[10-K] SIFCO INDUSTRIES INC Files Annual Report
Filing Impact
Filing Sentiment
Form Type
10-K
SIFCO Industries, Inc. is a Cleveland-based manufacturer of forgings, machined components and sub-assemblies for aerospace, defense, energy, commercial space and semiconductor markets, operating primarily from plants in Ohio and California. In October 2024, the company sold its CBlade European operations, which are now presented as discontinued operations, to streamline operations and focus on core aerospace forging activities. In fiscal 2025, revenue mix shifted toward military programs, with military accounting for 56.5% of sales and commercial 43.5%. Customer concentration remains high: one direct customer represented 18% of net sales and two customers and their subcontractors together represented 34%. Backlog grew to $119.2 million as of September 30, 2025, with $87.3 million scheduled for fiscal 2026, reflecting commercial airline recovery, new content awards and longer raw material lead times. The company employed about 259 U.S. workers at year-end 2025 and highlights extensive risk factors, including cyclical aerospace demand, government budget shifts, supply chain pressures, trade tariffs, cyber threats, liquidity and pension funding risks.
Positive
- None.
Negative
- None.
Insights
SIFCO refocuses on core aerospace forgings, with rising backlog but elevated concentration and macro risks.
SIFCO is positioning itself as a focused aerospace and energy forgings supplier by selling its CBlade European business and presenting it as discontinued operations. Operations are concentrated in two U.S. facilities serving OEMs, Tier 1/Tier 2 suppliers and aftermarket customers across commercial and military aerospace, energy, commercial space and semiconductor equipment. The 2025 sales mix tilted more heavily toward military programs, which now represent 56.5% of revenue versus 47.6% a year earlier.
The company reports a growing order book, with backlog increasing to
Risk disclosures are extensive. SIFCO underscores its dependence on a small number of large customers, including one accounting for 18% of net sales and two customers plus their subcontractors representing 34%. The business is exposed to cyclical aerospace and energy demand, U.S. and foreign defense budgets, supply chain constraints, trade tariffs introduced in
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
For the fiscal year ended September 30 , 2025
or
For the transition period from _________________ to _____________________
Commission file number 1-5978
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
| (Registrant’s telephone number, including area code) | ||||||||||||||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Securities registered pursuant to Section 12(g) of the Securities Exchange Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
large accelerated filer ☐ accelerated filer ☐ non-accelerated filer ☒ smaller reporting company ☒ emerging growth company ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1
Indicate by check mark whether the registrant has filed a report on an attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter is $14,255,290 .
The number of the Registrant’s Common Shares outstanding at December 5, 2025 was 6,173,688 .
Documents Incorporated By Reference
Certain information contained in the definitive Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on January 28, 2026 is incorporated by reference into Part III hereof.
2
Annual Report on Form 10-K
For the Year Ended September 30, 2025
Table of Contents
Item Number | ||||||||
| PART I | ||||||||
| 1 | Business | 4 | ||||||
| 1A. | Risk Factors | 7 | ||||||
1B. | Unresolved Staff Comments | 15 | ||||||
| 1C. | Cybersecurity | 16 | ||||||
| 2 | Properties | 17 | ||||||
| 3 | Legal Proceedings | 17 | ||||||
| 4A. | Mine Safety Disclosures | 17 | ||||||
| PART II | ||||||||
| 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 18 | ||||||
| 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||||||
| 8 | Financial Statements and Supplemental Data | 25 | ||||||
| 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | 60 | ||||||
| 9A | Controls and Procedures | 60 | ||||||
| 9B | Other Information | 61 | ||||||
| 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 61 | ||||||
| PART III | ||||||||
| 10 | Directors Executive Officers and Corporate Governance | 61 | ||||||
| 11 | Executive Compensation | 61 | ||||||
| 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 62 | ||||||
| 13 | Certain Relationships and Related Transactions, and Director Independence | 62 | ||||||
| 14 | Principal Accountant Fees and Services | 62 | ||||||
| PART IV | ||||||||
| 15 | Exhibits and Financial Statement Schedules | 62 | ||||||
Signatures | 64 | |||||||
3
Table of Contents
PART I
Item 1. Business
A.The Company
SIFCO Industries, Inc. (“SIFCO,” “Company,” “we” or “our”), an Ohio corporation, was incorporated in 1916. The executive offices of the Company are located at 970 East 64th Street, Cleveland, Ohio 44103, and its telephone number is (216) 881-8600.
SIFCO is engaged in the production of forgings, sub-assemblies, and machined components primarily for the Aerospace and Energy (“A&E”) markets. The Company’s processes and services include forging, heat-treating, chemical processing and machining. The Company’s operations are conducted in a single business segment. Information relating to the Company’s financial results is set forth in the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
In October 2024, the Company sold its European operations in order to streamline operational synergies and refocus on its core aerospace forging business. SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”) pursuant to which it sold 100% of the share capital of CBlade S.p.A. Forging & Manufacturing, an Italian joint stock company located in Maniago, Italy, and wholly-owned subsidiary of the Company (“CBlade”), for cash consideration.
As a result of the planned sale transaction, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of CBlade presented as assets held for sale as of September 30, 2024 and discontinued operations, respectively, as of and for the years ended September 30, 2025 and 2024. All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Discontinued Operations of the Notes to Consolidated Financial Statements.
B.Principal Products and Services
Operations
SIFCO is a manufacturer of forgings and machined components for the Aerospace and Defense, Energy and Commercial Space markets. We provide our customers with envelope and precision forgings, rough and finished machined components, as well as sub-assemblies. SIFCO services both original equipment manufacturers (“OEM”), Tier 1 and Tier 2 suppliers, and aftermarket service providers with products that range in size from approximately 2 to 1,200 pounds. The Company’s strategic vision is to build a leading A&E company positioned for long-term, stable growth and profitability.
SIFCO’s long-term plan is to seek to maintain a balance of military and commercial aerospace revenues, supplemented with revenue from energy, commercial space, and other adjacent market components. In fiscal 2025, commercial and military revenues accounted for 43.5% and 56.5% of revenues, respectively, compared with 52.4% in commercial revenues and 47.6% in military revenues in fiscal 2024. The Company’s capabilities are focused on supplying critical components, consisting primarily of steel, high temperature alloys, nickel alloys, titanium and aluminum.
SIFCO operates primarily from two locations. SIFCO manufacturing facilities are located in Cleveland, Ohio (“Cleveland”) and Orange, California (“Orange”). SIFCO’s operations in Cleveland and Orange are AS 9100D and/or ISO 9001:2015 certified and the Company also holds multiple National Aerospace and Defense Contractors Accreditation Program (“NADCAP”) certifications and site approvals from key OEM customers.
The Company’s success is not dependent on patents, trademarks, licenses or franchises.
Raw Materials
SIFCO generally has multiple sources for its raw materials, which consist primarily of high-quality metals essential to its business. Suppliers of such materials are located principally in North America. SIFCO generally does not depend on a single source for the supply of its raw materials. Due to the limited supply of certain raw materials, some material is provided by a small number of suppliers; however, SIFCO believes that its sources are adequate for its business. In recent years, the Company occasionally experienced delays in the supply chain, which, if such delays reoccur, could affect our ability to timely obtain materials and components from our suppliers in the quantities we require or on favorable terms. As a result of increased supply chain lead times and inflationary pressures, the Company has experienced increases in pricing for raw materials, which could affect our customer demand and cost. However, SIFCO believes that its ability to pass through raw material costs under certain contractual agreements and discrete orders limits this exposure. For those contractual agreements under which pass through pricing is not permissible, a material adverse effect upon the profitability of one or more of the affected contracts, future period financial reporting and performance may result.
4
Table of Contents
Products
SIFCO’s products are made primarily of steel, high temperature alloys, nickel alloy, titanium and aluminum. SIFCO’s product offerings include: OEM and aftermarket components for aircraft and industrial gas turbine engines; steam turbine blades; structural airframe components; aircraft landing gear components; aircraft wheels and brakes; critical rotating components for helicopters; and commercial/industrial products. SIFCO also provides heat-treatment, surface-treatment, non-destructive testing and select machining and sub-assembly of forged components.
Industry
The performance of the domestic and international air transport industry, the global energy sector, the semiconductor supply chain, and U.S. government defense spending continues to directly and significantly affect the Company's results.
•SIFCO supplies new and spare components to the U.S military for aircraft, helicopters, vehicles, and munitions. Key programs include the H-60 Black Hawk, C-130, F-18 and F-35. U.S. defense spending remains elevated due to geopolitical tensions and modernization initiatives; however, procurement priorities may shift based on changes in threat assessments, government leadership, budget constraints, and strategic focus. Sustainment demand for legacy platforms remains strong, and most Company-supported programs continue to experience stable or favorable trends.
•SIFCO supplies components for commercial aircraft, principally for large aircraft produced by Boeing and Airbus, as well as for general aviation. Global air travel has recovered to pre-pandemic levels, driving increased aircraft utilization and order activity. Airbus production rates, particularly for the A320neo and A350, continue to rise. Boeing’s 787 and 737 MAX programs are progressing through quality-related production constraints, and the 777-9 continues toward certification. These conditions support a continued recovery in demand for forged components.
•SIFCO supplies components to the commercial space industry, which is experiencing rapid growth driven by increased launch cadence, expansion of satellite constellations, reusability, and new entrants. This market's ongoing innovation and development present opportunities for the Company to increase market share as customers seek suppliers with advanced materials and high-reliability capabilities.
•SIFCO supplies components used in semiconductor manufacturing industry. These products require high-purity materials and stringent technical performance. Global investment in semiconductor fabrication—supported by government incentives and increased demand for advanced chips—continues to drive growth in equipment production. The Company’s materials expertise and customer qualifications position it to benefit from continued market expansion.
•SIFCO supplies new and spare components to the energy sector. While renewable energy markets continue to expand, demand for traditional oil and gas equipment has stabilized as global commodity prices normalize. Increased investment in Liquefied Natural Gas projects, refining capacity, and upstream infrastructure supports steady demand. The Company has reduced dependence on OEM production cycles while maintaining flexibility to meet aftermarket needs and respond to changing sector dynamics.
Competition
SIFCO competes with numerous companies, both in and tangential to the A&E industry. SIFCO competes with both U.S. and non-U.S. suppliers of forgings, some of which are significantly larger than SIFCO; however, our competitors range from companies focused on the A&E markets to large diversified corporations that may also have business interests outside of the A&E markets to smaller companies that offer a limited portfolio of products in this market. SIFCO believes that it has an advantage and distinguishes itself in the primary markets it serves due to its: (i) demonstrated A&E expertise; (ii) focus on quality and customer service; (iii) operating initiatives such as SMART (Streamlined Manufacturing Activities to Reduce Time/Cost); and (iv) broad range of capabilities and offerings. As customers establish and utilize new facilities throughout the world, SIFCO will continue to encounter non-U.S. competition. SIFCO believes it can expand its market share by (i) continuing to increase capacity utilization; (ii) broadening its product lines through investment in equipment that expands its manufacturing capabilities; and (iii) developing new customers in markets where the participants require similar technical competence and service as those in the A&E industries. See further discussion of the risks relating to competition SIFCO faces in Item 1A. Risk Factors.
Government Contracts
Companies, such as SIFCO, that supply equipment and products to the U.S. military are subject to certain risks related to commercial relationships with the U.S. government and its agencies. Under the terms of these agreements, it is possible for demand and build rates to fluctuate or for the U.S. government to terminate existing contracts.
5
Table of Contents
Customers and Seasonality
During fiscal 2025, SIFCO had one direct customer that accounted for 18% of consolidated net sales; and 34% of the Company’s consolidated net sales were from two customers and their direct subcontractors, which individually accounted for 18% and 16% of net sales, respectively. SIFCO believes that the loss of sales to these customers would result in a material adverse impact on the business. However, SIFCO has maintained a business relationship with these customers for many years and is currently conducting business with them under multi-year agreements. Although there is no assurance that these relationships will continue, as one or more major customers have reduced their purchases in the past, historically SIFCO has generally been successful in gaining new business from these customers or from other customers to offset any potential reduction in purchases, thereby avoiding a material adverse impact on the Company. SIFCO relies on its ability to adapt its services and operations to changing requirements of the market in general and its customers in particular. No material part of SIFCO’s business is seasonal. For additional financial information about geographic areas, refer to Note 13 — Segment Information of the Notes to Consolidated Financial Statements.
Backlog of Orders
SIFCO’s total backlog as of September 30, 2025 increased to $119.2 million, compared with $114.4 million as of September 30, 2024. Orders for delivery scheduled in the upcoming fiscal year 2026 increased to $87.3 million compared with $85.0 million scheduled as of the end of the 2024 fiscal year. Orders may be subject to modification or cancellation by the customer with limited charges. The increase in total backlog as of September 30, 2025 compared with the previous year is primarily due to timing of annual awards, SIFCO’s customers adjusting orders due to recovery within the commercial airline industry, new content awarded, and extended raw material lead times. Backlog information may not be indicative of future sales.
C.Regulatory Matters
The Company is subject to a number of domestic regulations relating to our operations and is required to comply with various environmental, health, and employee safety laws and regulations. The Company believes that it is in compliance with these laws and regulations. Historically, compliance with such laws and regulations has not had, and is not presently expected to have a material effect on capital expenditures, earnings or competitive position of the Company or its subsidiaries under existing regulations and interpretations. Nevertheless, the Company cannot guarantee that, in the future, it will not incur additional costs for compliance or that such costs will not be material.
D.Human Capital Management
Excluding CBlade employees due to the sale of this business in October 2024, SIFCO employed approximately 244 full-time employees at the beginning of fiscal 2025, which increased slightly to approximately 259 employees at the end of fiscal 2025.
The Company’s employees include full-time, part-time, and temporary employees. As of September 30, 2025, all employees were located within the U.S., excluding CBlade due to its sale in October 2024. Approximately 68% of our workforce within the U.S. is composed of skilled and unskilled labor, and the remaining population includes management, corporate, administrative and support staff.
The Company is a party to collective bargaining agreements (“CBA”) with certain employees within the Cleveland location. The Company’s Cleveland bargaining unit 1 new CBA took effect on May 15, 2025 and contains substantially similar terms and conditions as the expired CBA. The second bargaining unit CBA expired on March 31, 2025. The Company continued to be in negotiations with unit 2, who continued to work under the terms of the expired CBA. Subsequent to year-end, the new CBA took effect on October 4, 2025 and contains similar terms and conditions as the expired CBA. The CBlade business was sold to a third party on October 15, 2024, and all employees and obligations transferred to the third party with the consummation of this sale.
At September 30, 2025, approximately 94 of the hourly plant personnel are represented by two separate collective bargaining agreements. The table below shows the expiration dates of the collective bargaining agreements.
| Plant locations | Expiration date | |||||||
| Cleveland, Ohio (unit 1) | May 12, 2030 | |||||||
| Cleveland, Ohio (unit 2) | March 31, 2029 | |||||||
The skills, experience and industry knowledge of our employees significantly benefit our operations and performance. There are several ways in which we attract, develop, and retain highly qualified talent and measure the ongoing effectiveness of our human capital management practices, including by making the safety and health of our employees a top priority. The Company is focused on ensuring the health of our employees through the implementation of standards, controls, and inspections to help ensure that our operations and premises comply with national and local regulations. In addition, the Company conducts annual
6
Table of Contents
employee development reviews, identifies growth opportunities, which include employee rotations, promotes value-based recognition programs and engages employees in continuous improvement activities.
Set forth below is certain information concerning the Company’s executive officers. The executive officers are appointed annually by the Board of Directors (current officers in bold).
| Name | Age | Title and Business Experience | |||||||||
| George Scherff | 82 | Chief Executive Officer since July 2024. Prior to joining the Company, Mr. Scherff served as CEO for Thermal Systems Manufacturing, Paradigm Packaging, Lund International, ABC Truck Body, and Hartzell Manufacturing following its merger with Continental Metal Specialties. He has a bachelor’s degree from The Ohio State University and a master’s degree in mechanical engineering from the University of Toledo. Mr. Scherff has successfully led middle-market organizations through periods of growth and transition and most recently served as a consultant, providing services to various companies with a focus on operational improvement. | |||||||||
| Jennifer Wilson | 46 | Chief Financial Officer since November 13, 2024. Ms. Wilson served as the Company’s Director of External Reporting since 2022. She brings significant experience in strategic accounting and finance and a deep knowledge of the Company’s accounting and operating organization. Prior to her role as Director of External Reporting, Ms. Wilson served as the Controller of the Company’s Orange, California-facility and as the Director of Financial Planning and Analysis. Prior to joining the Company, Ms. Wilson served as an Accounting and Finance Consultant with Resources Global Professionals and as a Manager of Accounting and Treasury for Technical Consumer Products. She is a certified public accountant and holds a Masters of Business Administration and Bachelor of Science in accounting from David N. Myers University. | |||||||||
E.Non-U.S. Operations
The Company’s products are distributed in the U.S. as well as non-U.S. markets.
Financial information about the Company’s U.S. and non-U.S. operations is set forth in Note 13 — Segment Information of the Notes to Consolidated Financial Statements.
F.Available Information
The Company files annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Securities Exchange Act of 1934, as amended. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The public can obtain any documents that are filed by the Company at http://www.sec.gov.
In addition, our annual reports on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to all of the foregoing reports, are made available free of charge on or through the “Investor Relations” section of our website at www.sifco.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
Information relating to our corporate governance at SIFCO, including the Audit Committee, Corporate Governance and Nominating Committee and Compensation Committee Charters, as well as the Corporate Governance Guidelines and Policies and the Code of Conduct & Ethics adopted by our Board of Directors, is available free of charge on or through the “Investor Relations” section of our website at www.sifco.com. References to our website or the SEC’s website do not constitute incorporation by reference of the information contained on such websites, and such information is not part of this Form 10-K.
Item 1A. Risk Factors
Set forth below are material risks and uncertainties that could negatively affect our business and financial condition and could cause our actual results to differ materially from those expressed in forward-looking statements contained in this report.
Risks Related to Our Business and Operations
We are subject to the cyclical nature of the A&E industries and the continuing or further downturn in these industries could adversely impact the demand for our products.
The commercial aerospace industry is historically driven by the demand from commercial airlines for new aircraft. Demand for commercial aircraft is influenced by airline industry profitability, trends in airline passenger traffic, the state of U.S. and world economies, the ability of aircraft purchasers to obtain required financing and numerous other factors including the effects of terrorism, health and safety concerns and environmental constraints imposed upon aircraft operators. We continue to experience changes in demand from our customers in this market and a reduction in demand for commercial aircraft will adversely impact our net sales and operating results.
7
Table of Contents
There is risk that the industry reintroduces mitigation strategies in response to fluctuating demand for commercial air travel, which could include reduced capacity and shifting route patterns. We continue to experience uncertainty with respect to global trade volumes, which could put negative pressure on cargo traffic levels. Any of these factors would have a significant impact on the demand within the commercial aerospace industry. In addition, a lengthy period of reduced industry-wide demand for commercial aircraft could put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption. To the extent that the market conditions within the commercial airline industry further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.
The military aerospace cycle is highly dependent on U.S. and foreign government funding; as well as the effects of terrorism, a changing global political environment, U.S. foreign policy, the retirement of older aircraft and technological improvements to new engines. Accordingly, the timing, duration and severity of cyclical upturns and downturns within the military aerospace market cannot be forecast with certainty. Downturns or reductions in demand could have a material adverse effect on our business.
Government spending priorities and terms may change in a manner adverse to our business.
At times, our supplying of products to the U.S. military has been adversely affected by significant changes in U.S. defense and national security budgets. Budget changes that result in a decline in overall spending, program delays, program cancellations or a slowing of new program starts on programs in which we participate could materially adversely affect our business, prospects, financial condition or results of operations. Future levels of expenditures and authorizations for defense-related programs by the U.S. government may decrease, remain constant or shift to programs in areas where we do not currently provide products, thereby reducing the chances that we will be awarded new contracts. Moreover, an extended federal government shutdown resulting from failing to pass budget appropriations, adopt continuing funding resolutions, or raise the debt ceiling, and other budgetary decisions limiting or delaying deferral of government spending, may negatively impact U.S. or global economic conditions, and we could be at risk of program cancellations or other disruptions and nonpayment as a result. When the federal government operates under a continuing resolution, new contract and program starts are restricted and certain of our funding programs may be unavailable, reduced or delayed. Shifting funding priorities or federal budget compromises also could result in reductions in overall defense spending on an absolute or inflation-adjusted basis, which could adversely impact our business.
SIFCO has contracts for programs where the period of performance may exceed one year. Congress and certain foreign governments must usually approve funds for a given program each fiscal year and may significantly reduce funding of a program in a particular year. Significant reductions in these appropriations or the amount of new defense contracts awarded may affect our ability to complete contracts, obtain new work and grow our business. At times when there are perceived threats to national security, U.S. defense spending can increase; at other times, defense spending can decrease. Future levels of defense spending are uncertain and subject to congressional debate. Any reduction in future U.S. defense spending levels could adversely impact our sales, operating profit and cash flow.
Furthermore, business conducted pursuant to U.S. government contracts is subject to extensive procurement regulations and other unique risks. New procurement regulations, or changes to existing requirements, could increase compliance costs or otherwise have a material impact on the operating margins of the portion of our business derived from contracts with the U.S. government. The U.S. government contracting party may modify, curtail, or terminate its contracts and subcontracts with the Company without prior notice either at its convenience or for default based on performance, and funding pursuant to our U.S. government contracts may be reduced or withheld as a part of the appropriations process due to fiscal constraints or due to changes in foreign or domestic policy strategy.
Global economic conditions may adversely impact our business, operating results or financial condition.
Disruption and volatility in global financial markets may lead to increased rates of default and bankruptcy and may negatively impact consumer and business spending levels. These macroeconomic developments could adversely affect our business, operating results or financial condition. Current or potential customers may delay or decrease spending on our products and services as their business and/or budgets are impacted by economic conditions. The inability of current and potential customers to pay SIFCO for its products and services may adversely affect its earnings and cash flows.
We are subject to risks related to changes in U.S. and international trade policies, including new or increased tariffs on materials that we use in manufacturing, which could adversely affect our business, financial condition and operating results.
In April 2025, the U.S. imposed global trade tariffs on a wide range of products and goods. Our business may be adversely affected by evolving global trade policies, including tariffs and other trade restrictions. We are subject to risks associated with changes in international trade policies, regulations, and relationships. In recent years, multiple countries, including the United States, the People's Republic of China, and members of the European Union, among others have enacted tariffs, export controls, quotas, and other forms of trade restrictions on a variety of goods and services. These measures have led to increased costs,
8
Table of Contents
supply chain disruptions, and reduced demand across several industries. Although certain tariffs have been reduced or delayed, the potential for future escalation or the imposition of new trade restrictions remains. Ongoing or future trade disputes may impact the availability and cost of materials used in our manufacturing processes. In some cases, suppliers may struggle to meet increased demand resulting from accelerated purchasing ahead of anticipated policy changes, further exacerbating supply chain instability. Additionally, retaliatory actions or changes in trade policies by foreign governments may reduce the demand for our customers’ products in impacted regions, which could lead to reduced orders and revenue for us. If we are unable to mitigate the effects of increased costs or pass them on to our customers, our gross margins, financial condition, and results of operations could be materially and adversely affected. We cannot predict the outcome of current or future trade negotiations, the timing of any policy changes, or the impact such changes may have on our industry, supply chain, or customer base.
A deadlock in the U.S. Congress over budgets and spending could cause another partial shutdown of the U.S. government, which could result in a termination or suspension of some or all of our contracts with suppliers to the U.S. government.
Congress may fail to pass a budget or continuing resolution, which could result in a partial shutdown of the U.S. government and cause the termination or suspension of our contracts with suppliers to the U.S. government. SIFCO could be required to furlough affected employees for an indefinite time. It is uncertain in such a circumstance if we would be compensated or reimbursed for any loss of revenue during such a shutdown. If we were not compensated or reimbursed, it could result in significant adverse effects on our revenues, operating costs and cash flows.
Failure to retain existing contracts or win new contracts under competitive bidding processes may adversely affect our sales.
SIFCO obtains most of its contracts through a competitive bidding process, and a material portion of the business that we expect to seek in the foreseeable future likely will be subject to a competitive bidding process. Competitive bidding processes present a number of risks, including:
a.the need to compete against companies or groups of companies with more financial and marketing resources and more experience in bidding on and performing major contracts than we have;
b.the need to compete against companies or groups of companies that may be long-term, entrenched incumbents for a particular contract for which we are bidding and/or that have, as a result, greater domain expertise and better customer relations;
c.the need to compete to retain existing contracts that have in the past been awarded to SIFCO on a sole-source basis or that have been incumbent to SIFCO for a prolonged period of time;
d.the award of contracts to providers offering solutions at the “lowest price technically acceptable,” which may lower the profit we may generate under a contract awarded using this pricing method or prevent us from submitting a bid for such contracts due to us deeming such work to be unprofitable;
e.the reduction of margins achievable under any contracts awarded to us;
f.the need to bid on some programs in advance of the completion of their specifications, which may result in unforeseen technological difficulties or increased costs that lower our profitability;
g.the substantial cost and managerial time and effort, including design, development and marketing activities, necessary to prepare bids and proposals for contracts that may not be awarded to us;
h.the need to develop, introduce and implement new and enhanced solutions to our customers’ needs;
i.the need to locate and contract with teaming partners and subcontractors;
j.the need to accurately estimate the resources and cost structure that will be required to perform any contract that we are awarded; and
k.changes in our cost profile that may occur over the life of a long-term agreement.
If SIFCO wins a contract, and upon expiration, the customer requires further services of the type provided by the contract, there is frequently a competitive rebidding process. There can be no assurance that we will win any particular bid or rebid, that we will win the contract at the same or at a similar profit margin, or that we will be able to replace business lost upon expiration or completion of a contract.
If SIFCO is unable to consistently retain existing contracts or win new contract awards, our business, prospects, financial condition and results of operations may be adversely affected.
The Company may not receive the full amounts estimated under the contracts in our total backlog, which could reduce our sales in future periods below the levels anticipated, and which makes backlog an uncertain indicator of future operating results.
As of September 30, 2025, our total backlog was $119.2 million. Orders may be canceled and scope adjustments may occur, and we may not realize the full amounts of sales that we anticipate in our backlog numbers. Further, there is no assurance that our customers will purchase all the orders represented in our backlog, due in part to the U.S. government’s ability to modify,
9
Table of Contents
curtail or terminate major programs. Additionally, the timing of receipt of orders, if any, on contracts included in our backlog could change. The failure to realize amounts reflected in our backlog could materially adversely affect our business, financial condition and results of operations in future periods.
SIFCO business is dependent on a few number of direct and indirect customers.
A substantial portion of SIFCO’s business is conducted with a relatively small number of large direct and indirect customers. In fiscal 2025, one direct customer accounted for approximately 18% percent of our consolidated net sales and two direct customers and their direct subcontractors accounted for approximately 34% of the Company’s consolidated net sales. A financial hardship experienced by any one of these key customers, the loss of any of them or a reduction in or substantial delay of orders from any of them could have a material adverse effect on our business.
The Company’s failure to identify, attract and retain qualified personnel could adversely affect our existing business, financial condition and results of operations.
SIFCO may not be able to identify, attract or retain qualified technical personnel, sales and customer service personnel, employees with expertise in forging, or management personnel to supervise such activities. We may also not attract and retain employees who share the Company’s core values, who can maintain and grow our existing business, and who are suited to work in a public company environment, which could adversely affect our financial condition and results of operations.
The Company’s business could be negatively affected by cybersecurity threats, information systems interruptions, intrusions or new software implementations and other disruptions.
SIFCO faces cybersecurity threats, as well as the potential for business disruptions associated with information technology failures and interruptions, new software implementation, and damaging weather or other acts of nature, and pandemics or other public health crises, which may adversely affect our business.
Although we continue to regularly review and enhance our protection systems and cybersecurity controls, SIFCO has experienced and expects to continue to experience cybersecurity threats, including threats to our information technology infrastructure and attempts to gain access to the Company’s sensitive information, as do our customers, suppliers and subcontractors. Although we maintain information security policies and procedures to prevent, detect, and mitigate these threats, information system disruptions, equipment failures or cybersecurity attacks, such as unauthorized access, malicious software and other intrusions, could still occur and may lead to potential data corruption, exposure of or unauthorized access to proprietary and confidential information. Further, while SIFCO works cooperatively with its customers, suppliers and subcontractors to seek to minimize the impacts of cyber threats, other security threats or business disruptions, in addition to our internal processes, procedures and systems, it must also rely on the safeguards put in place by those entities.
Any intrusion, disruption, breach or similar event may cause operational stoppages, fines, penalties, diminished competitive advantages through reputational damages and increased operational costs. The costs related to cyber or other security threats or disruptions may not be fully mitigated by insurance or other means.
We continue to provide for remote work for certain of our employees, which may increase our vulnerability to cyber and other information technology risks. In addition to existing risks, any adoption or deployment of new technologies via acquisitions or internal initiatives may increase our exposure to risks, breaches, or failures, which could materially adversely affect our results of operations or financial condition. Furthermore, the Company may have access to sensitive, confidential, or personal data or information that may be subject to privacy and security laws, regulations, or other contractually-imposed controls. Despite our use of reasonable and appropriate controls, material security breaches, theft, misplaced, lost or corrupted data, programming, or employee errors and/or malfeasance or factors outside of our control could lead to the compromise or improper use of such sensitive, confidential, or personal data or information, resulting in possible negative consequences, such as fines, ransom demands, penalties, loss of reputation, competitiveness or customers, or other negative consequences resulting in adverse impacts to our results of operations or financial condition.
SIFCO relies on our suppliers to meet the quality and delivery expectations of our customers.
Our ability to deliver products on schedule is dependent upon a variety of factors, certain of which are outside of our control, including execution of internal performance plans, availability of raw materials, internal and supplier produced parts and structures, conversion of raw materials into parts and assemblies, and performance of suppliers and others. We rely on numerous third-party suppliers for raw materials and a large proportion of the components used in our production process. Certain of these raw materials and components are available only from single sources or a limited number of suppliers, or similarly, customers’ specifications may require SIFCO to obtain raw materials and/or components from a single source or certain suppliers. Many of our suppliers are small companies with limited financial resources and manufacturing capabilities. We do not currently have the ability to manufacture these components ourselves. Consequently, our supply of key products and components could be disrupted if our suppliers fail or are unable to perform because of shortages in raw materials, operational problems, strikes, natural disasters, health crises or other factors. We have experienced and, in the future, may continue to
10
Table of Contents
experience delays in the delivery of such products as a result of increased demands and pressures on the supply chain, customs, labor issues, geopolitical pressures, disruptions associated with changes in political, economic, and social conditions, weather, laws and regulations. Unfavorable fluctuations in prices for raw materials, international trade policies, quality, delivery, and availability of these products could continue to adversely affect the Company’s ability to meet demands of customers and cause negative impacts to the Company’s cost structure, profitability and its cash flow. If we were unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain could adversely affect our sales, earnings, financial condition, and liquidity.
We may have disputes with our vendors arising from, among other things, the quality of products and services or customer concerns about the vendor. If any of our vendors fail to timely meet their contractual obligations or have regulatory compliance or other problems, our ability to fulfill our obligations under contracts with our customers may be jeopardized. Economic downturns can adversely affect a vendor’s ability to manufacture or deliver products. Further, vendors may also be enjoined from manufacturing and distributing products to us as a result of litigation filed by third parties, including intellectual property litigation. If SIFCO were to experience difficulty in obtaining certain products from our key vendors, there could be an adverse effect on its results of operations and on its customer relationships and our reputation. Additionally, our key vendors could also increase pricing of their products, which could negatively affect our ability to win contracts by offering competitive prices.
Any material supply disruptions could adversely affect our ability to perform our obligations under our contracts and could result in cancellation of contracts or purchase orders, penalties, delays in realizing revenues, and payment delays, as well as adversely affect our ongoing product cost structure.
Failure by our subcontractors to perform could materially and adversely affect our contract performance and its ability to obtain future business.
The performance of contracts often involves subcontractors, upon which we rely to complete delivery of products to our customers. SIFCO may have disputes with subcontractors, and the failure by a subcontractor to satisfactorily deliver products can adversely affect our ability to perform our obligations as a prime contractor. Any subcontractor performance deficiencies could result in the customer terminating our contract for default, which could expose SIFCO to liability for excess costs of re-procurement by the customer and have a material adverse effect on our ability to compete for other contracts and on our results of operations generally.
The Company’s future success depends on the ability to meet the needs of its customer requirements in a timely manner.
The Company believes that the commercial A&E markets in which we operate require sophisticated manufacturing and system-integration techniques and capabilities using composite and metallic materials. The Company’s success depends to a significant extent on our ability to acquire, develop, execute and maintain such sophisticated techniques and capabilities to meet the needs of our customers, and to bring those products to market quickly and at cost-effective prices. If we are unable to acquire and/or develop, execute and maintain such techniques and capabilities, we may experience an adverse effect to our business, financial condition or results of operation.
The Company faces certain significant risk exposures and potential liabilities that may not be covered adequately by insurance or indemnity.
We are exposed to liabilities that are unique to the products we provide. While we maintain insurance for certain risks, the amount of insurance or indemnity may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs from an accident or incident. It is not possible for SIFCO to obtain insurance to protect against all operational risks and liabilities. Substantial claims resulting from an incident in excess of the indemnification we receive and our insurance coverage would harm our financial condition, results of operations and cash flows. Moreover, any accident or incident for which we are liable, even if fully insured, could negatively affect our standing with our customers and the public, thereby making it more difficult for us to compete effectively, and could significantly impact the cost and availability of adequate insurance in the future.
We operate in a highly competitive and price sensitive industry, and customer pricing pressures could reduce the demand and/or price for our products and services.
The end-user markets SIFCO serves are highly competitive and price sensitive. We compete globally with a number of domestic and international companies that have substantially greater manufacturing, purchasing, marketing and financial resources than we do. Many of SIFCO’s customers have the in-house capability to fulfill their manufacturing requirements. SIFCO’s larger competitors may be able to vie more effectively for very large-scale contracts than we can by providing different or greater capabilities or benefits such as technical qualifications, past performance on large-scale contracts, geographic presence, price and availability of key professional personnel. If SIFCO is unable to successfully compete for new business, our net sales growth and operating margins may decline. Competitive pricing pressures may have an adverse effect on our financial condition and operating results. Further, there can be no assurance that competition from existing or potential competitors will not have a material adverse effect on our financial results. If SIFCO does not continue to compete effectively
11
Table of Contents
and win contracts, our future business, financial condition, results of operations and our ability to meet its financial obligations may be materially compromised.
The Company uses estimates when pricing contracts and any changes in such estimates could have an adverse effect on our profitability and our overall financial performance.
When agreeing to contractual terms, some of which extend for multiple years, SIFCO makes assumptions and projections about future conditions and events. These projections assess the productivity and availability of labor, complexity of the work to be performed, cost and availability of materials, impact of delayed performance and timing of product deliveries. Contract pricing requires judgment relative to assessing risks, estimating contract revenues and costs, and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total revenues and costs at completion is complicated and subject to many variables. For example, assumptions are made regarding the length of time to complete a contract since costs also include expected increases in wages, prices for materials and allocated fixed costs. Similarly, assumptions are made regarding the future impact of our efficiency initiatives and cost reduction efforts. Incentives, awards or penalties related to performance on contracts are considered in estimating revenue and profit rates and are recorded when there is sufficient information to assess anticipated performance. Suppliers’ assertions are also assessed and considered in estimating costs and profit rates.
Because of the significance of the judgment and estimation processes described above, it is possible that materially different amounts could be obtained if different assumptions were used or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may have a material adverse effect upon the profitability of one or more of the affected contracts, future period financial reporting and performance, as pass through pricing is not always permissible.
Our technologies could become obsolete, reducing our revenues and profitability.
Technologies related to our products have undergone, and in the future may undergo, significant changes and the future of our business will depend in large part upon the continuing relevance of our forging capabilities. SIFCO could encounter competition from new or revised technologies that render its technologies and equipment less profitable or obsolete in our chosen markets and our operating results may suffer.
If the Company fails to maintain an effective system of internal control over financial reporting, it may not be able to accurately or timely report its financial results. As a result, current and potential shareholders could lose confidence in the Company’s financial reporting, which would harm the business and the trading price of its common stock.
The Sarbanes-Oxley Act, among other things, requires that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. Our testing has previously revealed, and in the future may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.
Labor disruptions by our employees or personnel turnover and/or shortage could adversely affect our business.
As of September 30, 2025, we employed approximately 259 people (excluding CBlade due to its sale in October 2024). We face competition for management and employees from other companies and organizations. If we continue to experience turnover and/or are unable to quickly hire employees and subsequently retain our workforce, or we experience a significant or prolonged work stoppage in such an environment, we may experience increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and our ability to secure new work and our results of operations and financial condition could be adversely affected. Additionally, we are party to a collective bargaining agreement with certain employees at our Cleveland, Ohio facility. Although we have not experienced any material labor-related work stoppage and consider our relations with our employees to be good, labor stoppages may occur in the future. If the unionized workers were to engage in a strike or other work stoppage, or if SIFCO is unable to negotiate acceptable collective bargaining agreements with the unions, or if other employees were to become unionized, we could experience a significant disruption of our operations, higher ongoing labor costs and possible loss of customer contracts, which could have an adverse effect on our business and results of operations.
12
Table of Contents
The price and availability of oil and other energy sources worldwide could adversely impact our results of operations. Unexpected pricing of fuel or a shortage of, or disruption in, the supply of fuel or other energy sources could have a material adverse effect on our and our customers’ business, results of operations and financial condition.
Our results of operations can be directly affected, positively and negatively, by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control. The ongoing conflict between Russia and Ukraine continues to impact global energy markets, particularly in Europe, leading to high volatility and increasing prices for crude oil, natural gas and other energy supplies. Our customers’ businesses are significantly impacted by the availability and pricing of fuel. Weather-related events, natural disasters, terrorism, wars, political disruption or instability involving oil-producing countries, changes in governmental or cartel policy concerning crude oil or aircraft fuel production, labor strikes, cyberattacks or other events affecting refinery production, transportation, taxes, marketing, environmental concerns, market manipulation, price speculation and other unpredictable events may drive actual or perceived fuel supply shortages. In particular, the ongoing conflict between Russia and Ukraine has caused shortages in the availability of fuel. In the event that the supply of natural gas from Russia stops or is significantly reduced, there may be supply disruptions, increased prices, shutdowns of manufacturing facilities, or further rationing of energy supply within countries where we and/or our customers do business, which could have a material adverse impact on our and our customers’ business or results of operations in those countries.
Risks Related to Financial Matters
A decline in operating results or access to financing may have an adverse impact on our liquidity position.
Our ability to make required payments of principal and interest on our debt will depend in part on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, political and other factors, some of which are beyond our control. Accordingly, conditions could arise that could limit our ability to generate sufficient cash flows or to access borrowings to enable us to fund our liquidity needs, which could further limit our financial flexibility or impair our ability to obtain alternative financing sufficient to repay our debt at maturity. We believe that our cash on hand, together with funds generated by our operations and borrowings under our existing credit facilities, will provide us with sufficient liquidity and capital resources to meet our operating needs for the foreseeable future. Significant assumptions underlie this belief however, including, among other things, assumptions relating to future sales volumes, the successful implementation of our business strategies and that there will be no material adverse developments in our competitive market position, business, liquidity or capital requirements. In the event that we do not have sufficient liquidity, we may be required to seek additional capital, reduce or cut back our operating activities, capital expenditures or otherwise alter our business strategy. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional debt, the agreements governing that debt may contain significant financial and other covenants that may materially restrict our operations. The Company may not be able to obtain refinancing or additional financing on favorable terms or at all.
Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility.
We have incurred indebtedness, and may incur additional debt in the future. Our ability to make interest and scheduled principal payments and operate within restrictive covenants could be adversely impacted by changes in the availability, terms and cost of capital, changes in interest rates or changes in our credit ratings or our outlook. These changes could increase our cost of business, limiting our ability to pursue acquisition opportunities, react to market conditions and meet operational and capital needs, thereby placing us at a competitive disadvantage.
Global economic conditions may adversely impact our business, operating results or financial condition.
Disruption and volatility in global financial markets may lead to increased rates of default and bankruptcy and may negatively impact consumer and business spending levels. Current or potential customers may delay or decrease spending on our products and services as their business and/or budgets are impacted by economic conditions. The inability of current and potential customers to pay SIFCO for its products and services may adversely affect its earnings and cash flows.
Further, we are exposed to fluctuations in inflation, which could negatively affect our business, financial condition and results of operation. The United States and other jurisdictions have recently experienced high levels of inflation. If inflation rates continue to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases.
We cannot predict changes in worldwide or regional economic conditions and government policies, as such conditions are highly volatile and beyond our control. If these conditions were to deteriorate for extended periods, however, our business, results of operations and financial condition could be materially adversely affected.
13
Table of Contents
The funding and costs associated with our pension plans and significant changes in key estimates and assumptions, such as discount rates and assumed long-term returns on assets, actual investment returns on our pension plan assets, and legislative and regulatory actions could affect our earnings, equity and contributions to our pension plans in future periods.
Certain of the Company’s employees are covered by its noncontributory defined benefit pension plans (collectively, the “Plans”). The impact of these Plans on our financial performance may be volatile in that the amount of expense we record may materially change from year to year because those calculations are sensitive to changes in several key economic assumptions, including discount rates, inflation, expected return on plan assets, retirement rates and mortality rates. The pension costs associated with the Plans are dependent on significant judgment in the use of various estimates and assumptions, particularly with respect to the discount rate and expected long-term rates of return on plan assets. Changes to these estimates and assumptions could have a material adverse effect on our financial position, results of operations or cash flows. Differences between actual investment returns and our assumed long-term returns on assets will result in changes in future pension expense and the funded status of our Plans, and could increase future funding of the Plans. Changes in these factors affect our plan funding, cash flows, earnings, and shareholders’ equity.
Market volatility and adverse capital or credit market conditions may affect our ability to access cost-effective sources of funding and may expose SIFCO to risks associated with the financial viability of suppliers.
The financial markets can experience high levels of volatility and disruption in response to various macroeconomic factors, reducing the availability of credit for certain issuers.
The tightening of the credit market and standards, as well as capital market volatility, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing Credit Agreement. Capital market uncertainty and volatility, together with the Company’s market capitalization and status as a smaller reporting company, could also negatively impact our ability to obtain capital market financing or bank financing on favorable terms, or at all, which could have a material adverse effect on our financial position, results of operations or cash flows.
Tightening credit markets could also adversely affect our suppliers’ ability to obtain financing. Delays in suppliers’ ability to obtain financing, or the unavailability of financing, could negatively affect their ability to perform their contracts with SIFCO and cause our inability to meet our contract obligations. The inability of our suppliers to obtain financing could also result in the need for us to transition to alternate suppliers, which could result in significant incremental costs and delays.
A write-off of all or part of our goodwill could adversely affect our operating results and net worth.
Goodwill is a component of our assets. At September 30, 2025, goodwill was $3.5 million of our total assets of $73.4 million. We may have to write off all or part of our goodwill if the value becomes impaired. Although this write-off would be a non-cash charge, it could reduce our earnings and our financial condition.
The failure to streamline operational synergies and refocus on our core aerospace forging business could adversely affect our business and results of operations.
As noted above, in October 2024, we completed the sale of our CBlade forging and manufacturing business located in Maniago, Italy. We cannot be certain that initiatives to streamline operational synergies and refocus on our core aerospace forging business will be successfully implemented following the sale of our Italian operations, or that the disposition of these operations will positively impact our profitability. To the extent we are not successful in implementing these initiatives, our business may be adversely impacted.
General Risks
The price of our common stock may fluctuate significantly.
An active, liquid and orderly market for our common stock may not be sustained, which could depress the trading price of our common stock.
Volatility in the market price of our common stock may prevent shareholders from being able to sell your shares at or above the price you paid for your shares or at all. The market price of our common stock could fluctuate significantly for various reasons, which include:
a.our quarterly or annual earnings or those of our competitors or our significant customers;
b.the public’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission;
c.changes in earnings estimates or recommendations by research analysts who track the stocks of our competitors;
d.new laws or regulations or new interpretations of laws or regulations applicable to our business;
e.changes in accounting standards, policies, guidance, interpretations or principles;
14
Table of Contents
f.changes in general conditions in the domestic and global economies or financial markets, including those resulting from war, incidents of terrorism, health crises or responses to such events;
g.litigation involving our company or investigations or audits by regulators into the operations of our company or our competitors;
h.strategic action by our competitors;
i.sales of common stock by our directors, executive officers and significant shareholders; and
j.our stock being closely held by insider holdings and is thinly traded which impacts price volatility.
In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. If litigation is instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources.
Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability and cash flow.
SIFCO is subject to income taxes in the United States and Ireland. Significant judgment is required in determining our provision for income taxes. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Changes in applicable income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax expense and profitability. In addition, the final results of any tax audits or related litigation could be materially different from our related historical income tax provisions and accruals. Additionally, changes in our tax rate as a result of changes in our overall profitability, changes in tax legislation, changes in the valuation of deferred tax assets and liabilities, changes in differences between financial reporting income and taxable income, the examination of previously filed tax returns by taxing authorities and continuing assessments of our tax exposures can also impact our tax liabilities and affect our income tax expense, profitability and cash flow.
Damage or destruction of our facilities caused by storms, earthquakes or other causes could adversely affect our financial results and financial condition.
We have operations located in regions of the world that may be exposed to damaging storms, earthquakes and other natural disasters as well as other events outside of our control, such as fires, floods and other catastrophic events. We maintain standard property casualty insurance coverage for our properties and may be able to recover costs associated with certain natural disasters through insurance; however, even if covered by insurance, any significant damage or destruction of our facilities due to such events could result in our inability to meet customer delivery schedules and may result in the loss of customers and significant additional costs to SIFCO. Thus, any significant damage or destruction of our properties could have a material adverse effect on our business, financial condition or results of operations.
The occurrence of litigation where we could be named as a defendant is unpredictable.
From time to time, we are involved in various legal and other proceedings that are incidental to the conduct of our business. While we believe no current proceedings, if adversely determined, could have a material adverse effect on our financial results, no assurances can be given. Any such claims may divert financial and management resources that would otherwise be used to benefit our operations and could have a material adverse effect on our financial results.
Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.
Our operations and facilities are subject to numerous stringent environmental laws and regulations. Although we believe that we are in compliance with these laws and regulations, future changes in these laws, regulations or interpretations of them, or changes in the nature of our operations may require us to make significant capital expenditures to ensure compliance.
Item 1B. Unresolved Staff Comments
None.
15
Table of Contents
Item 1C. Cybersecurity
Risk Management and Strategy
We have processes in place aimed at assessing, identifying, and managing material risks from cybersecurity threats. Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Key elements of our cybersecurity risk management program include:
•periodic risk assessments designed to help identify material cybersecurity risks to our critical systems and information;
•a formal register documenting and mitigating identified risks, reviewed by management on a quarterly basis;
•a data protection team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents;
•the regular use of external service providers to independently assess and test security posture, as well as to otherwise assist with aspects of our security processes;
•cybersecurity awareness training of our employees, including incident response personnel and senior management;
•a written cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents, including data storage and restoration and disaster recovery plans; and
•a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Governance
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and maintains oversight of risk assessment and risk management, including cybersecurity and other information technology risks. In addition, our Board of Directors oversees management’s implementation of our cybersecurity risk management program.
•the current cybersecurity landscape and best practices for mitigating emerging threats;
•progress on cybersecurity projects;
•incident reports;
•updates from past event(s); and
•adherence to regulatory requirements and/or industry standards, as appropriate.
Our management team, including our Data Protection Officer and external counsel, are responsible along with the Company’s Board of Directors for assessing and managing our material risks from cybersecurity threats. Our Data Protection Officer has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our Data Protection Officer has extensive experience in overseeing information technology and cybersecurity programs. Collectively, has approximately twenty years of experience in information technology, including more than eight years with direct responsibility for cybersecurity oversight and implementation. This experience included developing and implementing a cybersecurity incident response playbook and leading initiatives to achieve compliance with the NIST CSF 2.0 cybersecurity regulatory framework. Other experience included expanding and maintaining cybersecurity program in response to evolving state regulatory requirements, implementing automated playbooks to prevent and mitigate cyber threats, and overseeing compliance efforts related to NYDFS and CCPA. This backgrounds equips management with practical cybersecurity knowledge, and includes direct experience in cybersecurity program development, incident response readiness, automation of threat prevention, and compliance with applicable cybersecurity and data privacy regulations.
Our management team takes steps to remain informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat
16
Table of Contents
intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Item 2. Properties
The Company’s property, plant and equipment include the facilities described below and a substantial quantity of machinery and equipment, most of which consists of industry specific machinery and equipment using special dies, jigs, tools and fixtures and in many instances having automatic control features and special adaptations. In general, the Company’s property, plant and equipment are in good operating condition, are well maintained, and its facilities are in regular use. The Company considers its investment in property, plant and equipment as of September 30, 2025 suitable and adequate given the current product offerings for the respective operations in the current business environment. The square footage numbers set forth in the following paragraph are approximations:
•SIFCO operates and manufactures in multiple facilities—(i) an owned 280,000 square foot facility located in Cleveland, Ohio, which is also the site of the Company’s corporate headquarters and (ii) leased facilities aggregating approximately 70,500 square feet located in Orange, California.
Item 3. Legal Proceedings
In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters and does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation. See Note 12 — Commitments and Contingencies of the Notes to Consolidated Financial Statements for more information regarding the legal proceedings in which the Company is involved.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K may contain various forward-looking statements and includes assumptions concerning the Company’s operations, future results and prospects. The words "will," "may," "designed to," "outlook," "believes," "should," "anticipates," "plans," "expects," "intends," "estimates," "forecasts" and similar expressions identify certain of these forward-looking statements. These forward-looking statements are based on current expectations and are subject to risk and uncertainties. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions in general, and on the demand for product in the aerospace and energy (or "A&E”) industries in particular, of the global economic outlook, including the continuation of military spending at or near current levels and the availability of capital and liquidity from banks, the financial markets and other providers of credit; (2) the future business environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost at comparable margins; (4) metals and commodities price increases and the Company’s ability to recover such price increases; (5) successful development and market introduction of new products and services; (6) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations; (11) cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners; (12) our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulations; (13) the ability to maintain a qualified workforce; (14) the adequacy and availability of our insurance coverage; (15) our ability to develop new products and technologies and maintain technologies, facilities, and equipment to win new competitions and meet the needs of our customers; (16) our ability to realize amounts in our backlog; (17) investigations, claims, disputes, enforcement actions, litigation and/or other legal proceedings; and (18) extraordinary or force majeure events affecting the business or operations of our business.
17
Table of Contents
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s Common Shares are traded on the NYSE American exchange under the symbol “SIF.”
Dividends and Shareholders
The Company did not declare a cash dividend during fiscal 2025 or fiscal 2024. The Company will continue to evaluate the payment of dividends annually based on its relative profitability, available resources, and investment strategies. The Company currently intends to retain a significant majority of its earnings for operations, focusing on its long-term plan and growth. Additionally, the Company’s ability to declare or pay cash dividends is limited by its credit agreement. At December 5, 2025, there were approximately 241 shareholders of record of the Company’s Common Shares, as reported by Computershare, Inc., the Company’s Transfer Agent and Registrar, which maintains its U.S. corporate offices at 250 Royall Street, Canton, MA 02021.
Reference Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information related to the Company’s equity compensation plans.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
SIFCO is engaged in the production of forgings and machined and sub-assembled components primarily for the Aerospace and Defense, Energy and Commercial Space markets. The processes and services include forging, heat-treating, chemical processing and machining. The Company operates under one business segment.
When planning and evaluating its business operations, the Company takes into consideration certain factors, including the following: (i) the projected build rate for commercial, business and military aircraft, as well as the engines that power such aircraft; (ii) the projected demand for private space launch and reentry programs; and (iii) the projected maintenance, repair and overhaul schedules for commercial, business and military aircraft, as well as the engines that power such aircraft.
The Company operates within a cost structure that includes a significant fixed component. Therefore, higher net sales volumes are expected to result in greater operating income because such higher volumes allow the business operations to better leverage the fixed component of their respective cost structures. Conversely, the opposite effect is expected to occur at lower net sales and related production volumes.
A. Results of Operations
Overview
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armored military vehicles; (ii) airframe applications for a variety of aircraft; (iii) private space launch and reentry programs; and (iv) other commercial applications.
CBlade Sale
In October 2024, the Company sold its European operations in order to streamline operational synergies and refocus on its core aerospace forging business. SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”) pursuant to which it sold 100% of the share capital of CBlade S.p.A. Forging & Manufacturing, an Italian joint stock company and wholly-owned subsidiary of the Company (“CBlade”), for cash consideration.
As a result of the planned sale transaction, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of CBlade presented as assets held for sale and discontinued operations, respectively, as of and for the years ended September 30, 2025 and 2024. All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Discontinued Operations of the Notes to Consolidated Financial Statements.
18
Table of Contents
Fiscal Year 2025 Compared with Fiscal Year 2024
Net Sales
Net sales comparative information for fiscal 2025 and 2024 is as follows:
| (Dollars in millions) | Years Ended September 30, | Year Over Year Increase (Decrease) | |||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Aerospace components for: | |||||||||||||||||
| Fixed wing aircraft | $ | 51.4 | $ | 41.8 | $ | 9.6 | |||||||||||
| Rotorcraft | 17.1 | 17.3 | (0.2) | ||||||||||||||
| Commercial space | 5.0 | 13.2 | (8.2) | ||||||||||||||
| Energy components for power generation units | 2.5 | 1.8 | 0.7 | ||||||||||||||
| Commercial products and other revenue | 8.8 | 5.5 | 3.3 | ||||||||||||||
| Total | $ | 84.8 | $ | 79.6 | $ | 5.2 | |||||||||||
Net sales in fiscal 2025 increased 6.5%, or $5.2 million, to $84.8 million, compared with $79.6 million in fiscal 2024. Fixed wing aircraft sales increased $9.6 million compared with the same period last year primarily due to higher demand across most programs. Rotorcraft sales decreased $0.2 million in fiscal 2025 compared to the same period in fiscal 2024 primarily due to timing of orders in the H-60 program. Commercial space products decreased by $8.2 million year-over-year due to reduced procurement activity in the commercial space market. One key customer, significantly scaled back orders as they manage excess inventory. Energy components for power generation units increased $0.7 million due to growth in the steam turbine markets. Commercial products and other revenue increased by $3.3 million in fiscal 2025 compared to fiscal 2024, mostly due to timing of orders related to munitions programs.
Commercial net sales were 43.5% of total net sales and military net sales were 56.5% of total net sales in fiscal 2025, compared with 52.4% and 47.6%, respectively, in fiscal 2024. Commercial net sales decreased $4.8 million to $36.9 million in fiscal 2025, compared to $41.7 million in fiscal 2024 primarily due to reduced procurement activity in the commercial space market due to reasons noted above. Military net sales increased $10.0 million to $47.9 million in fiscal 2025, compared to $37.9 million in fiscal 2024 primarily due to increased demand across most programs.
Cost of Goods Sold
Cost of goods sold (“COGS”) increased by $0.6 million, or 0.8%, to $74.2 million, or 87.5% of net sales, during fiscal 2025, compared with $73.7 million, or 92.5%, of net sales during fiscal 2024. The increase was primarily due to higher sales volume, partially offset by $3.0 million of Employee Retention Credit (“ERC”) benefit.
Gross Profit
Gross profit increased by $4.6 million, to $10.6 million during fiscal 2025, compared with $6.0 million in fiscal 2024. Gross margin percent of sales was 12.5% during fiscal 2025, compared with 7.5% in fiscal 2024, primarily due to higher sales and improved margin, as well as $3.0 million ERC benefit recognized.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $10.4 million, or 12.3% of net sales, during fiscal 2025, compared with $11.1 million, or 14.0% of net sales, in fiscal 2024. The decrease in SG&A expenses is primarily due to lower employee-related expenses, resulting from reduced headcount due to deferred backfill of certain positions and a $0.5 million benefit recognized from ERC. These decreases were partially offset by approximately $0.8 million in legal and professional fees related to the ERC submission process. In addition, SG&A expenses in the prior year included a one time credit of $0.6 million from a vendor pertaining to the fiscal 2023 cybersecurity incident and $0.4 million in severance costs, which did not recur in the current period.
19
Table of Contents
Interest Expense, Net
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreements in fiscal 2025 and 2024:
| (Dollars in millions) | Weighted Average Interest Rate Years Ended September 30, | Weighted Average Outstanding Balance Years Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revolving credit agreement | 9.8% | 8.0% | $ | 11.3 | $ | 17.1 | |||||||||||||||||
| Term loan | 10.2% | —% | $ | 2.6 | $ | — | |||||||||||||||||
| Other debt | 4.0% | 12.6% | $ | 0.3 | $ | 0.3 | |||||||||||||||||
The Company believes that inflation did not materially impact its results of operations in either fiscal 2025 or 2024.
Income Taxes
The Company’s effective tax rate in fiscal 2025 was 24.7% compared with 0.4% in fiscal 2024. The decrease in the effective tax rate in fiscal 2025 is primarily attributable to changes in jurisdictional mix of income and increase in Ireland income tax expense as a result of the sale of Italian business in fiscal 2025 compared with the same period in fiscal 2024. The effective tax rate differs from the U.S. federal statutory rate due primarily to the valuation allowance against the Company’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.
Loss from Continuing Operations
Loss from continuing operations was $0.9 million during fiscal 2025 compared with a loss from continuing operations of $8.6 million in fiscal 2024 due to higher sales volumes and gross margins improvements coupled with lower SG&A expenses, lower interest expense attributable to lower average debt outstanding during the period and the net benefit recognized of $3.3 million related to ERC.
B. Liquidity and Capital Resources
Cash, cash equivalents and restricted cash decreased to $0.5 million at September 30, 2025 compared with $1.7 million at September 30, 2024. The Company also had cash and cash equivalents related to its discontinued operations (i.e., CBlade) of nil and $1.0 million, September 30, 2025 and 2024, respectively, which are included in current assets of business held for sale in the audited consolidated balance sheets. As of September 30, 2025 and 2024, cash included financing proceeds for capital investment and a nominal amount of the Company’s cash and cash equivalents were in the possession of its non-U.S. holding company subsidiary.
Our primary requirements for liquidity and capital resources besides our growth initiatives, are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, the main sources of liquidity of the Company have been cash flows from operations and borrowings under our debt agreements. As of September 30, 2025, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the upcoming fiscal year relate to payments on our outstanding debt and leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. For information regarding the Company’s expected cash requirements and timing of payments related to leases and noncancellable purchase commitments, see Note 11 — Leases and Note 12 — Commitments and Contingencies of the Notes to Consolidated Financial Statements. Additionally, refer to Note 9 — Retirement Benefit Plans of the Notes to Consolidated Financial Statements for more information related to the Company’s pension and defined contribution plans.
With the sale of the CBlade manufacturing operations located in Maniago, Italy, the Company increased its cash on hand from the proceeds, which was used to repay a portion of its outstanding debt balances and for general operational needs. Historically, the cash flows from the Company’s CBlade business represented a material portion of the consolidated results of operations, financial condition and cash flows. Although future contributions from the CBlade business ceased with the execution of the sale transaction, the Company believes that its streamlined operations will allow management to focus on domestic growth opportunities. There is no guarantee that the Company’s continuing operations will sufficiently replace the liquidity and cash flows previously provided by CBlade’s operations. For details regarding the sale of CBlade, refer to Note 2 — Discontinued Operations of the Notes to Consolidated Financial Statements.
We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our loan agreement or seek additional financing. The Company’s liquidity could be negatively affected if the Company is unable to obtain capital, if customers extend payment
20
Table of Contents
terms, and/or if demand for our products decline. The Company and management will continue monitor its liquidity needs. For details regarding our debt agreements, see Note 6 — Debt of the Notes to Consolidated Financial Statements.
Operating Activities
The Company’s operating activities provided $0.1 million of cash in fiscal 2025, compared with $2.6 million of cash used in fiscal 2024. The cash provided by operating activities in fiscal 2025 was primarily due to net operating loss of $0.9 million, adjusted for non-cash items of $8.7 million, partially offset by uses of working capital of $7.6 million. The use of cash from working capital of $7.6 million was primarily due to accounts receivable decreasing, reflecting improved collections and timing of billings, inventories increased, accounts payables and accrued liabilities decreased as the Company reduced outstanding obligations and normalized payment cycles.
The Company’s operating activities used $2.6 million of cash in fiscal 2024. The cash used by operating activities in fiscal 2024 was primarily due to net operating loss of $8.6 million, adjusted for non-cash items of $8.3 million, partially offset by use of working capital of $2.3 million. The use of cash from working capital of $2.3 million was primarily due to higher inventories due to timing of raw material receipts, the increase in account receivables due to higher sales and timing of payments at the end of fiscal year, and higher prepaid expenses attributable to deferred financing costs related to debt refinancing, partially offset by an increase in contract liabilities due to advance payments for raw materials and higher sales recognized over-time and higher accounts payable due to timing of payments
Investing Activities
Cash used for investing activities was $0.5 million in fiscal 2025, compared with $2.0 million in fiscal 2024. Fiscal 2025 and fiscal 2024 expenditures were used primarily for manufacturing enhancement and maintenance. Capital commitments as of September 30, 2025 were $0.1 million. The Company anticipates the total fiscal 2026 capital expenditures will be within the range of $1.0 million to $2.0 million. These expenditures are expected to relate primarily to projects aimed at improving production capabilities, expanding product offering, and achieving operating cost efficiencies.
Financing Activities
Cash used for financing activities was $14.0 million in fiscal 2025 compared to cash provided by financing activities of $6.3 million in fiscal 2024. The year-over-year decrease in cash from financing was primarily related to the higher repayments on our revolving credit line and the debt refinancing and repayment of the promissory note during fiscal 2025.
Refer to Note 6 — Debt of the Notes to Consolidated Financial Statements for details regarding our financing activities during fiscal 2025 and 2024.
Future cash flows from the Company’s operations may be used to pay down outstanding debt amounts. The Company believes it has adequate cash/liquidity available to finance its operations from the combination of (i) the Company’s expected cash flows from operations and (ii) funds available under its loan and security agreement as described in Note 6 — Debt of the Notes to Consolidated Financial Statements.
Tightening of the credit market and standards, as well as capital market volatility, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing debt agreements when needed in the future. Capital market uncertainty and volatility, together with the Company’s market capitalization and status as a smaller reporting company, could also negatively impact our ability to obtain equity financing.
Net Cash Provided By Discontinued Operations
Net cash from discontinued operations are presented in the consolidated statements of cash flows as summarized operating, investing and financing cash flows, as well as the impact of exchange rate changes on cash. The Company’s operating activities from discontinued operations provided no cash in fiscal 2025, compared with $1.4 million of cash provided by fiscal 2024 primarily driven by net income from discontinued operations and changes in working capital. Cash provided for investing activities from discontinued operations was $14.4 million in fiscal 2025 and cash use of $1.4 million in 2024, related to proceeds received from its sale and outlays for capital expenditures. Cash provided by financing activities from discontinued operations was $0.4 million in fiscal 2025 compared to $1.1 million of cash used in fiscal 2024, attributable to proceeds from new borrowings and loan payments, respectively.
C. Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. The Company believes that the accounting estimates employed and the resulting balances are
21
Table of Contents
reasonable; however, actual results in these areas could differ from management’s estimates under different assumptions or conditions.
Significant accounting policies used in the preparation of the consolidated financial statements are discussed in Note 1 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements. The Company believes that the assumptions and estimates associated with allowance for credit losses, inventory valuation, goodwill, contract balances, and income taxes have the greatest potential impact on our financial statements because they are inherently uncertain, involve significant judgements, and include areas where different estimates reasonably could materially impact the financial statements. The Company believes that the critical accounting estimates employed and the resulting balances are reasonable; however, actual results in these areas could differ from management’s estimates under different assumptions or conditions.
Allowances for Credit Losses
The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers. As these factors change, the Company’s allowances for credit losses may change in subsequent periods. Historically, losses have been within management’s expectations and have not been significant.
Inventories
Approximately 40% of the Company’s inventory is valued using the last-in, first-out (“LIFO”) method with the remaining valued using the first-in, first-out (“FIFO”) method stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion.
The Company evaluates obsolete and excess inventory on a quarterly basis. The Company maintains a formal policy, which requires at a minimum, that amounts are written down based on an analysis of the age of the inventory. In addition, if the Company learns of specific obsolescence, other than that identified by the aging criteria, an additional write down will be recognized. Specific obsolescence may arise due to a technological or market change or based on cancellation of an order. Management’s judgment is necessary in determining the proper write down for obsolete and excess inventory. For the portion of the Company’s inventory not valued at LIFO, inventory is valued at FIFO and stated at the lower of cost or net realizable value. The Company evaluates net realizable value on a quarterly basis. See Note 3 — Inventories, net of the Notes to Consolidated Financial Statements for further discussion.
Revenue Recognition
The Company recognizes revenue using the five-step revenue recognition model in which it depicts the transfer of goods to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. The revenue standard also requires disclosure sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the cost to obtain or fulfill a contract.
Contract Balances
Contract assets on the consolidated balance sheets are recognized when a good is transferred to the customer and the Company does not have the contractual right to bill for the related performance obligations. In these instances, revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time. Amounts do not exceed their net realizable value. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payment from customers are received based on the terms established in the contract with the customer.
Impairment of Long-Lived Assets
The Company reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable. This review involves judgment and is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets and which the Company considers a critical accounting estimate. The Company would assess the fair value of the asset group and compare it to its carrying value. Under the Accounting Standard Codification (“ASC”) 360 (“Topic 360”), if the carrying value of a long-lived asset or asset group is greater than the estimated undiscounted future cash flows, then the long-lived asset or asset group is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset or asset group exceeds its fair value.
22
Table of Contents
In projecting future undiscounted cash flows, the Company relies on internal budgets and forecasts, including revenue and cash flow projections,, and estimated residual value of the asset group upon disposal of long-lived assets. The Company’s budgets and forecasts are based on historical results and anticipated future market conditions, such as the general business climate and the effectiveness of competition. The Company believes that its estimates of future undiscounted cash flows and fair value are reasonable; however, changes in estimates of such undiscounted cash flows and fair value could change the Company’s estimates, which could result in future impairment charges.
2025 and 2024 Long-Lived Asset Recoverability Tests
In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange location, triggered a recoverability test. The results indicated that the long-lived assets were recoverable and did not require further review for impairment. The Company did not identify any indicators that the asset groups might be impaired in any of the other quarters assessed during fiscal 2025 and 2024.
Impairment of Goodwill
Goodwill is tested for impairment annually as of July 31. If circumstances change during interim periods between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company will test goodwill for impairment. Factors that would necessitate an interim goodwill impairment assessment include a sustained decline in the Company’s stock price, prolonged negative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results. Management uses judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for its goodwill impairment testing. The Company’s fair value measurement approach combines the income and market valuation techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparables, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions.
If a reporting unit fails the quantitative impairment test, impairment expense is immediately recorded as the difference between the reporting unit’s fair value and carrying value not to exceed the amount of goodwill recorded.
2025 Annual Goodwill Impairment Tests
SIFCO performed its annual test as of July 31, 2025. Goodwill existed at one of the Company’s reporting units, Cleveland, Ohio as of July 31, 2025 and September 30, 2025. No impairment charge was identified in connection with the annual goodwill impairment test with respect to the Cleveland reporting unit. Refer to Note 4 — Goodwill of the Notes to Consolidated Financial Statements.
2024 Annual Goodwill Impairment Tests
SIFCO performed its annual test as of July 31, 2024. Goodwill existed at one of the Company’s reporting units, Cleveland, Ohio as of July 31, 2024 and September 30, 2024. No impairment charge was identified in connection with the annual goodwill impairment test with respect to the Cleveland reporting unit. Refer to Note 4 — Goodwill of the Notes to Consolidated Financial Statements.
Defined Benefit Pension Plan Expense
The Company maintains three defined benefit pension plans in accordance with the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). The amounts recognized in the consolidated financial statements for pension benefits under these three defined benefit pension plans are determined on an actuarial basis utilizing various assumptions. The following table illustrates the sensitivity to change in the assumed discount rate and expected long-term rate of return on assets for the Company’s pension plans as of September 30, 2025.
| Impact on Fiscal 2025 Benefits Expense | Impact on September 30, 2025 Projected Benefit Obligation for Pension Plans | |||||||||||||
| Change in Assumptions | ||||||||||||||
| (In thousands) | ||||||||||||||
| 25 basis point decrease in discount rate | $ | 10 | $ | 391 | ||||||||||
| 25 basis point increase in discount rate | (10) | (391) | ||||||||||||
| 100 basis point decrease in expected long-term rate of return on assets | 172 | — | ||||||||||||
| 100 basis point increase in expected long-term rate of return on assets | (172) | — | ||||||||||||
The discussion that follows provides information on the significant assumptions/elements associated with these defined benefit pension plans.
23
Table of Contents
The Company determines the expected return on plan assets principally based on (i) the expected return for the various asset classes in the respective plans’ investment portfolios and (ii) the targeted allocation of the respective plans’ assets. The expected return on plan assets is developed using historical asset return performance as well as current and anticipated market conditions such as inflation, interest rates and market performance. Should the actual rate of return differ materially from the assumed/expected rate, the Company could experience a material adverse effect on the funded status of its plans and, accordingly, on its related future net pension expense.
The discount rate for each plan is determined, as of the fiscal year end measurement date, using prevailing market spot-rates (from an appropriate yield curve) with maturities corresponding to the expected timing/date of the future defined benefit payment amounts for each of the respective plans. Such corresponding spot-rates are used to discount future years’ projected defined benefit payment amounts back to the fiscal year end measurement date as a present value. A composite discount rate is then developed for each plan by determining the single rate of discount that will produce the same present value as that obtained by applying the annual spot-rates. The discount rate may be further revised if the market environment indicates that the above methodology generates a discount rate that does not accurately reflect the prevailing interest rates as of the fiscal year end measurement date. The Company computes a weighted-average discount rate taking into account anticipated plan payments and the associated interest rates from the USI Consulting Group Pension Discount Curve.
As of September 30, 2025 and 2024, SIFCO used the following weighted-average assumptions:
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Discount rate for liabilities | 5.1 | % | 4.8 | % | |||||||
| Discount rate for expenses | 4.9 | % | 5.7 | % | |||||||
| Expected return on assets | 6.2 | % | 6.2 | % | |||||||
Deferred Tax Valuation Allowance
The Company accounts for deferred taxes in accordance with the provisions of the Accounting Standards Codification guidance related to accounting for income taxes, whereby the Company recognizes an income tax benefit related to income tax credits, loss carryforwards and deductible temporary differences between financial reporting basis and tax reporting basis.
A high degree of judgment is required to determine the extent a valuation allowance should be provided against deferred tax assets. On a quarterly basis, the Company assesses the likelihood of realization of its deferred tax assets considering all available evidence, both positive and negative. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. It is generally difficult to outweigh objectively verifiable negative evidence of recent financial reporting losses. Based on the weight of available evidence, the Company determines if it is more likely than not that its deferred tax assets will be realized in the future.
As a result of losses incurred in recent years, the Company entered into a three-year cumulative loss position in the U.S. jurisdiction during the fourth quarter of fiscal 2016 and remains in a cumulative loss position at the conclusion of fiscal 2025. Accordingly, the Company maintained its valuation allowance on its U.S. deferred tax assets as of the fourth quarter of fiscal 2025.
D. Impact of Newly Issued Accounting Standards
Refer to Note 1 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report for information regarding recent accounting pronouncements.
24
Table of Contents
Item 8. Financial Statements and Supplementary Data
Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34 )¹
Report of Independent Registered Public Accounting Firm (PCAOB ID: 49)²
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
¹ Report provided in connection with audited financial statements for fiscal year ended 2025.
² Report provided in connection with audited financial statements for fiscal year ended 2024.
25
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of SIFCO Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of SIFCO Industries, Inc. and subsidiaries (the "Company") as of September 30, 2025, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for the year ended September 30, 2025, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025, and the results of its operations and its cash flows for the year ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provided a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Over time Revenue — Refer to Notes 1 and 7 to the financial statements
Critical Audit Matter Description
The Company recognizes revenue as they fulfil their performance obligations and transfer control of products to their customers. For products that have no alternative use and for which the Company has an enforceable right to payment (including a reasonable profit) throughout the production process, revenue is recognized over the contract term (“over time”). For contracts recognized over time, control transfer occurs incrementally during the Company’s production process as progress is made on fulfilling the performance obligation. The Company applies the cost-to-cost input method, which uses costs incurred to date relative to total estimated costs at completion to measure progress towards satisfying the Company’s performance obligations. The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs and profit for the performance obligation. As of September 30, 2025, over time revenue accounted for 62% of the Company’s year-to-date revenues.
We identified revenue recognized over time as a critical audit matter because of the significant judgment necessary for management to estimate total contract costs and profit used to recognize revenue for over time contracts. Auditing management’s estimates of total contract costs and profit for performance obligations recognized over time required significant auditor judgment and an increased extent of effort to evaluate the reasonableness of management’s estimates.
26
Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the recognition of revenue recognized over time included the following, among others:
•We tested the mathematical accuracy of management's calculation of revenue recognized over time.
•We performed a retrospective review comparing prior period assumptions to actual results in subsequent periods and conducted sensitivity analyses to evaluate the significance of potential effects on revenue recognition due to changes in management’s assumptions.
•We selected a sample of contracts that included revenue recognized over time and performed the following:
◦Evaluated whether the contracts were properly included in management’s calculation of revenue recognized over time based on the terms and conditions of each contract.
◦Compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.
◦Tested the accuracy and completeness of the costs incurred to date for the performance obligation.
◦Evaluated the reasonableness of the methodology used by management to estimate costs for each contract.
◦Compared management’s estimates for the selected contracts to costs and profits of similar performance obligations, when applicable.
•We evaluated management’s disclosures related to revenue recognized over time to assess their conformity with the appliable accounting policies and standards.
/s/ Deloitte & Touche LLP
December 22, 2025
We have served as the Company's auditor since 2025.
27
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of SIFCO Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of SIFCO Industries, Inc. and its subsidiaries (the Company) as of September 30, 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year then ended, the related notes to the consolidated financial statements and the financial statement schedule included under Item 15(a) for the year ended September 31, 2024 (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ RSM US LLP
We served as the Company’s auditor from 2023 to 2025.
Cleveland, Ohio
December 23, 2024, except for Note 13 as to which the date is December 22, 2025
28
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
| Years Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Net sales | $ | $ | ||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||
| Gross profit | ||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||
| Loss on disposal of operating assets | ||||||||||||||||||||
| Operating income (loss) | ( | |||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||
| Gain on forgiven loan | ( | |||||||||||||||||||
| Foreign currency exchange loss (gain), net | ( | |||||||||||||||||||
| Other (income) expense, net | ( | |||||||||||||||||||
| Loss from continuing operations before income tax expense | ( | ( | ||||||||||||||||||
| Income tax expense | ||||||||||||||||||||
| Loss from continuing operations | ( | ( | ||||||||||||||||||
| Income from discontinued operations, net of tax | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||
| Basic earnings (loss) per share: | ||||||||||||||||||||
| Basic loss per share from continuing operations | $ | ( | $ | ( | ||||||||||||||||
| Basic earnings per share from discontinued operations | ||||||||||||||||||||
| Basic loss per share | $ | ( | $ | ( | ||||||||||||||||
| Diluted earnings (loss) per share: | ||||||||||||||||||||
| Diluted loss per share from continuing operations | $ | ( | $ | ( | ||||||||||||||||
| Diluted earnings per share from discontinued operations | ||||||||||||||||||||
| Diluted loss per share | $ | ( | $ | ( | ||||||||||||||||
| Weighted-average number of common shares (basic) | ||||||||||||||||||||
| Weighted-average number of common shares (diluted) | ||||||||||||||||||||
See notes to consolidated financial statements.
29
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
| Years Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
| Foreign currency translation adjustment, net of tax | ||||||||||||||||||||
| Retirement plan liability adjustment, net of tax | ||||||||||||||||||||
| Interest rate swap agreement adjustment, net of tax | ( | ( | ||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | |||||||||||||||||
See notes to consolidated financial statements.
30
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
| September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Receivables, net of allowance for credit losses of $ | ||||||||||||||
| Contract asset | ||||||||||||||
| Inventories, net | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Current assets of discontinued operations | ||||||||||||||
| Total current assets | ||||||||||||||
| Property, plant and equipment, net | ||||||||||||||
| Operating lease right-of-use assets, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Other assets | ||||||||||||||
| Noncurrent assets of discontinued operations | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Current maturities of debt, net of unamortized debt issuance costs | $ | $ | ||||||||||||
Promissory note — related party | ||||||||||||||
| Revolver | ||||||||||||||
| Short-term operating lease liabilities | ||||||||||||||
| Accounts payable | ||||||||||||||
| Contract liabilities | ||||||||||||||
Accrued liabilities (related party — | ||||||||||||||
| Current liabilities of discontinued operations | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term finance lease, net of short-term | ||||||||||||||
| Long-term operating lease liabilities, net of short-term | ||||||||||||||
| Deferred income taxes, net | ||||||||||||||
| Pension liability | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Noncurrent liabilities of discontinued operations | ||||||||||||||
Commitment and contingencies (Note 12) | ||||||||||||||
| Shareholders’ equity: | ||||||||||||||
Serial preferred shares, no par value, authorized | ||||||||||||||
Common shares, par value $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive income (loss) | ( | |||||||||||||
| Total shareholders’ equity | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||||||||
31
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Amounts in thousands)
| Years Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||
| Income from discontinued operations, net of tax | ||||||||||||||||||||
| Loss from continuing operations | ( | ( | ||||||||||||||||||
| Adjustments to reconcile net loss to net cash (used for) provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||
| Loss on disposal of operating assets | ||||||||||||||||||||
| Gain on forgiven loan | ( | |||||||||||||||||||
| Inventory valuation accounts | ||||||||||||||||||||
| LIFO effect | ||||||||||||||||||||
| Share transactions under employee stock plan | ||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Interest added to promissory note - related party (paid-in-kind) | ||||||||||||||||||||
| Interest incurred but not yet paid | ||||||||||||||||||||
| Other expenses | ||||||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Receivables | ( | |||||||||||||||||||
| Contract assets | ( | |||||||||||||||||||
| Inventories | ( | ( | ||||||||||||||||||
| Refundable income taxes | ||||||||||||||||||||
| Prepaid expenses and other current assets | ( | |||||||||||||||||||
| Other assets | ||||||||||||||||||||
| Accounts payable | ( | |||||||||||||||||||
| Accrued liabilities | ( | |||||||||||||||||||
| Contract liabilities | ( | |||||||||||||||||||
| Accrued income tax and other | ( | |||||||||||||||||||
| Net cash provided by (used for) operating activities | ( | |||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||||||||
| Net cash used for investing activities | ( | ( | ||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from term note | ||||||||||||||||||||
| Repayments of term note | ( | ( | ||||||||||||||||||
| Proceeds from promissory note - related party | ||||||||||||||||||||
| Repayments of promissory note and related fees - related party | ( | |||||||||||||||||||
| Proceeds from revolving credit agreement | ||||||||||||||||||||
| Repayments of revolving credit agreement | ( | ( | ||||||||||||||||||
| Payments for debt issuance costs | ( | ( | ||||||||||||||||||
| Principal payments on finance leases | ( | |||||||||||||||||||
| Net cash (used for) provided by financing activities | ( | |||||||||||||||||||
32
Table of Contents
| Cash flows from discontinued operations: | ||||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||
| Net cash provided by (used for) investing activities | ( | |||||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ( | ||||||||||||||||||
| Net cash provided by discontinued operations | ||||||||||||||||||||
| Increase in cash, cash equivalents and restricted cash | ||||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of year | ||||||||||||||||||||
| Less cash and cash equivalents of discontinued operations at the end of the year | ( | |||||||||||||||||||
| Cash, cash equivalents and restricted cash from continuing operations at end of year | $ | $ | ||||||||||||||||||
See notes to consolidated financial statements.
SIFCO Industries, Inc. and Subsidiaries
Supplemental Disclosure of Cash Flow Information
(Amounts in thousands)
| Years Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Cash paid during the year: | ||||||||||||||||||||
| Cash paid for interest | $ | ( | $ | ( | ||||||||||||||||
| Cash paid for income tax, net | ( | ( | ||||||||||||||||||
| Non-cash financing activities: | ||||||||||||||||||||
| Debt issuance costs - incurred but not yet paid | ||||||||||||||||||||
Accrued guaranty fees - related party | ||||||||||||||||||||
Origination fees capitalized to promissory note principal - related party | ||||||||||||||||||||
| Interest added to promissory note - related party (paid-in-kind) | ||||||||||||||||||||
See notes to consolidated financial statements.
33
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity
(Amounts in thousands)
| Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
| Balance - October 1, 2023 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Comprehensive (loss) income | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Performance and restricted share expense | — | — | — | |||||||||||||||||||||||||||||||||||
| Share transactions under employee stock plans | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Balance - September 30, 2024 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Comprehensive (loss) income | — | — | ( | |||||||||||||||||||||||||||||||||||
| Performance and restricted share expense | — | — | — | |||||||||||||||||||||||||||||||||||
| Share transactions under employee stock plans | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Balance - September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
See notes to consolidated financial statements.
34
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Amounts in thousands, except per share data)
1.Summary of Significant Accounting Policies
A.DESCRIPTION OF BUSINESS
In October 2024, the Company sold its European operations in order to streamline operational synergies and refocus on its core aerospace forging business. SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”) pursuant to which it sold 100 % of the share capital of CBlade S.p.A. Forging & Manufacturing, an Italian joint stock company and wholly-owned subsidiary of the Company (“CBlade”), for cash consideration.
As a result of the planned sale transaction, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of CBlade presented as assets held for sale and discontinued operations, respectively. All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Discontinued Operations.
B.PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The U.S. dollar is the functional currency for all the Company’s U.S. operations and its non-operating, non-U.S. subsidiaries. For these operations, all gains and losses from completed currency transactions are included in income. Prior to the sale of CBlade, the functional currency was the Euro. Assets and liabilities are translated into U.S. dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange which approximate the rates in effect at the date of the transaction. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive income (loss) in the consolidated statements of shareholders’ equity.
C.CASH, CASH EQUIVALENTS AND RESTRICTED CASH
The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. Restricted cash primarily represents collateral for outstanding letters of credit that support normal business transactions. A substantial majority of the Company’s cash, cash equivalents and restricted cash balances exceed federally insured limits as of September 30, 2025 and 2024.
D.ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment. Unbilled receivables are reflected under contract assets on the consolidated balance sheets.
The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers.
Receivables are presented net of allowance for credit losses of $151 and $117 at September 30, 2025 and 2024, respectively. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible. In fiscal 2025, $68 of accounts receivable were written off against the allowance for credit losses, while $30 were written off in fiscal 2024. Bad debt expense of $102 and a benefit of $90 was recorded in fiscal 2025 and 2024, respectively.
35
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
E.CONCENTRATIONS OF CREDIT RISK
Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S. based companies. In fiscal 2025, 18 % of the Company’s consolidated net sales were from one of its largest customers; and 34 % of the Company’s consolidated net sales were from the two largest customers and their direct subcontractors, which individually accounted for 18 %, and 16 %, of consolidated net sales, respectively. In fiscal 2024, the Company had one customer who accounted for 15 % of the Company’s consolidated net sales; and 41 % of the Company’s consolidated net sales were from three of the largest customers and their direct subcontractors, which each individually accounted for 15 %, 15 % and 11 % of consolidated net sales. Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2025 and 2024.
At September 30, 2025, there was one customer of the Company with net accounts receivable balances representing greater than 10% of the total net accounts receivable at 17 two of the largest customers and their direct subcontractors collectively had an outstanding net accounts receivable which accounted for 36 % of total net accounts receivable. At September 30, 2024, there was no customer of the Company with net accounts receivable balances representing greater than 10 % of the total net accounts receivable; and two of the largest customers and their direct subcontractors collectively had an outstanding net accounts receivable which accounted for 22 % of total net accounts receivable.
F.INVENTORY VALUATION
For a portion of the Company’s inventory, cost is determined using the last-in, first-out (“LIFO”) method. For approximately 40 % and 30 % of the Company’s inventories at September 30, 2025 and 2024, respectively, the LIFO method is used to value the Company’s inventories. The first-in, first-out (“FIFO”) method is used to value the remainder of the Company’s inventories, which are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion. To reflect inventory at net realizable value, the Company recorded reserves of $3,164 and $705 as of September 30, 2025 and 2024, respectively.
The Company writes down inventory for obsolete and excess inventory each quarter and requires at a minimum that the write down be established based on an analysis of the age of the inventory. In addition, if the Company identifies specific obsolescence, other than that identified by the aging criteria, an additional write down will be recognized. Specific obsolescence and excess write down requirements may arise due to technological or market changes or based on cancellation of an order. In order to accurately reflect the value of inventory, the Company wrote down inventory for obsolete and excess inventory, and accrued reserves of $2,755 and $2,028 as of September 30, 2025 and 2024.
G.PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation is generally computed using the straight-line method. Depreciation is provided in amounts sufficient to amortize the cost of the assets over their estimated useful lives. Depreciation provisions are based on estimated useful lives: (i) buildings, including building improvements - 5 to 40 years; (ii) machinery and equipment, including office and computer equipment - 3 to 20 years; (iii) software - 3 to 7 years (included in machinery and equipment); and (iv) leasehold improvements - 6 to 15 years range represent the remaining life or length of the lease, whichever is less (included in buildings).
The Company’s property, plant and equipment assets by major asset class at September 30 consist of:
| 2025 | 2024 | |||||||||||||
| Property, plant and equipment: | ||||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings | ||||||||||||||
| Machinery and equipment | ||||||||||||||
| Total property, plant and equipment | ||||||||||||||
| Less: Accumulated depreciation | ||||||||||||||
| Property, plant and equipment, net | $ | $ | ||||||||||||
Depreciation expense was $5,020 and $4,784 in fiscal 2025 and 2024, respectively.
36
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
H.LONG-LIVED ASSET IMPAIRMENT
The Company reviews the carrying value of its long-lived assets (“asset groups”), when events and circumstances indicate a triggering event has occurred. A triggering event is a change in circumstances that indicates the carrying value of the asset group may not be recoverable. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. Under the Accounting Standard Codification (“ASC”) 360 (“Topic 360”), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.
Fiscal 2025 and 2024
The Company continuously monitors potential triggering events to determine if further testing is necessary. In the first, second, third and fourth quarters of both fiscal 2025 and 2024, the Company evaluated triggering events. In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange location, triggered a recoverability test. The results indicated that the long-lived assets were recoverable and did not require further review for impairment. The Company did not identify any indicators that the asset groups might be impaired in any of the other quarters assessed during fiscal 2025 and 2024.
I.GOODWILL AND INTANGIBLE ASSETS
Goodwill represents the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is subject to impairment testing if triggered in the interim, and if not, on an annual basis. The Company has selected July 31 as the annual impairment testing date. The first step of the goodwill impairment test compares the fair value of a reporting unit (as defined) with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired. However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See Note 4 — Goodwill, for further discussion of the July 31, 2025 and 2024 annual impairment test results. The Company monitors for triggering events outside of the annual impairment assessment date, and no potential triggers were identified through September 30, 2025.
Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog. Intangible assets are amortized over their useful lives ranging from one year to ten years . Identifiable intangible assets assessment for impairment is evaluated when events and circumstances warrant such a review.
J.NET LOSS PER SHARE
37
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The dilutive effect is as follows:
| September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Loss from continuing operations | $ | ( | ( | ||||||||||||||
| Income from discontinued operations, net of tax | |||||||||||||||||
| Net loss | $ | ( | $ | ( | |||||||||||||
| Weighted-average common shares outstanding (basic and diluted) | |||||||||||||||||
| Net earnings (loss) per share – basic and diluted: | |||||||||||||||||
| Continuing operations | $ | ( | $ | ( | |||||||||||||
| Discontinued operations | |||||||||||||||||
| Net loss per share | $ | ( | $ | ( | |||||||||||||
| Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share | |||||||||||||||||
K.REVENUE RECOGNITION
The Company recognizes revenue using the five-step revenue recognition model in which it depicts the transfer of goods to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. The revenue standard also requires disclosure sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the cost to obtain or fulfill a contract.
The Company recognizes revenue in the following manner using the five-step revenue recognition model. A contract exists when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company’s contracts are from purchase orders (“PO’s”), which continue to be recognized as of a point in time when products are shipped from the Company’s manufacturing facilities or at a later time when control of the products transfers to the customer. Under the revenue standard, the Company recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows:
•Certain military contracts, which relate to the provisions of specialized or unique goods to the U.S. government with no alternative use, include provisions within the contract that are subject to the Federal Acquisition Regulation (“FAR”). The FAR provision allows the customer to unilaterally terminate the contract for convenience and requires the customer to pay the Company for costs incurred plus reasonable profit margin and take control of any work in process.
•For certain commercial contracts involving customer-specific products with no alternative use, the contract may fall under the FAR clause provisions noted above for military contracts or may include certain provisions within their contract that the customer controls the work in process based on contractual termination clauses or restrictions of the Company’s use of the product and the Company possesses a right to payment for work performed to date plus reasonable profit margin.
As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. The determination of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. When the criteria to recognize revenue over time are not met, revenue is recognized at point in time. Under this method, transferring control of the good or service to the customer satisfies the performance obligation to recognize revenue at a point in time. Transfer of control is satisfied when the Company has the right to present for payment and/or the customer has legal title, physical possession, significant risks and rewards of ownership and/or accepted the asset.
38
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. An accounting policy election to exclude from transaction price was made for sales, value add, and other taxes the Company collects concurrent with revenue-producing activities when applicable. The Company has elected to recognize incremental costs incurred to obtain contracts, which primarily represent commissions paid to third party sales agents where the amortization period would be less than one year, as selling, general and administrative expenses in the consolidated statements of operations as incurred.
The amount of consideration to which the Company expects to be entitled in exchange for the goods is not generally subject to significant variations.
Contracts are occasionally modified to account for changes in contract specifications, requirements, and pricing. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Substantially all of the Company’s contract modifications are for goods that are distinct from the existing contract. Therefore, the effect of a contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is generally recognized on a prospective basis.
Contract Balances
Contract assets on the consolidated balance sheets are recognized when control is transferred to the customer over-time and the Company does not have the contractual right to bill for the related performance obligations. In these instances, revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time. Amounts do not exceed their net realizable value. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer.
L.LEASES
The leasing standard requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the consolidated balance sheet, with the exception of short-term leases. The Company primarily leases its manufacturing buildings, specifically at its Orange location, as well as certain machinery and office equipment. The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration. Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability. Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated balance sheets.
ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date and duration of the lease term in determining the present value of the future payments. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition.
M.EMPLOYEE RETENTION CREDIT
Under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Employee Retention Credit (“ERC”) is a refundable payroll tax credit available to eligible businesses and tax-exempt organizations impacted by the COVID-19 pandemic. Businesses qualified if they experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts (defined as a decline of more than 50% in any 2020 quarter compared to 2019, and more than 20% in 2021).
For the year ended September 30, 2025 the Company recognized a total gross benefit of $4,173 , consisting of $3,482 ERC refund and $690 in interest income. The credit was allocated as follows:
•$2,971 to cost of goods ("COGS")
39
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
•$511 to selling, general and administrative expense ("SG&A"), and
•$690 to other (income) expense, net.
Additionally, the Company incurred $835 in professional fees related to the ERC, which was recorded in SGA expense. There was no
N.IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS AND LEGISLATION
In November 2023, the FASB issued Accounting Standard Update (“ASU”) ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new ASU effective September 30, 2025. Adoption of this resulted in additional disclosure, but did not have an impact on the consolidated financial statements. See Note 13 - Segment Information.
Legislation
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company concluded that the impact of the OBBBA on fiscal year 2025 consists only changes related to bonus depreciation and the results of such evaluations are reflected within the financial statements for the fiscal year-ended September 30, 2025.
O.IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS
Accounting Pronouncements - Issued and Not Effective
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
In March 2024, the FASB issued ASU 2024-01 “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle. The amendments in ASU 2024-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated financial statements and related disclosures.
In January 2025, the FASB issued ASU 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” (“ASU 2025-01”). ASU 2025-01 outlines the effective date of ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), as the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. ASU 2024-03 requires both interim and annual disclosures pertaining to expense captions on the face of the income statement within continuing operations containing the following amounts: (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization, and (v) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. This disaggregated information will be required to be disclosed with other disaggregated amounts under other U.S. GAAP guidance, such as revenue and income taxes. Additionally, a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and total
40
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
selling expenses and a definition of such costs (in annual reporting periods only) should be disclosed. More granular information about cost of sales and selling, general, and administrative expenses (“SGA”) would assist a reader of the Company's consolidated financial statements in better understanding an entity’s cost structure and forecasting future cash flows. The amendments in ASU 2024-03 should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact of this standard on our consolidated financial statements and related disclosures.
P.USE OF ESTIMATES
Q.RESEARCH AND DEVELOPMENT
R.DEBT ISSUANCE COSTS
Debt issuance costs are capitalized and amortized over the life of the related debt. Amortization of debt issuance costs is included in interest expense in the consolidated statements of operations.
S.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows:
| 2025 | 2024 | ||||||||||||||||
| Foreign currency translation adjustment, net of income tax | $ | $ | ( | ||||||||||||||
| Net retirement plan liability adjustment, net of income tax | |||||||||||||||||
| Interest rate swap agreement, net of income tax | |||||||||||||||||
| Total accumulated other comprehensive income (loss) | $ | $ | ( | ||||||||||||||
The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive income (loss), net of tax:
| Foreign Currency Translation Adjustment | Retirement Plan Liability Adjustment | Interest Rates Swap Adjustment | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||||||
| Balance at September 30, 2023 | ( | ( | ( | ||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Balance at September 30, 2024 | ( | ( | |||||||||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | |||||||||||||||||||
41
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The following table reflects the changes in accumulated other comprehensive income (loss) related to the Company for September 30, 2025 and 2024:
| Amount reclassified from accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||||||||
| Details about accumulated other comprehensive income (loss) components | 2025 | 2024 | Affected line item in the Consolidated Statement of Operations | |||||||||||||||||||||||||||||
| Amortization of Retirement plan liability: | ||||||||||||||||||||||||||||||||
| Net actuarial gain | $ | $ | (1) | |||||||||||||||||||||||||||||
| Settlements/curtailments | (1) | |||||||||||||||||||||||||||||||
| Total before taxes | ||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||
| $ | $ | Net of taxes | ||||||||||||||||||||||||||||||
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See Note 9 — Retirement Benefit Plans for further discussion.
T.INCOME TAXES
The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s Irish subsidiaries also file tax returns in their respective jurisdiction.
The Company provides deferred income taxes for the temporary difference between the financial reporting basis and tax basis of the Company’s assets and liabilities. Such taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deductible temporary differences result principally from recording certain expenses in the financial statements in excess of amounts currently deductible for tax purposes. Taxable temporary differences result principally from tax depreciation in excess of book depreciation.
The Company evaluates for uncertain tax positions taken at each balance sheet date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company’s policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses.
The Company maintains a valuation allowance against its deferred tax assets when management believes it is more likely than not that all or a portion of a deferred tax asset may not be realized. Changes in valuation allowances are recorded in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. In assessing all available positive and negative evidence available as of the fourth quarter of fiscal 2025, based on the weight of positive evidence, primarily related to the cumulative income position, the Company has concluded that it is more-likely-than-not that the deferred tax assets for domestic entities will not be realized. Therefore, the Company maintains a valuation allowance against the full balance of their deferred tax assets, aside from those with indefinite lives.
The Tax Cut and Jobs Act (the “Act”) includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein minimum taxes are imposed on foreign income in excess of a deemed return on the tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate. The Company has elected to account for GILTI as a component of tax expense in the period in which the Company is subject to the rules.
U.FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.
Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
42
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Level 1 - Quoted market prices in active markets for identical assets or liabilities
Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data
Level 3 - Unobservable inputs that are not corroborated by market data
V.SHARE-BASED COMPENSATION
Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period). Share-based compensation includes expense related to restricted shares and performance shares issued under the Company’s 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan”). The Company recognizes share-based compensation within selling, general, and administrative expense and, where applicable, cost of goods sold, respectively, and adjusts for any forfeitures as they occur.
2.Discontinued Operations
The Company committed to the plan to sell CBlade in August 2024 in order to streamline operational synergies and refocus on its core aerospace forging entities. On August 1, 2024, the Company’s Board of Directors approved, and management executed a share purchase agreement (the “SPA”), under which SIFCO Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into an agreement to sell 100 % of the share capital of CBlade, to TB2 S.r.l. (the “Buyer”) totaling an enterprise value of €20,000 , less debt, for cash consideration of €13,800 in net equity value at closing, subject to adjustments for changes in working capital and certain other items.(the “CBlade Sale”). The Company determined that CBlade met the criteria for classification as assets held for sale upon the aforementioned events, and, based on the significance of the disposed operations (i.e., strategic shift), CBlade represented discontinued operations upon the classification of the CBlade assets and liabilities as held for sale.
In October 2024, upon regulatory approval, the Company completed the CBlade Sale and received cash consideration of approximately $14,408 , net of transaction costs of $530 . The Company does not expect to have any significant continuing involvement with CBlade after the sale. All operating activities prior to the disposal date were included in the Company's financial statements separately as discontinued operations, including income before income tax provision, gain from the sale CBlade (i.e., cash proceeds received less net assets transferred), and the release of accumulated other comprehensive income (loss) attributable to the Company's European operations.
Due to the CBlade Sale, the Company ceased manufacturing operations within the European market, as CBlade represented the
last remaining facility in this region. Prior to the transaction, CBlade was directly owned by SIFCO Irish Holdings Inc., a wholly-owned subsidiary of the Company incorporated in Ireland (“Irish Holdings”), which historically acted as the holding company for the Company's international operations. With the disposal of CBlade, the Company determined that its European operations represented a substantially complete liquidation. Therefore, $5,851 of cumulative translation adjustment loss attributable to these operations (related to Irish Holdings) was recognized in the statement of operations as a component of the gain on sale of discontinued operations upon the loss of a controlling financial interest in CBlade, which represented in excess of 90 % of the assets of the Company's European operations.
43
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The principal components of the assets and liabilities related to discontinued operations classified as held for sale for the periods presented were as follows:
| September 30, | |||||||||||
| 2024 | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | ||||||||||
| Short-term investments | |||||||||||
| Receivables, net | |||||||||||
| Inventories, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Intangible assets, net | |||||||||||
| Total assets held for sale | $ | ||||||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | ||||||||||
| Short-term operating lease liabilities | |||||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred income taxes, net | |||||||||||
| Pension liability | |||||||||||
| Total liabilities held for sale | $ | ||||||||||
A summary of the operating results for the discontinued operations is as follows:
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net sales | $ | $ | |||||||||
| Cost of sales | |||||||||||
| Interest expense net | |||||||||||
| Income from discontinued operations before income tax provision | |||||||||||
| Loss on sale of discontinued operations before income tax benefit | ( | ||||||||||
| Income tax benefit | ( | ( | |||||||||
| Income from discontinued operations, net of tax | $ | $ | |||||||||
A summary of the cash flows for the discontinued operations is as follows:
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities from discontinued operations | $ | $ | |||||||||
| Net cash provided by (used for) investing activities from discontinued operations | ( | ||||||||||
| Net cash provided by financing activities of discontinued operations | |||||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
44
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
3.Inventories, net
Inventories at September 30 consist of:
| 2025 | 2024 | ||||||||||
| Raw materials and supplies | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
If the FIFO method had been used for the entire Company, inventories would have been $10,897 and $10,496 higher than reported at September 30, 2025 and 2024, respectively. LIFO expense was $401 and $862 in fiscal 2025and 2024, respectively.
Results showed a reduction of inventory resulting in liquidations of LIFO inventory quantities in fiscal 2024. The estimated liquidation of LIFO inventory quantities results in a projected increase in cost of goods sold of nil and $610 during fiscal 2025 and 2024, respectively. These inventories were carried in prior periods at the then prevailing costs, which were accurate at the time, but differ from the current manufacturing cost and/or material costs.
The allocation of production costs to inventory are based on a normal range of capacity in production. The amount of cost allocated to each unit of production is not increased as a consequence of low production or idle capacity. As a result, the Company recorded idle cost within cost of goods sold line within the Statements of Operations in amount of $992 and $1,412 for the years ended September 30, 2025 and 2024, respectively.
4.Goodwill
Goodwill is not amortized, but is subject to an annual impairment test. The Company tests its goodwill for impairment on July 31, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. Factors that would necessitate an interim goodwill impairment assessment include a sustained decline in the Company’s stock price, prolonged negative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results.
The Company uses a fair value measurement approach which combines the income (discounted cash flow method) and market valuation (market comparable method) techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparable, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions (Level 3 inputs).
Although the Company believes its assumptions are reasonable, actual results may vary significantly and may expose the Company to material impairment charges in the future. The methodology for determining fair values was consistent for the periods presented.
2025 and 2024 Annual Goodwill Impairment Tests
SIFCO performed its annual impairment test as of July 31, 2025 and 2024, respectively, for the Cleveland, Ohio (“Cleveland”) reporting unit, which is the only reporting unit that carries goodwill. Results determined that the fair value of the reporting unit exceeded the carrying value at each assessment date. As a result, no
As of September 30, 2025 and 2024, the Company had goodwill of $3,493 4,164 at September 30, 2025. There were no impairment losses recorded during fiscal 2024.
5.Accrued Liabilities
Accrued liabilities at September 30 consist of:
| 2025 | 2024 | ||||||||||
| Accrued employee compensation and benefits | $ | $ | |||||||||
| Accrued workers’ compensation | |||||||||||
Other accrued liabilities (related party — | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
45
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
6.Debt
Debt at September 30 consists of:
| 2025 | 2024 | ||||||||||
| Revolving credit agreement | $ | $ | |||||||||
Term loan, net of unamortized debt issuance costs of $ | |||||||||||
| Finance lease obligations | |||||||||||
Promissory note — related party | |||||||||||
| Other debt | |||||||||||
| Total debt | |||||||||||
| Less – current maturities | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Loan and Security Agreement
On October 17, 2024, the Company and Quality Aluminum Forge, LLC, a wholly-owned subsidiary of the Company (“QAF”, and together with the Company, the “Borrowers”), entered into a Loan and Security Agreement (the “Loan Agreement”) among the Company and QAF, as borrowers, Siena Lending Group LLC, as Lender (“Siena”), and each of the affiliates of the borrowers signatory to the Loan Agreement from time to time as guarantors.
The Loan Agreement provided for a senior secured revolving credit facility with a term of three years in an aggregate principal amount not to exceed $20,000 (the “Revolver”) and a term loan in the original principal amount of $3,000 (the “Term Loan”). The Loan Agreement also provided for a $2,500 letter of credit sub-facility (the “Letter of Credit Sub-facility,” and collectively with the Revolver and the Term Loan, the “Credit Facility”). The Credit Facility matures on October 17, 2027.
Proceeds of borrowings under the Credit Facility were used to repay amounts outstanding under the Company’s Credit Agreement, Security Agreement, and Export Credit Agreement dated August 8, 2018, as amended, and was also available for working capital, capital expenditures and other general corporate purposes. These amounts included accrued paid-in-kind interest of $387 and fees under the guaranty agreement and subordinated promissory note with Garnet Holdings, Inc., a California corporation owned and controlled by Mark J. Silk (“GHI”) (Mr. Silk is a member of the Board of Directors of the Company and considered a related party) of $1,030 .
Borrowings under the Revolver and the Letter of Credit Sub-facility will bear interest at an annual rate of 4.5 % plus the adjusted term SOFR (or, if the base rate is applicable, an annual rate of 3.5 % plus the base rate). Borrowings under the Term Loan will bear interest at an annual rate of 5.5 % plus the adjusted term SOFR (or, if the base rate is applicable, 4.5 % plus the base rate) and shall be repaid in equal consecutive monthly installments of $50 commencing November 1, 2024, with the entire unpaid balance due and payable on the maturity date. Letters of credit issued under the Letter of Credit Sub-facility will have an interest rate equal to 4.5 % plus adjusted term SOFR per annum of the face amount of such letter of credit. The Letter of Credit Sub-facility requires the Company to maintain compensating balances in a money market account in support of any issuances. The Company may withdraw funds from this account at its discretion; however, availability under the Letter of Credit Sub-facility will be dependent upon the maintenance of such compensating balances. As of September 30, 2025, the Company held $1,553 in compensating balances, which were included in restricted cash in the consolidated balance sheets.
In consideration of the execution and delivery by Siena of the Loan Agreement, the Company agreed pursuant to the fee letter to pay a closing fee in the amount of $230 (of which $115 was paid on the closing date and $115 is payable on the first anniversary of the closing date, with the remaining amount (if any) of the closing fee to be paid in full on the maturity date). The fee letter provides for a collateral monitoring fee in the amount of $126 , which fee shall be paid in installments as follows: (a) equal payments of approximately $4 shall be payable on the closing date and on the first day of each month thereafter and (b) the remaining amount of such fee (if any) shall be paid in full on the maturity date. In addition, an unused line fee accrues with respect to the unused amount of the Revolver at an annual rate of 0.5 %. All fees that are payable in future installments or in full at maturity were recognized within accrued liabilities in the consolidated condensed balance sheets as of September 30, 2025.
Borrowings under the Credit Facility are secured by (a) a continuing first priority lien on and security interest in and to substantially all of the assets of the Company and other loan parties identified therein; and (b) a continuing first priority pledge of the pledged equity. The obligations of the Borrowers are guaranteed by each guarantor on the terms set forth in the Loan Agreement.
46
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The Loan Agreement includes a springing financial covenant requiring the Company to maintain a minimum fixed charge coverage ratio (“FCCR”), in accordance with the Loan Agreement, once the availability block has been released. The Loan agreement contains a $2,000 availability block that reduces the borrowing base until the later of the (i) the first anniversary date of the closing date and (ii) date on which the Company achieves a FCCR of at least 1.05 to 1.00, measure on a trailing twelve-month basis, at which point the block will be eliminated. The Loan Agreement further includes affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investment, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default for financings of this type. Additionally, the Loan Agreement contains provisions for a lockbox arrangement and a subjective acceleration clause related to the appraised value of collateralized property, plant, and equipment; hence, the Term Loan and the Revolver were each classified as current maturities of long-term debt in the consolidated balance sheet as of September 30, 2025.
As of September 30, 2025, the availability block remained in place; therefore, the FCCR was not required to be tested. As of September 30, 2025, total availability under the Revolver was $6,738 , and no letters of credit were outstanding.
As of September 30, 2025 and September 30, 2024, the Company had effective interest rates of 9.8 % and 8.1 %, respectively, under its revolving credit agreements.
Prior to the refinancing, the Company maintained an asset-based credit facility and export credit facility (together, the "prior Credit Facilities") with JPMorgan Chase Bank, N.A. The prior Credit Facilities were secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67 % of the stock of its first-tier non-U.S. subsidiaries.
During fiscal 2024, the Company entered into a series of amendments to the prior Credit Facilities that, among other things, modified availability levels, borrowing base reserves, covenant thresholds, and extended the maturity to November 6, 2024. In connection with these amendments, the Company also incurred a $3,000 secured subordinated loan from GHI, a corporation owned and controlled by Mark J. Silk (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), which bore interest at 14 % per annum payable in kind (and not in cash) by capitalization as additional principal (“PIK Interest”) each six-month period after the date hereof in arrears, and for which certain guarantee and amendment fees were incurred. These obligations were secured on a subordinated basis.
As of September 30, 2024, the prior Credit Facilities provided a combined revolving commitment of $26,000 , subject to borrowing base limitations and minimum reserve requirements. Total availability at September 30, 2024 was $2,055 . Availability exceeded required thresholds at each balance sheet date, and therefore covenant testing was not required. Outstanding letters of credit totaled $1,970 .
All obligations under the prior Credit Facilities and the related subordinated loan were fully repaid and terminated in October 2024 in connection with the Company’s refinancing. Related debt issuance costs were fully amortized as of September 30, 2024. These prior-year facilities are presented for comparative purposes only.
Debt issuance costs
As of September 30, 2025 and September 30, 2024, the Company had debt issuance costs related to its outstanding revolving credit agreements of $556 and $461 , respectively, which are included in the consolidated balance sheets as a deferred charge in other current assets, net of amortization of $170 and nil , respectively. As of September 30, 2025, the Company had debt issuance costs related to the Term Loan of $83 , which are included net of debt in the consolidated condensed balance sheets, net of amortization of $33 .
Other
First Energy
In April 2019, the Company entered into an economic development loan in the amount of $864 with FirstEnergy Corporation (“FirstEnergy”) through its Ohio Electric Security Plan (“ESP”) in effect at that time (the “ED Loan”). The ED Loan matures in five years and requires quarterly payments at an interest rate of zero percent per annum for the first twenty-four months and 2.0 % per annum for the remainder of the term. Any unpaid balance after the initial term will convert to the U.S. Prime Rate plus 1.0 %. As of September 30, 2025 and 2024, the Company had outstanding balances under the ED Loan of $147 and $133 , respectively.
Beginning on October 1, 2019, FirstEnergy invoiced the Company on a quarterly basis and payments were made accordingly. The Company has not received an invoice from FirstEnergy since October 2023, and attempts to contact the lender have been unsuccessful.
47
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
City of Cleveland
In May 2019, the Company entered into a vacant property initiative loan agreement with the City of Cleveland in the amount of $180 at an annual interest rate of 3.6 % to construct a die storage building near our Cleveland, OH facility (the “VPI Loan”). The VPI Loan matures in five years with a final balloon payment of all outstanding principal and interest. Under the terms of the agreement, the VPI loan was eligible for full forgiveness contingent upon the Company achieving specified job creation and maintaining minimum employment levels during the term of the loan.
Due to the effects of the COVID-19 pandemic on demand for the Company's products, the Company experienced reduced workforce and did not maintain levels at or above the required levels. The Company requested for forgiveness of the VPI loan based on the extenuating circumstances.
As of September 30, 2025, the Company obtained forgiveness of the VPI Loan from the City of Cleveland. As a result the Company derecognized the outstanding principal and accrued interest and recorded the corresponding gain forgiven loan in the consolidated statements of operations. As of September 30, 2025 and 2024, the Company's amounts outstanding under the VPI Loan was nil and $220 , respectively.
7.Revenue
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armored military vehicles; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) other commercial applications.
The following table represents a breakout of total revenue by customer type:
| Years Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Commercial revenue | $ | $ | ||||||||||||
| Military revenue | ||||||||||||||
| Total | $ | $ | ||||||||||||
The following table represents revenue by the various components:
| Years Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Aerospace components for: | ||||||||||||||
| Fixed wing aircraft | $ | $ | ||||||||||||
| Rotorcraft | ||||||||||||||
| Commercial space | ||||||||||||||
| Energy components for power generation units | ||||||||||||||
| Commercial products and other revenue | ||||||||||||||
| Total | $ | $ | ||||||||||||
All revenue based on selling locations originated from the Company’s U.S. operations.
In addition to the disaggregating revenue information provided above, approximately 62 % and 54 % of total net sales as of September 30, 2025 and 2024, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.
Contract Balances
Generally, payment is due upon the shipment of goods. For performance obligations recognized at a point in time, a contract asset is not established as the billing and revenue recognition occur at the same time. For performance obligations recognized over time, a contract asset is established for revenue that is recognized prior to billing and shipment. Upon shipment and billing, the value of the contract asset is reversed and accounts receivable is recorded. In circumstances where prepayments are required and payment is made prior to satisfaction of performance obligations, a contract liability is established. If the satisfaction of the performance obligation occurs over time, the contract liability is reversed over the course of production. If the satisfaction of the performance obligation is point in time, the contract liability reverses upon shipment.
48
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The following table contains a roll forward of contract assets and contract liabilities for the years ended September 30, 2025 and 2024:
| Contract assets - Ending balance, September 30, 2023 | $ | |||||||
| Additional revenue recognized over-time | ||||||||
| Less amounts billed to the customers | ( | |||||||
| Contract assets - Ending balance, September 30, 2024 | $ | |||||||
| Additional revenue recognized over-time | ||||||||
| Less amounts billed to the customers | ( | |||||||
| Contract assets - Ending balance, September 30, 2025 | $ | |||||||
| Contract liabilities - Ending balance, September 30, 2023 | $ | ( | ||||||
| Payments received in advance of performance obligations | ( | |||||||
| Performance obligations satisfied | ||||||||
| Contract liabilities - Ending balance, September 30, 2024 | $ | ( | ||||||
| Payments received in advance of performance obligations | ( | |||||||
| Performance obligations satisfied | ||||||||
| Contract liabilities - Ending balance, September 30, 2025 | $ | ( | ||||||
Accounts receivable, net were $16,103 , $17,272 , $15,638 as of September 30, 2025, 2024, and 2023, respectively. During the year ended September 30, 2025, management determined there were certain contracts met the criteria for loss recognition, a loss contract reserve of $325 was recorded. No such reserve was required in the prior year. 2024, respectively.
Remaining performance obligations
As of September 30, 2025 the Company's total backlog was $119,214 , of which $87,336 is anticipated to be completed within the next twelve months , and the remaining thereafter.
As of September 30, 2024, the Company has $85,019 of remaining performance obligations, the majority of which were anticipated to be completed within twelve months of that date.
8.Income Taxes
The components of income (loss) before income tax provision are as follows:
| Years Ended September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| U.S. | $ | ( | $ | ( | |||||||||||||
| Non-U.S. | ( | ||||||||||||||||
| Loss before income tax provision | $ | ( | $ | ( | |||||||||||||
49
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Income tax provision consists of the following:
| Years Ended September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Current income tax provision (benefit): | |||||||||||||||||
| U.S. federal | $ | $ | |||||||||||||||
| U.S. state and local | |||||||||||||||||
| Non-U.S. | ( | ||||||||||||||||
| Total current tax provision | |||||||||||||||||
| Deferred income tax provision: | |||||||||||||||||
| U.S. federal | |||||||||||||||||
| U.S. state and local | |||||||||||||||||
| Total deferred tax provision | |||||||||||||||||
| Income tax provision | $ | $ | |||||||||||||||
The income tax provision in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:
| Years Ended September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Loss before income tax provision | $ | ( | $ | ( | |||||||||||||
| Income tax provision (benefit) at U.S. federal statutory rates | ( | ( | |||||||||||||||
| Tax effect of: | |||||||||||||||||
| Foreign rate differential | ( | ||||||||||||||||
| Permanent items | ( | ||||||||||||||||
| State and local income taxes | |||||||||||||||||
| Federal tax credits | ( | ( | |||||||||||||||
| Valuation allowance | |||||||||||||||||
| Other | |||||||||||||||||
| Income tax provision | $ | $ | |||||||||||||||
50
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Deferred tax assets and liabilities at September 30 consist of the following:
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net U.S. operating loss carryforwards | $ | $ | |||||||||
| Net non-U.S. operating loss carryforwards | |||||||||||
| Employee benefits | |||||||||||
| Inventory reserves | |||||||||||
| Allowance for credit losses | |||||||||||
| Intangibles | |||||||||||
| Foreign tax credits | |||||||||||
| Other tax credits | |||||||||||
| Other | |||||||||||
| Total deferred tax assets | $ | $ | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation | ( | ( | |||||||||
| Inventory reserves | ( | ||||||||||
| Prepaid expenses | ( | ( | |||||||||
| Intangibles | ( | ||||||||||
| Other | ( | ( | |||||||||
| Total deferred tax liabilities | $ | ( | $ | ( | |||||||
| Net deferred tax assets | |||||||||||
| Valuation allowance | ( | ( | |||||||||
| Net deferred tax liabilities | $ | ( | $ | ( | |||||||
At September 30, 2025, the Company has a non-U.S. tax loss carryforward of approximately $5,458 related to the Company’s non-operating subsidiary. The Company’s non-operating subsidiary ceased operations in 2007 and therefore, a valuation allowance has been recorded against the deferred tax asset related to the Irish tax loss carryforward because it is unlikely that such operating loss can be utilized unless the Irish subsidiary resumes operations. The non-operating and Italian tax loss carryforwards do not expire.
The Company has $1,215 of foreign tax credit carryforwards that are subject to expiration in fiscal 2026-2028, $2,215 of U.S. general business tax credits that are subject to expiration in 2035-2045, $2,248 of interest expense carryforward that do not expire, $670 of capital loss carryforward that expires in 2030, and $32,943 of U.S. Federal tax loss carryforwards with $4,643 subject to expiration in fiscal 2037 and $28,300 that do not expire. A valuation allowance has been recorded against the deferred tax assets related to the foreign tax credit carryforwards, U.S. general business credits, interest expense carryforward, and U.S. Federal tax loss carryforwards. The valuation allowance decreased during fiscal 2025 related to $116 in amounts charged to expense less $364 of reductions charged to other accounts. The valuation allowance increased during fiscal 2024 related to $2,000 in amounts charged to expense less $212 of reductions charged to other accounts.
In addition, the Company has $12 of U.S. state tax credit carryforwards subject to expiration in fiscal 2029 and $30,151 of U.S. state and local tax loss carryforwards subject to expiration in fiscal 2026-2044. The U.S. state tax credit carryforwards and U.S. state and local tax loss carryforwards have been fully offset by a valuation allowance.
The Company reported liabilities for uncertain tax positions, excluding any related interest and penalties, of $22 22 of the fiscal 2025 uncertain tax positions would impact the effective tax rate. As of September 30, 2025, the Company had accrued interest of $19 and recognized $1 for interest and penalties in operations. The Company classifies interest and penalties on uncertain tax positions as income tax expense. A summary of activity related to the Company’s uncertain tax position is as follows:
51
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
| 2025 | 2024 | ||||||||||
| Balance at beginning of year | $ | $ | |||||||||
| Decrease due to lapse of statute of limitations | |||||||||||
| Balance at end of year | $ | $ | |||||||||
The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy and various states and local jurisdictions. The Company believes it has appropriate support for its federal income tax returns. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2022, state and local income tax examinations for fiscal years prior to 2019, or non-U.S. income tax examinations by tax authorities for fiscal years prior to 2009.
9.Retirement Benefit Plans
Defined Benefit Plans
The Company and certain of its subsidiaries sponsor three defined benefit pension plans covering some of its employees. The Company’s funding policy for its defined benefit pension plans is based on an actuarially determined cost method allowable under Internal Revenue Service regulations. One of the defined benefit pension plans covers non-union employees of the Company’s U.S. operations who were hired prior to March 1, 2003. Benefit accruals ceased in March 2003. A second defined benefit plan covered employees at a business location that closed in December 2013, at which time benefits accruals ceased. The third defined pension plan covers one of the Company’s union groups at the Cleveland location. Benefits accruals under this plan ceased in March 2020, when the then-current union disclaimed all interest in the bargaining unit. Curtailment occurred; however, there was no impact to consolidated financial statements. A new union was certified and the collective bargaining agreement was finalized in December 2021, at which time it was agreed that the defined benefit plan would be frozen and retirement benefits are to be provided through a defined contribution plan.
The Company uses a September 30 measurement date for its U.S. defined benefit pension plans. Net pension expense, benefit obligations and plan assets for the Company-sponsored defined benefit pension plans consist of the following:
| Years Ended September 30, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Service cost | $ | $ | |||||||||||||||
| ( | ( | ||||||||||||||||
| Net pension expense for defined benefit plans (non-operating expense) | $ | $ | |||||||||||||||
52
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The status of all defined benefit pension plans at September 30 is as follows:
| 2025 | 2024 | ||||||||||
| Benefit obligations: | |||||||||||
| Benefit obligations at beginning of year | $ | $ | |||||||||
| Service cost | |||||||||||
| Interest cost | |||||||||||
| Actuarial (gain) loss | ( | ||||||||||
| Benefits paid | ( | ( | |||||||||
| Benefit obligations at end of year | $ | $ | |||||||||
| Plan assets: | |||||||||||
| Plan assets at beginning of year | $ | $ | |||||||||
| Actual return on plan assets | |||||||||||
| Employer contributions | |||||||||||
| Benefits paid | ( | ( | |||||||||
| Plan assets at end of year | $ | $ | |||||||||
| Underfunded status at end of year | $ | ( | $ | ( | |||||||
As shown within the above table, there was an decrease in the benefit obligation of $1,654 to $19,234 at September 30, 2025 compared with $20,888 at September 30, 2024. The primary drivers that attributed to the change pertained to increase in the discount rate used along with demographic changes.
| Plans in which Assets Exceed Benefit Obligations at September 30, | Plans in which Benefit Obligations Exceed Assets at September 30, | |||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
| Reconciliation of funded status: | ||||||||||||||||||||
| Plan assets in excess of (less than) projected benefit obligations | $ | $ | $ | ( | $ | ( | ||||||||||||||
| Amounts recognized in accumulated other comprehensive income (loss): | ||||||||||||||||||||
| Net loss | ||||||||||||||||||||
| Prior service cost | ||||||||||||||||||||
| Net amount recognized in the consolidated balance sheets | $ | $ | $ | ( | $ | |||||||||||||||
| Amounts recognized in the consolidated balance sheets are: | ||||||||||||||||||||
| Other assets | $ | $ | $ | $ | ||||||||||||||||
| Accrued liabilities | ( | ( | ||||||||||||||||||
| Pension liability | ( | ( | ||||||||||||||||||
| Accumulated other comprehensive income (loss) – pretax | ||||||||||||||||||||
| Net amount recognized in the consolidated balance sheets | $ | $ | $ | ( | $ | |||||||||||||||
Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans:
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Discount rate for liabilities | % | % | |||||||||
| Discount rate for expenses | % | % | |||||||||
| Expected return on assets | % | % | |||||||||
53
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The Company holds its investments in mutual funds and money market funds, in which the fair value of assets of the underlying funds are determined in the following ways:
•Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
•Money market funds are valued at NAV, which approximates fair value.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. However, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement result.
The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2025 and 2024:
| September 30, 2025 | Asset Amount | Level 1 | |||||||||||||||||||||
| U.S. equity securities: | |||||||||||||||||||||||
| Large blend | $ | $ | |||||||||||||||||||||
| Large growth | |||||||||||||||||||||||
| Mid blend | |||||||||||||||||||||||
| Small growth | |||||||||||||||||||||||
| Non-U.S. equity securities: | |||||||||||||||||||||||
| Foreign large blend | |||||||||||||||||||||||
| Diversified emerging markets | |||||||||||||||||||||||
| Global equity securities | |||||||||||||||||||||||
| U.S. debt securities: | |||||||||||||||||||||||
| Intermediate term bond | |||||||||||||||||||||||
| Multi-sector bond | |||||||||||||||||||||||
| Stable value: | |||||||||||||||||||||||
| Cash or money market | |||||||||||||||||||||||
| Total plan assets at fair value | $ | $ | |||||||||||||||||||||
| September 30, 2024 | Asset Amount | Level 1 | |||||||||||||||||||||
| U.S. equity securities: | |||||||||||||||||||||||
| Large blend | |||||||||||||||||||||||
| Large growth | |||||||||||||||||||||||
| Mid blend | |||||||||||||||||||||||
| Small growth | |||||||||||||||||||||||
| Non-U.S. equity securities: | |||||||||||||||||||||||
| Foreign large blend | |||||||||||||||||||||||
| Diversified emerging markets | |||||||||||||||||||||||
| Global equity securities | |||||||||||||||||||||||
| U.S. debt securities: | |||||||||||||||||||||||
| Intermediate term bond | |||||||||||||||||||||||
| Multi-sector bond | |||||||||||||||||||||||
| Stable value: | |||||||||||||||||||||||
| Cash or money market | |||||||||||||||||||||||
| Total plan assets at fair value | $ | $ | |||||||||||||||||||||
54
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Investment objectives relative to the assets of the Company’s defined benefit pension plans are to (i) optimize the long-term return on the plans’ assets while assuming an acceptable level of investment risk; (ii) maintain an appropriate diversification across asset categories and among investment managers; and (iii) maintain a careful monitoring of the risk level within each asset category. Asset allocation objectives are established to promote optimal expected returns and volatility characteristics given the long-term time horizon for fulfilling the obligations of the Company’s defined benefit pension plans. Selection of the appropriate asset allocation for the plans’ assets was based upon a review of the expected return and risk characteristics of each asset category in relation to the anticipated timing of future plan benefit payment obligations. The Company has a long-term objective for the allocation of plan assets. However, the Company realizes that actual allocations at any point in time will likely vary from this objective due principally to (i) the impact of market conditions on plan asset values and (ii) required cash contributions to and distribution from the plans. The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the plans’ investments to vary around the objective without triggering a reallocation of the assets, as noted by the following:
| Percent of Plan Assets at September 30, | Asset Allocation Range | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| U.S. equities | % | % | |||||||||||||||
| Non-U.S. equities | % | % | |||||||||||||||
| U.S. debt securities | % | % | |||||||||||||||
| Non-U.S. debt securities | % | % | |||||||||||||||
| Other securities | % | % | |||||||||||||||
| Total | % | % | |||||||||||||||
External consultants assist the Company with monitoring the appropriateness of the above investment strategy and the related asset mix and performance. To develop the expected long-term rate of return assumptions on plan assets, generally the Company uses long-term historical information for the target asset mix selected. Adjustments are made to the expected long-term rate of return assumptions when deemed necessary based upon revised expectations of future investment performance of the overall investments markets.
The Company anticipates making approximately $447 in contributions to its defined benefit pension plans during fiscal 2026.
The following defined benefit payment amounts are expected to be made in the future:
Years Ending September 30, | Projected Benefit Payments | ||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031-2035 | |||||
Multi-Employer Plan
One of the bargaining units previously participated in a multi-employer plan; however, as part of the ratification of a new collective bargaining agreement in December 2019, there was a provision to withdraw from the existing multi-employer plan effective December 31, 2019. The withdrawal resulted in a liability of $739 , which was recorded within the costs of goods sold line in fiscal 2020 of the consolidated statements of operations and is included in other long-term liabilities. The liability is payable in quarterly installments over the next 20 years. The next four quarterly installments are recorded in accrued liabilities of the consolidated balance sheet.
Defined Contribution Plans
Substantially all non-union U.S. employees of the Company and its U.S. subsidiaries are eligible to participate in the Company’s U.S. defined contribution plan. The Company makes non-discretionary, regular matching contributions to this plan equal to an amount that represents one hundred percent (100 %) of a participant’s deferral contribution up to one percent (1 %) of eligible compensation plus eighty percent (80 %) of a participant’s deferral contribution between one percent (1 %) and six percent (6 %) of eligible compensation. The Company’s regular matching contribution expense for its U.S. defined
55
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
contribution plan in fiscal 2025 and 2024 was $534 and $550 , respectively. This defined contribution plan provides that the Company may also make an additional discretionary matching contribution during those periods in which the Company achieves certain performance levels. The Company did not provide additional discretionary matching contributions in either fiscal 2025 and 2024.
The Company sponsors two defined contribution plans for the Cleveland bargaining units that either withdrew from the multi-employer plan (union) pension plan or bargained to freeze the company-sponsored pension plan. Impacted employees were enrolled into one of two newly formed defined contribution plans. The Company makes a non-elective contribution equal to $1.50 or $1.25 per work, vacation, or holiday hour, up to a maximum of 40 hours per week. The Company’s non-elective contribution expense was $244 in fiscal 2025 and $228 in fiscal 2024.
10.Stock-Based Compensation
The Company has awarded performance and restricted shares under the Company’s 2007 Long-Term Incentive Plan (“2007 Plan”) and the Company’s 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan”). The aggregate number of shares that may be awarded by the Company under the 2016 Plan is 1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. Any such awards are exercisable no later than ten years from the date of grant.
The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the granting of such award. The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200 % of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives. Beginning in fiscal 2020, the maximum shares that may be achieved was reduced to 150 % of target.
With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. The Company is not recognizing compensation expense for three tranches of awards as it has concluded it is not probable that the performance criteria for those awards will be met. During each future reporting period, such expense may be subject to adjustment based upon the Company’s financial performance, which impacts the number of shares that it expects to vest upon the completion of a performance period. The performance shares were valued at the closing market price of the Company’s common shares on the date of grant. The vesting of such shares is determined at the end of the performance period.
The Company has awarded restricted shares to certain of its directors, officers and other employees of the Company. The restricted shares were valued at the closing market price of the Company’s common shares on the date of grant, and such value was recorded as unearned compensation. The unearned compensation is being amortized ratably over the restricted stock vesting period of one (1 ) year or three (3 ) years.
If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 375 shares that remain available for award at September 30, 2025. If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to the maximum of 200 % or 150 % of such target, then a fewer number of shares would be available for award.
Stock-based compensation under the 2016 Plan was expense of $173 and $250 for fiscal 2025 and 2024, respectively. As of September 30, 2025, there was $117 of total unrecognized compensation cost related to the performance and restricted shares awarded under the 2016 Plan. The Company expects to recognize this cost over the next year.
56
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
The following is a summary of activity related to performance and restricted shares:
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Number of Shares | Weighted Average Fair Value at Date of Grant | Number of Shares | Weighted Average Fair Value at Date of Grant | ||||||||||||||||||||||||||||||||
| Outstanding at beginning of year | $ | $ | |||||||||||||||||||||||||||||||||
| Restricted shares awarded | |||||||||||||||||||||||||||||||||||
| Restricted shares earned | ( | ( | |||||||||||||||||||||||||||||||||
| Performance shares awarded | |||||||||||||||||||||||||||||||||||
| Awards forfeited | ( | ( | |||||||||||||||||||||||||||||||||
| Outstanding at end of year | $ | $ | |||||||||||||||||||||||||||||||||
11.Leases
The components of lease expense were as follows:
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Lease expense | |||||||||||
| Finance lease expense: | |||||||||||
| Amortization of right-of use assets on finance leases | $ | $ | |||||||||
| Interest on lease liabilities | |||||||||||
| Operating lease expense | |||||||||||
| Variable lease cost | |||||||||||
| Total lease expense | $ | $ | |||||||||
The following table presents the impact of leasing on the consolidated balance sheet at September 30:
| Classification to the consolidated balance sheets | 2025 | 2024 | |||||||||||||||
| Assets: | |||||||||||||||||
| Finance lease assets | Property, plant and equipment, net | $ | $ | ||||||||||||||
| Operating lease assets | Operating lease right-of-use assets, net | ||||||||||||||||
| Total lease assets | $ | $ | |||||||||||||||
| Current liabilities: | |||||||||||||||||
| Finance lease liabilities | Current maturities of long-term debt | $ | $ | ||||||||||||||
| Operating lease liabilities | Short-term operating lease liabilities | ||||||||||||||||
| Non-current liabilities: | |||||||||||||||||
| Finance lease liabilities | Long-term finance lease, net of short-term | ||||||||||||||||
| Operating lease liabilities | Long-term operating lease liabilities, net of short-term | ||||||||||||||||
| Total lease liabilities | $ | $ | |||||||||||||||
57
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
Supplemental cash flow and other information related to leases were as follows:
| September 30, 2025 | September 30, 2024 | ||||||||||
| Other Information | |||||||||||
| Cash paid for amounts included in measurement of liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Operating cash flows from finance leases | |||||||||||
| Financing cash flows from finance leases | |||||||||||
| Right-of-use assets obtained in exchange for new lease liabilities: | |||||||||||
| Finance leases | $ | ||||||||||
| Operating leases | |||||||||||
| September 30, 2025 | September 30, 2024 | ||||||||||
| Weighted-average remaining lease term (years): | |||||||||||
| Finance leases | |||||||||||
| Operating leases | |||||||||||
| Weighted-average discount rate: | |||||||||||
| Finance leases | % | % | |||||||||
| Operating leases | % | % | |||||||||
Future minimum lease payments under non-cancellable leases as of September 30, 2025 were as follows:
| Year ending September 30, | Operating Leases | ||||||||||
| 2026 | $ | ||||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| 2030 | |||||||||||
| Thereafter | |||||||||||
| Total lease payments | $ | ||||||||||
| Less: Imputed interest | ( | ||||||||||
| Present value of lease liabilities | $ | ||||||||||
12.Commitments and Contingencies
In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters; however, it does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation.
58
Table of Contents
SIFCO Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
13.Segment Information
The Company identifies itself as one The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets.
| Years Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net sales | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of goods sold | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Other¹ | |||||||||||
| Loss from continuing operations | $ | ( | $ | ( | |||||||
¹ Other items include loss on disposal of operating assets, interest expense, gain on forgiven loan, foreign currency exchange loss (gain), other (income) expense, and income tax expense.
General Information
Geographic net sales are based on location of customer. The United States of America is the single largest country for unaffiliated customer sales, accounting for 75 % and 77 % of consolidated net sales in fiscal 2025 and 2024, respectively. No other single country represents greater than 10% of consolidated net sales in fiscal 2025 and 2024. Net sales to unaffiliated customers located in various European countries accounted for 7 % and 8 % of consolidated net sales in fiscal 2025 and 2024, respectively. Net sales to unaffiliated customers located in various Asian countries accounted for 10 % and 8 % of consolidated net sales in fiscal 2025 and 2024, respectively. Other North American countries represent 6 % and 6 % of consolidated net sales in fiscal 2025 and 2024, respectively.
All of the Company’s continuing operations and identifiable assets not held for sale are located within the United States.
| 2025 | 2024 | |||||||||||||
| Long-Lived Assets | ||||||||||||||
| United States | $ | $ | ||||||||||||
14.Related Party Transactions
In October 2024, the Company repaid all amounts outstanding under its secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J. Silk ("GHI") (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $3,000 , as well as accrued paid-in-kind interest. As part of the guaranty and subordinated promissory note with GHI, the Company paid fees of $880 and $150 , respectively. See Note 6 — Debt for further information.
15.Subsequent Events
The Company has evaluated subsequent events through December 22, 2025, and has determined that the following subsequent events require disclosure in the financial statements.
The Company is a party to collective bargaining agreements (“CBA”) with certain employees within the Cleveland location. The second bargaining unit CBA expired on March 31, 2025. The Company continued to be in negotiations with unit 2, who continued to work under the terms of the expired CBA. Subsequent to year-end, the new CBA took effect on October 4, 2025 and contains similar terms and conditions as the expired CBA.
59
Table of Contents
Schedule II
SIFCO Industries, Inc. and Subsidiaries
Valuation and Qualifying Accounts
Years Ended September 30, 2025 and 2024
(Amounts in thousands)
| Balance at Beginning of Period | Additions (Reductions) Charged to Expense | Additions (Reductions) Charged to Other Accounts | Deductions | Balance at End of Period | ||||||||||||||||||||||||||||
| Year Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Deducted from asset accounts | ||||||||||||||||||||||||||||||||
| Allowance for credit losses | $ | $ | $ | $ | ( | (a) | $ | |||||||||||||||||||||||||
| Inventory valuation accounts ¹ | (b) | |||||||||||||||||||||||||||||||
| Inventory LIFO reserve | ||||||||||||||||||||||||||||||||
| Deferred tax valuation allowance | ( | |||||||||||||||||||||||||||||||
| Accrual for estimated liability | ||||||||||||||||||||||||||||||||
| Workers’ compensation reserve | ( | (c) | ||||||||||||||||||||||||||||||
| Year Ended September 30, 2024 | ||||||||||||||||||||||||||||||||
| Deducted from asset accounts | ||||||||||||||||||||||||||||||||
Allowance for credit losses | ( | ( | (a) | |||||||||||||||||||||||||||||
| Inventory valuation accounts ¹ | (b) | |||||||||||||||||||||||||||||||
| Inventory LIFO reserve | ||||||||||||||||||||||||||||||||
| Deferred tax valuation allowance | ( | |||||||||||||||||||||||||||||||
| Accrual for estimated liability | ||||||||||||||||||||||||||||||||
| Workers’ compensation reserve | ( | ( | (c) | |||||||||||||||||||||||||||||
Note: all historical amounts have been retrospectively adjusted to represent balances and activity from continuing operations.
¹ Inventory valuation accounts reflect the impact of excess and obsolete and net realizable value inventory write downs.
(a) Accounts determined to be uncollectible, net of recoveries
(b) Inventory sold or otherwise disposed
(c) Payment of workers’ compensation claims
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s SEC reports was recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. If the Company fails to maintain the adequacy of its
60
Table of Contents
internal controls, including any failure to implement required new or improved controls, or if the Company experiences difficulties in their implementation, the Company’s business and financial results could be harmed, and the Company could fail to meet its financial reporting obligations.
Management’s Report on Internal Control over Financial Reporting
Management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2025. In making this assessment, our management used the criteria for effective internal control over financial reporting described in the 2013 “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting and other Remediation
As of September 30, 2025, no material changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During fiscal year 2025, none of our officers or directors adopted terminated
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information about the Executive Officers of the Company appears in Part I of this Report.
The Company incorporates herein by reference the information required by this Item as to the Directors, procedures for recommending Director nominees and the Audit Committee appearing under the captions “Proposal 1 — To Elect Four (4) Directors,” and “Corporate Governance and Board of Director Matters” of the Company’s definitive Proxy Statement to be filed with the SEC on or about December 22, 2025.
The Directors of the Company are elected annually to serve for one-year terms or until their successors are elected and qualified.
On December 15, 2025, Jennifer Wilson notified the Board of Directors of her desire to resign from her position as Chief Financial Officer, effective as of February 20, 2026, as reported by the Company on Form 8-K filed with the SEC on December 19, 2025.
The Company has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K under the Securities Exchange Act of 1934, as amended. The Code of Ethics is applicable to, among other people, the Company’s Chief Executive Officer, Chief Financial Officer, who is the Company’s Principal Financial Officer, and Principal Accounting Officer. The Company’s Code of Ethics (including any amendments to, or related waivers from, the Code of Ethics) is available on its website: www.sifco.com.
The Company has adopted an insider trading policy which governs the purchase, sale and/or any other dispositions of our securities by the Company and its directors, officers and employees and is designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.
Item 11. Executive Compensation
The Company incorporates herein by reference the information appearing under the captions “Executive Compensation” and “Director Compensation” of the Company’s definitive Proxy Statement to be filed with the SEC on or about December 22, 2025.
61
Table of Contents
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information regarding Common Shares to be issued under the Company’s equity compensation plans as of September 30, 2025.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | ||||||||||||||
| Equity compensation plans approved by security holders: | |||||||||||||||||
2016 Plan (1) | 127,500 | N/A | 375,192 | ||||||||||||||
(1)Under the 2016 Plan, the aggregate number of common shares that are available to be granted is 1,196,401 shares, with a further limit of no more than 50,000 shares to any one person in any twelve-month period. For additional information concerning the Company’s equity compensation plans, refer to the discussion in Note 10 — Stock-Based Compensation of the Notes to Consolidated Financial Statements. These securities are issued under time based vesting for retention and/or upon meeting performance objectives.
The Company incorporates herein by reference the beneficial ownership information appearing under the captions “Stock Ownership of Certain Beneficial Owners” and “Stock Ownership of Executive Officers, Director and Nominees” of the Company’s definitive Proxy Statement to be filed with the SEC on or about December 22, 2025.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The Company incorporates herein by reference the information required by this item appearing under the captions “Corporate Governance and Board of Director Matters” of the Company’s definitive Proxy Statement to be filed with the SEC on or about December 22, 2025.
Item 14. Principal Accounting Fees and Services
The Company incorporates herein by reference the information required by this item appearing under the caption “Principal Accounting Fees and Services” of the Company’s definitive Proxy Statement to be filed with the SEC on or about December 22, 2025.
Part IV
Item 15. Exhibits, Financial Statement Schedules
(a) (1) Financial Statements:
The following Consolidated Financial Statements; Notes to the Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are included in Part II, Item 8 of the Annual Report on Form 10-K.
(a) (2) Financial Statement Schedules:
The following financial statement schedule is included in Item 8:
Schedule II – Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related regulations, are inapplicable, or the information has been included in the Notes to the Consolidated Financial Statements.
(a) (3) Exhibits:
The following exhibits are filed with this report or are incorporated herein by reference to a prior filing in accordance with Rule 12b-32 under the Securities and Exchange Act of 1934. (Asterisk denotes exhibits filed with this report)
*Filed herewith.
**Management contract or compensatory plan or arrangement.
62
Table of Contents
Exhibit No. | Description | |||||||
| 2.1 | Share Purchase Agreement, dated as of August 1, 2024 by and among SIFCO Irish Holdings, Ltd (a wholly-owned subsidiary of SIFCO Industries Inc.) and TB2 S.r.l. dated August 1, 2024 filed as Exhibit 10.1 to the Company's Form 8-K dated August 6, 2024, and incorporated herein by reference. | |||||||
| 2.2 | Amendment to Share Purchase Agreement, dated September 27, 2024, by and between SIFCO Irish Holdings Ltd. (a wholly-owned subsidiary of SIFCO Industries Inc.) and TB2 S.r.l. dated September 27, 2024 filed as Exhibit 10.1 to the Company's Form 8-K dated October 3, 2024, and incorporated herein by reference. | |||||||
| 3.1 | Third Amended Articles of Incorporation of SIFCO Industries, Inc., filed as Exhibit 3(a) of the Company’s Form 10-Q dated March 31, 2002, and incorporated herein by reference. | |||||||
| 3.2 | SIFCO Industries, Inc. Amended and Restated Code of Regulations dated November 13, 2024., and incorporated herein by reference. | |||||||
| *4.1 | Description of securities. | |||||||
| 10.1** | SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2008 Annual Meeting to Shareholders dated December 14, 2007, and incorporated herein by reference. | |||||||
10.2** | Amendment No. 1 to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2011 Annual Meeting to Shareholders dated December 15, 2010, and incorporated herein by reference. | |||||||
| 10.3** | Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.6 to the Company’s Form 10-Q dated May 16, 2016, and incorporated herein by reference. | |||||||
| 10.4** | Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.7 to the Company’s Form 10-Q dated May 16, 2016, and incorporated herein by reference. | |||||||
| 10.5** | Amendment and Restatement to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2017 Annual Meeting to Shareholders dated December 6, 2016, and incorporated herein by reference. | |||||||
| 10.6** | Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.14 to the Company’s Form 10-Q dated January 31, 2017, and incorporated herein by reference. | |||||||
| 10.7** | Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.15 to the Company’s Form 10-Q dated January 31, 2017, and incorporated herein by reference. | |||||||
| 10.8** | Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.16 to the Company’s Form 10-Q dated January 31, 2017, and incorporated herein by reference. | |||||||
| 10.9 | Economic Development Administration Title IX Loan Agreement, dated November 8, 2018, by and between the City of Cleveland and SIFCO Industries, Inc., filed as Exhibit 10.2 to the Company’s Form 8-K dated November 8, 2018, and incorporated herein by reference. | |||||||
| 10.10** | Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.21 to the Company’s Form 10-K dated December 23, 2020, and incorporated herein by reference. | |||||||
| 10.11 | Loan and Security Agreement dated October 17, 2024 among Siena Lending Group LLC, SIFCO Industries, Inc., Quality Aluminum Forge, LLC and each of the Affiliates of the Borrowers signatory thereto from time to time as guarantors, filed as Exhibit 10.1 to the Company's Form 8-K dated October 17, 2024, and incorporated herein by reference. | |||||||
| *10.12** | Change in Control Agreement and Separation Agreement between the Company and Jennifer Wilson Skuhrovec, effective November 13, 2024 | |||||||
| 14.1 | Code of Ethics, filed as Exhibit 14.1 of the Company’s Form 8-K dated February 6, 2018, and incorporated herein by reference. | |||||||
| 16.1 | Letter Regarding Change in Certifying Accountant, filed as Exhibit 16.1 of the Company's Form 8-K dated March 24, 2025, and incorporated herein by reference | |||||||
| *19.1 | Insider Trading Policy | |||||||
| *21.1 | Subsidiaries of Company. | |||||||
| *23.1 | Consent of Independent Registered Public Accounting Firm. | |||||||
| *23.2 | Consent of Independent Registered Public Accounting Firm - RSM LLP. | |||||||
| *31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15d-14(a). | |||||||
| *31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15d-14(a). | |||||||
63
Table of Contents
| *32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | |||||||
| *32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | |||||||
| 97.1 | Policy for the Recovery of Erroneously Awarded Compensation filed as Exhibit 97.1 of the Company's Form 10-K dated January 2, 2024, and incorporated herein by reference. | |||||||
| *101 | The following financial information from SIFCO Industries, Inc. Report on Form 10-K for the year ended September 30, 2025 filed with the SEC on December 22, 2025, formatted in XBRL includes: (i) Consolidated Statements of Operations for the years ended September 30, 2025 and 2024 (ii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2025 and 2024, (iii) Consolidated Balance Sheets at September 30, 2025 and 2024, (iv) Consolidated Statements of Cash Flow for the years ended September 30, 2025 and 2024, (vi) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2025 and 2024 and (v) the Notes to the Consolidated Financial Statements. | |||||||
| *104 | Cover Page Interactive Data File: the cover page XBRL tags are embedded within the Inline XBRL document and are contained with Exhibit 101 | |||||||
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SIFCO Industries, Inc. | ||||||||
| By: /s/ Jennifer Wilson | ||||||||
| Jennifer Wilson | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
Date: December 22, 2025 | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on December 22, 2025 by the following persons on behalf of the Registrant in the capacities indicated.
| /s/ Alayne Reitman | /s/ George Scherff | ||||||||||
| Alayne Reitman | George Scherff | ||||||||||
| Chairman of the Board | Chief Executive Officer | ||||||||||
| (Principal Executive Officer) | |||||||||||
| /s/ Robert D. Johnson | /s/ Donald C. Molten, Jr. | ||||||||||
| Robert D. Johnson | Donald C. Molten, Jr. | ||||||||||
| Director | Director | ||||||||||
| /s/ Mark J. Silk | /s/ Jennifer Wilson | ||||||||||
| Mark J. Silk | Jennifer Wilson | ||||||||||
| Director | Chief Financial Officer | ||||||||||
| (Principal Financial Officer) | |||||||||||
64
FAQ
What does SIFCO Industries (SIF) primarily do?
SIFCO Industries manufactures forgings, machined components and sub-assemblies for aerospace, defense, energy, commercial space and semiconductor markets. It supplies OEMs, Tier 1 and Tier 2 suppliers and aftermarket customers with critical components made from steel, high-temperature alloys, nickel alloys, titanium and aluminum.
How did SIFCO Industries change its business portfolio in 2024–2025?
In October 2024, SIFCO sold its European CBlade business, an Italian forging and manufacturing operation, for cash consideration. The CBlade assets and results are now presented as held for sale and discontinued operations, reflecting a strategy to streamline operations and refocus on core aerospace forgings.
What is SIFCO Industries backlog as of September 30, 2025?
SIFCO reported total backlog of $119.2 million as of September 30, 2025, up from $114.4 million a year earlier. Of this, $87.3 million is scheduled for delivery in fiscal 2026. Management notes that backlog can be modified or canceled and may not directly predict future sales.
How concentrated is SIFCO Industries customer base in fiscal 2025?
Customer concentration is significant. In fiscal 2025, one direct customer accounted for 18% of consolidated net sales, and two direct customers and their direct subcontractors together accounted for 34% of consolidated net sales. The company states that the loss of these customers could materially impact its business.
What is the revenue mix between commercial and military customers for SIFCO (SIF)?
For fiscal 2025, SIFCO reports 43.5% of revenue from commercial markets and 56.5% from military, compared with 52.4% commercial and 47.6% military in fiscal 2024. This indicates a shift toward military aerospace programs, including components for platforms such as the H-60, C-130, F-18 and F-35.
How many employees does SIFCO Industries have and what is its union exposure?
Excluding CBlade, SIFCO employed approximately 259 full-time employees at the end of fiscal 2025, all in the United States. About 94 hourly employees at the Cleveland plant are covered by two collective bargaining agreements, expiring in
What are the main risks SIFCO Industries highlights in its 2025 annual report?
SIFCO lists numerous risks, including cyclical aerospace and energy demand, changes in U.S. and foreign defense spending, customer concentration, supply chain and raw material constraints, trade tariffs imposed in April 2025, cybersecurity threats, labor availability, pension funding assumptions, indebtedness and potential volatility in its thinly traded common stock.
SIFCO INDS INC
NYSE:SIF
SIF Rankings
SIF Latest News
Dec 22, 2025
SIFCO Industries, Inc. ("SIFCO") Announces Fourth Quarter and Full Year Fiscal 2025 Financial Results
Aug 14, 2025
SIFCO Industries, Inc. (“SIFCO”) Announces Third Quarter and First Nine Months of Fiscal 2025 Financial Results
SIF Latest SEC Filings
Dec 22, 2025
[8-K] SIFCO INDUSTRIES INC Reports Material Event
Dec 19, 2025
[8-K] SIFCO INDUSTRIES INC Reports Material Event
SIF Stock Data
34.45M
4.51M
38.33%
18.31%
0.32%
Aerospace & Defense
Aircraft Engines & Engine Parts
United States
CLEVELAND