UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q 
FORM 10-Q
☒
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 20172023
or
☐
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5978
SIFCO Industries, Inc.
(Exact name of registrant as specified in its charter)
Ohio34-0553950
Ohio34-0553950
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
970 East 64th Street, Cleveland Ohio44103
(Address of principal executive offices)(Zip Code)
(216) 881-8600
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer¨☐Accelerated filer¨☐
Non-accelerated filer¨☒Smaller reporting companyý☒
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  ý☒
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common SharesSIFNYSE American
The number of the Registrant’s Common Shares, par value $1.00, outstanding at December 31, 20172023 was 5,644,414.

6,159,987.



Part I. Financial Information
Item 1. Financial Statements
SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)

Three Months Ended 
 December 31,
Three Months Ended
December 31,
Three Months Ended
December 31,
Three Months Ended
December 31,
2017
2016 20232022
Net sales$24,251

$31,473
Cost of goods sold22,222

27,305
Gross profit2,029

4,168
Selling, general and administrative expenses4,072

5,303
Amortization of intangible assets
Amortization of intangible assets
Amortization of intangible assets425

592
Gain on disposal of operating assets(1,400)
(6)
Operating loss(1,068)
(1,721)
Interest income(9)
(14)
Interest expense444

678
Foreign currency exchange (gain) loss, net(36)
4
Other income, net(316)
(107)
Loss from operations before income tax expense(1,151)
(2,282)
Income tax expense (benefit)(240)
327
Operating loss
Operating loss
Interest expense, net
Interest expense, net
Interest expense, net
Foreign currency exchange loss (gain), net
Foreign currency exchange loss (gain), net
Foreign currency exchange loss (gain), net
Other expense, net
Loss before income tax expense
Income tax expense
Net loss$(911)
$(2,609)
Net loss
Net loss
Net loss per share
Net loss per share


Net loss per share


Basic$(0.17)
$(0.48)
Basic
Basic
Diluted$(0.17)
$(0.48)

Weighted-average number of common shares (basic)5,502
 5,467
Weighted-average number of common shares (basic)
Weighted-average number of common shares (basic)
Weighted-average number of common shares (diluted)5,502

5,467
See notes to unaudited consolidated condensed financial statements.

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SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Comprehensive Loss(Loss) Income
(Unaudited)
(Amounts in thousands)
 Three Months Ended 
 December 31,
 2017 2016
Net loss$(911) $(2,609)
Other comprehensive income (loss):   
Foreign currency translation adjustment296
 (1,048)
Retirement plan liability adjustment162
 234
Interest rate swap agreement adjustment20
 16
Comprehensive loss$(433) $(3,407)
Three Months Ended
December 31,
 20232022
Net loss$(3,422)$(2,589)
Other comprehensive loss:
Foreign currency translation adjustment, net of tax253 342 
Retirement plan liability adjustment, net of tax43 78 
       Other— 1 
Comprehensive loss$(3,126)$(2,168)
See notes to unaudited consolidated condensed financial statements.

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SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Amounts in thousands, except per share data)

December 31, 
 2017		 September 30, 
 2017
December 31,
2023		December 31,
2023		September 30,
2023
(unaudited)   (unaudited) 
ASSETS   
Current assets:   
Current assets:
Current assets:
Cash and cash equivalents$1,131
 $1,399
Receivables, net of allowance for doubtful accounts of $298 and $330, respectively24,590
 25,894
Other receivables2,969
 —
Cash and cash equivalents
Cash and cash equivalents
Receivables, net of allowance for doubtful accounts of $121 and $242, respectively
Contract assets
Contract assets
Contract assets
Inventories, net
Inventories, net
Inventories, net19,362
 20,381
Refundable income taxes100
 292
Prepaid expenses and other current assets1,824
 1,644
Assets held for sale1,076
 2,524
Prepaid expenses and other current assets
Prepaid expenses and other current assets
Total current assets
Total current assets
Total current assets51,052
 52,134
Property, plant and equipment, net38,855
 39,508
Operating lease right-of-use assets, net
Intangible assets, net6,432
 6,814
Goodwill12,305
 12,170
Other assets225
 261
Total assets
Total assets
Total assets$108,869
 $110,887
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Current liabilities:
Current liabilities:
Current maturities of long-term debt$8,084
 $7,560
Revolving credit agreement18,755
 18,557
Current maturities of long-term debt
Current maturities of long-term debt
Promissory note - related party
Revolver
Short-term operating lease liabilities
Accounts payable11,739
 12,817
Accrued liabilities7,136
 6,791
Accrued liabilities
Accrued liabilities
Total current liabilities45,714
 45,725
Long-term debt, net of current maturities4,509
 5,151
Deferred income taxes2,548
 3,266
Total current liabilities
Total current liabilities
Long-term debt, net of current maturities, net of unamortized debt issuance costs
Long-term operating lease liabilities, net of short-term
Deferred income taxes, net
Pension liability6,059
 6,184
Other long-term liabilities148
 430
Shareholders’ equity:   
Serial preferred shares, no par value, authorized 1,000 shares—
 —
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares –5,644 at December 31, 2017 and 5,596 at September 30, 20175,644
 5,596
Shareholders’ equity:
Shareholders’ equity:
Serial preferred shares, no par value, authorized 1,000 shares; 0 shares issued and outstanding at December 31, 2023 and September 30, 2023
Serial preferred shares, no par value, authorized 1,000 shares; 0 shares issued and outstanding at December 31, 2023 and September 30, 2023
Serial preferred shares, no par value, authorized 1,000 shares; 0 shares issued and outstanding at December 31, 2023 and September 30, 2023
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 6,160 at December 31, 2023 and 6,105 at September 30, 2023
Additional paid-in capital9,664
 9,519
Retained earnings43,356
 44,267
Accumulated other comprehensive loss(8,773) (9,251)
Total shareholders’ equity49,891
 50,131
Total liabilities and shareholders’ equity$108,869
 $110,887
See notes to unaudited consolidated condensed financial statements.

4





SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Unaudited, Amounts in thousands)
Three Months Ended
December 31,
 20232022
Cash flows from operating activities:
Net loss$(3,422)$(2,589)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization1,562 1,571 
Amortization of debt issuance costs11 10 
Gain on disposal of operating assets— (11)
Loss on insurance proceeds received for non-property claim— 110 
LIFO effect293 262 
Share transactions under company stock plan, net37 51 
Inventory valuation accounts392 (812)
Other long-term liabilities18 (96)
Deferred income taxes(37)7 
Changes in operating assets and liabilities:
Receivables2,230 1,632 
Contract assets(859)(1,350)
Inventories(4,056)1,544 
Prepaid expenses and other current assets(667)84 
Other assets(49)107 
Accounts payable862 2,488 
Other accrued liabilities1,459 (2,775)
Accrued income and other taxes89 59 
Net cash (used for) provided by operating activities(2,137)292 
Cash flows from investing activities:
Proceeds from disposal of operating assets— 12 
Capital expenditures(496)(547)
Net cash used for investing activities(496)(535)
Cash flows from financing activities:
Proceeds from long-term debt2,183 — 
Payments on long-term debt(274)(257)
Proceeds from revolving credit agreement23,413 19,768 
Repayments of revolving credit agreement(23,641)(19,385)
Payment of debt issuance costs(236)— 
Proceeds from promissory note related party3,000 — 
Short-term debt borrowings2,246 1,360 
Short-term debt repayments(1,223)(1,370)
Net cash provided by financing activities5,468 116 
Increase (decrease) in cash and cash equivalents2,835 (127)
Cash and cash equivalents at the beginning of the period368 1,174 
Effect of exchange rate changes on cash and cash equivalents33 110 
Cash and cash equivalents at the end of the period$3,236 $1,157 
Supplemental disclosure of cash flow information of operations:
Cash paid for interest$(428)$(259)
Non-cash investing activities:
Additions to property, plant & equipment - incurred but not yet paid$541 $795 
Non-cash financing activities:
Debt issuance cost due at maturity - related party$910 $— 

Three Months Ended 
 December 31,
 2017 2016
Cash flows from operating activities:   
Net loss$(911) $(2,609)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:   
Depreciation and amortization2,191
 2,515
Amortization and write-off of debt issuance cost53
 273
Gain on disposal of operating assets(1,400) (6)
LIFO expense52
 107
Share transactions under company stock plan194
 138
Other long-term liabilities(234) 2
Deferred income taxes(756) 189
Changes in operating assets and liabilities:   
Receivables1,415
 (1,556)
Inventories1,041
 818
Refundable taxes194
 —
Prepaid expenses and other current assets(228) (197)
Other assets35
 302
Accounts payable(1,474) (1,411)
Other accrued liabilities(222) 555
Accrued income and other taxes508
 92
Net cash provided (used) by operating activities458
 (788)
Cash flows from investing activities:   
Proceeds from disposal of operating assets25
 48
Capital expenditures(703) (457)
Net cash used for investing activities(678) (409)
Cash flows from financing activities:   
Payments on long term debt(743) (12,223)
Proceeds from revolving credit agreement17,901
 29,622
Repayments of revolving credit agreement(17,703) (17,036)
Payment of debt issue costs—
 (498)
Short-term debt borrowings1,600
 2,330
Short-term debt repayments(1,105) (454)
Net cash provided (used) for financing activities(50) 1,741
(Decrease) Increase in cash and cash equivalents(270) 544
Cash and cash equivalents at the beginning of the period1,399
 471
Effect of exchange rate changes on cash and cash equivalents2
 4
Cash and cash equivalents at the end of the period$1,131
 $1,019
Supplemental disclosure of cash flow information of operations:   
Cash paid for interest$(366) $(369)
Cash refund (paid) for income taxes, net183
 (25)
See notes to unaudited consolidated condensed financial statements.

5



SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Shareholders’ Equity
(Unaudited, Amounts in thousands)

Three Months Ended
December 31, 2023
CommonAdditional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Total
Shareholders’
Equity
SharesAmount
Balance - September 30, 20236,105 $6,105 $11,626 $23,264 $(6,660)$34,335 
Comprehensive (loss) income— — — (3,422)296 (3,126)
Performance and restricted share expense— — 87 — — 87 
Share transactions under equity-based plans55 55 (104)— — (49)
Balance - December 31, 20236,160 $6,160 $11,609 $19,842 $(6,364)$31,247 

Three Months Ended
December 31, 2022
CommonAdditional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Total
Shareholders’
Equity
SharesAmount
Balance - September 30, 20226,040 $6,040 $11,387 $31,956 $(8,693)$40,690 
Comprehensive (loss) income— — — (2,589)421 (2,168)
Performance and restricted share expense— — 122 — — 122 
Share transactions under equity-based plans32 32 (103)— — (71)
Balance - December 31, 20226,072 $6,072 $11,406 $29,367 $(8,272)$38,573 


See notes to unaudited consolidated condensed financial statements.

6



SIFCO Industries, Inc. and Subsidiaries
Notes to Unaudited Consolidated Condensed Financial Statements
(Amounts in thousands, except per share data)
1.Summary of Significant Accounting Policies
1.Summary of Significant Accounting Policies

A. Principles of Consolidation
The accompanying unaudited consolidated condensed financial statements include the accounts of SIFCO Industries, Inc. and its wholly-owned subsidiaries (the(collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated.eliminated in consolidation.

The U.S. dollar is the functional currency for all of the Company’s operations in the United States ("U.S. operations") and its Irishnon-operating subsidiaries. For these operations, all gains and losses from completed currency transactions are included in income currently.(loss). The functional currency for the Company's other non-U.S. subsidiaries is the Euro. Assets and liabilities are translated into U.S. dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange for the period.period which approximate the rates in effect at the date of the transaction. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the unaudited consolidated condensed financial statements.

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal 20172023 Annual Report on Form 10-K. The year-end consolidated condensed balance sheet datacontained in these financial statements was derived from the audited financial statements and disclosures required by accounting principles generally accepted accounting in the United States ("U.S."). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and disclosures considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.

B. Accounting Policies
A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company's fiscal 2017 Annual Report on Form 10-K except for the following:year ended September 30, 2023.

Income taxes
On December 22, 2017, the U.S. enacted the Tax Cut and Jobs Act (the "Act") which, among other items, reduces the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. On the same day of the Act, the Securities and Exchange Commission (the "SEC") issued Staff Bulletin 118 ("SAB 118"). SAB 118 expresses views of the SEC regarding ASC Topic 740, Income taxes ("ASC 740") in the reporting period that includes the enactment date of the Act. The SEC staff issuing SAB 118 recognized that a company’s review of certain income tax effects of the Act may be incomplete at the time the financial statements are issued for the reporting period that includes the enactment date, including interim periods therein.  If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year from the day of enactment.  

The Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate in general. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under the U.S. generally accepted accounting principles wherein companies are allowed to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after its completion of the analysis of the GILTI provisions and its election method will depend, in part, on analyzing its global income to determine whether the Company expects to have future material U.S. inclusions in its taxable income related to GILTI and, if so, the impact that is expected.

Refer to Note 5, Income Taxes.
C. Net Loss per Share
The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding. Due to theDuring a period of net loss, for each reporting period, nozero restricted and performance shares are included in the calculation of basic or diluted earnings per share because the effect would be anti-dilutive. The dilutiveIn a period of net income, the net income per diluted share reflects the effect of the Company’sCompany's outstanding restricted shares and performance shares wereunder the treasury stock method. The dilutive effect is as follows:

Three Months Ended
December 31,
 20232022
Net loss$(3,422)$(2,589)
Weighted-average common shares outstanding (basic and diluted)5,956 5,896 
Net loss per share – basic and diluted$(0.57)$(0.44)
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share249 176 

D. Going Concern
In accordance with ASU 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40) ("ASC 205-40")", the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether its plans that are not yet fully implemented are probable of both being implemented and effective in alleviating that doubt. In the event substantial doubt is raised, disclosures in the notes to the consolidated condensed financial statements of management’s plans and management’s conclusion as to whether
6
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the substantial doubt exists or has been alleviated are required. The consolidated condensed financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty. This step shall not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.

  Three Months Ended 
 December 31,
  2017 2016
Net loss $(911) $(2,609)
     
Weighted-average common shares outstanding (basic and diluted) 5,502
 5,467
     
Net loss per share – basic and diluted:    
                        Net loss per share (0.17) $(0.48)
     
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 110
 59

D. Derivative Financial Instruments
The Company entered into an interest rate swap agreement on March 29, 2016has debt maturing in October 2024. As a result of this condition, there is substantial doubt about the Company’s ability to reduce risk related to variable-rate debt, which was subject to changes in market rates of interest. The interest rate swap was designatedcontinue as a cash flow hedge. going concern.

The agreement was canceled as partCompany continues to evaluate available financial alternatives, including obtaining acceptable alternative financing. The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreements. See Note 7, Debt.

E. Recent Accounting Standards Adopted
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the debt modification on November 9, 2016, as further discussed in Note 4, Debt. The Company accounted forexposure, the interest rate swap termination by recordingexpected credit loss model requires entities to estimate the loss in accumulated other comprehensive loss as of December 31, 2016. The amount incurred in interest expense was nominal. As part of the new Credit Facility, described further in Note 4, Debt, on November 9, 2016, the Company entered into a new interest rate swap on November 30, 2016 to reduce risk related to the variable debtcredit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating expected credit losses. ASU 2016-13 does not prescribe a specific method to make the new term loan. Atestimate, so its application will require significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 31, 2017,15, 2019, including interim periods within those fiscal years. However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, this ASU is effective for the Company held one interest rate swap agreement with a notional amountbeginning October 1, 2023. The effect of $3,816. Cash flows relatedadopting this ASU did not have an impact to the interest rate swap agreement are included in interest expense. The Company’s interest rate swap agreementCompany's results within the consolidated condensed statements of operations and its variable-rate term debt were based upon LIBOR. At December 31, 2017 and September 30, 2017, the Company’s interest rate swap agreement qualified as a fully effective cash flow hedge against the Company’s variable-rate term note. The mark-to-market valuation was a $24 asset and a $4 asset at December 31, 2017 and September 30, 2017, respectively.financial condition.


E. Impact of Recently Issued Accounting Standards
In February 2016, the FinancialF. Recent Accounting Standards Board ("FASB")Not Yet Adopted
In July 2023, the FASB issued Accounting Standards Update ("ASU") 2016-02, “LeasesASU 2023-03, "Presentation of Financial Statement (Topic 842).” This ASU requires lessees205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", to recognize a lease liability and a right-of-use asset onamend various SEC paragraphs in the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification Topic 606, Revenue from Contractsto reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with Customers.it. The standardCompany is currently assessing the impact of adopting ASU 2023-03 on the consolidated condensed financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a modified retrospective transitionpublic entity to report for capitaleach reportable segment a measure of segment profit or loss that its chief operating decision maker ("CODM") uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating leases existing atsegments, aggregates those operating segments, or entered into afterapplies the beginning of the earliest comparative period presentedquantitative thresholds to determine its reportable segments. The amendments in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial adoption. The ASU is2023-07 are effective for fiscal years beginning after December 15, 2018, including2023, and interim periods within those fiscal years.years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the
8


financial statements. The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated condensed financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the requirements of ASU 2016-02 and anticipates that the adoption will impact the consolidated condensed balance sheets due to the recognition of the right-to-use asset and lease liability related to its current operating leases.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” This ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs, along with subsequent updates, apply to all companies that enter into contracts with customers to transfer goods or services, and are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The Company will adopt the new guidance on October 1, 2018. The Company is executing a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue streams. The Company has determined that many of its long-term agreements contain variable consideration clauses and is in the process of quantifying the impact to its consolidated financial statements. In addition, some of the Company's agreements have clauses which may require the Company to recognize revenue over time. The majority of the Company's current revenue is recognized at a point-in-time. As such, SIFCO continues to evaluate the impact of thethis standard on its financial reporting, disclosures and related systems and internal controls. The Company has engaged a third party to assist with its efforts.

F. Recently Adopted Accounting Standards
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for

7



fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. ASU 2016-09 was adopted by the Company effective October 1, 2017.

This guidance requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement and also requires a policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company changed its policy to recognize the impact of forfeitures when they actually occur. There was no impact to theour consolidated condensed financial statements and related disclosures.

G. Employee Retention Credit
Under the Employee Retention Credit ("ERC") program, eligible businesses, both for-profit and not-for-profit, that experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts in any quarter (more than 50% decrease in 2020 from 2019, and more than 20% in 2021) could receive a quarterly refundable payroll tax credit. The Company, with reasonably assured qualification, submitted for refunds under the ERC program.

As no authoritative guidance exists under U.S. GAAP for reporting ERCs, the Company adopted International Accounting Standards ("IAS") 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as of October 1, 2017.   Also, this guidance requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified inother income or netting the consolidated condensed statementcredit against related expense. For the three months ended December 31, 2023 and 2022, there was no income or expense recorded.

2.Inventories
Inventories consist of:
December 31,
2023		September 30,
2023
Raw materials and supplies$2,710 $1,684 
Work-in-process6,548 4,061 
Finished goods3,172 3,108 
Total inventories, net$12,430 $8,853 

For a portion of cash flows as a financing activity, which differs from the Company's previousinventory, cost is determined using the last-in, first-out ("LIFO") method. Approximately 32% and 19% of the Company’s inventories at December 31, 2023 and September 30, 2023, respectively, use the LIFO method. An actual valuation of inventory under the LIFO method is made at the end of classificationeach fiscal year based on the inventory levels and costs existing at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of such cash paymentsexpected year-end inventory levels and costs. Because the actual results may vary from these estimates, the annual results may differ from interim results as an operating activity.they are subject to adjustments based on the differences between the estimates and the actual results. The Company applied this provision retrospectively, andfirst-in, first-out ("FIFO") method is used for the first quarterremainder of fiscal 2017, the impact between operating activities to financing activities was nominal. This guidance also requires the tax effects of exercised or vested awards to be treated as discrete items in the reporting period ininventories, which they occur, which was applied prospectively, beginning October 1, 2017 by the Company. Due to the Company having recorded a domestic valuation allowance, the tax impact upon adoption of this ASU was not material to the consolidated condensed financial statements. Lastly, the guidance requires that excess tax benefits should be classified along with other income tax cash flows as an operating activity on the statement of cash flows, which differs from the Company’s historical classification of excess tax benefits as cash inflows from financing activities. The Company elected to apply this provision using the prospective transition method.  

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which provides new guidance to simplify the measurement of inventory valuationare stated at the lower of cost or net realizable value.value ("NRV"). If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $9,927 and $9,634 higher than reported at December 31, 2023 and September 30, 2023, respectively. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. The adoptionCompany estimates net realizable value, excess and obsolescence and shrink reserves for its inventory based upon historical experience, historical and projected sales trends and the age of this ASUinventory on hand. As of December 31, 2023 and September 30, 2023, our inventory valuation allowances were $3,534 and $4,049, respectively.

3.Long-lived Assets
The Company reviews the carrying value of its long-lived assets ("asset groups"), when events and circumstances indicate a triggering event has occurred. A triggering event is a change in circumstances that indicates the carrying value of the asset group may not be recoverable. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. Under the Accounting Standard Codification ("ASC") 360 ("Topic 360"), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

The Company continuously monitors for indicators of impairment to determine if further testing is necessary. In the first quarter ended December 31, 2017 had no impact onof fiscal 2024, the Company's consolidated condensed financial statements.
2.Inventories
Inventories consist of:Company evaluated potential triggering events and did not identify any indicators that the asset groups might be impaired.
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 December 31, 
 2017		 September 30, 
 2017
Raw materials and supplies$4,867
 $6,108
Work-in-process7,129
 7,650
Finished goods7,366
 6,623
Total inventories$19,362
 $20,381

Inventories are stated at
4.Goodwill
The Company tests its goodwill for impairment in the lowerfourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of cost or market. Cost isgoodwill may be impaired. In the first quarter of fiscal 2024, the Company evaluated potential triggering events and determined using the last-in, first-out (“LIFO”) method for 40% and 38% of the Company’s inventories at December 31, 2017 and September 30, 2017, respectively. The first-in, first-out (“FIFO”) method is used for the remainder of the inventories. If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $8,371 and $8,319 higher than reported at December 31, 2017 and September 30, 2017, respectively.interim testing was not required.

3.    
5.    Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
December 31,
2023		September 30,
2023
Foreign currency translation adjustment$(5,675)$(5,928)
Retirement plan liability adjustment, net of tax(698)(741)
Interest rate swap agreement, net of tax9 9 
Total accumulated other comprehensive loss$(6,364)$(6,660)

6.    Leases
 December 31, 
 2017		 September 30, 
 2017
Foreign currency translation adjustment$(4,311) $(4,607)
Retirement plan liability adjustment, net of tax(4,486) (4,648)
Interest rate swap agreement adjustment, net of tax24
 4
Total accumulated other comprehensive loss$(8,773) $(9,251)
The components of lease expense were as follows:

Three Months Ended
December 31,
20232022
Finance lease expense:
     Amortization of right-of use assets on finance leases$18 $12 
     Interest on lease liabilities2 1 
Operating lease expense426 423 
Variable lease cost20 25 
Total lease expense$466 $461 

The following table presents the impact of leasing on the consolidated condensed balance sheet.
Classification in the consolidated condensed balance sheetsDecember 31,
2023		September 30,
2023
Assets:
Finance lease assets  Property, plant and equipment, net$135 $147 
Operating lease assets  Operating lease right-of-use assets, net14,152 14,380 
Total lease assets$14,287 $14,527 
Current liabilities:
Finance lease liabilities  Current maturities of long-term debt$62 $61 
Operating lease liabilities  Short-term operating lease liabilities884 869 
Non-current liabilities:
Finance lease liabilities  Long-term debt, net of current maturities70 81 
Operating lease liabilities  Long-term operating lease liabilities, net of short-term13,799 14,020 
Total lease liabilities$14,815 $15,031 



8
10





Supplemental cash flow and other information related to leases were as follows:
4.    Debt
December 31,
2023		December 31,
2022
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases$424 $422 
     Operating cash flows from finance leases2 1 
     Financing cash flows from finance leases16 12 

December 31,
2023		September 30,
2023
Weighted-average remaining lease term (years):
     Finance leases3.12.9
     Operating leases12.312.5
Weighted-average discount rate:
     Finance leases5.0 %5.1 %
     Operating leases5.9 %5.9 %

Future minimum lease payments under non-cancellable leases at December 31, 2023 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the three months ended December 31, 2023)$51 $1,276 
202538 1,698 
202630 1,695 
202722 1,703 
2028— 1,557 
Thereafter— 12,741 
Total lease payments$141 $20,670 
Less: Imputed interest(9)(5,987)
Present value of lease liabilities$132 $14,683 

7.    Debt
Debt consists of:
December 31,
2023		September 30,
2023
Revolving credit agreement$16,061 $16,289 
Foreign subsidiary borrowings, net of unamortized debt issuance cost8,975 5,771 
Promissory note - related party3,150 — 
Finance lease obligations132 142 
Less: unamortized debt issuance cost - ($910 is related party)(940)— 
Other, net of unamortized debt issuance costs $(6) and $(9), respectively311 364 
Total debt27,689 22,566 
Less – current maturities(23,296)(20,109)
Total long-term debt$4,393 $2,457 


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December 31, 
 2017
September 30, 
 2017
Revolving credit agreement$18,755

$18,557
Foreign subsidiary borrowings8,492
 8,346
Capital lease obligations328
 352
    
Term loan3,815

4,060
   Less: unamortized debt issuance cost(42) (47)
Term loan less unamortized debt issuance cost3,773
 4,013
Total debt31,348
 31,268
    
Less – current maturities(26,839)
(26,117)
Total long-term debt$4,509

$5,151
Credit Agreement and Security Agreement
On November 9, 2016,8, 2023, the Company entered into an Amended and Restatedthe Eighth Amendment to the Credit and Security Agreement ("Credit Facility"(the "Eighth Amendment") with its Lender. The Eighth Amendment, among other things, reduced the Reserves under the Borrowing Base in the Credit Facility matures on June 25, 2020 and consisted of secured loansAgreement to $1,500, or such lesser amount, if any, as may be agreed upon in an aggregate principal amount of up to $39,871. The Credit Facility was comprised of (i) a senior secured revolving credit facility of a maximum borrowing amount of $35,000, including swing line loans and letters of credit providedwriting by the Lender in its sole discretion.

The Company entered into the Ninth Amendment (the "Ninth Amendment") to the Credit Agreement and the Fourth Amendment (the "Fourth Amendment") to the Export Credit Agreement with its lender on December 21, 2023. The Ninth Amendment amends the Credit Agreement to, among other things, to: (i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Mark J. Silk (Mr. Silk is a member of the Board of Directors of the Company and considered a related party) of the Subordinated Loan Documents, and the receipt by borrowers of $3,000 in immediately available funds on the Ninth Amendment Effective Date; (ii) senior secured term loan facility indelay the amount of $4,871 (the "Term Facility"). The Term Facilitymaturity date from December 31, 2023 to October 4, 2024, or any earlier date on which the Revolving Commitment is repayable in monthly installments of $81, which commenced December 1, 2016. Thereduced to zero or otherwise terminated pursuant to the terms of the Credit Facility contain bothAgreement; (iii) reduce the Revolving Commitment to $19,000 from $23,000; (iv) modify the definition of Borrowing Base to mean, at any time, the sum of (a) 85% of Eligible Accounts at such time, plus (b) the lesser of (1) 70% of Eligible Inventory, valued at the lower of cost or market value, determined on a lock-box arrangementfirst-in-first-out basis, at such time and subjective acceleration clause. As(2) the product of 85% multiplied by the NOLV Percentage identified in the most recent inventory appraisal ordered by the Lender multiplied by Eligible Inventory, valued at the lower of cost or market value, determined on a result, the amounts outstandingfirst-in-first-out basis, at such time, minus (c) Reserves of $1,500, increasing on the first day of each month by $250, commencing on May 1, 2024 and continuing until (and including) August 1, 2024, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion (which may be by email from the Lender), plus (d) the PP&E Component; (v) modify the Applicable Margin schedule to reflect the following applicable rates: 2.75% (CBFR REVSOFR30), 0.25% (CBFR Spread (CB Floating Rate)), 2.75% (SOFR Spread), and 0.50% (Commitment Fee Rate); and (vi) amend and restate subsection (l) of the Reporting Schedule to require, by the 17th day of every month, the delivery of a rolling 13 week cash flow forecast in form acceptable to Lender, which must include a projected to actual results comparison for the week then ended and on a cumulative basis from the beginning of the cash flow forecast. The Fourth Amendment of the Export Credit Agreement, to, among other things, to: (i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk of the Subordinated Loan Documents, and the receipt by borrowers of $3,000 in immediately available funds on the Ninth Amendment Effective Date; and (ii) delay the maturity date to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms thereof.

The total collateral at December 31, 2023 and September 30, 2023 was $23,065 and $21,089, respectively, and the revolving commitment was $26,000 and $30,000, respectively. Total availability at December 31, 2023 and September 30, 2023 was $5,034 and $2,830, respectively, which exceeds both the collateral and total commitment threshold. The Credit Agreement contains affirmative and negative covenants and events of default. Since the availability exceeded the $1,500 reserve minimum as of December 31, 2023 and September 30, 2023, no covenant calculations were required. The Company has a letter of credit balance of $1,970 as of December 31, 2023 and September 30, 2023, respectively. The Credit Agreement under the Ninth Amendment has a maturity date of October 4, 2024.

The revolving credit facility are classifiedagreement (or "revolver"), as a short-term liability. The amounts borrowed under the Credit Facility were used to repay the amounts outstanding under the Company's previous Credit Agreement, for working capital, for general corporate purposes and to pay fees and expenses associated with this transaction. In connection with entering into the Credit Facility, the Company terminated its interest rate swap agreement with the Lender, as referenced in Note 1, Summary of Significant Accounting Policies - Derivative Financial Instruments.
Borrowings bear interest at the LIBOR rate, prime rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case, plus the applicable margin as set forth in the Credit Facility. The revolveramended, has a rate based on LIBORSOFR plus a 3.75%2.75% spread, and a prime rate, which resulted in a weighted average rate of 5.4%was 8.2% at December 31, 20172023 and the term loana rate based on SOFR plus a 2.25% spread, which was 7.7% at September 30, 2023. The Export Credit Agreement as amended has a rate of 5.6%based on SOFR plus a 2.25% spread, which was 7.7% at December 31, 2017,2023 and a rate based on SOFR plus a 1.75% spread, which was based on LIBOR plus a 4.25% spread. This rate becomes an effective fixed rate of 5.8% after giving effect to the interest rate swap agreement. There is7.2% at September 30, 2023. The Company also has a commitment fee ranging from 0.15% to 0.375%of 0.50% under the Credit Agreement as amended to be incurred on the unused balance.balance of the revolver.

Debt issuance costs - revolver
The Company incurred new debt issuance costs of $117 in the first quarter of fiscal 2024 as it pertains to the new amendments entered into, its Firstwhich are included in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $0 at December 31, 2023. The Company previously had debt issuance costs of $86, which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $86 and $78 at December 31, 2023 and September 30, 2023, respectively.

Subordinated Promissory Note and Guarantee
The Company, in connection with the Ninth Amendment Agreementand the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J. Silk ("First Amendment"GHI") (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $3,000 (the "Subordinated Loan") on the terms and subject to the Credit Facilityconditions of a Subordinated Secured Promissory Note (the "Subordinated Promissory Note"). The obligations of borrowers under the Subordinated Loan mature on February 16, 2017.October 4, 2024. Interest accrues on
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the then-outstanding principal amount at a rate of 14% per annum and shall be paid in kind (and not in cash) by capitalization as additional principal ("PIK Interest") each six-month period after the date hereof in arrears. The First Amendment assigned itsCompany agreed to pay to Mr. Silk a fully earned and non-refundable fee in an amount equal to $150, which fee shall be due and payable in full on, and subject to the occurrence of the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof. Borrower’s obligations under the Subordinated Promissory Note are secured by a first priority lien, subject to any liens granted to Lender as Administrative Agentdescribed in the Subordination Agreement, on all of borrowers’ accounts, deposit accounts, contract rights, documents, equipment, general intangibles, instruments, inventory, investment property, commercial tort claims, all other goods and assignedpersonal property whether tangible or intangible and wherever located, and all proceeds of the foregoing. The Subordinated Promissory note carrying value was $3,150 and $0 at December 31, 2023 and September 30, 2023, respectively. The Subordinated Promissory Note interest rate was 14% and 0% at December 31, 2023 and September 2023, respectively.

The Ninth Amendment, was also subject to including, but not limited to, the execution and delivery by Mark. J. Silk, a portionmember of its Credit Facility to a participating Lender.

Under the Company's Credit Facility,Board of Directors of the Company is subject to certain customary loan covenants. These include, without limitation, covenants that require maintenance of certain specified financial ratios, including that the Company meeting a minimum EBITDA and the maintenance("Silk"), of a minimum fixed charge coverage ratio. In the event of a default, we may not be able to access our revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.

On August 4, 2017, the Company entered into its Second Amendment Agreement ("Second Amendment") with its Lender to (i) amend certain definitions within its Credit Facility to, among other things, effect the changes described herein and to reset the Fixed Charge Coverage Ratio (as defined in the Credit Facility) to build to a trailing four quarters in each of the fiscal 2018 quarters, commencing with the quarter ended December 31, 2017; (ii) replace certain of its financial covenants outlined in the description of Credit Facility and amend its financial covenants with a revised minimum EBITDA for the four fiscal quarters ending September 30, 2017 and to maintain a fixed charge coverage ratio commencing on December 31, 2017; (iii) reduce its maximum revolving amount of $35,000 to $30,000; and (iv) the Company must use its cash proceeds from the sale of the Irish building discussed in Note 10, Assets Held for Sale and Disposal to reduce the Term Facility by $700 and use the remaining proceeds to reduce the revolver. On November 28, 2017, the Company obtained a consent letter from its Lender which extended to December 31, 2017 the date to consummate such sale of the Irish property.

On February 8, 2018, the Company entered into the Third AmendmentGuaranty Agreement (the “Third Amendment”"Guaranty") in favor of Lender pursuant to its Credit Facility withwhich Silk guarantees the Agent and Lendersobligations of borrowers under the Credit Facility,Agreement and Export Credit Agreement. The Fee Letter requires the borrowers to pay Silk a fee (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $760, which was included in the Companyconsolidated condensed balance sheets as a deferred charge in accrued liabilities. The Guaranty Fee becomes due and payable on the Agent and the Lenders agreed to, among other things, (i) amend the interest rate pricing spreads, (ii) add an owned real property location as part of the collateral and sell certain identified assets at our closed location in Alliance, (iii) adjust the calculation of EBITDA and certain financial covenants,maturity date.

9



and (iv)  revise the financial covenants by adding a new minimum EBITDA test for a specific location and changing the timing of the tests and some of the covenant levels. The Company is in compliance with its loan covenants as of December 31, 2017. Absent the Third Amendment, the Company would not have been in compliance with its financial loan covenant as of December 31, 2017.


Foreign subsidiary borrowings in USD
As of December 31, 2017 and September 30, 2017, the total foreignForeign debt borrowings (excluding capital leases) were $8,492 and $8,346, respectively, of which $6,298 and $5,805, respectively is the current portion. Current debt as of December 31, 2017 and September 30, 2017, consist of $3,369 and $2,618 of short-term borrowings, $1,222 and $1,340 is the current portion of long-term debt, and $1,707 and $1,847 of factoring. consists of:
December 31,
2023		September 30,
2023
Term loan, net of unamortized debt issuance cost $(89) and $0, respectively$5,329 $3,293 
Short-term borrowings2,215 1,862 
Factor1,431 616 
Total debt$8,975 $5,771 
Less – current maturities(4,645)(3,386)
Total long-term debt$4,330 $2,385 
Receivables pledged as collateral$1,348 $1,247 

Interest rates on the term noteforeign borrowings are based on Euribor rates, which range from 1.0%0.5% to 4.0%8.0%.

The factoring programs are uncommitted, wherebyCompany's Maniago, Italy ("Maniago") location obtained borrowings from two separate lending sources in the Company offers receivablesfirst quarter of fiscal 2024. The first was a bond for sale to an unaffiliated financial institution, which are then subject to acceptance by$2,208 with repayment terms of seven years. Under the unaffiliated financial institution. Following the sale and transferterms of the borrowing, repayments are made semi-annually in the amount of $200, beginning on June 29, 2024. The proceeds from this loan are shown within cash and cash equivalents on the consolidated condensed balance sheets and will be used for capital investment. A second loan with a with a term of 1 year, 6 months was obtained in the amount of $1,104. The proceeds from this loan will be for working capital purposes.

The Company factors receivables to the unaffiliated financial institution, the receivables are not isolated from the Company, and effective controlone of the receivables is not passed to the unaffiliated financial institution, which does not have the right to pledge or sell the receivables.its customers. The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated condensed balance sheet. The carrying value of the receivables pledged as collateral were $3,658 and $3,548 at December 31, 2017 and September 30, 2017, respectively.sheets.


Debt issuance costs
The Company incurred debt issuance costs related to the prior Credit Agreement in the amount of $724. The Company incurred an additional $562 of debt issuance costs in November 2016 and August 2017 and wrote off a combined amount of $323 of debt issuance costs during fiscal 2017 due to the debt modification accounting for deferred financing costs as it relates to the Term Facility and due to the Second Amendment. The costs are included in interest expense in the accompanying consolidated condensed financial statements. Total debt issuance cost in the amount of $768 is split between the Term Facility and the revolving credit facility. The portion noted above within the debt table relates to the Term Facility in the amount of $61, net of amortization of $19 at December 31, 2017. The remaining $707 of debt issuance cost relates to the revolving credit facility. This portion is shown in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $217 at December 31, 2017.
5.8.     Income Taxes
For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations. This estimated effective rate is used in providing for income taxes on a year-to-date basis. The Company’s effective tax rate through the first three months of fiscal 20182024 was 21%(1.5)%, compared with (14)(2.6)% for the same period of fiscal 2017. This increase is2023. The decrease in the effective rate was primarily driven by discrete tax benefitsattributable to changes in jurisdictional mix of $718 primarily related to tax legislation enacted during the first quarter of fiscal 2018 and tax impacts related to the sale of the Cork, Ireland building discussed further in Note 10, Assets Held for Sale and Disposal, partially offset by an increase in year-to-date non-U.S. income in the first quarter of fiscal 20182024 compared with the first quartersame period of fiscal 2017.2023. The effective tax rate differs from the U.S. federal statutory rate due primarily to the valuation allowance against the Company'sCompany’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates thatthan the U.S. statutory tax rate.
In the first quarter of fiscal 2018, the U.S. enacted the Act which, among other items, reduces the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. The decrease in the U.S. federal corporate tax rate from 35% to 21% results in a blended statutory tax rate of 24.5% for the fiscal year ending September 30, 2018. The new taxes for certain foreign-sourced earnings under the Act are effective for the Company after the fiscal year ending September 30, 2018.
The Company revalued its gross U.S. deferred taxes and the related valuation allowance, as a result of the Act. The revaluation, which is considered complete, resulted in a discrete tax benefit of $198 during the first quarter of fiscal 2018. Other provisions of the Act, including the one-time transition tax, are considered provisional as final transition impacts of the Act may differ from the above estimate, due to changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. As a result of the valuation allowance in the U.S. on tax attribute carryforwards, as of the first quarter of fiscal 2018 no charge to tax expense was recorded related to the one-time transition tax. Additionally, the Company released $305 of valuation allowance in the first quarter of fiscal 2018 on a portion of its U.S. deferred tax assets as a result of deferred tax liabilities for indefinite lived intangible assets now available as a source of income as a result of the Act. The change in assessment of the realization of deferred taxes as a result of the Act is provisional as of the first quarter of fiscal 2018 as the Company will continue to analyze the necessary information and evaluate assumptions made in its assessment of the realization of its deferred tax assets.

10




The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy, and various state and local jurisdictions. The Company believes it has appropriate support for its federal income tax returns.
13
6.Retirement Benefit Plans


9.    Retirement Benefit Plans
The Company and certain of its subsidiaries sponsor defined benefit pension plans covering some of its employees. The components of the net periodic benefit cost of the Company’s defined benefit plans are as follows:

 Three Months Ended 
 December 31,
Three Months Ended
December 31,
Three Months Ended
December 31,
Three Months Ended
December 31,
2017 2016 20232022
Service cost$63
 $78
Interest cost240
 220
Expected return on plan assets(402) (404)
Amortization of net loss161
 216
Net periodic cost$62
 $110
Amortization of net loss
Amortization of net loss
Net periodic pension cost (benefit)
Net periodic pension cost (benefit)
Net periodic pension cost (benefit)

During the three months ended December 31, 20172023 and 2016,2022, the Company made no$9 and $8 in cash contributions, and $86 and $0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans. The Company anticipates making $45 of additional$66 in cash contributions to fund its defined benefit pension plans duringfor the balance of fiscal 20182024, and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal 2018.2024. The Company's ability to elect to use such carryover balance will be determined based on the actual funded status of each defined benefit pension plan relative to the plan's minimum regulatory funding requirements. The Company does not anticipate making cash contributions above the minimum funding requirement to fund its defined benefit pension plans during the balance of fiscal 2018.2024.

7.Stock-Based Compensation
10.    Stock-Based Compensation
The Company has awardedoutstanding equity awards under the Company's 2007 Long-Term Incentive Plan (the "2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan"), and awards performance and restricted shares under its shareholder approved amended and restated 2007 Long-Term Incentive Plan ("2007 Plan") to the 2016 Long-Term Incentive Plan ("2016 Plan"). The amendment increased the aggregate number of shares that may be awarded under the 2016 Plan to 646 less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms, including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. Any such award is exercisable no later than ten years from the date of the grant.Plan.
The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the making of such award. The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200% of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives.
With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. During each future reporting period, such expense may be subject to adjustment based upon the Company's financial performance, which impacts the number of common shares that it expects to vest upon the completion of the performance period. The performance shares were valued at the closing market price of the Company’s common shares on the date of the grant. The vesting of such shares is determined at the end of the performance period.
DuringIn the first three months of fiscal 2018,2024, the Company granted 119120 shares under the 2016 Plan to certain key employees. The award wasawards were split into two tranches, 68 performancecomprised of 46 performance-based shares and 51 shares of74 time-based restricted shares, with a grant date fair value of $6.70.$3.60 per share. The award vestsawards vest over three years. 5 performanceThere were 8 shares and 3 time-based restricted shares were forfeited.forfeited during the three month period ended December 31, 2023.
The Company has awarded restricted shares to its directors, officers, and other employees of the Company. The restricted shares were valued at the closing market price of the Company’s common shares on the date of the grant, and such value was recorded as unearned compensation. The unearned compensation is being amortized ratably over the restricted stock vesting period of one year or three years.
If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 302308 shares that remain available for award at December 31, 2017.2023. If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to a maximum of 200%150% of such target, then a fewer number of shares would be available for award.

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Stock-based compensation under the 2016 Plan was $194$86 and $158$122 during the first three months of fiscal 20172024 and 2016,2023, respectively. As of December 31, 2017,2023, there was $1,242$573 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan. The Company expects to recognize this cost over the next 1.8 years.

8.Commitments and Contingencies
In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters; however, it does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation.
11.    Revenue
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications.

Revenue is currentlyrecognized when performance obligations under the terms of the contract with a defendant in a class action lawsuit filed in the Superior Courtcustomer of California, County of Orange, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations; and unfair competition. Although the Company records reserves for legal disputes and other mattersare satisfied. A portion of the Company's contracts are from purchase orders ("PO's"), which continue to be recognized as of a point in accordance with generally accepted accounting principles intime when products are shipped from the United StatesCompany's manufacturing facilities or at a later time when control of America ("GAAP"), the ultimate outcomes of these types of matters are inherently uncertain. Actual results may differ significantly from current estimates. Givenproducts transfers to the current status of this matter,customer. Under the revenue standard, the Company recorded an estimated lossrecognizes certain revenue over time as it satisfies the performance obligations because the conditions of $385transfer of control to the applicable customer are as follows:

•Certain military contracts, which relate to the provisions of September 30, 2017specialized or unique goods to the U.S. government with no alternative use, include provisions within the contract that are subject to the Federal Acquisition Regulation ("FAR"). The FAR provision allows the customer to unilaterally terminate the contract for convenience and requires
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the customer to pay the Company for costs incurred plus reasonable profit margin and take control of which $10 was paid asany work in process.

•For certain commercial contracts involving customer-specific products with no alternative use, the contract may fall under the FAR clause provisions noted above for military contracts or may include certain provisions within their contract that the customer controls the work in process based on contractual termination clauses or restrictions of September 30, 2017the Company's use of the product and the remaining balance is expectedCompany possesses a right to be paid within the second quarter of fiscal 2018.payment for work performed to date plus reasonable profit margin.

9.Restructuring Costs
The Company completed the closure of the Alliance, Ohio ("Alliance") location in October 2017. Orders after September 30, 2017 are processed and manufactured by the Cleveland, Ohio location. As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the closure, Allianceperformance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based on costs incurred non-cash chargesfor these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as of September 30, 2017. The remaining estimated exit costs are incurred.

The following table represents a breakout of total revenue by customer type:
Three Months Ended
December 31,
20232022
Commercial revenue$13,240 $10,181 
Military revenue7,812 11,118 
Total$21,052 $21,299 

The following table represents revenue by end market:
Three Months Ended
December 31,
Net Sales20232022
Aerospace components for:
Fixed wing aircraft$9,939 $10,726 
Rotorcraft3,150 4,380 
Energy components for power generation units6,191 4,624 
Commercial product and other revenue1,772 1,569 
Total$21,052 $21,299 

The following table represents revenue by geographic region based on the Company's selling operation locations:

Three Months Ended
December 31,
Net Sales20232022
North America$15,474 $17,294 
Europe5,578 4,005 
Total$21,052 $21,299 

In addition to be expensed as incurred, which included workforce reduction costs. Workforce reduction costs incurredthe disaggregated revenue information provided above, approximately 41% and 54% of total net sales for the three months ended December 31, 2023 and 2022, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time. 

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Contract Balances
The following table contains a roll forward of contract assets and contract liabilities for the period ended December 31, 2023:
December 31,
2023		December 31,
2022
Contract assets - Beginning balance$10,091 $10,172 
Additional revenue recognized over-time9,184 12,042 
Less amounts billed to the customers(8,326)(10,692)
Contract assets - Ending balance$10,949 $11,522 

December 31,
2023		December 31,
2022
Contract liabilities (included within Accrued liabilities) - Beginning balance$(1,150)$(807)
Payments received in advance of performance obligations(1,753)(1,401)
Performance obligations satisfied20 426 
Contract liabilities (included within Accrued liabilities) - Ending balance$(2,883)$(1,782)

Accounts receivable were $16,515 and $15,308 at September 30, 20172022 and December 31, 2022, respectively. There were approximately $215, of which a $15 was paid by September 30, 2017 and the remainder was paid in the first quarter of fiscal 2018.
10.    Assets Held for Sale and Disposal
The Company hadno impairment losses recorded on contract assets held for sale as it related to the Cork, Ireland building and the Alliance building and certain machinery and equipment. In the first quarter of fiscal 2018, the Company signed a purchase agreement with a buyer for the sale of the building located in Cork, Ireland. The sale transaction was finalized on December 15, 2017 for cash proceeds of approximately $3,078, resulting in an approximate gain of $1,521. The cash proceeds were received by our legal counsel and have not been transferred to the Company as of December 31, 2017. As such, the $2,969, (the cash proceeds of the sale, net of legal2023 and professional fees paid) is separately shown within other receivables to the consolidated condensed balance sheets asSeptember 30, 2023.

Remaining performance obligations
As of December 31, 2017. The net cash proceeds after legal and professional fees and taxes have been considered,2023, the Company has $103,569 of remaining performance obligations, the majority of which are expectedanticipated to be usedcompleted within the next twelve months.

12.    Commitments and Contingencies
On December 30, 2022, the Company became aware of a cyber security issue involving unauthorized access to be usedthe Company's system (the "Cyber Incident"). The Company immediately began an investigation and engaged cyber security experts to pay downassist with the Term Facilityassessment of the incident and revolving credit facility as further discussedto help determine what data was impacted. The Company's investigation uncovered that the threat actor had gained access to certain areas of the Company's systems on or about December 27, 2022. With the assistance of outside cyber security experts, the Company located and closed the unauthorized access to our systems and identified compromised information, and notified those impacted in Note 4, Debt.accordance with state and federal requirements. The Company undertook a number of other measures to demonstrate our continued support and commitment to data privacy and protection and coordinated with law enforcement.


The Alliance buildingCompany maintains $3,000 of cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cyber Incident. The Company recorded a benefit of $1 to selling, general, and machineryadministrative expenses in the three months ended December 31, 2023 and equipment are recorded as assets held for salecosts of $110 to other expense (income), net related to loss on insurance recovery in the three months ended December 31, 2022. At December 31, 2023 and September 30, 2023, the Company recorded $827 and $965, respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets. The assets held for sale balance at December 31, 2017 and September 30, 2017 were $1,076 and $2,524, respectively. The balance at December 31, 2017 represents the Alliance building and certain machinery and equipment that continues to meet the asset held for sale classification due to the circumstances of the closure of Alliance and expected plan to sell. The Alliance assets fair value are stated at its orderly liquidation value.

The Company expectshas incurred, and may continue to sellincur, certain expenses related to this attack, including expenses associated with additional remediation measures. The Company will accrue these assets within the next 12 months.costs as incurred.

11.Subsequent Events
13.    Related Party Transactions
On February 8, 2018,December 21, 2023, the Company entered into its Thirdthe Ninth Amendment and Fourth Amendment with its lender.lender incurring a secured subordinated loan from GHI, in the original principal amount of $3,000. GHI is controlled by Mr. Silk, a member of the Board of Directors of the Company and considered a related party. Additionally, Mr. Silk provided a Guaranty in favor of the Lender pursuant to which Mr. Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement. As part of the Guaranty and Promissory Note, the Company will pay GHI fees of $760 and $150, respectively, and has paid $30 of legal costs. The Company has accumulated a total of $940 deferred financing costs related to the Guaranty and Subordinated Promissory Note. See Note 4, 7,Debt for further discussion on the Third Amendment.information.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain various forward-looking statements and includes assumptions concerning the Company’s operations, future results and prospects. The words "will," "may," "designed to," "outlook," "believes," "should," "anticipates," "plans," "expects," "intends," "estimates," "forecasts" and similar expressions identify certain of these forward-looking statements. These forward-looking statements are based on current expectations and are subject to risk and uncertainties. In connection with the “safe harbor”"safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions in general, and on the demand for productsproduct in the Aerospaceaerospace and Energy ("Aenergy (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

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environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost;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 turbineturboprop 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; and (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations.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; (18) extraordinary or force majeure events affecting the business or operations of our business (19) the continued long term impact of the COVID-19 pandemic and related residual negative impact on the global economy, which may exacerbate the above factors and/or impact our results of operations and financial condition; and (20) in connection with its entry into the Ninth Amendment (the "Ninth Amendment") to its Credit Agreement and Fourth Amendment (the "Fourth Amendment") to its Export Credit Agreement, and as a condition to the consummation by the Company’s senior lender of the transactions contemplated thereby: (a) the Company incurred a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J. Silk ("GHI") (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $3.0 million, which subordinated loan is subject to the terms and conditions of an Intercreditor and Subordination Agreement by and among the Company, GHI and the Company’s senior lender; and (b) Mr. Silk executed and delivered a personal guaranty in favor of the Company’s senior lender of certain Company indebtedness under the Credit Agreement and the Export Credit Agreement. The Company is evaluating available financial alternatives, including obtaining acceptable alternative financing. If the Company is unable to restructure existing debt obligations, obtain capital or enter into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations by the terms of the Ninth Amendment, the lender under the Credit Agreement may choose to accelerate repayment. The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreements.


The Company is engagedengages in the production of forgings and machined components primarily for the A&E and commercial space markets. The processes and services provided by the Company include forging, heat-treating, machining, subassembly, and test. The Company operates under one business segment.


The Company endeavors to continue to plan and evaluate its business operations while taking into consideration certain factors including the following: (i) the projected build rate for commercial, business and military aircraft, as well as the engines that power such aircraft; (ii) the projected maintenance, repair and overhaul schedules for commercial, business and military aircraft, as well as the engines that power such aircraft; and (iii) the projected build rate and repair for industrial turbines.turbines; and (iv) commercial space.

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


the fixed component of their respective cost structures. Conversely, the opposite effect is expected to occur at lower net sales and related production volumes.
A. Results of Operations
Overview
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armoredother military vehicles;applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications. The Company finalized the closure

Backlog of its Alliance, Ohio ("Alliance") location in October 2017. Orders after September 30, 2017
SIFCO’s total backlog at December 31, 2023 was $130.1 million, of which $103.6 million are being processed and manufactured by its Cleveland, Ohio ("Cleveland") location. As a result of the closure of Alliance, impairment costs and restructuring costs were recorded in fiscal 2017. The remaining estimated exit costs areanticipated to be expensed as incurred, which include workforce reduction costscomplete within the next 12 months, compared with total backlog of $0.2$84.2 million which were paid in the first quarter of fiscal 2018. Certain machinery and equipment and the building remain classified as assets held for sale as of December 31, 2017.

The Company completed2023. Orders may be subject to modification or cancellation by the salecustomer with limited charges. Recovery in the A&E markets has resulted in increased bookings. Backlog information may not be indicative of the Cork, Ireland building on December 15, 2017.

future sales.
Three Months Ended December 31, 20172023 compared with Three Months Ended December 31, 2016

2022
Net Sales
Net sales for the first three months of fiscal 2018 decreased 23.0% to $24.3 million, compared with $31.5 million in the comparable period of fiscal 2017. Net sales comparative information for the first three months of fiscal 20182024 and 20172023 is as follows:
(Dollars in millions)Three Months Ended
December 31,		Increase/ (Decrease)
Net Sales20232022
Aerospace components for:
Fixed wing aircraft$9.9 $10.7 $(0.8)
Rotorcraft3.2 4.4 (1.2)
Energy components for power generation units6.2 4.6 1.6 
Commercial product and other revenue1.8 1.6 0.2 
Total$21.1 $21.3 $(0.2)
(Dollars in millions)Three Months Ended
December 31,		 
Increase/(Decrease)

Net Sales2017 2016 
Aerospace components for:     
Fixed wing aircraft$12.5
 $14.6
 $(2.1)
Rotorcraft5.6
 4.9
 0.7
Energy components for power generation units6.1
 7.8
 (1.7)
Commercial product and other revenue0.1
 4.2
 (4.1)
Total$24.3
 $31.5
 $(7.2)

The decrease in commercial product and other revenueNet sales is largely driven by a decreasefor the first three months of fiscal 2024 decreased $0.2 million to $21.1 million, compared with $21.3 million in the Hellfire II missile program due to timingcomparable period of orders. The decrease in fixedfiscal 2023. In general, the production of the Company's products have lead times of varying lengths. Fixed wing aircraft sales is primarily due to changes in build demand of Rolls Royce AE Engines due to a buffering plan for a customer plant closure which increased sales in fiscal 2017. Energy components for power generation units decreased by $1.7$0.8 million compared with the same period last year primarily due to F18 demand reduction and timing of whichorders on the 767 and other programs. Rotorcraft sales decreased $1.2 million relatedcompared with the same period last year primarily due to the closure of the Alliance location and $0.5V22 demand reduction. The energy components for power generation units increased by $1.6 million due to planned refurbishment of a hammer at the Maniago, Italy ("Maniago") location.

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Rotorcraft sales increased $0.7 million due to recovery of sales from a customer that had previously taken measures of inventory destockinggrowth in the comparable period.steam turbine markets. Commercial products and other revenue were slightly higher compared with the same period last year.

Commercial net sales were 56.6%62.9% of total net sales and military net sales were 43.4%37.1% of total net sales in the first three months of fiscal 2018,2024, compared with 53.6%47.8% and 46.4%52.2%, respectively, in the comparable period in fiscal 2017.2023. Military net sales decreased by $4.0$3.3 million to $10.6$7.8 million in the first three months of fiscal 2018,2024, compared with $14.6$11.1 million in the comparable period of fiscal 2017,2023, primarily due to the timing of the Hellfire II missile program.  CommercialF18 and V22 demand reduction. Commercial net sales decreased $3.2increased $3.0 million to $13.7$13.2 million in the first three months of fiscal 2018,2024, compared with $16.9$10.2 million in the comparable period of fiscal 20172023, primarily due to changesan increase in program build ratesthe power generation steam turbine market and closure of the Alliance location mentioned above. commercial space.

Cost of Goods Sold
Cost of goods sold decreasedincreased by $5.1$0.3 million, or 18.6%1.4%, to $22.2$20.3 million, or 91.6%96.5% of net sales, during the first three months of fiscal 2018,2024, compared with $27.3$20.0 million or 86.8%94.1% of net sales, in the comparable period of fiscal 2017.2023. The decrease wasincrease is primarily due primarily to lower volumes as previously mentioned, lowerproduct mix, higher labor costs of $1.6$0.4 million, outside services $0.3 million and lower scrap expense$0.1 million of $0.3 million.hiring costs as the Company increased production to meet customer demands.

Gross Profit
Gross profit decreased $2.1$0.5 million to $2.0$0.7 million in the first three months of fiscal 2024, compared with $1.3 million gross profit in the comparable period of fiscal 2023. Gross profit percent of sales was 3.5% during the first three months of fiscal 2018,2024, compared with $4.2 million in the comparable period of fiscal 2017. Gross margin percent of sales was 8.4% during the first three months of fiscal 2018, compared with 13.2%5.9% in the comparable period in fiscal 2017.2023. The decrease in gross profit compared to prior fiscal year
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was primarily due to lower sales volumeproduct mix, higher labor costs of $0.4 million, outside services $0.3 million and mix.$0.1 million of hiring costs

Selling, General and Administrative Expenses
Selling, general and administrative expenses were $4.1$3.6 million, or 16.8%17.0%, of net sales during the first three months of fiscal 2018,2024, compared with $5.3$3.3 million, or 16.8%15.4%, of net sales in the comparable period of fiscal 2017.2023. The decreaseincrease in selling, general and administrative expenses is primarily due to $1.0higher legal costs of $0.2 million in lower expansion costs related to one of the Company's plant locationsstrategic alternatives and higher salaries and benefits $0.1 million in lower sales commissions attributed to changes in the Company's sales organization.million.

Amortization of Intangibles and Asset Impairment of Long-lived Assets
Amortization of intangibles decreased $0.2 million to $0.4 million during the first three months of fiscal 2018, compared with $0.6 million in the comparable period of fiscal 2017. The decrease was due to the impairment of certain definite-lived intangible assets related to the Alliance location in the third quarter of fiscal 2017.
Other/General
Interest expense decreased $0.2 million to $0.4$0.1 million in the first three months of fiscal 2018, compared with $0.7 million in the same period in2024 and fiscal 2017. The decrease is primarily due to a $0.2 million prior period write-off of deferred financing costs associated with the Company’s Amended and Restated Credit and Security Agreement ("Credit Facility") with its lender in fiscal 2017. See Note 4, Debt for further information.2023.


Other/General
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the first three months of both fiscal 20182024 and 2017. 2023:

 Weighted Average
Interest Rate
Three Months Ended
December 31,		Weighted Average
Outstanding Balance
Three Months Ended
December 31,
 2023202220232022
Revolving credit agreement7.7 %5.9 %$ 15.6 million$ 11.2 million
Foreign term debt4.3 %3.5 %$ 8.2 million$ 7.3 million
Other debt1.0 %1.7 %$ 0.3 million$ 0.6 million

Income Taxes
The Company entered into an interestCompany’s effective tax rate swap in the prior year as discussed in Note 1, Summary of Significant Accounting Policies - Derivatives Financial Instruments of the notes to the unaudited consolidated condensed statements:
 Weighted Average
Interest Rate
Three Months Ended
December 31,		 Weighted Average
Outstanding Balance
Three Months Ended
December 31,
 2017 2016 2017 2016
Revolving credit agreement5.4% 4.4% $ 19.6 million $ 20.3 million
Term note5.8% 4.6% $ 3.9 million $ 9.7 million
Foreign term debt2.7% 4.2% $ 8.1 million $ 10.3 million
Other income, net, consists principally of $0.3 million of rental income earned from the lease of the Company's Cork, Ireland ("Irish building") facility and grant income realized due to the sale of the Irish building inthrough the first three months of fiscal 2018 compared with $0.1 million in the first three months of fiscal 2017. The Company also had a gain of $1.4 million in the first three months of fiscal 2018 compared with a nominal amount in the first three months of fiscal 2017. The majority of the gain recognized2024 was due to the sale of the Irish building. See Note 10, Assets Held for Sale and Disposal for further discussion on the sale of the Irish building in the first three months of fiscal 2018.



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Income Taxes
The Company’s effective tax rate in the first three months of fiscal 2018 was 21%(1.5)%, compared with (14)(2.6)% for the same period of fiscal 2023. The decrease in the comparable periodeffective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2017. This increase is primarily driven by discrete tax benefits of $0.7 million, primarily related to tax legislation enacted in2024 compared with the first quartersame period of fiscal 2018 and tax impacts related to the sale of the Irish building, partially offset by an increase in year-to-date non-U.S. income in the first quarter of fiscal 2018 compared to the first quarter in fiscal 2017.2023. The effective tax rate differs from the U.S. federal statutory rate due primarily due to the valuation allowance against the Company’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.
In the first quarter of fiscal 2018, the U.S. enacted the Act which, among other items, reduces the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. The decrease in the U.S. federal corporate tax rate from 35% to 21% results in a blended statutory tax rate of 24.5% for the fiscal year ending September 30, 2018. The new taxes for certain foreign-sourced earnings under the Act are effective for the Company after the fiscal year ending September 30, 2018.
The Company revalued its gross U.S. deferred taxes and the related valuation allowance, as a result of the Act. The revaluation, which is considered complete, resulted in a discrete tax benefit of $0.2 million during the first quarter of fiscal 2018. Other provisions of the Act, including the one-time transition tax, are considered provisional as final transition impacts of the Act may differ from the above estimate, due to changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. As a result of the valuation allowance in the U.S. on tax attribute carryforwards, as of the first quarter of fiscal 2018 no charge to tax expense was recorded related to the one-time transition tax. Additionally, the Company released $0.3 million of valuation allowance in the first quarter of fiscal 2018 on a portion of its U.S. deferred tax assets as a result of deferred tax liabilities for indefinite lived intangible assets now available as a source of income as a result of the Act. The change in assessment of the realization of deferred taxes as a result of the Act is provisional as of the first quarter of fiscal 2018 as the Company will continue to analyze the necessary information and evaluate assumptions made in its assessment of the realization of its deferred tax assets.
Net Loss
Net loss was $0.9$3.4 million during the first three months of fiscal 2018,2024, compared with a net loss of $2.6 million in the comparable period of fiscal 2017.  Net2023. Increase in net loss decreased primarilyis due to higher labor costs, outside services and hiring costs as the decrease in selling, general and administrative costs, the gain on the sale of the Irish building and the tax benefits realized as noted above.Company positions itself for increased demand.


Non-GAAP Financial Measures
Presented below is certain financial information based on the Company's EBITDA and Adjusted EBITDA. References to “EBITDA”"EBITDA" mean earnings (losses) from continuing operations before interest, taxes, depreciation and amortization, and references to “Adjusted EBITDA”"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.


Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under generally accepted accounting principles in the United States of America (“GAAP”("GAAP"). The Company presents EBITDA and Adjusted EBITDA because itmanagement believes that they are useful indicators for evaluating operating performance and liquidity, including the Company’s ability to incur and service debt and it uses EBITDA to evaluate prospective acquisitions. 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. 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;
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•The omission of the substantial amortization expense associated with the Company’s intangible assets further limits the usefulness of EBITDA and Adjusted EBITDA; and
•Neither EBITDA nor Adjusted EBITDA includes the payment of taxes, which is a necessary element of operations.

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. 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

15



income (loss), to measure operating performance. 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.


The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA:
Dollars in thousandsThree Months Ended
 December 31,
 20232022
Net loss$(3,422)$(2,589)
Adjustments:
Depreciation and amortization expense1,562 1,571 
Interest expense, net430 275 
Income tax expense50 66 
EBITDA(1,380)(677)
Adjustments:
Foreign currency exchange loss (gain), net (1)4 (3)
Other expense, net (2)54 72 
Gain on disposal of assets (3)— (11)
Equity compensation (4)86 122 
LIFO impact (5)293 262 
IT incident costs, net (6)(1)110 
Strategic alternative expense (7)187 — 
Adjusted EBITDA$(757)$(125)
Dollars in thousandsThree Months Ended
 December 31,
 2017 2016
Net loss$(911) $(2,609)
Adjustments:   
Depreciation and amortization expense2,191
 2,515
Interest expense, net435
 664
Income tax expense (benefit)(240) 327
EBITDA1,475
 897
Adjustments:   
Foreign currency exchange (gain) loss, net (1)(36) 4
Other income, net (2)(316) (107)
Gain on disposal of operating assets (3)(1,400) (6)
Equity compensation (4)194
 158
LIFO impact (5)52
 107
Orange expansion (6)—
 953
Adjusted EBITDA$(31) $2,006

(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.
(2)Represents miscellaneous non-operating income or expense, primarily rental income from the Company's Irish subsidiary and in the three months ended 2018, grant income was realized as it relates to the Company's Irish subsidiary.
(3)Represents the difference between the proceeds from the sale of operating equipment and sale of the Ireland building and the carrying value shown on the Company’s books.
(4)Represents the equity-based compensation benefit and expense recognized by the Company under its 2007 Long-Term Incentive Plan due to granting of awards, awards not vesting and/or forfeitures.
(5)Represents the increase in the reserve for inventories for which cost is determined using the last-in, first-out (“LIFO”) method.
(6)Represents costs related to expansion of one of the plant locations that are required to be expensed as incurred.
(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.
(2)Represents miscellaneous non-operating income or expense, such as pension costs or grant income (prior year included $0.1 million in loss on insurance recovery, separately reclassed to IT incident costs, net line).
(3)Represents the difference between the proceeds from the sale of operating equipment and the carrying value shown on the Company's books.
(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.
(5)Represents the change in the reserve for inventories for which cost is determined using the last-in, first-out ("LIFO") method.
(6)Represents incremental information technology costs as it relates to the cybersecurity incident and loss on insurance recovery (prior year balance includes reclassed amount of $0.1 million from footnote two above).
(7)Represents expense related to evaluation of strategic alternatives.

B. Liquidity and Capital Resources
The main sources of liquidity for the Company have been cash flows from operations and borrowings under our Credit Agreement. The Company's liquidity could be negatively affected if the Company is unable to restructure existing debt obligations, obtain capital or enter into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreements, by customers
20


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. See Note 7, Debt.
Cash and cash equivalents were $1.1was $3.2 million at December 31, 2017 compared with $1.42023 and $0.4 million at September 30, 2017.2023. At December 31, 2017, approximately $0.9 million2023, the majority of the Company’s cash and cash equivalents waswere in the possession of its non-U.S. subsidiaries. See Note 7, Debt - Foreign subsidiary borrowings in USD. Distributions from the Company's non-U.S. subsidiaries to the Company may be subject to adverse tax consequences.
Operating Activities
The Company’s operating activities from operations provided $0.5used $2.1 million of cash in the first three months of fiscal 2018, compared with $0.82024, primarily due to net operating loss of $3.4 million partially offset by depreciation and amortization of $1.6 million and change in inventory valuation accounts of $0.4 million and LIFO effect of $0.3 million. The uses of cash usedfrom working capital of $1.0 million was primarily due to increase in inventory of $4.0 million, contract asset of $0.9 million and other assets/prepaids of $0.7 million, partially offset by accounts receivable reductions of $2.2 million and increase in accrued liabilities $2.4 million. The increase in inventory is primarily driven by increase in work in process to meet heightened customer demand. The increase in accrued liabilities is primarily driven by increases in deferred revenue of $1.7 million and legal and professional fess.

The Company’s operating activities infor the first three months of fiscal 2017. The cash2023 provided by operating activities in the first three months of fiscal 2018 was primarily due to depreciation and amortization of $2.2 million, offset by a gain on sale of Irish building and other assets of $1.4 million, a net source of working capital of $1.3 million, and $0.7 million of other non-cash items, such as equity based compensation, deferred income taxes and LIFO effect, partially offset by a net loss of $0.9 million. The cash provided for working capital was primarily due to a $1.4 million decrease in accounts receivables and $1.0 million decrease in inventory.
The Company’s operating activities used $0.8$0.3 million of cash, generated primarily by decreases in the first three monthsaccounts receivable of fiscal 2017.  The cash used by operating activities in the first three months of fiscal 2017 was primarily due to a net loss of $2.6$1.6 million and a net use of working capital of $1.4inventory reserves $0.8 million, partially offset by $2.5 million of depreciation and amortization and $0.7 million of other non-cash items, such as equity based compensation and LIFO effect. The cash used for working capital was primarily due to a $1.6 millionan increase in accounts receivables as a result to higher sales.inventory $1.5 million.

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Investing Activities
Cash used for investing activities was $0.7$0.5 million in the first three months of fiscal 2018, compared with $0.4 million in the first three months of2024 and fiscal 2017. In addition to the $0.7 million expended during the first three months of fiscal 2018, $0.4 million was committed for future capital expense2023, respectively. Capital commitments as of December 31, 2017.2023 were $0.5 million. The Company anticipates that the remaining total fiscal 20182024 capital expenditures will be within the range of $3.5 million to $4.0 million and will relate principally to the further enhancement of production and product offering capabilities and drive operating cost reductions.

Financing Activities
Cash usedprovided by financing activities was $5.5 million in the first three months of fiscal 2024, compared with $0.1 million in the first three months of fiscal 2018, compared2023.

As discussed in Note 7, Debt, the Company's Maniago location obtained borrowings from two separate lending sources during the first three months of fiscal 2024. The first was a bond for approximately $2.2 million with a seven year term. The proceeds from this loan are shown within cash provided by financing activitiesand cash equivalents on the consolidated condensed balance sheets and will be used for capital investment. A second loan for approximately $1.1 million with a term of $1.7eighteen months, will be for working capital purposes, of which only $0.8 million has been received. The Company had $1.2 million of net short-term debt borrowings in the first three months of fiscal 2017.
The Company had repayments of $0.7 million of long-term2024 compared with nominal net short-term debt of which $0.2 million is a repayment under its term loan and repayments of $0.5 million under its foreign long-term loan, compared to $12.2 million in repayments in the comparable prior periodfirst three months of which $11.6 million of repayments related to the term loan after entering into the November 9, 2016 Credit Facility and $0.6 million under its foreign long-term loan in fiscal 2017. The principal reason for the term loan repayment in the prior period was due to the modification of the debt structure, as discussed herein.2023.
The Company had net borrowings fromrepayments to the revolver under the Credit FacilityAgreement of $0.2 million in the first three months of fiscal 2018,2024 compared with $12.6 million of net borrowings of $0.4 million in the first three months of fiscal 2017. The net borrowings in the first three months in fiscal 2017 were used to repay long-term debt.
On November 9, 2016, the Company entered into a Credit Facility with its Lender. The new Credit Facility matures on June 25, 2020 and consisted of senior secured loans in the aggregate principal amount of up to $39.9 million. The Credit Facility was comprised of (i) a senior secured revolving credit facility of a maximum borrowing amount of $35.0 million, including swing line loans and letters of credit provided by the Lender and (ii) senior secured term loan facility in the amount of $4.9 million (the “Term Facility”). The new Term Facility is repayable in monthly installments of $0.1 million which began December 1, 2016. The terms of the Credit Facility contain both a lock-box arrangement and a subjective acceleration clause. As a result, the amounts outstanding on the revolving credit facility are classified as a short-term liability. The amounts borrowed under the Credit Facility were used to repay the amounts previously outstanding under the Company’s previous Credit Agreement and for working capital, general corporate purposes and to pay fees and expenses associated with this transaction. In connection with entering into the Credit Facility, the Company terminated its interest rate swap agreement with the Lender. See Note 1, Summary of Significant Accounting Policies - Derivative Financial Instruments for further discussion.
Borrowings bears interest at the LIBOR rate, prime rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case, plus the applicable margin as set forth in the Credit Facility. The revolver has a rate based on LIBOR plus a 3.75% spread and a prime rate which resulted in a weighted average rate of 5.4% at December 31, 2017 and the term loan has a rate of 5.6% at December 31, 2017, which was based on LIBOR plus a 4.25% spread. This rate becomes an effective fixed rate of 5.8% after giving effect to the interest rate swap agreement. There is also a commitment fee ranging from 0.15% to 0.375% to be incurred on the unused balance.
The Company entered into its First Amendment Agreement ("First Amendment") to the Credit Facility on February 16, 2017. The First Amendment assigned its Lender as Administrative Agent and assigned portion of its Credit Facility to another participating Lender.
2023. Under the Company's Credit Facility,Agreement, the Company is subject to certain customary loan covenants. These include, without limitation, covenants that require maintenance of certain specified financial ratios, including that the Company meeting a minimum EBITDA and the maintenance of a minimum fixed charge coverage ratio to commence on September 30, 2017. In the event of a default, we may not be able to access our revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.
On August 4, 2017, the Company entered into its Second Amendment Agreement ("Second Amendment") with its lender to (i) amend certain definitions within its Credit Facility to, among other things, effect the changes described herein and to reset the Fixed Charge Coverage Ratio (as defined in the Credit Facility) to build to a trailing four quarters in each of the fiscal 2018 quarters, commencing with the quarter endedregarding availability. The availability at December 31, 2017; (ii) replace certain2023 was $5.0 million, which exceeds reserve minimum threshold as of its financial covenants outlined in the description of Credit Facility and amend its financial covenants with a revised minimum EBITDA for the four fiscal quarters ending September 30, 2017 and to maintain a fixed charge coverage ratio commencing on December 31, 2017; (iii) reduce its maximum revolving amount of $35,000 to $30,000; and (iv) the Company must use its cash proceeds from the sale of the Irish building discussed2023, as such, no covenant calculations were required.

As noted in Note 10, Assets Held for Sale and Disposal to reduce the Term Facility by $700 and use the remaining proceeds to reduce the revolver. On7, Debt, on November 28, 2017, the Company obtained a consent letter from its Lender which extended to December 31, 2017 the date to consummate such sale of the Irish property.

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On February 8, 2018,2023, the Company entered into the ThirdEighth Amendment to the Credit Agreement (the “Third Amendment”) towith its Credit Facility withLender. The Eighth Amendment, among other things, reduced the Agent and LendersReserves under the Borrowing Base in the Credit Facility,Agreement to $1.5 million, or such lesser amount, if any, as may be agreed upon in whichwriting by the Lender in its sole discretion.

As noted in Note 7, Debt, on December 21, 2023, the Company entered into the Ninth Amendment to the Credit Agreement and the Agent andFourth Amendment to the Lenders agreedExport Credit Agreement with its lender. The Ninth Amendment amends the Credit Agreement to, among other things, to: (i) amendreflect the interest rate pricing spreads, (ii) add an owned real property location as partincurrence by borrowers of the collateralSubordinated Loan and sell certain identified assets at our closed location in Alliance, (iii) adjust the calculation of EBITDAexecution and certain financial covenants,delivery by borrowers, the Lender and (iv)  revise the financial covenants by addingSilk (Mr. Silk is a new minimum EBITDA test for a specific location and changing the timingmember of the tests and someBoard of Directors of the covenant levels. The Company isand considered a related party) of the Subordinated Loan Documents, and the receipt by borrowers of $3.0 million in compliance with its loan covenants as ofimmediately available funds on the Ninth Amendment Effective Date; (ii) delay the maturity date from December 31, 2017. Absent2023 to October 4, 2024, or any earlier date on which the Third Amendment,Revolving Commitment is reduced to zero or otherwise terminated pursuant to the Company would not have beenterms of the Credit Agreement; (iii) reduce the Revolving Commitment to $19.0 million from $23.0 million; (iv) modify the definition of Borrowing Base to mean, at any time, the sum of (a) 85% of Eligible Accounts at such time, plus (b) the lesser of (1) 70% of Eligible Inventory,
21


valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time and (2) the product of 85% multiplied by the NOLV Percentage identified in compliance with its financial loan covenant asthe most recent inventory appraisal ordered by the Lender multiplied by Eligible Inventory, valued at the lower of December 31, 2017.
The Company incurred debt issuance costs and certain costs were written off duringcost or market value, determined on a first-in-first-out basis, at such time, minus (c) Reserves of $1.5 million, increasing on the first quarterday of fiscal 2017. See Noteeach month by $0.3 million, commencing on May 1, 2024 and continuing until (and including) August 1, 2024, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion (which may be by email from the Lender), plus (d) the PP&E Component; (v) modify the Applicable Margin schedule to reflect the following applicable rates: 2.75% (CBFR REVSOFR30), 0.25% (CBFR Spread (CB Floating Rate)), 2.75% (SOFR Spread), and 0.50% (Commitment Fee Rate); and (vi) amend and restate subsection (l) of the Reporting Schedule to require, by the 17th day of every month, the delivery of a rolling 13 week cash flow forecast in form acceptable to Lender, which must include a projected to actual results comparison for the week then ended and on a cumulative basis from the beginning of the cash flow forecast. The Fourth Amendment of the Export Credit Agreement, to, among other things, to: (i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk of the Subordinated Loan Documents, and the receipt by borrowers of $3.0 million in immediately available funds on the Ninth Amendment Effective Date; and (ii) delay the maturity date to October 4, Debt for further discussion.2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms thereof.

Future cash flows from the Company’s operations willmay be used to pay down amounts outstanding under the Credit Facility. The cash proceeds from the sale of the Irish building approximate $3.1 million, of which $2.4 million, net proceeds after taxesAgreement and fees, will be used to pay down the Credit Facility, $0.7 million will reduce Term Facility and the remaining balance is expected to reduce the revolving credit facility.its foreign related debts. 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 the Credit Facility.Agreement for its domestic locations. In fiscal year 2024, the Company was able to obtain new financing at its Maniago location to provide Maniago with sufficient liquidity. 

Additionally, the credit and capital markets saw significant volatility during the course of the pandemic. Tightening of the credit market and standards, as well as capital market volatility, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing Credit Agreement. Capital market uncertainty and volatility, together with the Company’s market capitalization and status as a smaller reporting company, could also negatively impact our ability to obtain equity financing.

C. CriticalRecent Accounting Standards
For recent accounting standards adopted and not yet adopted refer to Note 1, Summary of Significant Accounting Policies - Recent Accounting Standards Adoptedand Estimates

The Recent Accounting Standards Not Yet Adopted for further detail. Additionally, the Company's disclosures of criticalsignificant accounting policies and procedures are explained in itsthe Management's Discussion and Analysis section of the Company's Annual Report on Form 10-K for the year ended September 30, 2017 have not materially changed since that report was filed, except for the following:2023.


Income taxes
On December 22, 2017, the U.S. enacted the Tax Cut and Jobs Act (the "Act") which, among other items, reduces the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. On the same day of the Act, the Securities and Exchange Commission (the "SEC") issued Staff Bulletin 118 ("SAB 118"). SAB 118 expresses views of the SEC regarding ASC Topic 740, Income taxes ("ASC 740") in the reporting period that includes the enactment date of the Act. The SEC staff issuing SAB 118 recognized that a Company’s review of certain income tax effects of the Act may be incomplete at the time the financial statements are issued for the reporting period that includes the enactment date, including interim periods therein.  If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year from the day of enactment.  

The Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate in general. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under the U.S. generally accepted accounting principles wherein companies are allowed to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after its completion of the analysis of the GILTI provisions and its election method will depend, in part, on analyzing its global income to determine whether the Company expects to have future material U.S. inclusions in its taxable income related to GILTI and, if so, the impact that is expected.

D. Impact of Recently Issued Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial adoption. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the requirements of ASU 2016-02 and anticipates that the adoption will impact the consolidated condensed balance sheets due to the recognition of the right-to-use asset and lease liability related to its current operating leases.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common

18



revenue recognition guidance for GAAP and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” This ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs, along with subsequent updates, apply to all companies that enter into contracts with customers to transfer goods or services, and are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The Company will adopt the new guidance on October 1, 2018. The Company is executing a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue streams. The Company has determined that many of its long-term agreements contain variable consideration clauses and is in the process of quantifying the impact to its consolidated financial statements. In addition, some of the Company's agreements have clauses which may require the Company to recognize revenue over time. The majority of the Company's current revenue is recognized at a point-in-time. As such, SIFCO continues to evaluate the impact of the standard on its financial reporting, disclosures and related systems and internal controls. The Company has engaged a third party to assist with its efforts.

E. Recently Adopted Accounting Standards
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. ASU 2016-09 was adopted by the Company effective October 1, 2017.

This guidance requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement and also requires a policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company changed its policy to recognize the impact of forfeitures when they actually occur. There was no impact to the consolidated condensed financial statements as of October 1, 2017.   Also, this guidance requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified in the consolidated condensed statement of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. The Company applied this provision retrospectively, and for the first quarter of fiscal 2017, impact between operating activities to financing activities was nominal. This guidance also requires the tax effects of exercised or vested awards to be treated as discrete items in the reporting period in which they occur, which was applied prospectively, beginning October 1, 2017 by the Company. Due to the Company having recorded a domestic valuation allowance, the tax impact upon adoption of this ASU was not material to the consolidated condensed financial statements. Lastly, the guidance requires that excess tax benefits should be classified along with other income tax cash flows as an operating activity on the statement of cash flows, which differs from the Company’s historical classification of excess tax benefits as cash inflows from financing activities. The Company elected to apply this provision using the prospective transition method.  

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which provides new guidance to simplify the measurement of inventory valuation 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, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no impact on the Company's consolidated condensed financial statements.
Item 4. Controls and Procedures
As defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act"), disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s disclosure controls and procedures include components of the Company’s internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management of the Company, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) as of December 31, 20172023 (the “Evaluation Date”"Evaluation Date"). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were not effective, as a result of the continuing

19



existence of the material weaknessesweakness in the Company's internal controls over financial reporting described in Item 9A of the Company's 2017 Annual Report.
A
The Company is in the process of designing and implementing improved controls to remediate the material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. The following material weaknesses relatedcontinued to our control environment existedexist as of December 31, 2017.2023.
Key controls within IT general and application controls for domestic operations were not operating effectively.
Key controls within business and IT processes were not designed and operating effectively at Maniago.
Due to a lack of resources in accounting personnel, the Company did not evaluate a complex accounting issue in a timely manner.
The control environment deficiencies described above could have resulted in a failure to prevent or detect a material misstatement in our financial statements due to the omission of information or inappropriate conclusions regarding information required to be recorded, processed, summarized, and reported in the Company’s SEC reports. Notwithstanding the identified material weaknesses, management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.


Remediation Plan for Material Weakness in Internal Control over Financial Reporting
Management and the Company's Board of Directors are committed to improving the Company's overall system of internal controls over financial reporting.


To address
22


In response to the material weaknessesweakness identified in our control environment, management is taking the following actions to remediateCompany has made progress in executing our remediation action plan, including the material weaknesses:following:
Implement robust security and access reviews at a level of precision necessary to ensure they are timely and appropriate, including monitoring
•Implemented additional control activities for users with privileged access. The Company is making progress and will continue to explore other information technology tools with additional detective and monitoring controls to mitigate this risk.

Management is unable to remediate the Company’s Maniago IT general controls for fiscal year 2018. However, management will continue to perform a quarterly evaluation of business process control effectiveness, implement periodic monitoring controls over its financial review procedures, and deploy additional resources to enhance its internalbackup and recovery controls, over financial reporting.

Management will evaluate the structure of the finance organization and consider adding resources to further strengthen its internal controls over financial reporting.

With theincreased oversight of senior management and the Company's Board of Directors, the Company continues to take steps and additional measures to remediate the underlying causes of the identified material weaknesses, including but not limited to (i) evaluating our information technology systems, or invest in improvementswith emphasis on endpoint protection and detection as well as monitoring backups.
•Further engaged with outside specialist resources to assist with our technology sufficientongoing assessment of existing policies and procedures.

The actions we are taking are subject to generate accurate, transparent, and timely financial information, and (ii) continue to strengthen organizational structureongoing senior management review as well as oversight by holding individuals accountable for their internal control responsibilities.

the Audit Committee of the Board of Directors. Although we expectplan to make meaningful progress in ourcomplete this remediation plan during fiscal year 2018,as quickly as possible, we cannot, at this time, estimate how long it will take to complete the process or the costs of actions required. There is no assurance that the aforementioned plans will be sufficient and that additional steps may not be necessary.take.


Changes in Internal Control over Financial Reporting and other Remediation
Except as for the remediation items described in Item 4 related to prior yearquarter findings, there have been no changes in the Company’sCompany's internal controls over financial reporting during the Company’sCompany's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal controls over financial reporting.


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Part II. Other Information
Items 1, 1A, 2, 3, 4 and 45 are not applicable or the answer to such items is negative; therefore, the items have been omitted and no reference is required in this Quarterly Report.

Item 1. Legal Proceedings
In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters and does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation. For a more complete description of our outstanding material legal proceedings, see Note 8, Commitments and Contingencies.
Item 5. Other Information
On February 8, 2018, the Company entered into its Third Amendment Agreement ("Third Amendment") to its Credit Facility, as further described under Part I – Financial Information – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – B. Liquidity and Capital Resources of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. The Third Amendment is included as Exhibit 10.11 to this Quarterly Report on Form 10-Q.
Item 6. (a) Exhibits
The following exhibits are filed with this report or are incorporated herein by reference to a prior filing in accordance with Rule 12b-32 under the Securities and Exchange Act of 1934 (Asterisk denotes exhibits filed with this report.)
.
Exhibit
No.		Description
2.1
Exhibit
No.
Description
2.1
Stock Purchase Agreement between Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons and SIFCO Italy Holdings S.R.L (a wholly-owned subsidiary of SIFCO Industries Inc.) dated March 16, 2015 filed as Exhibit 2.1 to the Company’s Form 8-K dated July 2, 2015, and incorporated herein by reference
2.2
Amendment to the Stock Purchase Agreement Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons and SIFCO Italy Holdings S.R.L (a wholly-owned subsidiary of SIFCO Industries Inc.) dated June 30, 2015 filed as Exhibit 2.2 to the Company’s Form 8-K dated July 2, 2015, and incorporated herein by reference
3.1
Third Amended Articles of Incorporation of SIFCO Industries, Inc., filed as Exhibit 3(a) of the Company’s Form 10-Q dated March 31, 2002, and incorporated herein by reference
3.2
SIFCO Industries, Inc. Amended and Restated Code of Regulations dated January 28, 2016, filed as Exhibit 3.2 of the Company’s Form 10-K dated September 30, 2015, and incorporated herein by reference
9.1
Voting Trust Agreement dated January 31, 2013, filed as Exhibit 9.1 to the Company’s Form 10-Q dated February 11, 2013 and incorporated herein by reference
9.2
Voting Trust Extension Agreement dated January 15, 2015, filed as Exhibit 9.2 to the Company's Form 10-Q dated February 3, 2015 and incorporated herein by reference
9.3
Voting Trust Agreement dated January 31, 2017, filed as Exhibit 9.3 to the Company's Form 10-Q dated JanuaryDecember 31, 20172016 and incorporated herein by reference
10.19.4
Voting Trust Extension Agreement dated January 18, 2019, filed as Exhibit 9.4 to the Company's Form 10-Q dated February 14, 2019, and incorporated herein by reference
9.5
Voting Trust Extension Agreement dated January 27, 2021, filed as Exhibit 9.5 to the Company's Form 10-Q dated February 5, 2021, and incorporated herein by reference
10.1
SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2008 Annual Meeting to Shareholders dated December 14, 2007, and incorporated herein by reference
10.2
Letter Agreement between the Company and Jeffrey P. Gotschall, dated August 12, 2009 filed as Exhibit 10.1 of the Company’s Form 8-K dated August 12, 2009 and incorporated herein by reference
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10.3
Amendment No. 1 to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2011 Annual Meeting to Shareholders dated December 15, 2010, and incorporated herein by reference
10.4
Change in Controlcontrol Agreement and Separation Agreement between the Company and Peter W. Knapper, effective June 29, 2016,2022, filed as Exhibit 10.210.1 to the Company's Form 8-K dated June 17, 2016,29, 2022 and incorporated herein by referencereference.
10.5
Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.6 to the Company's Form 10-Q dated May 16, 2016, and incorporated herein by reference

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10.6
10.6
Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.7 to the Company's Form 10-Q dated May 16, 2016, and incorporated herein by reference
10.7
Award agreement between the Company and Peter W. Knapper, granted June 29, 2016, filed as Exhibit 10.1 to the Company's Form 8-K dated June 17, 2016, and incorporated herein by reference
10.8
Amended and Restated Credit and Security Agreement, dated November 9, 2016, by and among SIFCO Industries, Inc., the Lenders named therein and KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender, filed as Exhibit 10.1 to the Company's Form 8-K dated November 15, 2016, and incorporated herein by reference
10.9
First Amendment to the Amended and Restated Credit and Security Agreement, dated February 16, 2017, by and among SIFCO Industries, Inc., the Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender; and Presidential Financial Corporation, as Assignee, and incorporated herein by reference
10.10
Second Amendment to the Amended and Restated Credit and Security Agreement, dated August 4, 2017, by and among SIFCO Industries, Inc., the Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender; and Presidential Financial Corporation, as Assignee, and incorporated herein by reference
*10.11
Third Amendment to the Amended and Restated Credit and Security Agreement, dated February 8, 2018, by and among SIFCO Industries, Inc. and Lender named therein and J.P. Morgan Chase Bank, N.A., filed as Exhibit 10.12 to the Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line LenderCompany's Form 10-Q dated August 9, 2018, and Issuing Lender; and Presidential Financial Corporation, as Assigneeincorporated herein by reference
10.1210.8
Amendment and Restatement to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2017 Annual Meeting to Shareholders dated December 6, 2016, and incorporated herein by reference
10.1310.9
Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.14 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
10.1410.10
Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.15 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
10.1510.11
Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.16 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
14.110.12
Change in Control Agreement and Separation Agreement between the Company and Thomas R. Kubera, effective June 29, 2019, filed as Exhibit 10.2 to the Company's Form 8-K dated July 1, 2019 and incorporated herein by reference
10.13
First Amendment to Credit Agreement, dated November 5, 2018, by and among SIFCO Industries, Inc., T&W Forge, LLC., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated November 8, 2018, and incorporated herein by reference
10.14
Economic Development Administration Title IX Loan Agreement, dated November 8, 2018, by and between the City of Cleveland and SIFCO Industries, Inc., filed as exhibit 10.2 to the Company's Form 8-K dated November 8, 2018, and incorporated herein by reference
10.15
Second Amendment to Credit Agreement, dated December 17, 2018, by and among SIFCO Industries, Inc., T&W Forge, LLC., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 19, 2018, and incorporated herein by reference
10.16
Export Credit Agreement, dated December 17, 2018, by and among SIFCO Industries, Inc., T & W Forge, LLC, Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association filed as Exhibit 10.1 to the Company's Form 8-K dated December 19, 2018 and incorporated herein by reference
10.17
Third Amendment to Credit Agreement, dated March 29, 2019, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.19 to the Company's Form 10-Q dated May 10, 2019
10.18
Fourth Amendment to Credit Agreement, dated September 20, 2019, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated September 24, 2019, and incorporated herein by reference.
10.19
First Amendment to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) filed as Exhibit A of the Company’s Definitive Proxy Statement dated December 16, 2019, and incorporated herein by reference.
10.20
10.21
Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.21 to the Company's Form 10-K dated December 23, 2020, and incorporated herein by reference
10.22
Fifth Amendment to Credit Agreement, dated February 19, 2021, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated February 22, 2021, and incorporated herein by reference.
10.23
First Amendment to Export Credit Agreement, dated February 19, 2021, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association filed as Exhibit 10.2 to the Company's Form 8-K dated February 22, 2021, and incorporated herein by reference
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10.24
Sixth Amendment to the Credit Agreement, dated March 23, 2022, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association filed as Exhibit 10.1 to the Company's Form 8-K dated March 24, 2022, and incorporated herein by reference
10.25
Second Amendment to the Export Credit Agreement, dated March 23, 2022, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association filed as Exhibit 10.2 to the Company's Form 8-K dated March 24, 2022, and incorporated herein by reference
10.26
Forbearance Agreement, dated April 28, 2023, by and among JPMorgan Chase Bank, N.A., SIFCO Industries, Inc., T&W Forge LLC, and Quality Aluminum Forge, LLC.
10.27
Seventh Amendment to Credit Agreement, dated August 9, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated August 10, 2023, and incorporated herein by reference.
10.28
Third Amendment to Export Credit Agreement, dated August 9, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated August 10, 2023, and incorporated herein by reference.
10.29
Eighth Amendment to Credit Agreement, dated November 8, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated November 13, 2023, and incorporated herein by reference.
10.30
Ninth Amendment to Credit Agreement, dated December 21, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated December 28, 2023, and incorporated herein by reference.
10.31
Fourth Amendment to Export Credit Agreement, dated December 21, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 28, 2023, and incorporated herein by reference.
10.32
Subordinated Promissory Note - Garnet Holdings (M. Silk), dated December 21, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 28, 2023, and incorporated herein by reference.
10.33
Silk Subordination and Intercreditor Agreement, dated December 21, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 28, 2023, and incorporated herein by reference.
10.34
Side Letter - MS Guaranty, dated December 21, 2023, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 28, 2023, and incorporated herein by reference.
14.1
Code of Ethics, filed as Exhibit 14.1 of the Company’s Form 8-K dated February 6, 2018, and incorporated herein by reference
*31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15d-14(a)
*31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15d-14(a)
*32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
*32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
*97.1
Policy for the Recovery of Erroneously Awarded Compensation
*101The following financial information from SIFCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 20172023 filed with the SEC on February 8, 2018,14, 2024, formatted in XBRL includes: (i) Consolidated Condensed Statements of Operations for the fiscal periods ended December 31, 20172023 and 2016,2022, (ii) Consolidated Condensed Statements of Comprehensive Income for the fiscal periods ended December 31, 20172023 and 2016,2022, (iii) Consolidated Condensed Balance Sheets at December 31, 20172023 and September 30, 2017,2023, (iv) Consolidated Condensed Statements of Cash Flow for the fiscal periods ended December 31, 20172023 and 2016,2022, (iv) Consolidated Condensed Statements of Shareholders' Equity for the periods December 31, 2023 and (iv)2022, and (v) the Notes to the Consolidated Condensed Financial Statements.
*104Cover Page Interactive Data File: the cover page XBRL tags are embedded within the Inline XBRL document and are contained with Exhibit 101

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIFCO Industries, Inc.
(Registrant)
Date: February 8, 201814, 2024/s/ Peter W. Knapper
Peter W. Knapper
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 8, 201814, 2024/s/ Thomas R. Kubera
Thomas R. Kubera
Interim Chief Financial Officer & Chief Accounting Officer
(Principal Financial Officer)

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