Limitations%20of%20Non-GAAP%20Measures) Non-GAAP measures like EBITDA and Adjusted EBITDA have limitations, as they do not reflect interest expense, cash requirements for asset replacement (despite non-cash depreciation), amortization of intangible assets, or tax payments. They should not be considered in isolation or as substitutes for GAAP results - Neither EBITDA nor Adjusted EBITDA reflects **interest expense**, cash requirements for asset replacements, intangible asset amortization, or tax payments[15](index=15&type=chunk) - These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP results of operations[12](index=12&type=chunk) - The Company's calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies[13](index=13&type=chunk) [Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA](index=5&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20EBITDA%20and%20Adjusted%20EBITDA) The reconciliation table details the adjustments made to net income (loss) from continuing operations to arrive at EBITDA and Adjusted EBITDA for both the third quarter and first nine months of fiscal 2025 and 2024. Key adjustments include depreciation, interest, income tax, and various non-recurring or non-operating items Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (Q3 and 9M FY2025 vs FY2024) | Metric (in thousands) | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net income (loss) | $3.4 million | $0.1 million | $(0.3) million | $(4.9) million | | Income (loss) from continuing operations | $3.3 million | $(0.9) million | $(0.4) million | $(7.2) million | | Depreciation and amortization expense | $1.5 million | $1.2 million | $3.9 million | $3.6 million | | Interest (income) expense, net | $0.4 million | $0.9 million | $1.3 million | $2.1 million | | Income tax expense | $41 thousand | $0 thousand | $120 thousand | $11 thousand | | **EBITDA** | **$5.3 million** | **$1.2 million** | **$4.9 million** | **$(1.5) million** | | Foreign currency exchange loss (gain), net | $5 thousand | $(1) thousand | $4 thousand | $0 thousand | | Other (income) expense, net | $(479) thousand | $99 thousand | $(404) thousand | $253 thousand | | LIFO impact | $(470) thousand | $475 thousand | $(606) thousand | $826 thousand | | **Adjusted EBITDA** | **$4.4 million** | **$1.8 million** | **$4.0 million** | **$0.1 million** | [Corporate Information](index=6&type=section&id=Corporate%20Information) This section provides contact details for SIFCO Industries, Inc. and footnotes explaining various adjustments in the non-GAAP reconciliation [Contacts and Footnotes](index=6&type=section&id=Contacts%20and%20Footnotes) This section provides contact information for SIFCO Industries, Inc. and detailed explanations for the adjustments made in the non-GAAP reconciliation, including foreign currency exchange, other income/expense, asset disposal, severance, equity compensation, pension, transaction-related expenses, LIFO impact, IT incident costs, and strategic alternative expenses - Contact information for SIFCO Industries, Inc. includes Jennifer Wilson (216-881-8600) and www.sifco.com[17](index=17&type=chunk) - Footnotes detail non-GAAP reconciliation adjustments, including foreign currency exchange, other income/expense, asset disposal, severance, equity compensation, pension, transaction-related, LIFO impact, IT incident, and strategic alternative expenses[17](index=17&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section details SIFCO Industries, Inc.'s identification, filing status, and common share trading information [Registrant Information](index=1&type=section&id=Registrant%20Information) Details SIFCO Industries, Inc.'s identification, filing status, and common shares trading on NYSE American - SIFCO Industries, Inc. is incorporated in Ohio with IRS Employer Identification No. 34-0553950, located at 970 East 64th Street, Cleveland Ohio 44103[3](index=3&type=chunk) - The registrant is a non-accelerated filer and a smaller reporting company[3](index=3&type=chunk) Securities Registered (Amounts in millions) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Shares | SIF | NYSE American | - As of June 30, 2025, the number of outstanding Common Shares, par value $1.00, was **6,180,388**[3](index=3&type=chunk) [Part I. Financial Information](index=2&type=section&id=Part%20I.%20Financial%20Information) Presents SIFCO Industries, Inc.'s unaudited consolidated condensed financial statements and related notes for specified periods [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Contains unaudited consolidated condensed financial statements and detailed notes for SIFCO Industries, Inc. [Consolidated Condensed Statements of Operations](index=2&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Presents net income, gross profit, and EPS for the three and nine months ended June 30, 2025 and 2024 Consolidated Condensed Statements of Operations (Amounts in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $22.1 | $22.0 | $62.0 | $58.0 | | Gross profit | $5.9 | $2.7 | $8.4 | $3.7 | | Operating profit (loss) | $3.3 | $0.1 | $0.6 | $(4.8) | | Income (loss) from continuing operations | $3.3 | $(0.9) | $(0.4) | $(7.2) | | Income from discontinued operations, net of tax | $0.1 | $1.0 | $0.1 | $2.3 | | Net income (loss) | $3.4 | $0.1 | $(0.3) | $(4.9) | | Basic and diluted EPS from continuing operations| $0.54 | $(0.16) | $(0.07) | $(1.20) | | Basic and diluted EPS | $0.56 | $0.01 | $(0.05) | $(0.82) | [Consolidated Condensed Statements of Comprehensive Income (Loss)](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income%20(Loss)) Presents comprehensive income/loss, foreign currency adjustments, and retirement plan liabilities Consolidated Condensed Statements of Comprehensive Income (Loss) (Amounts in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) | $3.4 | $0.1 | $(0.3) | $(4.9) | | Foreign currency translation adjustment | — | $(0.1) | — | $0.1 | | Reclassification of foreign translation adjustments to net loss | — | — | $5.6 | — | | Retirement plan liability adjustment | $0.0 | $0.1 | $0.1 | $0.2 | | Comprehensive income (loss) | $3.4 | $0.1 | $5.3 | $(4.7) | [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Summarizes assets, liabilities, and shareholders' equity, reflecting discontinued operations impact Consolidated Condensed Balance Sheets (Amounts in millions) | Metric | June 30, 2025 | September 30, 2024 | | :---------------------------------------- | :------------ | :----------------- | | Total current assets | $38.1 | $54.3 | | Total assets | $77.3 | $104.6 | | Total current liabilities | $25.6 | $54.0 | | Total liabilities and shareholders' equity| $77.3 | $104.6 | | Total shareholders' equity | $35.8 | $30.4 | - Current assets of discontinued operations were **$0** as of June 30, 2025, down from **$16.0 million** as of September 30, 2024, reflecting the CBlade sale[11](index=11&type=chunk) - Current maturities of long-term debt increased significantly to **$3.0 million** as of June 30, 2025, from **$0.4 million** as of September 30, 2024[11](index=11&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Outlines cash flows from operating, investing, financing, and discontinued operations Consolidated Condensed Statements of Cash Flows (Amounts in millions) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Net cash used for operating activities | $(0.6) | $(3.5) | | Net cash used for investing activities | $(0.3) | $(1.7) | | Net cash (used for) provided by financing activities | $(13.4) | $6.2 | | Net cash provided by discontinued operations | $13.6 | $0.3 | | (Decrease) increase in cash and cash equivalents | $(0.7) | $1.3 | | Cash and cash equivalents from continuing operations at the end of the period | $2.0 | $1.0 | [Supplemental Disclosure of Cash Flow Information](index=6&type=section&id=Supplemental%20Disclosure%20of%20Cash%20Flow%20Information) Highlights cash paid for interest and non-cash investing activities for specified periods Supplemental Cash Flow Information (Amounts in millions) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | | Cash paid for interest | $(1.5) | $(1.1) | | Cash paid for income taxes, net | $(0.0) | $(0.0) | | Additions to property, plant & equipment — incurred but not yet paid | $0.0 | $0.0 | | Debt issuance costs — incurred but not yet paid | $0.1 | — | | Accrued guaranty fees — related party | — | $0.9 | | Origination fees capitalized to promissory note principal — related party | — | $0.2 | [Consolidated Condensed Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Shareholders'%20Equity) Details changes in common shares, paid-in capital, retained earnings, and comprehensive income (loss) Consolidated Condensed Statements of Shareholders' Equity (Amounts in millions) | Metric | June 30, 2025 | September 30, 2024 | | :---------------------------------------- | :------------ | :----------------- | | Common Shares (Amount) | $6.2 | $6.2 | | Additional Paid-In Capital | $11.9 | $11.8 | | Retained Earnings | $17.6 | $17.9 | | Accumulated Other Comprehensive Income (Loss) | $0.2 | $(5.4) | | Total Shareholders' Equity | $35.8 | $30.4 | - Comprehensive income for the nine months ended June 30, 2025, was **$5.3 million**, a significant improvement from a loss of **$(4.7) million** in the prior year[18](index=18&type=chunk) - Accumulated other comprehensive income (loss) shifted from a loss of **$(5.4) million** at October 1, 2024, to an income of **$0.2 million** at June 30, 2025, largely due to a reclassification of foreign translation adjustments[18](index=18&type=chunk) [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) Provides essential context and detailed explanations for the unaudited financial statements [1. Summary of Significant Accounting Policies](index=8&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines key accounting principles, discontinued operations, foreign currency, and new accounting standards - The Company sold its European operations (CBlade S.p.A.) in October 2024 to refocus on its core aerospace forging business, resulting in CBlade's financial results being presented as discontinued operations[21](index=21&

Core Viewpoint - SIFCO Industries, Inc. experienced a decline in share price following its earnings report for Q2 and the first half of fiscal 2025, despite a recent surge in stock performance over the past month, indicating mixed investor sentiment [1] Revenue and Earnings Overview - For Q2 ended March 31, 2025, SIFCO reported net sales of $19 million, a 7.3% decrease from $20.5 million in the same quarter last year, primarily due to raw material sourcing issues [2] - The net loss from continuing operations narrowed to $1.3 million, or $(0.22) per diluted share, compared to a loss of $2.2 million, or $(0.38) per share, in the prior year [2] - Total net loss for the quarter was $1.4 million, an improvement from the $1.6 million loss a year ago [2] Half-Year Performance - For the first half of fiscal 2025, net sales increased by 10.9% to $39.9 million from $35.9 million in the previous year [3] - The net loss from continuing operations decreased to $3.7 million, or $(0.62) per diluted share, down from $6.3 million, or $(1.05) per share, last year [3] - Total net loss for the first six months was $3.7 million compared to $5 million a year earlier [3] Profitability and Operational Metrics - Gross profit for Q2 rose 5.1% to $1.6 million from $1.5 million despite declining revenues [4] - SG&A expenses decreased by 16.6% to $2.4 million from $2.8 million, contributing to reduced operating losses [4] - The operating loss for the quarter was $0.8 million, an improvement from $1.3 million a year ago [4] EBITDA Trends - EBITDA for Q2 improved to $0.4 million from a loss of $0.2 million in the prior year [6] - Adjusted EBITDA swung to a loss of $0.2 million from a positive $0.2 million in the previous year, primarily due to an unfavorable LIFO inventory adjustment of $(0.6) million [6] - For the first half, EBITDA was $(0.4) million compared to $(2.7) million last year, while adjusted EBITDA improved to a loss of $(0.4) million from $(1.7) million previously [7] Management Commentary - CEO George Scherff highlighted operational improvements and emphasized the focus on throughput and margin-enhancing initiatives despite sales challenges [8] - The order backlog reached $129.2 million, indicating solid demand from aerospace and energy markets [8] Factors Behind Financial Results - The revenue decline was attributed to raw material shortages, but cost controls, particularly lower SG&A expenses and interest costs, helped mitigate losses [9] - Interest expenses dropped 47.7% to $0.4 million from $0.8 million in the prior-year quarter [9] Balance Sheet and Asset Management - Current assets fell to $38.1 million as of March 31, 2025, from $54.3 million as of September 30, 2024, largely due to the removal of discontinued operations [12] - The revolving credit facility balance decreased to $8.9 million from $20.1 million, indicating significant deleveraging [12] - Shareholders' equity increased to $32.4 million from $30.4 million, mainly due to positive adjustments in accumulated other comprehensive income [12] Guidance and Future Outlook - SIFCO did not provide specific financial guidance but noted a growing backlog as a positive indicator of sustained demand [13] - Management did not quantify expectations or provide adjusted earnings targets [13] Other Developments - The financials reflected the impact of completed divestitures, with discontinued operations having minimal impact this year compared to the previous fiscal year [14] - No new acquisitions or divestitures were announced during the quarter [14]

[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].