UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022


☐			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)


Ohio						34-0553950
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

970 East 64th Street, Cleveland Ohio						44103
(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 company	☒

		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 ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares

SIF

NYSE American

The number of the Registrant’s Common Shares, par value $1.00, outstanding at March 31, ~~2021~~2022 was ~~5,989,129.~~6,039,617.

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 March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Net sales	Net sales	$	24,866	$	30,537	$	49,944	$	56,744	Net sales	$	24,568	$	24,866	$	43,815	$	49,944
Cost of goods sold	Cost of goods sold	22,123		24,260		43,278		47,143		Cost of goods sold	23,109		22,123		42,347		43,278
Gross profit	Gross profit	2,743		6,277		6,666		9,601		Gross profit	1,459		2,743		1,468		6,666
Selling, general and administrative expenses	Selling, general and administrative expenses	3,596		3,321		7,423		7,529		Selling, general and administrative expenses	2,680		3,596		6,216		7,423

Amortization of intangible assets	Amortization of intangible assets	248		408		517		817		Amortization of intangible assets	65		248		190		517
Loss on disposal of operating assets		0		41		0		41
Gain on disposal of operating assets										Gain on disposal of operating assets	(2)		—		(2)		—
Gain on insurance recoveries	Gain on insurance recoveries	0		(1,000)		(2,495)		(1,000)		Gain on insurance recoveries	—		—		—		(2,495)
Operating income (loss)		(1,101)		3,507		1,221		2,214
Operating (loss) income										Operating (loss) income	(1,284)		(1,101)		(4,936)		1,221

Interest expense		169		262		335		513
Foreign currency exchange loss (income), net		14		(1)		21		0
Interest expense, net										Interest expense, net	193		169		307		335
Gain on debt extinguishment										Gain on debt extinguishment	(5,106)		—		(5,106)		—
Foreign currency exchange loss, net										Foreign currency exchange loss, net	3		14		9		21
Other loss (income), net	Other loss (income), net	42		25		103		(84)		Other loss (income), net	(36)		42		(68)		103
Income (loss) before income tax expense (benefit)		(1,326)		3,221		762		1,785
(Loss) income before income tax expense (benefit)										(Loss) income before income tax expense (benefit)	3,662		(1,326)		(78)		762
Income tax expense (benefit)	Income tax expense (benefit)	165		(39)		(740)		(134)		Income tax expense (benefit)	23		165		(26)		(740)

Net income (loss)		$	(1,491)	$	3,260	$	1,502	$	1,919
Net (loss) income										Net (loss) income	$	3,639	$	(1,491)	$	(52)	$	1,502

Net income (loss) per share
Net (loss) income per share										Net (loss) income per share
Basic	Basic	$	(0.26)	$	0.57	$	0.26	$	0.34	Basic	$	0.62	$	(0.26)	$	(0.01)	$	0.26
Diluted	Diluted	$	(0.26)	$	0.57	$	0.25	$	0.33	Diluted	$	0.61	$	(0.26)	$	(0.01)	$	0.25

Weighted-average number of common shares (basic)	Weighted-average number of common shares (basic)	5,777		5,679		5,735		5,645		Weighted-average number of common shares (basic)	5,840		5,777		5,819		5,735
Weighted-average number of common shares (diluted)	Weighted-average number of common shares (diluted)	5,777		5,770		5,932		5,748		Weighted-average number of common shares (diluted)	5,961		5,777		5,819		5,932

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Comprehensive (Loss) Income ~~(Loss)~~

(Unaudited)

(Amounts in thousands)

Three Months Ended
March 31, Six Months Ended
March 31,
2021 2020 2021 2020
Net income (loss) $ (1,491) $ 3,260 $ 1,502 $ 1,919
Other comprehensive income:
Foreign currency translation adjustment, net of tax $0 and $0 for the three months ended and net of tax $0 and $0 for the six months ended, respectively (303) (130) (17) 63
Retirement plan liability adjustment, net of tax $0 and $0 for the three months end and net of tax $0 and $0 for the six month ended, respectively 211 249 423 437
Comprehensive income (loss) $ (1,583) $ 3,379 $ 1,908 $ 2,419


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Net (loss) income	$	3,639	$	(1,491)	$	(52)	$	1,502
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of tax $0 and $0 for the three months ended and net of tax $0 and $0 for the six months ended, respectively	(136)		(303)		(259)		(17)
Retirement plan liability adjustment, net of tax $0 and $0 for the three months ended, net of tax $0 and $0 for the six months ended, respectively	119		211		238		423

Comprehensive (loss) income	$	3,622	$	(1,583)	$	(73)	$	1,908

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Balance Sheets

(Amounts in thousands, except per share data)


		March 31, 2021		September 30, 2020			March 31, 2022		September 30, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	311	$	427	Cash and cash equivalents	$	124	$	346
Receivables, net of allowance for doubtful accounts of $251 and $249, respectively		19,068		23,225
Other receivables		0		1,547
Receivables, net of allowance for doubtful accounts of $99 and $167, respectively						Receivables, net of allowance for doubtful accounts of $99 and $167, respectively	18,284		19,914

Contract assets	Contract assets	13,565		11,997		Contract assets	13,113		12,874

Inventories, net	Inventories, net	15,568		15,569		Inventories, net	14,535		12,546
Refundable income taxes	Refundable income taxes	103		103		Refundable income taxes	101		101

Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,959		2,338		Prepaid expenses and other current assets	1,279		1,792

Total current assets	Total current assets	50,574		55,206		Total current assets	47,436		47,573
Property, plant and equipment, net	Property, plant and equipment, net	44,448		44,201		Property, plant and equipment, net	41,342		42,708
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	16,405		17,021		Operating lease right-of-use assets, net	15,477		15,943
Intangible assets, net	Intangible assets, net	1,377		1,890		Intangible assets, net	659		874
Goodwill	Goodwill	3,493		3,493		Goodwill	3,493		3,493
Other assets	Other assets	89		137		Other assets	72		77

Total assets	Total assets	$	116,386	$	121,948	Total assets	$	108,479	$	110,668
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of long-term debt	Current maturities of long-term debt	$	9,783	$	7,144	Current maturities of long-term debt	$	4,259	$	9,566
Revolver	Revolver	7,742		12,870		Revolver	12,838		8,930
Short-term operating lease liabilities	Short-term operating lease liabilities	796		991		Short-term operating lease liabilities	773		788
Accounts payable	Accounts payable	14,495		14,002		Accounts payable	10,522		9,811
Accrued liabilities	Accrued liabilities	6,368		8,290		Accrued liabilities	5,429		6,871

Total current liabilities	Total current liabilities	39,184		43,297		Total current liabilities	33,821		35,966
Long-term debt, net of current maturities	Long-term debt, net of current maturities	2,542		4,606		Long-term debt, net of current maturities	3,266		2,669
Long-term operating lease liabilities, net of short-term	Long-term operating lease liabilities, net of short-term	15,825		16,188		Long-term operating lease liabilities, net of short-term	15,050		15,439
Deferred income taxes	Deferred income taxes	616		1,400		Deferred income taxes	148		158
Pension liability	Pension liability	9,764		10,165		Pension liability	5,716		6,073
Other long-term liabilities	Other long-term liabilities	747		769		Other long-term liabilities	730		741

Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Serial preferred shares, no par value, authorized 1,000 shares	Serial preferred shares, no par value, authorized 1,000 shares	0		0		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 5,989 at March 31, 2021 and 5,916 at September 30, 2020		5,989		5,916
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 6,040 at March 31, 2022 and 5,987 at September 30, 2021						Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 6,040 at March 31, 2022 and 5,987 at September 30, 2021	6,040		5,987
Additional paid-in capital	Additional paid-in capital	10,940		10,736		Additional paid-in capital	11,264		11,118
Retained earnings	Retained earnings	43,841		42,339		Retained earnings	41,544		41,596
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(13,062)		(13,468)		Accumulated other comprehensive loss	(9,100)		(9,079)
Total shareholders’ equity	Total shareholders’ equity	47,708		45,523		Total shareholders’ equity	49,748		49,622
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	116,386	$	121,948	Total liabilities and shareholders’ equity	$	108,479	$	110,668

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(Unaudited, Amounts in thousands)


		Six Months Ended March 31,					Six Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	1,502	$	1,919
Net (loss) income						Net (loss) income	$	(52)	$	1,502

Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:						Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	3,730		3,731		Depreciation and amortization	3,210		3,730
Amortization of debt issuance costs	Amortization of debt issuance costs	52		52		Amortization of debt issuance costs	20		52
Loss on disposal of operating assets		0		41
Gain on insurance proceeds received		(2,495)		(1,000)
Gain on disposal of operating assets						Gain on disposal of operating assets	(2)		—
Gain on insurance proceeds received for damaged property						Gain on insurance proceeds received for damaged property	—		(2,495)

LIFO effect	LIFO effect	335		(11)		LIFO effect	383		335
Share transactions under company stock plan	Share transactions under company stock plan	277		217		Share transactions under company stock plan	199		277

Gain on extinguishment of debt						Gain on extinguishment of debt	(5,106)		—
Other long-term liabilities	Other long-term liabilities	(2)		(90)		Other long-term liabilities	(107)		(2)
Deferred income taxes	Deferred income taxes	(830)		(135)		Deferred income taxes	(15)		(830)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	4,149		1,533		Receivables	1,441		4,149
Contract assets	Contract assets	(1,569)		(2,171)		Contract assets	(239)		(1,569)
Inventories	Inventories	(301)		(2,858)		Inventories	(2,598)		(301)
Refundable income taxes		0		10

Prepaid expenses and other current assets	Prepaid expenses and other current assets	40		(434)		Prepaid expenses and other current assets	490		40
Other assets	Other assets	47		42		Other assets	4		47
Accounts payable	Accounts payable	2,749		(3,296)		Accounts payable	387		2,749
Other accrued liabilities	Other accrued liabilities	(2,077)		2,050		Other accrued liabilities	(1,191)		(2,077)
Accrued income and other taxes	Accrued income and other taxes	182		(14)		Accrued income and other taxes	(20)		182

Net cash provided by (used for) operating activities		5,789		(414)
Net cash (used for) provided by operating activities						Net cash (used for) provided by operating activities	(3,196)		5,789

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Insurance proceeds received		4,101		4,500

Insurance proceeds received for damaged property						Insurance proceeds received for damaged property	—		4,101
Proceeds from disposal of operating assets						Proceeds from disposal of operating assets	2		—
Capital expenditures	Capital expenditures	(5,416)		(4,596)		Capital expenditures	(1,493)		(5,416)

Net cash used for investing activities	Net cash used for investing activities	(1,315)		(96)		Net cash used for investing activities	(1,491)		(1,315)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt	Proceeds from long-term debt	0		137		Proceeds from long-term debt	1,402		—
Payments on long-term debt	Payments on long-term debt	(264)		(568)		Payments on long-term debt	(696)		(264)
Proceeds from revolving credit agreement	Proceeds from revolving credit agreement	44,666		59,372		Proceeds from revolving credit agreement	41,912		44,666
Repayments of revolving credit agreement	Repayments of revolving credit agreement	(49,794)		(57,723)		Repayments of revolving credit agreement	(38,004)		(49,794)
Payment of debt issuance costs	Payment of debt issuance costs	(45)		0		Payment of debt issuance costs	—		(45)

Short-term debt borrowings	Short-term debt borrowings	2,471		1,542		Short-term debt borrowings	1,623		2,471
Short-term debt repayments	Short-term debt repayments	(1,631)		(2,257)		Short-term debt repayments	(1,755)		(1,631)

Net cash provided by (used for) financing activities		(4,597)		503
Net cash (used for) provided by financing activities						Net cash (used for) provided by financing activities	4,482		(4,597)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(123)		(7)		Decrease in cash and cash equivalents	(205)		(123)
Cash and cash equivalents at the beginning of the period	Cash and cash equivalents at the beginning of the period	427		341		Cash and cash equivalents at the beginning of the period	346		427
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	7		11		Effect of exchange rate changes on cash and cash equivalents	(17)		7
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	311	$	345	Cash and cash equivalents at the end of the period	$	124	$	311

Supplemental disclosure of cash flow information of operations:	Supplemental disclosure of cash flow information of operations:					Supplemental disclosure of cash flow information of operations:
Cash paid for interest	Cash paid for interest	$	(203)	$	(419)	Cash paid for interest	$	(249)	$	(203)
Cash paid for income taxes, net	Cash paid for income taxes, net	$	(22)	$	(34)	Cash paid for income taxes, net	$	(15)	$	(22)

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Shareholders’ Equity

(Unaudited, Amounts in thousands)

Six Months Ended
March 31, 2021
Common Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Shareholders’
Equity
Shares Amount
Balance - September 30, 2020 5,916 $ 5,916 $ 10,736 $ 42,339 $ (13,468) $ 45,523
Comprehensive income — — — 1,502 406 1,908
Performance and restricted share expense — — 293 — — 293
Share transactions under equity based plans 73 73 (89) — — (16)
Balance - March 31, 2021 5,989 $ 5,989 $ 10,940 $ 43,841 $ (13,062) $ 47,708


	Six Months Ended March 31, 2022
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount









Balance - September 30, 2021	5,987	$	5,987	$	11,118	$	41,596	$	(9,079)	$	49,622

Comprehensive loss	—	—		—		(52)		(21)		(73)


Performance and restricted share expense	—	—		306		—		—		306
Share transactions under equity based plans	53	53		(160)		—		—		(107)
Balance - March 31, 2022	6,040	$	6,040	$	11,264	$	41,544	$	(9,100)	$	49,748


	Three Months Ended March 31, 2022
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance - December 31, 2021	6,003	$	6,003	$	11,156	$	37,905	$	(9,083)	$	45,981




Comprehensive income	—	—		—		3,639		(17)		3,622

Performance and restricted share expense	—	—		145		—		—		145
Share transactions under equity based plans	37	37		(37)		—		—		—
Balance - March 31, 2022	6,040	$	6,040	$	11,264	$	41,544	$	(9,100)	$	49,748


		Three Months Ended March 31, 2021																		Six Months Ended March 31, 2021
		Common			Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss					Total Shareholders’ Equity						Common			Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Total Shareholders’ Equity
		Shares	Amount														Shares					Amount
Balance - December 31, 2020		5,959	$	5,959			$	10,820			$	45,332			$	(12,970)						$	49,141
Balance - September 30, 2020																					Balance - September 30, 2020			5,916	$	5,916			$	10,736			$	42,339			$	(13,468)			$	45,523

Comprehensive loss		—	—		—				(1,491)				(92)							(1,583)
Comprehensive income																					Comprehensive income			—	—		—				1,502				406				1,908

Performance and restricted share expense	Performance and restricted share expense	—	—		150				—				—					150			Performance and restricted share expense			—	—		293				—				—				293
Share transactions under equity based plans	Share transactions under equity based plans	30	30		(30)				—				—					0			Share transactions under equity based plans			73	73		(89)				—				—				(16)
Balance - March 31, 2021	Balance - March 31, 2021	5,989	$	5,989	$	10,940			$	43,841			$	(13,062)				$	47,708		Balance - March 31, 2021			5,989	$	5,989	$	10,940			$	43,841			$	(13,062)			$	47,708

Six Months Ended
March 31, 2020
Common Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Shareholders’
Equity
Shares Amount
Balance - September 30, 2019 5,777 $ 5,777 $ 10,438 $ 33,148 $ (13,309) $ 36,054
Comprehensive income — — — 1,919 500 2,419
Performance and restricted share expense — — 225 — — 225
Share transactions under equity based plans 139 139 (147) — — (8)
Balance - March 31, 2020 5,916 $ 5,916 $ 10,516 $ 35,067 $ (12,809) $ 38,690

Three Months Ended
March 31, 2020
Common Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Shareholders’
Equity
Shares Amount
Balance - December 31, 2019 5,863 $ 5,863 $ 10,503 $ 31,807 $ (12,928) $ 35,245
Comprehensive loss — — — 3,260 119 3,379
Performance and restricted share expense — — 70 — — 70
Share transactions under equity based plans 53 53 (57) — — (4)
Balance - March 31, 2020 5,916 $ 5,916 $ 10,516 $ 35,067 $ (12,809) $ 38,690


	Three Months Ended March 31, 2021
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance - December 31, 2020	5,959	$	5,959	$	10,820	$	45,332	$	(12,970)	$	49,141




Comprehensive income	—	—		—		(1,491)		(92)		(1,583)

Performance and restricted share expense	—	—		150		—		—		150
Share transactions under equity based plans	30	30		(30)		—		—		—
Balance - March 31, 2021	5,989	$	5,989	$	10,940	$	43,841	$	(13,062)	$	47,708

See notes to unaudited consolidated condensed financial statements.

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

A. Principles of Consolidation

The accompanying unaudited consolidated condensed financial statements include the accounts of SIFCO Industries, Inc. and its wholly-owned subsidiaries (the "Company"). All significant intercompany accounts and transactions have been 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 non-operating subsidiaries. For these operations, all gains and losses from completed currency transactions are included in income. 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. 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 ~~2020~~2021 Annual Report on Form 10-K. The year-end consolidated balance sheet data was derived from the audited financial statements and disclosures required by accounting principles generally accepted in the ~~United States ("~~U.S.~~").~~ 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 2020~~ Annual Report on ~~Form 10-K.~~From 10-K for the year ended September 30, 2021.

C. Net ~~Income/~~(Loss)/Income per Share

The Company’s net ~~income~~loss and ~~loss~~net income per basic share has been computed based on the weighted-average number of common shares outstanding. ~~Net~~During a period of net loss, zero restricted and performance shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive. In a period of net income, the net income per diluted share reflects the effect of the Company's outstanding restricted shares and performance shares under the treasury method. ~~In the three months ended March 31, 2021, due to the net loss, 0 restricted shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive.~~ The dilutive effect is as follows:

Three Months Ended
March 31, Six Months Ended
March 31,
2021 2020 2021 2020
Net Income (loss) $ (1,491) $ 3,260 $ 1,502 $ 1,919
Weighted-average common shares outstanding (basic and diluted) 5,777 5,679 5,735 5,645
Effect of dilutive securities:
Restricted shares 0 89 144 102
Performance shares 0 2 53 1
Weighted-average common shares outstanding (basic and diluted) 5,777 5,770 5,932 5,748
Net income (loss) per share – basic: $ (0.26) $ 0.57 $ 0.26 $ 0.34
Net income (loss) per share – diluted: $ (0.26) $ 0.57 $ 0.25 $ 0.33
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 411 215 217 147


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021


Net (loss) income	$	3,639	$	(1,491)	$	(52)	$	1,502

Weighted-average common shares outstanding (basic)	5,840		5,777		5,819		5,735
Effect of dilutive securities:

Restricted shares	100		—		—		144
Performance shares	21		—		—		53
Weighted-average common shares outstanding (diluted)	5,961		5,777		5,819		5,932


Net (loss) income per share – basic:	$	0.62	$	(0.26)	$	(0.01)	$	0.26







Net (loss) income per share – diluted:	$	0.61	$	(0.26)	$	(0.01)	$	0.25

Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share	196		411		307		217

D. ~~Impact of~~ Recently ~~Issued~~Adopted Accounting Standards

In ~~June 2016,~~December 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU 2016-13,~~Accounting Standards Update ("ASU") 2019-12, "~~Financial Instruments - Credit Losses (Topic 326): Measurement~~Income Taxes (ASC 740) – Simplifying the Accounting for Income Taxes," which is intended to reduce complexity in the accounting for income taxes while maintaining or improving the usefulness of ~~Credit Losses on Financial Instruments" and subsequent updates.~~information provided to financial statement users. The guidance amends certain existing provisions under ASC 740 to address a number of distinct items. The Company adopted 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 recognition2019-12 effective October 1, 2021. Adoption of the ~~exposure, the expected credit loss model requires entities~~amendments in this ASU did not have an impact to estimate the credit 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 estimate, so its application will require significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 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 are considered smaller reporting companies ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, the Company does not need to implement ASU 2016-13 until October 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results ~~within the consolidated condensed statements~~ of operations and financial condition.

~~In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes"~~ was issued to (i) reduce the complexity of the standard by removing certain exceptions to the general principles in Topic 740 and (ii) improve consistency and simplify other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective beginning October 1, 2021. The Company continues to evaluate the effect adopting this ASU will have on the Company's results within the consolidated condensed statements of operations and financial condition.

~~In March 2020, the FASB issued ASU 2020-04,~~ ~~"Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,"~~ which is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. This ASU, along with recently issued ASU 2021-01, which further clarifies the scope of Topic 848, is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company is currently evaluating these standards to determine whether it will apply the optional expedients and exceptions.

2.Inventories

Inventories consist of:


		March 31, 2021		September 30, 2020			March 31, 2022		September 30, 2021
Raw materials and supplies	Raw materials and supplies	$	6,379	$	6,548	Raw materials and supplies	$	5,099	$	4,111
Work-in-process	Work-in-process	3,564		3,786		Work-in-process	5,046		3,560
Finished goods	Finished goods	5,625		5,235		Finished goods	4,390		4,875
Total inventories	Total inventories	$	15,568	$	15,569	Total inventories	$	14,535	$	12,546

For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method. Approximately ~~49%~~43% and ~~47%~~39% of the Company’s inventories at March 31, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively, use the LIFO method. An actual valuation of inventory under the LIFO method is made at the end of each 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 expected year-end inventory levels and costs. Because the actual results may vary from these estimates, calculations are subject to many factors beyond management’s control, and annual results may differ from interim results as they are subject to adjustments based on the differences between the estimates and the actual results. The first-in, first-out (“FIFO”) method is used for the remainder of the inventories, which are stated at the lower of cost or net realizable value. If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been ~~$8,621~~$9,593 and ~~$8,286~~$9,210 higher than reported at March 31, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

3. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:


		March 31, 2021		September 30, 2020			March 31, 2022		September 30, 2021
Foreign currency translation adjustment	Foreign currency translation adjustment	$	(5,274)	$	(5,257)	Foreign currency translation adjustment	$	(5,618)	$	(5,359)
Retirement plan liability adjustment, net of tax	Retirement plan liability adjustment, net of tax	(7,788)		(8,211)		Retirement plan liability adjustment, net of tax	(3,482)		(3,720)

Total accumulated other comprehensive loss	Total accumulated other comprehensive loss	$	(13,062)	$	(13,468)	Total accumulated other comprehensive loss	$	(9,100)	$	(9,079)

4. Leases

The components of lease expense were as follows:


		Three Months Ended March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021

Finance lease expense:	Finance lease expense:									Finance lease expense:
Amortization of right-of use assets on finance leases	Amortization of right-of use assets on finance leases	$	13	$	14	$	27	$	27	Amortization of right-of use assets on finance leases	$	2	$	13	$	14	$	27
Interest on lease liabilities	Interest on lease liabilities	1		1		2		3		Interest on lease liabilities	—		1		—		2
Operating lease expense:		540		543		1,092		1,079
Operating lease expense										Operating lease expense	429		540		828		1,092

Variable lease cost:		35		39		69		79
Variable lease cost										Variable lease cost	30		35		60		69

Total lease expense	Total lease expense	$	589	$	597	$	1,190	$	1,188	Total lease expense	$	461	$	589	$	902	$	1,190

The following table presents the impact of leasing on the consolidated condensed balance sheet.

Classification in the consolidated condensed balance sheets March 31,
2021 September 30,
2020
Assets:
Finance lease assets   Property, plant and equipment, net $ 62 $ 89
Operating lease assets   Operating lease right-of-use assets, net 16,405 17,021
Total lease assets $ 16,467 $ 17,110
Current liabilities:
Finance lease liabilities   Current maturities of long-term debt $ 41 $ 58
Operating lease liabilities   Short-term operating lease liabilities 796 991
Non-current liabilities:
Finance lease liabilities   Long-term debt, net of current maturities 10 22
Operating lease liabilities   Long-term operating lease liabilities, net of short-term 15,825 16,188
Total lease liabilities $ 16,672 $ 17,259


	Classification in the consolidated condensed balance sheets	March 31, 2022		September 30, 2021
Assets:
Finance lease assets	Property, plant and equipment, net	$	20	$	34
Operating lease assets	Operating lease right-of-use assets, net	15,477		15,943
Total lease assets		$	15,497	$	15,977

Current liabilities:
Finance lease liabilities	Current maturities of long-term debt	$	10	$	17
Operating lease liabilities	Short-term operating lease liabilities	773		788
Non-current liabilities:
Finance lease liabilities	Long-term debt, net of current maturities	—		5
Operating lease liabilities	Long-term operating lease liabilities, net of short-term	15,050		15,439
Total lease liabilities		$	15,833	$	16,249

Supplemental cash flow and other information related to leases were as follows:

March 31,
2021 March 31,
2020
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases $ 1,097 $ 1,086
     Operating cash flows from finance leases 2 3
     Financing cash flows from finance leases 29 28
Right-of-use assets obtained in exchange for new lease liabilities:
     Operating leases 43 278


	March 31, 2022		March 31, 2021
Other Information

Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	834	$	1,097
Operating cash flows from finance leases	—		2
Financing cash flows from finance leases	15		29
Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases	—		43


	March 31, 2022		September 30, 2021
Weighted-average remaining lease term (years):
Finance leases	1.1		1.1
Operating leases	13.9		14.4
Weighted-average discount rate:
Finance leases	—	%	2.8	%
Operating leases	5.9	%	5.9	%

March 31,
2021 September 30,
2020
Weighted-average remaining lease term (years):
     Finance leases 1.2 1.6
     Operating leases 14.8 15.2
Weighted-average discount rate:
     Finance leases 4.4 % 4.8 %
     Operating leases 5.9 % 5.9 %

Future minimum lease under non-cancellable leases at March 31, ~~2021~~2022 were as follows:


		Finance Leases		Operating Leases			Finance Leases		Operating Leases
Year ending September 30,	Year ending September 30,					Year ending September 30,
2021 (excluding the six months ended March 31, 2021)		$	27	$	852
2022		21		1,696
2022 (excluding the six months ended March 31, 2022)						2022 (excluding the six months ended March 31, 2022)	$	5	$	829
2023	2023	4		1,633		2023	5		1,632
2024	2024	0		1,647		2024	—		1,647
2025	2025	0		1,644		2025	—		1,644
2026						2026	—		1,620
Thereafter	Thereafter	0		17,532		Thereafter	—		15,912
Total lease payments	Total lease payments	$	52	$	25,004	Total lease payments	$	10	$	23,284
Less: Imputed interest	Less: Imputed interest	(1)		(8,383)		Less: Imputed interest	—		(7,461)
Present value of lease liabilities	Present value of lease liabilities	$	51	$	16,621	Present value of lease liabilities	$	10	$	15,823

5. Debt

Debt consists of:


		March 31, 2021		September 30, 2020			March 31, 2022		September 30, 2021
Revolving credit agreement	Revolving credit agreement	$	7,742	$	12,870	Revolving credit agreement	$	12,838	$	8,930
Foreign subsidiary borrowings	Foreign subsidiary borrowings	6,623		5,759		Foreign subsidiary borrowings	6,809		6,632
Finance lease obligations	Finance lease obligations	51		80		Finance lease obligations	10		22
Other, net of unamortized debt issuance costs $(37) and $(20), respectively		5,651		5,911
Other, net of unamortized debt issuance costs $(26) and $(32), respectively						Other, net of unamortized debt issuance costs $(26) and $(32), respectively	706		5,581

Total debt	Total debt	20,067		24,620		Total debt	20,363		21,165

Less – current maturities	Less – current maturities	(17,525)		(20,014)		Less – current maturities	(17,097)		(18,496)
Total long-term debt	Total long-term debt	$	2,542	$	4,606	Total long-term debt	$	3,266	$	2,669

Credit Agreement and Security Agreement

The ~~Company's asset-based~~ Credit Agreement (as amended, the "Credit Agreement"), Security Agreement (“Security Agreement”) and Export Credit Agreement (as amended, the "Export Credit Agreement") are secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67% of the stock of its first-tier non-U.S. subsidiaries. The Credit Agreement (as amended by Fifth Amendment (the "Fifth Amendment") described below), consists of a senior secured revolving credit facility with a maximum borrowing of $28,000. The revolving commitment through the Export Credit Agreement, as amended, which lends amounts to the Company on foreign receivables is $7,000. The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of the Lender (as defined below) or upon additional lenders joining the Credit Agreement. The Credit Agreement and the Export Agreement were amended on February 19, 2021, when the Company and certain of its subsidiaries (collectively, the "borrowers") entered into the Fifth Amendment to the Credit Agreement and the First Amendment (the "First Amendment") to the Export Credit Agreement, in each case, with JPMorgan Chase Bank, N.A., a national banking association, (the "Lender"). The combined maximum borrowings remain unchanged at $35,000; however the maximum borrowing under the Credit Agreement was decreased to $28,000 (from $30,000) and the revolving commitment through the Export Agreement was

~~increased to $7,000 (from $5,000). The Fifth Amendment, among other things, extends the maturity date from August 6, 2021 to February 19, 2024.~~

~~The Credit Agreement~~ contains affirmative and negative covenants and events of ~~defaults. Prior~~default. On March 23, 2022, the Company entered into the Sixth Amendment (the "Sixth Amendment") to ~~the Fifth Amendment,~~ the Credit Agreement ~~required~~(as previously amended, the ~~Company to maintain a fixed charge coverage ratio ("FCCR"~~"Credit Agreement") ~~of 1.1:1.0 any time~~and the ~~availability is equal to or less than 12.5% of the revolving commitment. However, the Fifth~~Second Amendment provides that the Company will not permit the fixed charge coverage ratio to be less than 1.1 to 1.0 as of the last day of any calendar month; provided that the fixed charge coverage ratio will not be tested unless (i) a default has occurred and is continuing, (ii) when the combined availability was less than or equal(the "Second Amendment") to the greater of (x) 10% of the lesser of the combined commitments or (y) 10% of the combined borrowing base, and $2,000, for three or more business days in any consecutive 30 day period. In the event of a default, the Company may not be able to access the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.Export Credit Agreement (the "Export Credit Agreement"), with its lender. The total collateral at March 31, ~~2021~~2022 and September 30, ~~2020~~2021 was ~~$26,619~~$26,126 and ~~$26,964,~~$25,370, respectively, and the revolving commitment was $35,000 for both periods. Total availability at March 31, ~~2021~~2022 and September 30, ~~2020~~2021 was ~~$18,067~~$12,759 and ~~$13,284,~~$14,570, respectively, which exceed both the collateral and total commitment threshold. Since the availability was greater than the 10.0% of the revolving commitment as of March 31, 2022 and September 30, 2021, no covenant calculations were required. The Company has letter of credit balance of $1,800 as of March 31, 2022 and ~~12.5%~~September 30, 2021, respectively.

The Sixth Amendment amends the Credit Agreement to, among other things, (i) revise the fixed coverage ratio to exclude the first $1,500 of unfunded capital expenditures through April 20, 2023, (ii) increase the letter of credit sub-limit from $2,000 to $3,000, (iii) modify the reference rate from the London interbank offered rate ("LIBOR") to the secured overnight financing rate ("SOFR") under the Credit Agreement, and (iv) revise the property, plant and equipment component of the ~~revolving commitment at September 30, 2020,~~borrowing base under the ~~FCCR calculation was not required.~~Credit Agreement.

~~Borrowings will bear interest at~~

The Second Amendment amends the ~~Lender's established domestic~~Export Credit Agreement to replace the reference rate orfrom LIBOR ~~plus~~to SOFR under the ~~applicable margin as set forth in the Fifth Amendment.~~ Export Credit Agreement.

The revolver has a rate based on SOFR plus 2.0% spread, which was 2.3% at March 31, 2022 and a rate based on LIBOR plus 1.75% spread, which was ~~1.87%~~1.8% at ~~March 31, 2021 and~~September 30, 2021. The Export Credit Agreement as amended has a rate based on ~~LIBOR~~SOFR plus 1.5% spread, which was ~~1.7% September 30, 2020. The Export Credit Agreement has~~1.8% at March 31, 2022 and a rate based on LIBOR plus 1.25% spread, which was ~~1.4% at March 31, 2021 and a rate based on LIBOR plus 1.0% spread, which was 1.2%~~1.3% at September 30, ~~2020,~~2021, respectively. The Company also has a commitment fee of 0.25% under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Foreign subsidiary borrowings

Foreign debt consists of:


		March 31, 2021		September 30, 2020			March 31, 2022		September 30, 2021
Term loan	Term loan	$	2,661	$	2,670	Term loan	$	3,545	$	3,127
Short-term borrowings	Short-term borrowings	2,147		2,620		Short-term borrowings	2,553		1,867
Factor	Factor	1,815		469		Factor	711		1,638
Total debt	Total debt	$	6,623	$	5,759	Total debt	$	6,809	$	6,632

Less – current maturities	Less – current maturities	(4,743)		(3,544)		Less – current maturities	(4,012)		(4,551)
Total long-term debt	Total long-term debt	$	1,880	$	2,215	Total long-term debt	$	2,797	$	2,081

Receivables pledged as collateral	Receivables pledged as collateral	$	2,343	$	1,859	Receivables pledged as collateral	$	594	$	485

Interest rates on foreign borrowings are based on Euribor rates which range from 1.0% to 4.2%.

The Maniago, Italy ("Maniago") location obtained borrowings from 1 lender in the first six months of fiscal 2022. The loan was for $1,141 with repayment terms of six years. Under the terms of the borrowing, repayments are made quarterly in the amount of $56, beginning on December 31, 2022.

The Company factors receivables from 1 of 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 sheets.

Debt issuance costs

The Company ~~incurred~~had debt issuance costs ~~as it pertains to the Fifth Amendment in the amount of $45 and combined the amount with the remaining unamortized debt issuance costs prior to the amendment for a total~~ of $86, which is included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $2$31 and ~~$205~~$17 at March 31, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

Other

~~On April 10, 2020, the Company entered into an unsecured promissory note under~~As of March 31, 2022 and September 30, 2021, the Paycheck Protection Program loan (the ~~“PPP Loan”~~"PPP Loan"). balance was $0 and $4,764, respectively. The Company applied for forgiveness of the full amount of the PPP Loan to the ~~Company~~Small Business Administration ("SBA") and was ~~made through JPMorgan Chase Bank, N.A., a national banking association~~notified by the SBA in January 2022 that the full PPP Loan originating amount of $5,025 was forgiven. All accrued interest was forgiven and the ~~Company’s existing~~amount previously repaid by the Company of $261 was reimbursed to the Company by its lender. The ~~note has an aggregate principal amount of approximately $5,025, of which $261 was repaid in fiscal 2020 and has a two year term. The interest rate on~~Company elected to treat the PPP Loan ~~is 0.98%, which~~as debt under FASB Topic 470. As such, the Company derecognized the liability in the second quarter of fiscal 2022 when the loan was ~~deferred for~~forgiven and the ~~first six months of the term of~~Company was legally released from the loan. The ~~promissory note evidencing the PPP Loan contains customary events~~gain on extinguishment of ~~default. The occurrence of an event of default may result~~loan is included in the ~~repayment~~consolidated condensed statements of ~~all amounts outstanding, collection~~operations in the amount of ~~all amounts owed from the Company,~~

11$5,106 (includes $81 of interest forgiven).

and/or filing suit and obtaining judgment against the Company. The loan proceeds were received on April 10, 2020 and were used for payroll payments. As of March 31, 2021 and September 30, 2020, the PPP loan balance was $4,764.

PPP Loan recipients can apply for and potentially be granted forgiveness for all or a portion of loans granted under the Paycheck Protection Program. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs. As of March 31, 2021, based on guidance from the U.S. Department of Treasury, the Company is in the process of applying for forgiveness for the PPP Loan. However, no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

6. Income Taxes

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the "Appropriations Act") was enacted in response to the COVID-19 pandemic. The Appropriations Act, among other actions temporarily extends through December 31, 2025 certain expiring tax credit and other provisions. Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), enacted on March 27, 2020. The CARES Act included provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The Appropriations Act and CARES Act did not materially affect the Company’s income tax provision, deferred tax assets and liabilities, or related taxes payable through the second quarter of fiscal 2021. The Company will continue to assess the implications of these and any new relief provisions on its consolidated condensed financial statements but does not expect the impact to be material.

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 six months of fiscal ~~2021~~2022 was ~~(97)%~~33%, compared with ~~(8)~~(97)% for the same period of fiscal ~~2020.~~2021. The ~~decrease~~increase in the effective rate was primarily attributable to tax benefits from adjusting deferred taxes recorded in Italy recognized on a discrete basis ~~partially offset by changes in jurisdictional mix of income~~ in fiscal 2021, ~~compared to the same period of~~which were non-recurring in fiscal ~~2020.~~2022. The effective tax rate differs from the U.S. federal statutory rate due primarily to the valuation allowance against the Company’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate. Recent positive evidence related to the potential or partial release of the Company's valuation allowance includes profitable U.S. results, however, there continues to be uncertainty as a result of the ongoing COVID-19 pandemic. As such, the Company has maintained a full valuation allowance on its U.S. net deferred tax assets in the second quarter of fiscal 2021. It is reasonably possible that sufficient positive evidence required to release all, or a portion of the valuation allowance in the U.S. will exist within the next 12 months.

The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy, and various state and local jurisdictions.

7.Retirement Benefit Plans

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


		Three Months Ended March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Service cost	Service cost	$	26	$	85	$	52	$	170	Service cost	$	11	$	26	$	21	$	52
Interest cost	Interest cost	175		208		350		416		Interest cost	178		175		357		350
Expected return on plan assets	Expected return on plan assets	(355)		(363)		(711)		(727)		Expected return on plan assets	(340)		(355)		(681)		(711)

Amortization of net loss	Amortization of net loss	211		188		423		376		Amortization of net loss	119		211		238		423

Net periodic cost	Net periodic cost	$	57	$	118	$	114	$	235	Net periodic cost	$	(32)	$	57	$	(65)	$	114

During the six months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company made ~~$56~~$0 and ~~$244~~$56 in contributions, respectively to its defined benefit pension plans. The Company anticipates making ~~$141 additional~~$3 in cash contributions to fund its defined benefit pension plans for the balance of fiscal ~~2021~~2022 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 ~~2021.~~2022. 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 ~~2021.~~

122022.

8.Stock-Based Compensation

The Company ~~has awarded~~awards performance and restricted shares under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan"). The aggregate number of shares that may be awarded by the Company under the 2016 Plan is 1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms, including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. Any such award is exercisable no later than ten years from the date of the grant.

The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the 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 0 shares to a maximum of 200% of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives. Beginning in fiscal 2020, the maximum share that may be achieved was reduced to 150% of target.

With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. The Company is currently recognizing compensation expense for two tranches of awards where it has concluded it is probable that the performance criteria for that award will be met, while the Company is currently not recognizing compensation expense for one tranche of awards where it had concluded that it is not probable that the performance criteria for those awards will be met. During each future reporting period, such expense may be subject to adjustment based upon the Company's financial performance, which impacts the number of 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.

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.

In fiscal ~~2021,~~2022, the Company granted ~~120~~74 shares under the 2016 Plan to certain key employees. The awards were split into 2 tranches, 7144 performance shares and 4930 shares of time-based restricted shares, with a grant date fair value of ~~$3.74~~$8.00 per share. The awards vest over three years. There were 5 shares forfeited during the period.

In fiscal ~~2021,~~2022, the Company granted its non-employee directors 3042 restricted shares under the 2016 Plan, with a grant date fair value of ~~$9.08,~~$6.59 per share, which vests over one year. One award for 5730 restricted shares ~~vested.~~vested in January 2022.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately ~~442~~433 shares that remain available for award at March 31, ~~2021.~~2022. 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% or 150% of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was ~~$293~~$306 and ~~$225~~$293 during the first six months of fiscal ~~2021~~2022 and ~~2020,~~2021, respectively and ~~$150~~$145 and ~~$70~~$150 during the three months ended of fiscal ~~2021~~2022 and ~~2020,~~2021, respectively. As of March 31, ~~2021,~~2022, there was ~~$778~~$847 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 ~~1.5~~1.4 years.

9.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) other commercial applications.

The following table represents a breakout of total revenue by customer type:


		Three Months Ended March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Commercial revenue	Commercial revenue	$	9,247	$	12,497	$	20,000	$	22,688	Commercial revenue	$	9,506	$	9,247	$	17,866	$	20,000
Military revenue	Military revenue	15,619		18,040		29,944		34,056		Military revenue	15,062		15,619		25,949		29,944
Total	Total	$	24,866	$	30,537	$	49,944	$	56,744	Total	$	24,568	$	24,866	$	43,815	$	49,944

The following table represents revenue by the various components:


		Three Months Ended March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
Net Sales	Net Sales	2021		2020		2021		2020		Net Sales	2022		2021		2022		2021
Aerospace components for:	Aerospace components for:									Aerospace components for:
Fixed wing aircraft	Fixed wing aircraft	$	10,176	$	14,065	$	19,966	$	25,400	Fixed wing aircraft	$	10,071	$	10,176	$	19,960	$	19,966
Rotorcraft	Rotorcraft	7,872		6,813		15,603		13,661		Rotorcraft	4,371		7,872		7,914		15,603
Energy components for power generation units	Energy components for power generation units	5,102		3,417		11,565		6,074		Energy components for power generation units	4,346		5,102		8,003		11,565
Commercial product and other revenue	Commercial product and other revenue	1,716		6,242		2,810		11,609		Commercial product and other revenue	5,780		1,716		7,938		2,810
Total	Total	$	24,866	$	30,537	$	49,944	$	56,744	Total	$	24,568	$	24,866	$	43,815	$	49,944

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


		Three Months Ended March 31,				Six Months Ended March 31,					Three Months Ended March 31,				Six Months Ended March 31,
Net Sales	Net Sales	2021		2020		2021		2020		Net Sales	2022		2021		2022		2021
North America	North America	$	20,019	$	27,495	$	39,784	$	51,271	North America	$	20,426	$	20,019	$	36,288	$	39,784
Europe	Europe	4,847		3,042		10,160		5,473		Europe	4,142		4,847		7,527		10,160
Total	Total	$	24,866	$	30,537	$	49,944	$	56,744	Total	$	24,568	$	24,866	$	43,815	$	49,944

In addition to the disaggregated revenue information provided above, approximately ~~61%~~62% and ~~63%~~61% of total net sales as of March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

Contract Balances

The following table contains a roll forward of contract assets and contract liabilities for the period ended March 31, ~~2021:~~

2022:



Contract assets - Beginning balance, October 1, ~~2020~~2021	$	~~11,997~~12,874
Additional revenue recognized over-time	~~30,428~~27,375
Less amounts billed to the customers	~~(28,860)~~(27,136)
Contract assets - Ending balance, March 31, ~~2021~~2022	$	~~13,565~~13,113



Contract liabilities (included within Accrued liabilities) - Beginning balance, October 1, ~~2020~~2021	$	~~(636)~~(236)
Payments received in advance of performance obligations	~~(186)~~(1,209)
Performance obligations satisfied	~~754~~1,169
Contract liabilities (included within Accrued liabilities) - Ending balance, March 31, ~~2021~~2022	$	~~(68)~~(276)

There were 0no impairment losses recorded on contract assets as of March 31, ~~2021~~2022 and September 30, ~~2020.~~

142021.

Remaining performance obligations

As of March 31, ~~2021,~~2022, the Company has ~~$82,305~~$72,045 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.

~~10.~~ ~~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.

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), is currently a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco. Avco also sued Arconic, Inc. (“Arconic”), which was the raw material supplier. No specific amount of damages was claimed by Avco and discovery has only recently begun. Orange disputes the allegations made by Avco and has made cross claims against Arconic. Previously, Orange was a defendant with respect to the same action in the United States District Court for the District of Rhode Island, which action was dismissed in connection with the movement of the matter to Pennsylvania State Court. Although the Company records reserves for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain. Actual results may differ significantly from current estimates. Given the current status of this matter, the Company has not accrued for any expected losses, as the Company has not deemed it probable and does not have a reasonable basis on which to establish an estimate.

The Company is a defendant in a purported class action lawsuit filed in the Superior Court of California, County of Orange, which was filed in August 2017, 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; failure to maintain required wage records and furnish accurate wage statements; and unfair competition. A settlement has been reached and the Company received preliminary court approval on July 13, 2020. Class action notices were sent at the end of September and there were no objections to the settlement. On February 4, 2021, the court issued a tentative ruling to grant final approval. The final approval was granted and the previously recorded liability of $315 ~~was paid on~~ ~~March 29, 2021.~~

During fiscal 2020, the Company received notice from the International Association of Machinists and Aerospace Workers Union that they were disclaiming all interest in representing certain hourly employees at the Company’s Cleveland facility. Subsequently, the International Brotherhood of Boilermakers Union filed a petition to represent this same group of hourly employees. A mail ballot election took place in June 2020 and the National Labor Relations Board certified the International Brotherhood of Boilermakers as the elected representative of the Company’s hourly production employees. The Company’s obligations will be more fully understood following the ratification of a collective bargaining agreement.

In the first quarter of fiscal 2021, the insurance claim related to the fire on December 26, 2018 at the Orange location was finalized with the Company's insurance carrier. The Company continues to work diligently to restore the final 2 of the 6 presses damaged in the fire. Certain vendor delays and certification processes have extended the restoration of these presses. They continue to be on track to be completed by the end of the third quarter of fiscal 2021; however, no assurances can be made that the restoration will be completed within such timeframe. Restoration of the building structure is nearly complete.

Having finalized the claim with its insurance carrier, proceeds in the amount of $3,148 were received in December 2020. In addition, the Company received the remaining receivable balance from the landlord in January in the amount $648, resulting in having received cash proceeds of $4,646 in fiscal 2021. As noted in the table below, $3,099 was recognized within the consolidated condensed statements of operations and the balance was separately designated to the landlord for the continued restoration of the damaged building as prescribed under the lease arrangement. The Company has business interruption insurance coverage, of which $546 of the amount received was reflected within the cost of goods sold line within the consolidated condensed statement of operations.


~~Balance sheet (Other receivables):~~
~~September 30, 2020~~		$	~~1,547~~
	~~Cash proceeds~~	~~(4,646)~~
	~~Capital expenditures (equipment)~~	~~2,495~~

	~~Other expenses~~	58
	~~Business interruption~~	~~546~~
~~March 31, 2021~~		$	0

~~The tables below reflect how the proceeds received impacted the consolidated condensed statements of operations for the six months ended March 31, 2021 and 2020, respectively.~~

Six Months Ended
March 31, 2021
Balance without insurance proceeds Insurance recoveries Balance with insurance proceeds
Cost of goods sold $ 43,882 (604) $ 43,278
Gain on insurance proceeds received $ 0 (2,495) $ (2,495)
Income (loss) before income tax (benefit) expense $ (2,337) (3,099) $ 762

Six Months Ended
March 31, 2020
Balance without insurance proceeds Insurance recoveries Balance with insurance proceeds
Cost of goods sold $ 49,430 (2,287) $ 47,143
Gain on insurance proceeds received $ 0 (1,000) $ (1,000)
Income (loss) before income tax (benefit) expense $ (1,502) (3,287) $ 1,785

~~The following table demonstrates the total settlement amount since December 26, 2018:~~


	~~Total Claim~~
Property & damage **	$	~~20,364~~
~~Extra expense & mitigation expense~~	~~4,404~~
~~Business interruption~~	~~2,932~~
	$	~~27,700~~

**$3,640 of total was directed to the landlord of the property for the restoration of the building as prescribed by the lease arrangement.

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” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions in general, and on the demand for product in the aerospace and energy (or

"A&E&E") industries in particular, of the global economic outlook, including the continuation of military spending at or near current levels and the availability of capital and liquidity from banks, the financial markets and other providers of credit; (2) the future business environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost at comparable margins; (4) metals and commodities price increases and the Company’s ability to recover such price increases; (5) successful development and market introduction of new products and services; (6) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the

impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations; (11) cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners; (12) our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulations; (13) the ability to maintain a qualified workforce; (14) the adequacy and availability of our insurance coverage; (15) our ability to develop new products and technologies and maintain technologies, facilities, and equipment to win new competitions and meet the needs of our customers; (16) our ability to realize amounts in our backlog; (17) investigations, claims, disputes, enforcement actions, litigation and/or other legal proceedings; (18) extraordinary or force majeure events affecting the business or operations of our business; and (19) the impact of the novel COVID-19 pandemic and related impact on the global economy, which may exacerbate the above factors and/or impact our results of operations and financial condition.

The Company is engaged in the production of forgings and machined components primarily for the A&E 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 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.

The Company operates within a cost structure that includes a significant fixed component. Therefore, higher net sales volumes are expected to result in greater operating income because such higher volumes allow the business operations to better leverage the fixed component of their respective cost structures. Conversely, the opposite effect is expected to occur at lower net sales and related production volumes.

A. Results of Operations

Overview

~~Fire Restoration~~Impact of COVID-19 & Other

The ~~insurance claim related to the fire on December 26, 2018 at the Orange location was finalized with the Company's insurance carrier. The Company continues to work diligently to restore the final two~~impact and effects of the six presses damaged in the fire. Certain vendor delays and the certification processes have extended the restoration of these presses. They continue to be on track to be completed by the end of the third quarter of fiscal 2021; however, no assurances can be made that the restoration will be completed within such timeframe. Restoration of the building structure is nearly complete.

Having finalized the claim with its insurance carrier, proceeds in the amount of $3.1 million were received in December 2020 and a remaining receivable balance from the landlord was received in January 2021 in the amount of $0.6 million, resulting in the Company having received cash proceeds of $4.6 million in fiscal 2021. A total of $3.1 million was recognized within the consolidated condensed statements of operations and the balance was separately designated as payable to the landlord for the continued restoration of the damaged building as prescribed under the lease arrangement. The Company has business interruption insurance coverage, of which $0.5 million of the amount received was reflected within the cost of goods sold line within the consolidated condensed statement of operations.

~~For further detail of how the consolidated condensed statements of operations and balance sheets were impacted for the six months ended, refer to Note 10,~~ ~~Commitments and Contingencies.~~

~~COVID-19~~

~~Since being recognized by the World Health Organization as a pandemic, the novel~~ coronavirus ("COVID-19") ~~outbreak~~pandemic continues to impact the ~~United States and other countries in which~~markets we ~~operate.~~serve. The ~~COVID-19 pandemic and its~~ effects ~~continue to evolve, including scope, severity and duration~~ of the ~~COVID-19~~ pandemic, as well as ~~any worsening of~~ the pandemic ~~the potential for additional outbreaks of the pandemic, the impact of new variants of COVID-19, actions~~itself, continue to ~~contain~~evolve, and the ~~pandemic's spread or treat its impact, the rollout and effectiveness of the vaccine, and governmental, business and other actions taken in response to the pandemic. The~~ exact timing and pace of the recovery continues to be indeterminable; however, there are indications that commercial air travel is ~~indeterminable as~~steadily recovering in certain ~~markets have~~

~~reopened, some~~areas and for certain types of ~~which have since experienced a resurgence~~travel while continuing to lag in others. While the long-term outlook remains positive given the nature of ~~COVID-19 cases, and in recent months new variants of COVID-19 have been identified, resulting in additional restrictions put in place by certain governments around~~ the ~~world. Capital markets and economies worldwide have been negatively impacted by COVID-19 and, given~~industry, there continues to be uncertainty with the respect to when commercial air traffic will return to pre-COVID-19 levels. Given the fluidity of the situation, it is still unclear how lasting and deep the ongoing economic impacts of COVID-19 will be, specifically in relation to the commercial aerospace ~~industry. During fiscal 2021,~~industry and energy, where the ~~COVID-19 pandemic continues~~production of the Company's products have lead times of varying lengths and recovery may lag behind other industries. Additionally, other factors such as ongoing geopolitical tensions and further strains on the supply chain continue to ~~have mixed effects~~put pressure on the Company’s results of operations. ~~Given~~

During the ~~long lead times for certain~~second quarter of fiscal 2022, COVID-19 continued to have an impact on the ~~Company's products, the~~Company’s results of operations. The Company has ~~seen a greater impact related to the effects of COVID-19 on~~been impacted by delays in receiving orders and ~~deliveries~~delays in ~~fiscal 2021 than in fiscal 2020. In response~~getting materials required to produce certain products. Due to the uncertain environment created by ~~the~~ COVID-19, ~~pandemic,~~ the Company has ~~in prior periods,~~ taken measures to reduce costs from time to time since the commencement of the COVID-19 pandemic by, from time to time, furloughing ~~and laying off~~ certain of its employees from one of its plant locations that ~~has experienced~~continues to experience reduced sales of commercial aerospace products. ~~Such~~The employees furloughed have since returned to ~~work~~work. Additionally, our operations are subject to global economic, political and geopolitical risks.For example, while the Company does not have a presence in these regions, the ongoing conflict between Russia and Ukraine and

the related actions taken by those countries, sanctions and other measures imposed by the European Union, the U.S. and other countries and organizations in response, along with continued increases in the cost of materials, and increased oil, natural gas and other commodity prices and further pressures on supply chains and transportation, have contributed to and may continue to cause disruption and instability in global markets, supply chains and industries that could negatively impact our businesses, financial condition and results of operations.The Company continues to actively monitor and find ways to mitigate the impact ~~of the pandemic~~ on its ~~operations and consider its ability to pivot its operations and the industries served.~~operations.

Backlog of Orders

SIFCO’s total backlog at March 31, ~~2021~~2022 was ~~$82.3~~$72.0 million, compared with ~~$107.0~~$82.3 million as of March 31, ~~2020.~~2021. Orders may be subject to modification or cancellation by the customer with limited charges. Sales in the A&E markets continue to be impacted by ~~the~~ COVID-19, ~~pandemic,~~ which has created increased pressure in these ~~markets. If the COVID-19 pandemic continues to have a material impact on the A&E~~ markets ~~including with regards to our more significant customers, it could materially affect our business~~ and ~~results of operations. Backlog may decline as customers adjust orders~~accordingly restrained sales in ~~response to the ongoing COVID-19 pandemic and its impact on their operations.~~such markets. Backlog information may not be indicative of future sales.

Six Months Ended March 31, ~~2021~~2022 compared with Six Months Ended March 31, ~~2020~~2021

Net Sales

Net sales comparative information for the first six months of fiscal ~~2021~~2022 and ~~2020~~2021 is as follows:


(Dollars in millions)	(Dollars in millions)	Six Months Ended March 31,				Increase/ (Decrease)		(Dollars in millions)	Six Months Ended March 31,				Increase/ (Decrease)
Net Sales	Net Sales	2021		2020				Net Sales	2022		2021
Aerospace components for:	Aerospace components for:							Aerospace components for:
Fixed wing aircraft	Fixed wing aircraft	$	20.0	$	25.4	$	(5.4)	Fixed wing aircraft	$	20.0	$	20.0	$	—
Rotorcraft	Rotorcraft	15.6		13.6		2.0		Rotorcraft	7.9		15.6		(7.7)
Energy components for power generation units	Energy components for power generation units	11.5		6.1		5.4		Energy components for power generation units	8.0		11.5		(3.5)
Commercial product and other revenue	Commercial product and other revenue	2.8		11.6		(8.8)		Commercial product and other revenue	7.9		2.8		5.1
Total	Total	$	49.9	$	56.7	$	(6.8)	Total	$	43.8	$	49.9	$	(6.1)

Net sales for the first six months of fiscal ~~2021~~2022 decreased ~~$6.8~~$6.1 million to ~~$49.9~~$43.8 million, compared with ~~$56.7~~$49.9 million in the comparable period of fiscal ~~2020. Given~~2021. In general, the ~~long lead times for certain~~production of the Company's products ~~the Company has seen a greater impact related~~have lead times of varying lengths. The varying lead times, coupled with constraints caused by pressures in timely obtaining raw materials, have contributed to the ~~effects~~decline of ~~COVID-19 on~~sales year over year, along with the current state of the commercial aerospace market, in particular, the wide body market. Rotorcraft sales decreased $7.7 million compared with the same period last year due to delays in receiving customer orders and ~~deliveries~~a decrease in ~~fiscal 2021 than~~build rates. The energy components for power generation units decreased by $3.5 million due to variability in ~~fiscal 2020.~~the steam turbine market that we serve. Commercial products and other revenue ~~decreased $8.8~~increased $5.1 million in the first six months of fiscal ~~2021~~2022 compared to the same period in fiscal ~~2020,~~2021, primarily due to the timing of orders related to a munitions ~~program. The energy components for power generation units~~program and increased ~~by $5.4 million primarily due~~sales related to ~~customer order increases as~~ the ~~market saw some recovery. Fixed wing aircraft sales decreased $5.4 million due to timing of customer orders and a decrease in build rates in certain~~ commercial ~~programs, partially offset by increased military programs. The Company experienced an increase in rotorcraft sales primarily due to increased shipments relating to certain military programs.~~space industry.

Commercial net sales were ~~40.0%~~40.8% of total net sales and military net sales were ~~60.0%~~59.2% of total net sales in the first six months of fiscal ~~2021~~2022, compared with 40.0% and 60.0%, respectively, in the comparable period in fiscal ~~2020, respectively.~~2021. Military net sales decreased by ~~$4.1~~$4.0 million to ~~$29.9~~$25.9 million in the first six months of fiscal ~~2021,~~2022, compared with ~~$34.0~~$29.9 million in the comparable period of fiscal ~~2020,~~2021, primarily due to ~~the~~ timing ~~of orders~~in order placement related to certain programs and the ability to timely get material to produce parts, partially offset by increased sales in a munitions program. Commercial net sales decreased ~~$2.7~~$2.1 million to ~~$20.0~~$17.9 million in the first six months of fiscal ~~2021,~~2022, compared with ~~$22.7~~$20.0 million in the comparable period of fiscal ~~2020~~2021 primarily due to ~~decreased build rates in certain commercial programs, partially offset by an increase~~a decrease in energy components sales for power generation due to ~~increased customer orders.~~decreased demand in the market, partially offset by increase in commercial space product.

Cost of Goods Sold

Cost of goods sold decreased by ~~$3.9~~$0.9 million, or ~~8.2%~~2.2%, to ~~$43.3~~$42.3 million, or ~~86.7%~~96.7% of net sales, during the first six months of fiscal ~~2021,~~2022, compared with ~~$47.1~~$43.3 million or ~~83.1%~~86.7% of net sales, in the comparable period of fiscal ~~2020.~~2021. The decrease ~~was~~is primarily due ~~primarily~~ to ~~decreased~~lower volume ~~cost controlling measures~~ and ~~the non-recurrence~~$0.9 million in lower payroll costs, partially offset by $1.7 million of ~~the one-time pension withdrawal liability charge of $0.8~~idle expense and $0.6 million ~~incurred~~in higher natural gas costs. The same period in the prior year ~~which partially offset $1.3~~included approximately $0.5 million ~~of idle costs incurred~~in insurance recoveries related to business interruption from ~~its~~the fire claim that occurred in December 2018 at the Orange, California ("Orange") location.

1815

~~location due to reduced production and mitigated by insurance recoveries related to business interruption losses of $0.5 million as part of fire settlement.~~

Gross Profit

Gross profit decreased ~~$2.9~~$5.2 million to $1.5 million in the first six months of fiscal 2022, compared with $6.7 million of gross profit in the comparable period of fiscal 2021. Gross margin percent of sales was 3.3% during the first six months of fiscal ~~2021,~~2022, compared with ~~$9.6 million in the comparable period of fiscal 2020. Gross margin percent of sales was~~ 13.3% ~~during the first six months of fiscal 2021, compared with 16.9%~~ in the comparable period in fiscal ~~2020.~~2021. The decrease in gross profit was primarily due to decreased volume and ~~the increased~~higher idle ~~costs.~~and natural gas costs as described above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were ~~$7.4~~$6.2 million, or ~~14.9%~~14.2% of net sales during the first six months of fiscal ~~2021,~~2022, compared with ~~$7.5~~$7.4 million, or ~~13.3%~~14.9% of net sales in the comparable period of fiscal ~~2020.~~2021. The decrease in selling, general and administrative expenses is primarily due ~~to the continued cost~~lower depreciation expense of $0.4 million, a reduction ~~efforts by management~~ in ~~response to COVID-19~~accrued incentive of $0.3 million, $0.2 million lower sales and ~~other effects of the COVID-19 pandemic~~use taxes, and ~~its impact on operations such as~~$0.2 million in lower ~~wages related to a first quarter furlough at one location and less travel expense, partially offset by higher legal and professional costs and~~ commissions.

Amortization of Intangibles

Amortization of intangibles was ~~$0.5~~$0.2 million in the first six months of fiscal ~~2021,~~2022, compared with ~~$0.8~~$0.5 million in the comparable period of fiscal ~~2020. Such~~2021. The decrease was primarily due to certain intangible assets ~~that were~~which had been fully amortized during the prior fiscal ~~2020.~~

~~Other/General~~

~~The Company recorded income before taxes of $0.8 million in the first six months of fiscal 2021, compared with $1.8 million in the first six months of fiscal 2020.~~year.

Other/General

Prior year results included a $2.5 million gain in insurance recoveries related to the assets that were damaged in the fire at the Orange location that occurred in December 2018.

In the first six months of fiscal ~~2021, results included~~2022, the Company recognized a ~~$2.5 million~~ gain on ~~insurance recoveries, compared~~extinguishment of debt related to ~~$1.0 million in~~ the ~~comparable period.~~

~~Interest expense~~PPP loan that was ~~$0.3 million in~~forgiven by the ~~first six months of fiscal 2021, compared to $0.5 million in the first six months of fiscal 2020.~~SBA for $5.1 million. See Note 5, Debt for further discussion.

The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the first six months of both fiscal ~~2021~~2022 and ~~2020:~~2021:

Weighted Average
Interest Rate
Six Months Ended
March 31, Weighted Average
Outstanding Balance
Six Months Ended
March 31,
2021 2020 2021 2020
Revolving credit agreement 1.4 % 3.8 % $ 9.2 million $ 15.9 million
Foreign term debt 3.6 % 4.0 % $ 7.1 million $ 5.7 million
Other debt 1.0 % 0.9 % $ 5.7 million $ 1.0 million


	Weighted Average Interest Rate Six Months Ended March 31,				Weighted Average Outstanding Balance Six Months Ended March 31,
	2022		2021		2022	2021
Revolving credit agreement	1.8	%	1.4	%	$ 9.9 million	$ 9.2 million
Foreign term debt	3.2	%	3.6	%	$ 6.3 million	$ 7.1 million
Other debt	0.5	%	1.0	%	$ 3.2 million	$ 5.7 million

Income Taxes

The Company’s effective tax rate through the first six months of fiscal ~~2021~~2022 was ~~(97)%~~33%, compared with ~~(8%)~~(97)% for the same period of fiscal ~~2020.~~2021. The ~~decrease~~increase in the effective rate was primarily attributable to tax benefits from adjusting deferred taxes recorded in Italy recognized on a discrete basis ~~partially offset by changes in jurisdictional mix of income~~ in fiscal 2021, ~~compared to the same period of~~which were non-recurring in fiscal ~~2020.~~2022. The effective tax rate differs from the U.S. federal statutory rate due primarily to the valuation allowance against the Company’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax ~~rate~~rate.

Net (Loss) Income ~~(Loss)~~

Net ~~income~~loss was ~~$1.5~~$0.1 million during the first six months of fiscal ~~2021,~~2022, compared with ~~$1.9~~net income of $1.5 million in the comparable period of fiscal ~~2020.~~2021. The ~~decrease in income~~net loss is ~~primarily due~~attributed to lower sales ~~increased~~and decreased gross profit due to idle costs recorded, partially offset by ~~continued cost saving activities,~~the gain on loan extinguishment related to the PPP loan. Prior year results included $2.5 million in insurance recoveries ~~received~~ and ~~the~~a favorable tax ~~benefit in the first six months of fiscal 2021.~~benefit.

1916

Three Months Ended March 31, ~~2021~~2022 compared with Three Months Ended March 31, ~~2020~~2021

Net Sales

Net sales for the second quarter of fiscal ~~2021~~2022 decreased ~~18.6%~~1.2% to ~~$24.9~~$24.6 million, compared with ~~$30.5~~$24.9 million in the comparable period of fiscal ~~2020.~~2021. Net sales comparative information for the second quarter of fiscal ~~2021~~2022 and ~~2020~~2021 is as follows:


(Dollars in millions)	(Dollars in millions)	Three Months Ended March 31,				Increase (Decrease)		(Dollars in millions)	Three Months Ended March 31,				Increase (Decrease)
Net Sales	Net Sales	2021		2020				Net Sales	2022		2021
Aerospace components for:	Aerospace components for:							Aerospace components for:
Fixed wing aircraft	Fixed wing aircraft	$	10.2	$	14.1	$	(3.9)	Fixed wing aircraft	$	10.1	$	10.2	$	(0.1)
Rotorcraft	Rotorcraft	7.9		6.8		1.1		Rotorcraft	4.4		7.9		(3.5)
Energy components for power generation units	Energy components for power generation units	5.1		3.4		1.7		Energy components for power generation units	4.3		5.1		(0.8)
Commercial product and other revenue	Commercial product and other revenue	1.7		6.2		(4.5)		Commercial product and other revenue	5.8		1.7		4.1
Total	Total	$	24.9	$	30.5	$	(5.6)	Total	$	24.6	$	24.9	$	(0.3)

The ~~decrease was attributed to a $4.5 million decrease~~increase in commercial product and other revenues ~~due~~of $4.1 million was attributed to timing of orders for a munitions program and increase in sales related to the commercial space industry. This was offset by a decrease of ~~$3.9~~$3.5 million in ~~fixed wing aircraft revenues due to timing~~rotorcraft sales driven by a combination of ~~customer orders~~slower sales caused by COVID-19 (following a prior surge of purchases of military spares) along with continued procurement delays in obtaining raw materials and a decrease in build rates infor certain commercial programs. The decrease in revenues in the second quarter of fiscal 2021 was partially offset by an increase in sales in the energy components for power generation units of $1.7 million primarily due to customer order increases as the market saw some recovery and a $1.1 million increase in rotorcraft sales primarily due to increased shipments relating to certain military programs.

Commercial net sales were ~~37.2%~~38.7% of total net sales and military net sales were ~~62.8%~~61.3% of total net sales in the second quarter of fiscal ~~2021,~~2022, compared with ~~40.9%~~37.2% and ~~59.1%~~62.8%, respectively, in the comparable period of fiscal ~~2020.~~2021. Military net sales decreased by ~~$2.4~~$0.6 million to ~~$15.6~~$15.1 million in the second quarter of fiscal ~~2021,~~2022, compared with ~~$18.0~~$15.6 million in the comparable period of fiscal ~~2020,~~2021, primarily due to the timing of orders for a munitions ~~program.~~program, partially offset by a decrease in build rates in certain programs. Commercial net sales ~~decreased $3.2~~increased $0.3 million to ~~$9.2~~$9.5 million in the second quarter of fiscal ~~2021,~~2022, compared with ~~$12.5~~$9.2 million in the comparable period of fiscal ~~2020~~2021 primarily due to increase in sales related the commercial space industry partially offset by decreased build rates in certain commercial ~~programs partially offset by increased sales in the energy market.~~programs.

Cost of Goods Sold

Cost of goods sold was ~~$22.1~~$23.1 million, or ~~89.0%~~94.1% of net sales, during the second quarter of fiscal ~~2021,~~2022, compared with ~~$24.3~~$22.1 million or ~~79.4%~~89.0% of net sales, in the comparable period of fiscal ~~2020,~~2021, primarily due to ~~lower volume and idle~~higher material costs of ~~$0.8~~$0.5 million, ~~incurred at the Orange location.~~idle expense of $0.4 million, and increased energy costs of $0.3 million.

Gross Profit

Gross profit decreased ~~$3.5~~$1.2 million to ~~$2.7~~$1.5 million during the second quarter of fiscal ~~2021,~~2022, compared with ~~$6.3~~$2.7 million in the comparable period of fiscal ~~2020.~~2021. Gross margin was ~~11.0%~~5.9% during the second quarter of fiscal ~~2021,~~2022, compared with ~~20.6%~~11.0% in the comparable period in fiscal ~~2020.~~2021. The decrease in gross margin was primarily due to ~~lower sales volume and idle~~higher costs ~~associated with reduced production at the Orange location.~~incurred as noted above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were ~~$3.6~~$2.7 million, or ~~14.5%~~10.9% of net sales, during the second quarter of fiscal ~~2021,~~2022, compared with ~~$3.3~~$3.6 million, or ~~10.9%~~14.5% of net sales, in the comparable period of fiscal ~~2020.~~2021. The ~~increase~~decrease is primarily due to ~~an increase~~a reduction in ~~legal~~accrued incentive costs of $0.3 million, $0.2 million lower depreciation, $0.2 million lower sales and ~~professional costs~~use tax, along with lower commissions of $0.1 million and ~~IT related costs partially offset by~~ lower salary and ~~benefits in the second quarter of fiscal 2021.~~benefits.

Amortization of Intangibles

Amortization of intangibles was $0.1 million in the second quarter of fiscal 2022 compared with $0.3 million in the second quarter of fiscal ~~2021 compared with $0.4 million~~2021. The decrease was due to certain intangible assets that became fully amortized during the prior fiscal year.

Other/General

Included in other income (loss), net, in the second quarter of fiscal ~~2020.~~2022 is the PPP loan for forgiveness of $5.1 million. See Note 5, Debt for further discussion.

~~Other/General~~

~~The Company recorded loss before income taxes of $1.3 million in the second quarter of fiscal 2021, compared to income before income taxes of $3.2 million in the second quarter of fiscal 2020.~~

~~Prior period results include a $1.0 million gain in insurance proceeds related to the insurance recovery from the damage that occurred related to the fire at the Orange location.~~

2017

~~Interest expense was $0.2 million in the second quarter of fiscal 2021, compared to $0.3 million in the second quarter of fiscal 2020.~~

The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s Credit Agreement in the second quarter of both fiscal ~~2021~~2022 and ~~2020:~~2021:

Weighted Average
Interest Rate
Three Months Ended
March 31, Weighted Average
Outstanding Balance
Three Months Ended
March 31,
2021 2020 2021 2020
Revolving credit agreement 1.4 % 3.7 % $ 7.5 million $ 16.1 million
Foreign term debt 4.1 % 4.3 % $ 7.1 million $ 5.5 million
Other debt 1.0 % 0.9 % $ 5.7 million $ 0.9 million


	Weighted Average Interest Rate Three Months Ended March 31,				Weighted Average Outstanding Balance Three Months Ended March 31,
	2022		2021		2022	2021
Revolving credit agreement	1.8	%	1.4	%	$ 11.1 million	$ 7.5 million
Foreign term debt	5.0	%	4.1	%	$ 6.6 million	$ 7.1 million
Other debt	1.8	%	1.0	%	$ 0.8 million	$ 5.7 million

Income Taxes

The Company's effective tax rate in the second quarter of fiscal ~~2021~~2022 was ~~(12.4)%~~1%, compared with ~~(1)~~(12)% for the same period of fiscal ~~2020.~~2021. The ~~decrease~~increase in the effective rate was primarily attributable to changes in jurisdictional mix of income during the three months ended March 31, ~~2021~~2022 compared to the same period of fiscal ~~2020.~~2021. The effective tax rate differs from the U.S. Federal statutory rate due primarily to the valuation allowance against the Company's U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

~~Net Income (Loss)~~

Net ~~loss~~(Loss) Income

Net income was ~~$1.5~~$3.6 million during the second quarter of fiscal ~~2021,~~2022, compared with net ~~income~~loss of ~~$3.3~~$1.5 million in the comparable period of fiscal ~~2020.~~2021. The ~~decrease~~net income is primarily ~~due~~attributed to ~~lower sales, increase in idle~~the gain on loan extinguishment related to the PPP loan noted above, partially offset by the higher costs and higher selling, general and administrative expenses. Prior period includes a non-recurring gain of insurance recoveries in the amount of $1.0 million as the Company continued to work through the restoration of the Orange location.noted above.

Non-GAAP Financial Measures

Presented below is certain financial information based on the Company's EBITDA and Adjusted EBITDA. References to “EBITDA” mean earnings (losses) from continuing operations before interest, taxes, depreciation and amortization, and references to “Adjusted EBITDA” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and Adjusted EBITDA.

Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under generally accepted accounting principles in the United States of America (“GAAP”). The Company presents EBITDA and Adjusted EBITDA because management 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;

•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 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 ~~(loss)~~ to EBITDA and Adjusted EBITDA:


Dollars in thousands	Dollars in thousands	Three Months Ended				Six Months Ended				Dollars in thousands	Three Months Ended				Six Months Ended
		March 31,				March 31,					March 31,				March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income (loss)		$	(1,491)	$	3,260	$	1,502	$	1,919
Net (loss) income										Net (loss) income	$	3,639	$	(1,491)	$	(52)	$	1,502
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization expense	Depreciation and amortization expense	1,905		1,875		3,730		3,731		Depreciation and amortization expense	1,596		1,905		3,210		3,730
Interest expense, net	Interest expense, net	169		262		335		513		Interest expense, net	193		169		307		335
Income tax expense (benefit)	Income tax expense (benefit)	165		(39)		(740)		(134)		Income tax expense (benefit)	23		165		(26)		(740)
EBITDA	EBITDA	748		5,358		4,827		6,029		EBITDA	5,451		748		3,439		4,827
Adjustments:	Adjustments:									Adjustments:
Foreign currency exchange loss (income), net (1)		14		(1)		21		—
Foreign currency exchange loss, net (1)										Foreign currency exchange loss, net (1)	3		14		9		21
Other loss (income), net (2)	Other loss (income), net (2)	42		25		103		(84)		Other loss (income), net (2)	(36)		42		(68)		103
Loss on disposal of assets (3)		—		41		—		41
Gain on disposal of assets (3)										Gain on disposal of assets (3)	(2)		—		(2)		—
Gain on insurance recoveries (4)	Gain on insurance recoveries (4)	—		(1,000)		(2,495)		(1,000)		Gain on insurance recoveries (4)	—		—		—		(2,495)

Gain on extinguishment of debt (5)										Gain on extinguishment of debt (5)	(5,106)		—		(5,106)		—
Equity compensation ~~(5)~~(6)	Equity compensation ~~(5)~~(6)	150		70		293		225		Equity compensation ~~(5)~~(6)	145		150		306		293

LIFO impact ~~(6)~~(7)	LIFO impact ~~(6)~~(7)	207		(33)		335		(11)		LIFO impact ~~(6)~~(7)	207		207		383		335

Adjusted EBITDA	Adjusted EBITDA	$	1,161	$	4,460	$	3,084	$	5,200	Adjusted EBITDA	$	662	$	1,161	$	(1,039)	$	3,084

(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.

(3)Represents the difference between the proceeds from the sale of operating equipment and the carrying ~~values~~value shown on the Company's ~~books.~~books or asset impairment of long-lived assets.

(4)Represents the difference between the insurance proceeds received for the damaged property and the carrying values shown on the Company's books for the assets that were damaged in the fire at the Orange ~~location.~~location that occurred in December 2018.

(5)Represents the gain on extinguishment of debt and interest for the amount forgiven by the SBA as it relates to the PPP loan.

(6)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.

~~(6)~~(7)Represents the change in the reserve for inventories for which cost is determined using the last-in, first-out (“LIFO”) method.

B. Liquidity and Capital Resources

~~Historically, the~~The main sources of liquidity for the Company have been cash flows from operations and borrowings under our Credit Agreement. We anticipate that cash provided by the cash flows from operations and borrowing capacity under our Credit Agreement will be sufficient to meet our anticipated cash requirements for the next twelve months, which primarily include operating expenses, including salaries and working capital requirements. The ongoing impact and magnitude of the consequences and effects of COVID-19, along with the pandemic itself, continues to remain uncertain (including the pandemic's continued effects on the global economy and potential for market disruptions)~~, with the commercial aerospace market continuing to be impacted by the global disruption in travel and, further, the pandemic and responses~~ due to the ~~continued spread of the pandemic causing~~ continued interruptions to the business of our customers and suppliers, which in turn ~~is likely to~~can impact our business operations and results as well as our liquidity and capital resources. The Company's liquidity could be negatively affected by customers extending payment terms to the Company and/or the decrease in demand for our products as a result of the impact of ~~the~~ COVID-19 on the commercial airline industry. As the impact of ~~the~~ COVID-19 ~~pandemic~~ on the economy and the Company's operations continues to evolve, the Company and management will continue to assess and actively manage liquidity needs. See "Results of Operation" for further discussion of the impact of COVID-19.

Cash and cash equivalents was ~~$0.3~~$0.1 million at March 31, ~~2021~~2022 and ~~$0.4~~$0.3 million at September 30, ~~2020.~~2021. At March 31 ~~2021,~~2022, the majority of the Company’s cash and cash equivalents were in the possession of its non-U.S. subsidiaries. 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 used $3.2 million of cash in the first six months of fiscal 2022, primarily due to operating results, an increase in inventory of $2.6 million, and a reduction of accrued liabilities of $1.2 million, partially offset by accounts receivable collections and a slight increase in accounts payable.

The Company’s operating activities provided $5.8 million of cash in the first six months of fiscal ~~2021, compared with usage of~~2021. The cash ~~of $0.4 million~~provided by operating activities in the first six months of ~~fiscal 2020. The cash provided in~~ fiscal 2021 was primarily due to net income of $1.5 million and a $3.2 million decrease in net working capital, ~~and~~partially offset by $1.1 million in non-cash items, such as gain on insurance recovery, and deferred income taxes, depreciation and amortization, equity based compensation, and LIFO effect. The cash provided ~~from~~by working capital was primarily due to decrease in receivables due to customer collections and decreased ~~sales.~~

The Company’s operating activities used $0.4 million of cash in the first six months of fiscal 2020. The cash used by operating activities in the first six months of fiscal 2020 was primarily due to the use in working capital of $5.1 million (increase in inventory of $2.9 million, $2.2 million in contract assets, net accruals of $1.2 million partially offset by a $1.5 million decrease in receivables) partially offset by net income of $1.9 million and by $2.8 million of non-cash items such as depreciation and amortization of $3.8 million, offset by $1.0 million of other noncash items, such as gain on insurance recovery. The use of cash from working capital was primarily due to increase in inventories to support orders in the second half of fiscal 2020 and payments to suppliers and disbursements related to the fire recovery, partially offset by decreased receivables resulting from improved collections.accrued liabilities.

Investing Activities

Cash used for investing activities was $1.5 million in the first six months of fiscal 2022, compared with $1.3 million in the first six months of fiscal ~~2021, which includes~~2021. Prior year included $4.1 million of insurance recovery on the damaged property related to the fire at the Orange ~~location, compared with $0.1 million in the first six months of fiscal 2020.~~location. Capital expenditures were $5.4 million, of which $3.6 million related to the continued restoration of the Orange location as a result of the fire. In addition to the $5.4 million spent for capital expenditures during the first six months of fiscal 2021, $1.6 million was committed for future capital expenditurescommitments as of March 31, ~~2021.~~2022 were $1.2 million. The Company anticipates that the remaining total fiscal ~~2021~~2022 capital expenditures will be within the range of ~~$1.5~~$2.0 million to ~~$2.0~~$3.0 million ~~(exclusive of fire related expenditures)~~ and will relate principally to the further enhancement of production and product offering capabilities and drive operating cost reductions. Separate from the amounts given above, the Company anticipates incurring additional costs in fiscal 2021 of approximately $1.0 million to $1.5 million in capital expenditures at the Orange location as the result of the fire and resulting damage that took place. These costs are expected to be offset by the insurance proceeds previously received.

Financing Activities

Cash ~~used~~provided by financing activities was $4.5 million in the first six months of fiscal 2022, compared with cash used for financing activities of $4.6 million in the first six months of fiscal ~~2021, compared with cash provided by financing activities of $0.5 million in the first six months of fiscal 2020.~~2021.

As discussed in Note 5, Debt, the ~~Company amended~~Company's Maniago location obtained new borrowings from a lender during the Credit Agreement and the Export Agreement on February 19, 2021. The combined maximum borrowings remain unchanged at $35.0 million. The Fifth Amendment (the "Fifth Amendment") to the Credit Agreement (as amended, the "Credit Agreement") consistsfirst six months of ~~a senior secured revolving credit facility~~fiscal 2022 for approximately $1.1 million with a ~~maximum borrowing $28.0~~six year term. The proceeds of this loan are to be used for working capital purposes. Short-term debt repayments were $0.1 million ~~previously $30.0 million. The revolving commitment through~~in the ~~First Amendment (the "First Amendment")~~first six months of fiscal 2022 compared with net short-term debt advances of $0.9 million in the Export Credit Agreement, which lends amounts to the Company on foreign receivables increases its revolving commitment from $5.0 million to $7.0 million. The Fifth Amendment, among other things, extends the maturity date from August 6, 2021 to February 19, 2024.first six months of fiscal 2021.

The Company had net ~~repayments~~borrowings to the revolver under the Credit Agreement of $3.9 million in the first six months of fiscal 2022 compared with net repayments of $5.1 million in the first six months of fiscal ~~2021 compared with net borrowings of $1.6 million in the first six months of fiscal 2020.~~2021.

Under the Company's Credit Agreement, the Company is subject to certain customary loan covenants regarding availability as discussed in Note 5, Debt. The availability at March 31, ~~2021~~2022 was ~~$18.1 million.~~$12.8 million, which was greater than the 10.0% of the Revolving Commitment as of March 31, 2022. As such, no covenant calculation was required. If availability had fallen short, the Company would be required to meet the fixed charge coverage ratio ("FCCR") covenant, which must not be less than 1.1 to 1.0. 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. ~~Because the availability was greater than the 10.0% of the Revolving Commitment as of March 31, 2021, the FCCR calculation was not required.~~

As noted in Note 5, Debt, the ~~Company’s~~Company entered its Sixth Amendment which amends the Credit Agreement ~~is asset-based, a sustained significant decrease in revenue in~~to, among other things, (i) revise the ~~U.S. or excessive aging~~fixed coverage ratio to exclude the first $1.5 million of unfunded capital expenditures through April 20, 2023, (ii) increase the ~~underlying receivables and inventory as a result~~letter of credit sub-limit from $2.0 million to $3.0 million, (iii) modify the ~~impact of~~reference rate from the ~~COVID-19 pandemic could materially affect~~London interbank offered rate ("LIBOR") to the ~~collateral capacity limitation of the availability~~secured overnight financing rate ("SOFR") under the Credit Agreement, and ~~could impact our ability~~(iv) revise the property, plant and equipment component of the borrowing base under the Credit Agreement. As part of the amendment, was the Second Amendment which amends the Export Agreement to ~~comply with covenants~~replace the reference rate from LIBOR to SOFR under the Export Credit Agreement.

The Company received forgiveness of the $5.0 million PPP Loan, plus accrued interest, from the SBA in ~~our Credit Agreement.~~January 2022. As such, the Company derecognized the liability in the second quarter of fiscal 2022 and has been legally released from the loan.

Future cash flows from the Company’s operations may be used to pay down amounts outstanding under the Credit Agreement and 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 Agreement for its domestic locations. The Company was ~~previously~~ able to ~~defer payments for certain debt obligations~~obtain new financing at its Maniago location to provide Maniago with sufficient liquidity.

Additionally, the credit and capital markets ~~has~~have seen significant volatility during the course of the pandemic. Tightening of the credit market and standards, as well as capital market volatility caused by various factors, included the continued effects of COVID-19 and/or ongoing geopolitical tensions, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing Credit Agreement, in the event the Company seeks additional liquidity sources as a result of the

2320

~~a result of the~~ continued impact of COVID-19. 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.

~~D. Impact of~~C. Recently ~~Issued~~Adopted Accounting Standards

~~In June 2016,~~For recently adopted accounting standards refer to Note 1, Summary of Significant Accounting Policies - Recently Adopted Accounting Standards for further detail. Additionally, the ~~FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~"Company's significant accounting policies and ~~subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets~~procedures are explained in the Management's Discussion 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 recognitionAnalysis section of the ~~exposure,~~Company's Annual Report on Form 10-K for the expected credit loss model requires entities to estimate the credit 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 estimate, so its application will require significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 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 are considered smaller reporting companies ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, the Company does not need to implement until October 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results within the consolidated condensed statements of operations and financial condition.year ended September 30, 2021.

~~In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes"~~ was issued to (i) reduce the complexity of the standard by removing certain exceptions to the general principles in Topic 740 and (ii) improve consistency and simplify other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective beginning October 1, 2021. The Company is currently in the process of evaluating the impact of adoption of the rules on the Company's financial condition, results of operations and disclosure.

Item 4. Controls and Procedures

As defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “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 March 31, ~~2021~~2022 (the “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, the information is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as ~~a result of the continuing existence of the material weakness in the Company's internal controls over financial reporting described in Item 9A of the Company's 2020 Annual Report on Form 10-K.~~

A 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 aappropriate to allow timely ~~basis.~~

~~The following material weakness related to our control environment existed as of March 31, 2021.~~

•~~Insufficient review of specific controls associated with revenue, inventory, income taxes, and other matters at the Maniago location.~~

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 conclusionsdecisions regarding ~~information~~ required to be recorded, processed, summarized, and reported in the Company’s SEC reports. Notwithstanding the identified material weakness, 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 the material weakness identified in our control environment, the Company is taking the following actions to remediate the material weakness:~~

•Using a risk-based approach, management will implement additional monitoring controls through increased oversight and training local management to execute additional controls in detecting material errors.

•External resources with specialized knowledge and expertise, where appropriate, are being engaged and utilized and additional review controls are being instituted to prevent and detect material errors on a timely basis.

With the 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 weakness, including but not limited to (i) engaging subject matter experts on an as need basis to assist management in generating accurate, transparent, and timely financial information, and (ii) continue to strengthen organizational structure including holding individuals accountable for their internal control responsibilities.

Although we continue to make meaningful progress on our remediation plan during fiscal year 2021, we cannot 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.disclosure.

Changes in Internal Control over Financial Reporting ~~and other Remediation~~

No material changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) occurred during the period covered by this Quarterly Report on Form 10‑Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Items 1, 1A, 2, 3, 4 and 5 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 information regarding our outstanding material legal proceedings, see Note 10, ~~Commitments and Contingencies~~.

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						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 December 31, 2016 and incorporated herein by reference
9.4						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
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 control Agreement and Separation Agreement between the Company and Peter W. Knapper, effective June 29, 2019, filed as Exhibit 10.1 to the Company's Form 8-K dated July 1, 2019 and incorporated herein by reference.
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
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						Credit Agreement, dated August 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 Company's Form 10-Q dated August 9, 2018, and incorporated herein by reference
10.8						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
10.9						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
10.10						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
10.11						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


10.12						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						Promissory Note, dated April 10, 2020, by and between SIFCO Industries, Inc. and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated April 13, 2020, and incorporated herein by reference.
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
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
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
*101						The following financial information from SIFCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021~~2022 filed with the SEC on May ~~6, 2021,~~5, 2022, formatted in XBRL includes: (i) Consolidated Condensed Statements of Operations for the fiscal periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, (ii) Consolidated Condensed Statements of Comprehensive Income for the fiscal periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, (iii) Consolidated Condensed Balance Sheets at March 31, ~~2021~~2022 and September 30, ~~2020,~~2021, (iv) Consolidated Condensed Statements of Cash Flow for the fiscal periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, (iv) Consolidated Condensed Statements of Shareholders' Equity for the periods March 31, ~~2021~~2022 and ~~2020,~~2021, and (v) the Notes to the Consolidated Condensed Financial Statements.
*104						Cover Page Interactive Data File: the cover page XBRL tags are embedded within the Inline XBRL document and are contained with Exhibit 101

2723

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: May ~~6, 2021~~5, 2022						/s/ Peter W. Knapper
						Peter W. Knapper
						President and Chief Executive Officer
						(Principal Executive Officer)

Date: May ~~6, 2021~~5, 2022						/s/ Thomas R. Kubera
						Thomas R. Kubera
						Chief Financial Officer
						(Principal Financial Officer)

2824


	Six Months Ended March 31, 2020
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount









Balance - September 30, 2019	5,777	$	5,777	$	10,438	$	33,148	$	(13,309)	$	36,054

Comprehensive income	—	—		—		1,919		500		2,419


Performance and restricted share expense	—	—		225		—		—		225
Share transactions under equity based plans	139	139		(147)		—		—		(8)
Balance - March 31, 2020	5,916	$	5,916	$	10,516	$	35,067	$	(12,809)	$	38,690


	Three Months Ended March 31, 2020
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance - December 31, 2019	5,863	$	5,863	$	10,503	$	31,807	$	(12,928)	$	35,245




Comprehensive loss	—	—		—		3,260		119		3,379

Performance and restricted share expense	—	—		70		—		—		70
Share transactions under equity based plans	53	53		(57)		—		—		(4)
Balance - March 31, 2020	5,916	$	5,916	$	10,516	$	35,067	$	(12,809)	$	38,690


	March 31, 2021		March 31, 2020
Other Information

Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	1,097	$	1,086
Operating cash flows from finance leases	2		3
Financing cash flows from finance leases	29		28
Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases	43		278


	Six Months Ended March 31, 2021
	Balance without insurance proceeds		Insurance recoveries	Balance with insurance proceeds

Cost of goods sold	$	43,882	(604)	$	43,278
Gain on insurance proceeds received	$	0	(2,495)	$	(2,495)
Income (loss) before income tax (benefit) expense	$	(2,337)	(3,099)	$	762