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What changed in SIFCO INDUSTRIES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SIFCO INDUSTRIES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+191 added−207 removedSource: 10-K (2025-12-22) vs 10-K (2024-12-26)

Top changes in SIFCO INDUSTRIES INC's 2025 10-K

191 paragraphs added · 207 removed · 111 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

29 edited+8 added−15 removed21 unchanged
Biggest changeF. 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.
Biggest changeFinancial 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.
In addition, the Company conducts annual employee development reviews, identifies growth opportunities, which include employee rotations, promotes value-based recognition programs and engages employees in continuous improvement activities. 6 Table of Contents 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).
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).
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 — Business Information of the Notes to Consolidated Financial Statements.
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.
Orders may be subject to modification or cancellation by the customer with limited charges. The increase in total backlog as of September 30, 2024 compared with the previous year is primarily due to tim ing 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.
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 tim ing 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.
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 Six Sigma; and (iv) broad range of capabilities and offerings.
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.
Name Age Title and Business Experience George Scherff 81 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.
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.
Jennifer Wilson 45 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.
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.
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 and Europe. SIFCO generally does not depend on a single source for the supply of its raw materials.
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.
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, 2024 and 2023.
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.
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. Products SIFCO’s products are made primarily of steel, high temperature alloys, nickel alloy, titanium and aluminum.
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 Irish Holdings, Ltd., a wholly owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”) pursuant to which it sold 100% of the share capital of C Blade S.p.A. Forging & Manufacturing, an Italian joint stock company located in Maniago, Italy, and wholly-owned subsidiary of the Company (“CBlade”), for cash consideration.
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.
See further discussion of the risks relating to competition SIFCO faces in Item 1A. Risk Factors . 5 Table of Contents 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.
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.
As of September 30, 2024, all employees were located within the U.S., excluding CBlade due its sale in October 2024. Approximately 65% 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.
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.
In recent 4 Table of Contents 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 ter ms.
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 ter ms.
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.
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.
Backlog of Orders SIFCO’s total backlog as of September 30, 2024 increased to $114.4 million , co mpared with $97.4 million as of September 30, 2023. Orders for delivery scheduled in the upcoming fiscal year 2025 increased to $85.0 million compared with $70.9 million scheduled as of the end of the 2023 fiscal year.
Backlog of Orders SIFCO’s total backlog as of September 30, 2025 increased to $119.2 million , co mpared 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.
Human Capital Management Excluding CBlade employees due to the sale of this business in October 2024, SIFCO employed approximat ely 252 f ul l-time employees at the beginning of fiscal 2024, which decreased slightly to approximately 244 employees at the end of fiscal 2024 . The Company’s employees include full-time, part-time, and temporary employees.
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.
Industry The performance of the domestic and international air transport industry, the energy industry, as well as government defense spending, directly and significantly impact the performance of SIFCO. • SIFCO supplies new and spare components to the U.S. military for aircraft, helicopters, vehicles, and munitions. The Company’s top programs include Blackhawk (H60), C-130, F-18 and F-35.
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.
All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Assets Held for Sale and Discontinued Operations of the Notes to Consolidated Financial Statements.
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.
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 2024, commercial and military revenues accounted for 52.4% and 47.6% of revenues, respectively, compared with 41.5% in commercial revenues and 58.5% in military revenues in fiscal 2023.
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.
The public can obtain any documents that are filed by the Company at http://www.sec.gov .
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 .
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”).
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 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.
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.
Customers and Seasonality During fiscal 2024, SIFCO had one direct customer that accounted for 15% of consolidated net sales; and 41% of the Company’s consolidated net sales were from three customers and their direct subcontractors, which individually accounted for 15%, 15% and 11% of net sales, respectively.
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.
The Company is a party to collective bargaining agreements (“CBA”) with certain employees within the Cleveland location. The Company ratified its CBA with one such bargaining unit in December 2019 and ratified its CBA with the second bargaining unit in December 2021.
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.
Certain programs in which the Company participates have seen favorable trends, which are expected to continue. • SIFCO supplies components for commercial aircraft, principally for large aircraft produced by Boeing and Airbus, and for general aviation. Domestic and international travel are now at pre-pandemic levels.
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.
SIFCO has positioned itself to be less dependent on OEM production, but with flexibility to address the demand cycle in this segment as well as continuing to support the aftermarket. Competition SIFCO competes with numerous companies, both in and tangential to the A&E industry.
Competition SIFCO competes with numerous companies, both in and tangential to the A&E industry.
The Maniago 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. The skills, experience and industry knowledge of our employees significantly benefit our operations and performance.
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.
She is a certified public accountant and holds a Masters of Business Administration and Bachelor of Science in accounting from David N. Meyers College. Peter W. Knapper 62 President and Chief Executive Officer from June 2016 to July 2024. Prior to joining SIFCO, Mr.
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.
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Cybersecurity Incident As reported on Forms 8-K filed January 6, 2023 and February 10, 2023, the Company became aware of unauthorized access to the Company’s systems on December 30, 2022. The Company’s domestic operations were impacted by this cybersecurity incident (“Cyber Incident”), which resulted in production delays and delayed shipments due to information access limitations.
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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.
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The Company immediately initiated response protocols and an investigation, engaging cyber security experts to assist with the assessment of the incident and to help determine what data was impacted. The Company has since completed data recovery and restoration from the cyber incident. See Note 12 — Commitments and Contingencies of the Notes to Consolidated Financial Statements . B.
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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.
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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.
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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.
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The defense budget in the United States varies from year to year, driven by defense procurement policy and government budget constraints. Coming out of the pandemic, the defense aerospace market has been impacted by COVID overproduction and build rates.
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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.
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Uncertainty may arise if the government reprioritizes funding as a result of, among other factors, potential changes in the threat environment, defense spending levels, government priorities, political leadership, procurement strategy, military strategy and planning, and broader changes in social, economic or political demands or priorities.
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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.
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Build rates, particularly the Boeing 777-9 (formerly 777X), 787, 737 MAX and the Airbus A350, continued to rebound in both fiscal 2023 and 2024. • SIFCO supplies components to the commercial space industry, which is rapidly evolving.
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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.
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An increasing number of companies are participating in private space launch and reentry programs, which brings continuous development, innovation in technologies, and new approaches in this market.
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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.
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We believe there is an opportunity for SIFCO to gain an increased market share as this industry continues to evolve and grow. • SIFCO supplies components to the semiconductor industry, for use in the manufacture of microchips. These components require very challenging material properties and purity.
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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.
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Our technical expertise has allowed SIFCO to gain customer certifications for a variety of materials in this application. We believe this market is a growth opportunity for SIFCO. • SIFCO supplies new and spare components to the energy industry.
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While alternative energy markets continue to strengthen, oil and gas prices are expected to rebound given rising gas prices from historic lows. As such, it’s currently anticipated that purchases of parts and supplies within the industry will increase.
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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.
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Knapper worked for the TECT Corporation, holding positions including Vice President of Operations of TECT Power, Corporate Director of Strategy and Site Development, and President of TECT Aerospace. In addition, Mr. Knapper held progressive leadership roles for other companies including Rolls Royce Energy Systems, Inc., a subsidiary of Rolls-Royce Holdings plc, and GE Aircraft Engines. Mr.
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Knapper has 38 years of experience in Aerospace and related industries. Thomas R. Kubera 65 Chief Financial Officer from August 8, 2018 to November 13, 2024. Prior to his appointment, Mr. Kubera was Interim Chief Financial Officer from July 1, 2017 to August 7, 2018 and Chief Accounting Officer since January 31, 2018. Mr.
Removed
Kubera was Corporate Controller from May 2014 and had served as Interim Chief Financial Officer from April 2015 to May 2015. Prior to joining SIFCO, Mr. Kubera was previously at Cleveland-Cliffs, Inc. (previously known as Cliffs Natural Resources, Inc.) from April 2005 through 2014, most recently as the Controller of Global Operations Services.
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He also held several assistant controller positions and was a Senior Manager of External Reporting while at Cleveland-Cliffs, Inc. 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 — Business Information of the Notes to Consolidated Financial Statements.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

36 edited+18 added−5 removed88 unchanged
Biggest changeSIFCO 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. 9 Table of Contents 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.
Biggest changeSIFCO 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.
Failure to perform by our subcontractors 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.
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.
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; 8 Table of Contents 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.
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.
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; 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.
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.
Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for your shares or at all.
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.
In the event that the 12 Table of Contents 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.
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.
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. 11 Table of Contents Our technologies could become obsolete, reducing our revenues and profitability.
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.
We have experienced and, in the future, may continue to 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.
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.
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. 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 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.
At September 30, 2024 , goodwill was $3.5 million of our total assets of $104.6 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.
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.
SIFCO may have disputes with subcontractors, and the failure by a subcontractor to satisfactorily deliver products 10 Table of Contents can adversely affect our ability to perform our obligations as a prime contractor.
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.
Labor disruptions by our employees or personnel turnover and/or shortage could adversely affect our business. As of September 30, 2024, we employed approximately 244 pe ople (excluding Maniago due its sale in October 2024). We face competition for management and employees from other companies and organizations.
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 pe ople (excluding CBlade due to its sale in October 2024). We face competition for management and employees from other companies and organizations.
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, 2024, our total backlog w as $114.4 million.
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 w as $119.2 million.
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. SIFCO has contracts for programs where the period of performance may exceed one year.
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.
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.
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.
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.
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.
Our testing in the past has revealed, as described below, and in the future may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain.
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.
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.
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.
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.
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. 7 Table of Contents Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and financial condition.
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.
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.
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.
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.
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.
If SIFCO does not continue to compete effectively 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.
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.
Changes in these factors affect our plan funding, cash flows, earnings, and shareholders’ equity. 13 Table of Contents 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.
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.
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.
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.
If litigation is instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources. 14 Table of Contents 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.
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.
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, curtail or terminate major programs.
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.
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.
We cannot predict changes in worldwide or regional economic conditions and government policies, as such conditions are highly volatile and beyond our control.
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.
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.
A substantial portion of SIFCO’s business is conducted with a relatively small number of large direct and indirect customers. In fiscal 2024, one direct customer accounted for approximately 15% percent of our consolidated net sales and three direct customers and their direct subcontractors accounted for approximately 41% of the Company’s consolidated net sales.
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.
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.
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.
Removed
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.
Added
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.
Removed
As further described in Item 9A in our Annual Report on Form 10-K, for the fiscal year ended September 30, 2023, management determined that SIFCO’s internal control over financial reporting and its disclosure controls and procedures were not effective.
Added
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.
Removed
Management identified deficiencies in its oversight and backup and recovery controls that represent a material weakness in internal control over financial reporting. This material weakness was remediated during the first half of fiscal 2024.
Added
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.
Removed
Until it was fully remediated, this material weakness could have resulted in a material misstatement to the annual or interim consolidated financial statements that would not have been prevented or detected on a timely basis.
Added
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.
Removed
If the Company is unable to maintain effective internal control over financial reporting or disclosure controls and procedures or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, the Company’s ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject the Company to litigation or investigations requiring management resources and payment of legal and other expenses, including civil penalties, negatively affect investor confidence in our financial statements and adversely impact our stock price.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+3 added−3 removed7 unchanged
Biggest changeExcept for the above incident, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Biggest changeMost recently, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected us, including our operations, business strategy, results of operations, or financial condition.
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 15 Table of Contents • a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
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.
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 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.
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.
Removed
As reported on Forms 8-K filed January 6, 2023 and February 10, 2023, the Company became aware of unauthorized access to the Company's systems on December 30, 2022. The Company’s domestic operations were impacted by the Cyber Incident, which resulted in production delays and delayed shipments due to information access limitations.
Added
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.
Removed
The Company immediately initiated response protocols and an investigation, engaging cyber security experts to assist with the assessment of the incident and to help determine what data was impacted. The Company has since completed data recovery and restoration from the cyber incident. See Note 12 — Commitments and Contingencies of the Notes to Consolidated Financial Statements .
Added
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.
Removed
Our Data Protection Officer has extensive experience in information technology, including prior experience in cybersecurity architecture. We have a diverse information security team, including external consultants, with varying backgrounds and experience and levels of information security certification.
Added
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.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeThe 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, (ii) leased facilities aggregating approximately 70,500 square feet located in Orange, California, and (iii) owned facilities aggregating approximately 91,000 square feet located in Maniago, Italy (this facility was included in the sale of the Maniago business effective October 15, 2024).
Biggest changeThe 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.
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, 2024 suitable and adequate given the current product offerings for the respective operations in the current business environment.
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−50 removed2 unchanged
Biggest changeSee 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. C.
Biggest changeSee 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.
Removed
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.
Removed
Estimates are revised as additional information becomes available. The Company believes that the accounting estimates employed and the resulting balances are 22 Table of Contents reasonable; however, actual results in these areas could differ from management’s estimates under different assumptions or conditions.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
Inventories Approximately 30% 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.
Removed
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.
Removed
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.
Removed
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 of the Notes to Consolidated Financial Statements for further discussion.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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. 23 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.
Removed
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.
Removed
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. 2024 and 2023 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.
Removed
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 2024 and 2023. Impairment of Goodwill Goodwill is tested for impairment annually as of July 31.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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. 2024 Annual Goodwill Impairment Tests SIFCO performed its annual test as of July 31, 2024.
Removed
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.
Removed
Refer to Note 4 — Goodwill and Intangible Assets of the Notes to Consolidated Financial Statements. 2023 Annual Goodwill Impairment Tests SIFCO performed its annual test as of July 31, 2023. Goodwill existed at one of the Company’s reporting units, Cleveland, Ohio as of July 31, 2023 and September 30, 2023.
Removed
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 and Intangible Assets of the Notes to Consolidated Financial Statements.
Removed
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.
Removed
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, 2024.
Removed
Impact on Fiscal 2024 Benefits Expense Impact on September 30, 2024 Projected Benefit Obligation for Pension Plans Change in Assumptions (In thousands) 25 basis point decrease in discount rate $ 6 $ 438 25 basis point increase in discount rate (6) (438) 100 basis point decrease in expected long-term rate of return on assets 170 — 100 basis point increase in expected long-term rate of return on assets (170) — The discussion that follows provides information on the significant assumptions/elements associated with these defined benefit pension plans. 24 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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
As of September 30, 2024 and 2023, SIFCO used the following weighted-average assumptions: Years Ended September 30, 2024 2023 Discount rate for liabilities 4.8 % 5.6 % Discount rate for expenses 5.7 % 5.1 % 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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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 2024.
Removed
Accordingly, the Company maintained its valuation allowance on its U.S. deferred tax assets as of the fourth quarter of fiscal 2024. As a result of income incurred in recent years, CBlade is in a three-year cumulative income position as of the end of fiscal 2024.
Removed
In assessing all available positive and negative evidence available as of the fourth quarter of fiscal 2024, 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 CBlade will be realized.
Removed
Accordingly, valuation allowance of $0.7 million was fully released during the fourth quarter of fiscal 2024. In October 2024, the Company sold 100% of the share capital of CBlade for cash consideration.
Removed
As a result of the transaction, the Company’s financial statements have been prepared with CBlade presented as assets held for sale and discontinued operations as of and for the years ended September 30, 2024 and 2023. Uncertain Tax Positions The calculation of the Company’s tax liabilities also involves considering uncertainties in the application of complex tax regulations.
Removed
SIFCO recognizes liabilities for uncertain income tax positions based on its estimate of whether it is more likely than not that additional taxes will be required, and it reports related interest and penalties as income taxes. Refer to Note 8 — Income Taxes of the Notes to Consolidated Financial Statements for further discussion. D.
Removed
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. 25 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

3 edited+0 added−0 removed1 unchanged
Biggest changeItem 4. Mine Safety Disclosures. Not applicable. 16 Table of Contents 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.
Biggest changeItem 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.
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.
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
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.
These forward-looking statements are based on current expectations and are subject to risk and uncertainties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed2 unchanged
Biggest changeAt December 3, 2024 , there were approximately 280 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.
Biggest changeAt 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.
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 2024 or fiscal 2023.
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

35 edited+51 added−23 removed12 unchanged
Biggest changeOther/General The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreements in fiscal 2024 and 2023: Weighted Average Interest Rate Years Ended September 30, Weighted Average Outstanding Balance Years Ended September 30, 2024 2023 2024 2023 Revolving credit agreement 8.0% 6.9% $17.1 million $ 13.1 million Other debt 12.6% 1.5% $0.3 million $ 0.5 million The Company believes that inflation did not materially impact its results of operations in either fiscal 2024 or 2023.
Biggest changeIn 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.
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 C Blade S.p.A.
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.
As of September 30, 2024, 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.
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.
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, 2024 and 2023.
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.
As of September 30, 2024 and 2023, 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.
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.
Net Cash Provided By (Used For) 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.
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 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 for its domestic locations.
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.
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 17 Table of Contents the fixed component of their respective cost structures.
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.
However, 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 — Assets Held for Sale and Discontinued Operations of the Notes to Consolidated Financial Statements.
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.
Additionally, refer to Note 19 — Retirement Benefit Plans of the Notes to Consolidated Financial Statements for more information related to the Company’s pension and defined contribution plans.
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.
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 will cease with the execution of the sale transaction, the Company believes that its streamlined operations and lower overall costs will allow management to focus on domestic growth opportunities.
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.
The Company’s operating activities from discontinued operations provided $1.4 million of cash in fiscal 2024, compared with $2.4 million of cash provided by fiscal 2023 primarily driven by net income from discontinued operations and changes in working capital.
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.
With the sale of the CBlade manufacturing operations located in Maniago, Italy, the Company expects to increase its cash on hand from the proceeds, which will be used to repay a portion of its outstanding debt balances and for general operational needs.
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.
As of September 30, 2024 and 2023, the Company also had cash and cash equivalents related to its business held for sale (i.e., CBlade) of $1.0 million and $0.3 million, respectively, which are included in Current assets of business held for sale in the audited consolidated balance sheets.
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.
Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses were $11.1 million, or 14.0% of net sales, during fiscal 2024, compared with $12.3 million, or 18.6% of net sales, in fiscal 2023.
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 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 accounts receivable due to higher sales and timing of payments at the end of the fiscal year, and higher prepaid expenses attributable to deferred financing costs related to the 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. 21 Table of Contents The Company’s operating activities used $3.8 million of cash in fiscal 2023.
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 Year 2024 Compared with Fiscal Year 2023 Net Sales Net sales comparative information for fiscal 2024 and 2023 is as follows: (Dollars in millions) Years Ended September 30, Year Over Year Increase (Decrease) 2024 2023 Aerospace components for: Fixed wing aircraft $ 41.8 $ 40.1 $ 1.8 Rotorcraft 17.3 16.4 0.9 Commercial space 13.2 4.6 8.6 Energy components for power generation units 1.8 2.1 (0.3) Commercial products and other revenue 5.5 2.9 2.5 Total $ 79.6 $ 66.1 $ 13.5 Net sales in fiscal 2024 increased 20.4%, or $13.5 million, to $79.6 million, compared with $66.1 million in fiscal 2023.
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.
Cash used for investing activities from discontinued operations was $1.4 million and $1.3 million in fiscal 2024 and 2023, respectively, related to outlays for capital expenditures. Cash provided by financing activities from discontinued operations was $1.1 million in fiscal 2024 compared to $2.0 million of cash used in fiscal 2023, attributable to proceeds from new borrowings and loan payments, respectively.
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.
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 such as depreciation and amortization of $4.8 million, amortization of debt issuance costs of $1.2 million, LIFO expense of $0.9 million, change in NRV reserve $0.6 million, equity based compensation of $0.2 million, partially offset by sources of working capital of $2.3 million.
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.
Income Taxes The Company’s effective tax rate in fiscal 2024 was (0.4)% compared with (0.2)% in fiscal 2023. The decrease in the effective tax rate in fiscal 2024 is primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period in fiscal 2023.
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.
All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation. Refer to Note 2 — Assets Held for Sale and Discontinued Operations of the Notes to Consolidated Financial Statements.
All historical statements, amounts and related disclosures have been retrospectively adjusted to conform to this presentation.
The Company’s liquidity could be negatively affected if the Company is unable to obtain capital, by customers extending payment terms to the Company and/or the decrease in demand for our products. The Company and management will continue to assess and actively manage liquidity needs.
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.
Higher demand in the commercial space market and the timing of shipments and contract approvals across most markets contributed to the increase in deliveries in fiscal 2024 from fiscal 2023. Fixed wing aircraft sales increased $1.8 million compared with the same period last year primarily due to the 787 program.
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.
Loss from Continuing Operations Net loss was $8.6 million during fiscal 2024 compared with $10.5 million in fiscal 2023 due to higher sales volumes and gross margins improvements coupled with lower SG&A expenses, partially offset by higher interest expense. Non-GAAP Financial Measures Presented below is certain financial information based on the Company’s EBITDA and Adjusted EBITDA.
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.
Commercial net sales were 52.4% of total net sales and military net sales were 47.6% of total net sales in fiscal 2024, compared with 41.5% and 58.5%, respectively, in fiscal 2023.
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.
The cash used by operating activities in fiscal 2023 was primarily due to net operating loss of $10.5 million, adjusted for non-cash items such as change in NRV reserve $1.1 million, and LIFO benefit of $0.3 million, partially offset by depreciation and amortization of $5.1 million, equity based compensation of $0.3 million and sources of working capital of $2.4 million.
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.
Refer to Note 6 — Debt of the Notes to Consolidated Financial Statements for details regarding our financing activities during fiscal 2024 and 2023. Future cash flows from the Company’s operations may be used to pay down outstanding debt amounts.
Future cash flows from the Company’s operations may be used to pay down outstanding debt amounts.
Investing Activities Cash used for investing activities was $2.0 million in fiscal 2024, compared with $1.1 million in fiscal 2023. Fiscal 2024 and fiscal 2023 expenditures were used primarily for manufacturing enhancement and maintenance. Capital commitments at September 30, 2024 were $0.3 million.
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.
Military net sales decreased $0.8 million to $37.9 million in fiscal 2024, compared to $38.7 million in fiscal 2023 primarily due to V22 and C130 demand reductions, partially offset by higher demand in certain rotorcraft and munition programs.
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 $10.9 million, or 17.4%, to $73.7 million, or 92.5% of net sales, during fiscal 2024, compared with $62.7 million, or 94.9%, of net sales during fiscal 2023.
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.
Financing Activities Cash provided by financing activities was $6.3 million in fiscal 2024 compared to cash provided by financing activities of $4.9 million in fiscal 2023. The year-over-year increase was primarily related to the higher proceeds received from the related party promissory note and funds drawn from the revolving credit facility, net of payments made, during 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.
Commercial net sales increased $14.4 million to $41.8 million in fiscal 18 Table of Contents 2024, compared to $27.4 million in fiscal 2023 primarily due to higher demand in the commercial space market, as well as increases in build rates in the commercial aerospace industry.
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.
Additionally, fiscal 2023 results included $1.5 million of Employee Retention Credit (“ERC”) benefit that did not reoccur in fiscal 2024. Gross Profit Gross profit increased by $2.6 million, to $6.0 million during fiscal 2024, compared with $3.3 million in fiscal 2023.
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.
Energy components for power generation units decreased $0.3 million compared with the same period last year due to lower demand in the steam turbine markets. Commercial products and other revenue increased by $2.5 million in fiscal 2024 compared to fiscal 2023, primarily due to timing of orders related to munitions programs.
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.
Reference to the above activities can be found in the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. B. Liquidity and Capital Resources Cash and cash equivalents increased to $1.7 million at September 30, 2024 compared with $21 thousand at September 30, 2023.
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.
Removed
Cybersecurity Incident As reported on Forms 8-K filed January 6, 2023 and February 10, 2023, the Company became aware of unauthorized access to the Company’s systems on December 30, 2022. The Company’s domestic operations were impacted by this cybersecurity incident which resulted in production delays and delayed shipments due to information access limitations.
Added
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.
Removed
The Company initiated response protocols and an investigation, engaging cyber security experts to assist with the assessment of the incident and to help determine what data was impacted. The Company has since completed data recovery and restoration from the cyber incident. See Note 12 — Commitments and Contingencies of the Notes to Consolidated Financial Statements .
Added
Income Taxes The Company’s effective tax rate in fiscal 2025 was 24.7% compared with 0.4% in fiscal 2024.
Removed
Rotorcraft sales increased $0.9 million in fiscal 2024 compared to the same period in fiscal 2023 primarily due to the Sikorsky H60 and Blackhawk programs, partially offset by declines in sales in the Bell/Boeing Osprey V22 components. Commercial space products increased by $8.6 million year-over-year due to higher demand for staged-combustion engine components.
Added
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.
Removed
The increase was primarily due to increased volume, coupled with higher labor costs of $1.3 million and other manufacturing and overhead costs of $1.4 million, primarily consisting of supplies, outside processing fees and insurance.
Added
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.
Removed
Current year results include $1.4 million of idle expense and less than $0.1 million of expense associated with net realizable value (“NRV”) compared with prior year costs of $2.1 million and $0.9 million, respectively, which partially offset the increases in COGS in fiscal 2024.
Added
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.
Removed
Gross margin percent of sales was 7.5% during fiscal 2024, compared with 5.1% in fiscal 2023, primarily due to the increases in sales volume and COGS discussed above and the impact of favorable mix of products sold, particularly due to growth in the commercial space market.
Added
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.
Removed
The decrease in SG&A expenses is primarily due to lower costs related to the prior year's cybersecurity incident, partially offset by higher legal and other costs related to the evaluation of strategic alternatives.
Added
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.
Removed
Amortization of Intangibles In fiscal 2024, amortization of intangibles decreased slightly by $0.1 million compared to the prior year due to certain intangible assets that were fully amortized during fiscal 2023.
Added
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.
Removed
References to “EBITDA” mean earnings (losses) from continuing operations before interest, taxes, depreciation and amortization, and references to “Adjusted EBITDA” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and Adjusted EBITDA. 19 Table of Contents Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under generally accepted accounting principles in the United States of America (“GAAP”).
Added
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.
Removed
The Company presents EBITDA and Adjusted EBITDA because management believes that they are useful indicators for evaluating operating performance, including the Company’s ability to incur and service debt and it uses EBITDA to evaluate prospective acquisitions.
Added
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.
Removed
Although the Company uses EBITDA and Adjusted EBITDA for the reasons noted above, the use of these non-GAAP financial measures as analytical tools has limitations. Therefore, reviewers of the Company’s financial information should not consider them in isolation, or as a substitute for analysis of the Company’s results of operations as reported in accordance with GAAP.
Added
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.
Removed
Some of these limitations include: • Neither EBITDA nor Adjusted EBITDA reflects the interest expense or the cash requirements necessary to service interest payments on indebtedness; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements; • The omission of the amortization expense associated with the Company’s intangible assets further limits the usefulness of EBITDA and Adjusted EBITDA as measurements of financial performance; and • Neither EBITDA nor Adjusted EBITDA includes the payment of taxes, which is a necessary element of operations.
Added
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.
Removed
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to the Company to invest in the growth of its businesses.
Added
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.
Removed
Management compensates for these limitations by not viewing EBITDA or Adjusted EBITDA in isolation and specifically by using other GAAP measures, such as net income (loss), net sales, and operating income (loss), to measure operating performance.
Added
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.
Removed
Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under GAAP, and neither should be considered as an alternative to net loss or cash flow from operations determined in accordance with GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.
Added
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.
Removed
The following table sets forth a reconciliation of net loss to EBITDA and Adjusted EBITDA: (Dollars in thousands) Years Ended September 30, 2024 2023 Net loss $ (5,383) $ (8,692) Less: Income from discontinued operations, net of tax 3,243 1,827 Loss from continuing operations (8,626) (10,519) Adjustments: Depreciation and amortization expense 4,784 5,071 Interest expense, net 3,080 997 Income tax expense 37 16 EBITDA (725) (4,435) Adjustments: Foreign currency exchange (gain) loss, net (1) (3) 3 Other expense, net (2) 302 361 Loss (gain) on disposal of assets (3) 4 (1) Non-recurring severance expense (4) 435 — Equity compensation expense (4) 250 375 Pension settlement/curtailment benefit (5) 60 78 LIFO impact (6) 862 (305) IT incident (benefit) expense, net (7) (594) 1,275 Strategic alternative expense (8) 237 85 Adjusted EBITDA $ 828 $ (2,564) (1) Represents the gain or loss from changes in the exchange rates between the functional currency and the foreign currency in which the transaction is denominated.
Added
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.
Removed
(2) Represents miscellaneous non-operating income or expense, such as pension costs or grant income. (3) Represents the difference between the proceeds from the sale of operating equipment and the carrying value shown on the Company’s books.
Added
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.
Removed
(4) Represents the equity-based compensation expense recognized by the Company under the 2016 Plan due to granting of awards, awards not vesting and/or forfeitures and executive severance. 20 Table of Contents (5) Represents expense incurred by its defined benefit pension plans related to settlement of pension obligations.
Added
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.
Removed
(6) Represents the change in the reserve for inventories for which cost is determined using the last-in, first-out (“LIFO”) method. (7) Represents incremental information technology costs (and credits) as it relates to the cybersecurity incident and loss on insurance recovery. (8) Represents expense related to evaluation of strategic alternatives.
Added
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.
Removed
We believe that our existing cash will be sufficient to finance our continued operations, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months. In order to support and achieve our future growth plans, we may need or advantageously seek to obtain additional funding through equity or debt financing.
Added
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.
Removed
For details regarding our debt agreements, see Note 6 — Debt of the Notes to Consolidated Financial Statements. Operating Activities The Company’s operating activities used $2.6 million of cash in fiscal 2024, compared with $3.8 million of cash used in fiscal 2023.
Added
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.
Removed
The source of cash from working capital of $2.4 million was primarily due to increase in accounts payable due to timing of payments and lower inventories due to extended raw material lead times, partially offset by higher accounts receivable due to increased sales at the end of the fiscal year.
Added
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.
Removed
The Company anticipates the total fiscal 2025 capital expenditures will be within the range of $2.0 million to $3.0 million and will relate principally to the further enhancement of production and product offering capabilities and operating cost reductions.

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