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SIF Sifco Industries Inc

3.00
-0.25 (-7.69%)
24 Dec 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Sifco Industries Inc AMEX:SIF AMEX Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  -0.25 -7.69% 3.00 3.40 2.95 3.25 31,689 22:00:00

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

12/08/2024 9:52pm

Edgar (US Regulatory)


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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 June 30, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-5978
SIFCO Industries, Inc.
(Exact name of registrant as specified in its charter) 
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 filerAccelerated filer
Non-accelerated filerSmaller 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 classTrading Symbol(s)Name of each exchange on which registered
Common SharesSIFNYSE American
The number of the Registrant’s Common Shares, par value $1.00, outstanding at June 30, 2024 was 6,179,881.



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
June 30,
Nine Months Ended
June 30,
 2024202320242023
Net sales$29,259 $21,853 $76,854 $62,394 
Cost of goods sold24,725 18,375 68,857 55,935 
Gross profit4,534 3,478 7,997 6,459 
Selling, general and administrative expenses3,150 3,388 9,939 10,517 
Amortization of intangible assets40 63 121 187 
(Gain) loss on disposal of operating assets (3)3  
Operating profit (loss)1,344 30 (2,066)(4,245)
Interest expense, net1,078 305 2,471 919 
Foreign currency exchange (gain) loss, net(1)1 6 11 
Other expense, net139 323 244 287 
Income (loss) before income tax expense128 (599)(4,787)(5,462)
Income tax expense56 35 153 128 
Net income (loss)$72 $(634)$(4,940)$(5,590)
Net income (loss) per share
Basic$0.01 $(0.11)$(0.82)$(0.94)
Diluted$0.01 $(0.11)$(0.82)$(0.94)
Weighted-average number of common shares (basic)6,009 5,940 5,991 5,925 
Weighted-average number of common shares (diluted)6,105 5,940 5,991 5,925 
See notes to unaudited consolidated condensed financial statements.
2



SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited, Amounts in thousands)
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Net income (loss)$72 $(634)$(4,940)$(5,590)
Other comprehensive income (loss):
Foreign currency translation (loss) gain, net of tax(73)20 52 436 
Retirement plan liability adjustment, net of tax104 153 190 305 
       Other(5) (5)1 
Comprehensive income (loss)$98 $(461)$(4,703)$(4,848)
See notes to unaudited consolidated condensed financial statements.
3



SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Amounts in thousands, except per share data)
June 30,
2024
September 30,
2023
 (unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$1,696 $368 
Short-term investments1,713  
Receivables, net of allowance for credit losses of $124 and $242, respectively
26,831 20,196 
Contract assets10,055 10,091 
Inventories, net13,423 8,853 
Refundable income taxes84 84 
Prepaid expenses and other current assets1,200 1,882 
Total current assets55,002 41,474 
Property, plant and equipment, net33,914 36,287 
Operating lease right-of-use assets, net13,673 14,380 
Intangible assets, net161 278 
Goodwill3,493 3,493 
Other assets88 81 
Total assets$106,331 $95,993 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt$6,116 $3,820 
Promissory note - related party3,366  
Revolver19,693 16,289 
Short-term operating lease liabilities906 869 
Accounts payable14,965 13,497 
Contract liabilities3,880 1,150 
Accrued liabilities (Related party is $880 at June 30, 2024 and $0 at September 30, 2023)
6,506 5,327 
Total current liabilities55,432 40,952 
Long-term debt, net of current maturities, net of unamortized debt issuance costs3,620 2,457 
Long-term operating lease liabilities, net of short-term13,333 14,020 
Deferred income taxes, net 142 
Pension liability3,469 3,417 
Other long-term liabilities651 670 
Shareholders’ equity:
Serial preferred shares, no par value, 1,000 shares authorized; 0 shares issued and outstanding at June 30, 2024 and September 30, 2023
  
Common shares, par value $1 per share, 10,000 shares authorized; issued and outstanding shares 6,180 at June 30, 2024 and 6,105 at September 30, 2023
6,180 6,105 
Additional paid-in capital11,745 11,626 
Retained earnings18,324 23,264 
Accumulated other comprehensive loss(6,423)(6,660)
Total shareholders’ equity29,826 34,335 
Total liabilities and shareholders’ equity$106,331 $95,993 
See notes to unaudited consolidated condensed financial statements.
4



SIFCO Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Unaudited, Amounts in thousands)
Nine Months Ended
June 30,
 20242023
Cash flows from operating activities:
Net loss$(4,940)$(5,590)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization4,568 4,821 
Amortization of debt issuance costs762 30 
Loss on disposal of operating assets 3  
Loss on insurance proceeds received for non-property claim 60 
LIFO effect826 (272)
Share transactions under company stock plan, net194 221 
Inventory valuation accounts481 (1,793)
Interest added to promissory note - related party (paid-in-kind)216  
Other long-term liabilities219 66 
Deferred income taxes(142)(136)
Changes in operating assets and liabilities:
Receivables(6,631)(3,160)
Contract assets36 1,153 
Inventories(5,598)869 
Prepaid expenses and other current assets1,087 653 
Other assets(703)128 
Accounts payable1,449 585 
Contract liabilities2,730 96 
Other accrued liabilities372 (253)
Accrued income and other taxes105 252 
Net cash used for operating activities (4,966)(2,270)
Cash flows from investing activities:
Proceeds from disposal of operating assets1 13 
Capital expenditures(2,044)(1,905)
Purchase of short-term investments(2,395) 
Maturity of short-term investments648  
Net cash used for investing activities (3,790)(1,892)
Cash flows from financing activities:
Proceeds from long-term debt2,183  
Payments on long-term debt(768)(809)
Proceeds from revolving credit agreement70,706 60,087 
Repayments of revolving credit agreement(67,302)(56,301)
Payment of debt issuance costs(228) 
Proceeds from promissory note - related party3,000  
Short-term debt borrowings7,652 4,459 
Short-term debt repayments(5,141)(3,965)
Net cash provided by financing activities10,102 3,471 
Increase (decrease) in cash and cash equivalents1,346 (691)
Cash and cash equivalents at the beginning of the period367 1,174 
Effect of exchange rate changes on cash and cash equivalents(17)115 
Cash and cash equivalents at the end of the period$1,696 $598 
5



Supplemental disclosure of cash flow information of operations:
Cash paid for interest$(1,463)$(924)
Cash paid for income taxes, net$(197)$(16)
Non-cash investing activities:
Additions to property, plant & equipment - incurred but not yet paid$240 $306 
Non-cash financing activities:
Debt issuance cost due at maturity - related party$1,030 $ 
Interest added to promissory note - related party (paid-in-kind)$216 $ 
See notes to unaudited consolidated condensed financial statements.
6



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

Nine Months Ended
June 30, 2024
CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmount
Balance - September 30, 20236,105 $6,105 $11,626 $23,264 $(6,660)$34,335 
Comprehensive (loss) income— — — (4,940)237 (4,703)
Performance and restricted share expense— — 243 — — 243 
Share transactions under equity-based plans75 75 (124)— — (49)
Balance - June 30, 20246,180 $6,180 $11,745 $18,324 $(6,423)$29,826 

Three Months Ended
March 31, 2024
CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmount
Balance - March 31, 20246,190 $6,190 $11,663 $18,252 $(6,449)$29,656 
Comprehensive loss— — — 72 26 98 
Performance and restricted share expense— — 72 — — 72 
Share transactions under equity-based plans(10)(10)10 — —  
Balance - June 30, 20246,180 $6,180 $11,745 $18,324 $(6,423)$29,826 

Nine Months Ended
June 30, 2023
CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmount
Balance - September 30, 20226,040 $6,040 $11,387 $31,956 $(8,693)$40,690 
Comprehensive (loss) income— — — (5,590)742 (4,848)
Performance and restricted share expense— — 292 — — 292 
Share transactions under equity-based plans67 67 (138)— — (71)
Balance - June 30, 20236,107 $6,107 $11,541 $26,366 $(7,951)$36,063 

Three Months Ended
June 30, 2023
CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
SharesAmount
Balance - March 31, 20236,108 $6,108 $11,455 $27,000 $(8,124)$36,439 
Comprehensive (loss) income— — — (634)173 (461)
Performance and restricted share expense— — 86 — — 86 
Share transactions under equity-based plans(1)(1)— — — (1)
Balance - June 30, 20236,107 $6,107 $11,541 $26,366 $(7,951)$36,063 
See notes to unaudited consolidated condensed financial statements.
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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 (collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation.

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

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal 2023 Annual Report on Form 10-K. The year-end consolidated condensed balance sheet contained in these financial statements was derived from the audited financial statements and disclosures required by accounting principles generally accepted in the U.S. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and disclosures considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.

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

C. Short-term Investments
In general, short-term investments have a maturity of three months to one year at the date of purchase. Short-term investments classified as held-to-maturity are recorded at cost, which approximates fair value.

D. Accounts Receivable and Allowance for Credit Losses
Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment. Unbilled receivables are reflected under contract assets on the consolidated condensed balance sheets.

The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers.

Allowance for credit losses:Three Months Ended
June 30, 2024
Nine Months Ended
June 30, 2024
Opening allowance for credit losses$(131)$(242)
     Changes in estimate5 104 
     Write-offs2 14 
     Recoveries  
Total allowance for credit losses$(124)$(124)

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E. Net Income (Loss) per Share
The Company’s net income (loss) per basic share has been computed based on the weighted-average number of common shares outstanding. 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 stock method. The dilutive effect is as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Net income (loss)$72 $(634)$(4,940)$(5,590)
Weighted-average common shares outstanding (basic and diluted)6,009 5,940 5,991 5,925 
Effect of dilutive securities:
Restricted shares 78    
Performance shares18    
Weighted-average common shares outstanding (diluted)6,105 5,940 5,991 5,925 
Net income (loss) per share – basic:$0.01 $(0.11)$(0.82)$(0.94)
Net income (loss) per share – diluted:$0.01 $(0.11)$(0.82)$(0.94)
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share151 211 251 187 

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

The Company has debt maturing in October 2024. As a result of this condition, there is substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to evaluate available financial alternatives, including obtaining acceptable alternative financing and the sale of its Maniago location. The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreement. See Note 7, Debt and Note 14, Subsequent Events.

G. Recent Accounting Standards Adopted
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the exposure, 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
9



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 qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, this ASU is effective for the Company beginning October 1, 2023. The effect of adopting this ASU did not have an impact to the Company's results within the consolidated condensed statements of operations and financial condition.

H. Recent Accounting Standards Not Yet Adopted
In July 2023, the FASB issued ASU 2023-03, "Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", to amend various SEC paragraphs in the Accounting Standards Codification (the "Codification") to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated condensed financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker ("CODM") uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments into reportable segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated condensed financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01 “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”) clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle. The amendments in ASU 2024-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements” (“ASU 2024-02”) amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are
10



extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities and is effective or fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.

I. Employee Retention Credit
Under the Employee Retention Credit ("ERC") program, eligible businesses, both for-profit and not-for-profit, that experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts in any quarter (more than 50% decrease in 2020 from 2019, and more than 20% in 2021) could receive a quarterly refundable payroll tax credit. The Company, with reasonably assured qualification, submitted for refunds under the ERC program on January 23, 2024. These submissions are still pending review and approval from the Internal Revenue Service ("IRS").

As no authoritative guidance exists under U.S. GAAP for reporting ERCs, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as other income or netting the credit against related expense. For the three and nine months ended June 30, 2024, there was no income or expense recorded. In the same periods of the prior year, the Company recorded a gross benefit of $1,772, which represented $1,688 claimed as refund and $84 in interest income. The ERC was recognized as a reduction in other manufacturing and selling, general and administrative expenses and allocated to the financial statement categories from which the payroll taxes were originally incurred. The Company recorded benefits to cost of goods sold of $1,452, selling, general and administrative expense of $236 and interest income $84, respectively and recorded selling, general and administrative expense of $354 for professional fees related to the tax credit in the consolidated condensed statements of operations during the three and nine months ended June 30, 2023. The Company received $1,246 of refunds on May 9, 2023 and recorded $526 in accounts receivable on the consolidated condensed balance sheets as of June 30, 2023.

J. Reclassification
Certain amounts in prior years have been reclassified to conform to the fiscal 2024 consolidated condensed statement presentation. In fiscal 2024, the Company revised its classification within the consolidated condensed balance sheets by moving a prior year amount of $1,150 of contract liabilities from accrued liabilities to contract liabilities to conform to current period presentation. The Company revised its classification within the consolidated condensed statements of cash flows by moving a prior year amount of $96, of contract liabilities from other accrued liabilities to conform to current period presentation.

2.Inventories
Inventories consist of:
June 30,
2024
September 30,
2023
Raw materials and supplies$2,964 $1,684 
Work-in-process7,342 4,061 
Finished goods3,117 3,108 
Total inventories, net$13,423 $8,853 

For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method. Approximately 31% and 19% of the Company’s inventories at June 30, 2024 and September 30, 2023, 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, the 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 ("NRV"). If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $10,460 and $9,634 higher than reported at June 30, 2024 and September 30, 2023, respectively. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. The Company estimates net realizable value, excess and obsolescence and shrink reserves for its inventory based upon historical experience, historical and projected sales trends and the age of inventory on hand. As of June 30, 2024 and September 30, 2023, our inventory valuation allowances were $3,849 and $4,049, respectively.

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

The Company continuously monitors for indicators of impairment to determine if further testing is necessary. In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange, California ("Orange") location, triggered a recoverability test. The results indicated that the long-lived assets were recoverable and did not require further review for impairment.

4.Goodwill
The Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. In the third quarter of fiscal 2024, the Company evaluated potential triggering events and determined interim testing was not required.

5.    Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
June 30,
2024
September 30,
2023
Foreign currency translation loss, net of tax$(5,875)$(5,927)
Retirement plan liability adjustment, net of tax(552)(742)
Interest rate swap agreement, net of tax4 9 
Total accumulated other comprehensive loss$(6,423)$(6,660)

6.    Leases
The components of lease expense were as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Finance lease expense:
     Amortization of right-of use assets on finance leases$17 $11 $53 $47 
     Interest on lease liabilities1 1 4 6 
Operating lease expense424 421 1,277 1,243 
Variable lease cost19 29 59 89 
Total lease expense$461 $462 $1,393 $1,385 

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The following table presents the impact of leasing on the consolidated condensed balance sheet.
Classification in the consolidated condensed balance sheetsJune 30,
2024
September 30,
2023
Assets:
Finance lease assets  Property, plant and equipment, net$97 $147 
Operating lease assets  Operating lease right-of-use assets, net13,673 14,380 
Total lease assets$13,770 $14,527 
Current liabilities:
Finance lease liabilities  Current maturities of long-term debt$41 $61 
Operating lease liabilities  Short-term operating lease liabilities906 869 
Non-current liabilities:
Finance lease liabilities  Long-term debt, net of current maturities55 81 
Operating lease liabilities  Long-term operating lease liabilities, net of short-term13,333 14,020 
Total lease liabilities$14,335 $15,031 

Supplemental cash flow and other information related to leases were as follows:
June 30,
2024
June 30,
2023
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases$1,280 $1,261 
     Operating cash flows from finance leases5 6 
     Financing cash flows from finance leases47 46 
Right-of-use assets obtained in exchange for new lease liabilities:
     Operating leases 60 

June 30,
2024
September 30,
2023
Weighted-average remaining lease term (years):
     Finance leases2.62.9
     Operating leases11.912.5
Weighted-average discount rate:
     Finance leases5.1 %5.1 %
     Operating leases5.9 %5.9 %

Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the nine months ended June 30, 2024)$16 $420 
202536 1,696 
202629 1,694 
202721 1,703 
2028 1,557 
Thereafter 12,740 
Total lease payments$102 $19,810 
Less: Imputed interest(6)(5,571)
Present value of lease liabilities$96 $14,239 

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7.    Debt
Debt consists of: 
June 30,
2024
September 30,
2023
Revolving credit agreement$19,693 $16,289 
Foreign subsidiary borrowings, net of unamortized debt issuance cost9,722 5,771 
Promissory note - related party3,366  
Finance lease obligations96 142 
Less: unamortized debt issuance cost - (Related party is $387)
(397) 
Other, net of unamortized debt issuance costs $0 and $(9), respectively
314 364 
Total debt32,794 22,566 
Less – current maturities(29,174)(20,109)
Total long-term debt$3,620 $2,457 

Credit Agreement and Security Agreement
On November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement (the "Eighth Amendment") with JPMorgan Chase Bank, N.A. ("Lender"). The Eighth Amendment, among other things, reduced the Reserves under the Borrowing Base in the Credit Agreement to $1,500, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion.

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

The Company entered into the Tenth Amendment (the "Tenth Amendment") to the Credit Agreement and the Fifth Amendment (the "Fifth Amendment") to the Export Credit Agreement with its lender on May 21, 2024. The Tenth and Fifth Amendments amend the Credit Agreement and the Export Credit Agreement to, among other things, to: (i) increase the Revolving Commitment, less the Availability Block, if applicable, (y) the Borrowing Base, and (z) in combination with the Export Revolving Loans under the Export Credit Agreement, (i) $18,000 through September 30, 2023, (ii) $19,000 from and including October 1, 2023 through May 14, 2024, and (iii) $22,000 thereafter until, and reducing to zero and terminating on, the Maturity Date; (ii) modify the definition of Borrowing Base Reserves to $1,500 or such other amount, if any, as may be determined in writing by the Lender in its Permitted Discretion (which may be by email from the Lender); and (iii) required the execution and delivery of the First Amendment of the Silk Guaranty discussed below.

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The total collateral at June 30, 2024 and September 30, 2023 was $24,576 and $21,089, respectively, and the revolving commitment was $26,000 and $30,000, respectively. Total availability at June 30, 2024 and September 30, 2023 was $2,912 and $2,830, respectively, which exceeds both the collateral and total commitment threshold. The Credit Agreement contains affirmative and negative covenants and events of default. Since the availability exceeded the $1,500 reserve minimum as of June 30, 2024 and September 30, 2023, no covenant calculations were required. The Company had a letter of credit balance of $1,970 as of June 30, 2024 and September 30, 2023, respectively.

The revolving credit agreement (or "revolver"), as amended, has a rate based on SOFR plus a 2.75% spread, which was 8.2% at June 30, 2024 and a rate based on SOFR plus a 2.25% spread, which was 7.7% at September 30, 2023. The Export Credit Agreement as amended has a rate based on SOFR plus a 2.25% spread, which was 7.7% at June 30, 2024 and a rate based on SOFR plus a 1.75% spread, which was 7.2% at September 30, 2023. The Company also has a commitment fee of 0.50% under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Debt issuance costs - revolver
The Company incurred new debt issuance costs of $117 in the first quarter of fiscal 2024 as it pertains to the new amendments entered into, which are included in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $81 at June 30, 2024. The Company previously had debt issuance costs of $86, which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $86 and $78 at June 30, 2024 and September 30, 2023, respectively.

Subordinated Promissory Note and Guaranty
The Company, in connection with the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc. ("GHI"), a California corporation owned and controlled by Mark J. Silk ("Silk") (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $3,000 (the "Subordinated Loan") on the terms and subject to the conditions of a Subordinated Secured Promissory Note (the "Subordinated Promissory Note"). The obligations of borrowers under the Subordinated Loan mature on October 4, 2024. Interest accrues on the then-outstanding principal amount at a rate of 14% per annum and shall be paid in kind (and not in cash) by capitalization as additional principal ("PIK Interest") each six-month period after the date hereof in arrears. The Company agreed to pay to Mr. Silk a fully earned and non-refundable fee in an amount equal to $150, which fee shall be included in the carrying value of the promissory note, due and payable in full on, and subject to the occurrence of, the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof. Borrower’s obligations under the Subordinated Promissory Note are secured by a first priority lien, subject to any liens granted to Lender as described in the Subordination Agreement, on all of borrowers’ accounts, deposit accounts, contract rights, documents, equipment, general intangibles, instruments, inventory, investment property, commercial tort claims, all other goods and personal property whether tangible or intangible and wherever located, and all proceeds of the foregoing. The Subordinated Promissory note carrying value was $3,366 and $0 at June 30, 2024 and September 30, 2023, respectively. The Subordinated Promissory Note interest rate was 14% and 0% at June 30, 2024 and September 2023, respectively.

The Ninth Amendment was also subject to the satisfaction of certain conditions, including, but not limited to, the execution and delivery by Silk, of a Guaranty Agreement (the "Guaranty") in favor of Lender pursuant to which Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement. The Fee Letter requires the borrowers to pay Silk a fee (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $760, which was included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities.

The Tenth Amendment was subject to the execution and delivery of the First Amendment of the Guaranty and an amendment to the Fee Letter, which required the borrowers to pay Silk an incremental fee of $120 in consideration for his agreement to execute and deliver the First Amendment to the Guaranty. Guaranty fees were included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities and become due and payable on the maturity date.

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Foreign subsidiary borrowings in USD
Foreign debt consists of:
June 30,
2024
September 30,
2023
Term loan, net of unamortized debt issuance cost $(79) and $0, respectively
$4,693 $3,293 
Short-term borrowings4,708 1,862 
Factor321 616 
Total debt$9,722 $5,771 
Less – current maturities(6,157)(3,386)
Total long-term debt$3,565 $2,385 
Receivables pledged as collateral$2,710 $1,247 

Interest rates on foreign borrowings are based on Euribor rates, which range from 0.5% to 7.8%.

The Company's Maniago, Italy ("Maniago") location obtained borrowings from two separate lending sources in the first quarter of fiscal 2024. The first was a bond for $2,208 with repayment terms of seven years. Under the terms of the borrowing, repayments are made semi-annually in the amount of $200, beginning on June 29, 2024. The proceeds from this loan are shown within cash and cash equivalents and short-term investments on the consolidated condensed balance sheets and will be used for capital investment. A second loan with a term of 1 year, 6 months was obtained in the amount of $1,104. The proceeds from this loan were used for working capital purposes.

In the third quarter, the Company increased three of its credit and factoring lines with existing lenders to support working capital needs.

The Company factors receivables from one 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.

8.     Income Taxes
For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations. This estimated effective rate is used in providing for income taxes on a year-to-date basis. The Company’s effective tax rate through the first nine months of fiscal 2024 was (3.2)%, compared with (2.3)% for the same period of fiscal 2023. The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period of fiscal 2023. 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.

The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy, and various state and local jurisdictions. As of the third quarter of fiscal 2024, the Company maintains a full valuation allowance on the net deferred tax assets in the U.S., Ireland and Italy.

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

Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Service cost$45 $6 $135 $18 
Interest cost271 274 813 824 
Expected return on plan assets(261)(277)(782)(831)
Amortization of net loss44 77 130 230 
Settlement cost60 78 60 78 
Net periodic pension cost$159 $158 $356 $319 

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During the nine months ended June 30, 2024 and 2023, the Company made $32 and $13 in cash contributions, and $87 and $0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans. The Company anticipates making $42 in cash contributions to fund its defined benefit pension plans for the balance of fiscal 2024, 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 2024. The Company's ability to elect to use such carryover balance will be determined based on the actual funded status of each defined benefit pension plan relative to the plan's minimum regulatory funding requirements. The Company does not anticipate making cash contributions above the minimum funding requirement to fund its defined benefit pension plans during the balance of fiscal 2024.

10.    Stock-Based Compensation
The Company has outstanding equity awards under the Company's 2007 Long-Term Incentive Plan (the "2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan"), and awards performance and restricted shares under the 2016 Plan.

In the first nine months of fiscal 2024, the Company granted 120 shares under the 2016 Plan to certain key employees. The awards were split into two tranches, comprised of 46 performance-based shares and 74 time-based restricted shares, with a grant date fair value of $3.60 per share. The awards vest over three years. There were 66 shares forfeited during the nine month period ended June 30, 2024.

In the first nine months of fiscal 2024, the Company granted its non-employee directors 39 restricted shares under the 2016 Plan, with a grant date fair value of $3.08 per share, which vest over one year. One award for 38 restricted shares vested in January 2024.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 327 shares that remain available for award at June 30, 2024. 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 150% of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was $243 and $292 during the first nine months of fiscal 2024 and 2023, respectively. As of June 30, 2024, there was $421 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 years.

11.    Revenue
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications.

Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company's contracts are from purchase orders ("PO's"), which continue to be recognized as of a point in time when products are shipped from the Company's manufacturing facilities or at a later time when control of the products transfers to the customer. Under the revenue standard, the Company recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows:

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

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

As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based
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on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred.

The following table represents a breakout of total revenue by customer type:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Commercial revenue$19,114 $13,086 $49,730 $34,629 
Military revenue10,145 8,767 27,124 27,765 
Total $29,259 $21,853 $76,854 $62,394 

The following table represents revenue by end market:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
Aerospace components for:
    Fixed wing aircraft$10,631 $8,726 $30,650 $28,307 
    Rotorcraft5,470 4,067 12,817 11,960 
Energy components for power generation units7,802 7,005 20,462 16,729 
Commercial product and other revenue5,356 2,055 12,925 5,398 
Total$29,259 $21,853 $76,854 $62,394 

The following table represents revenue by geographic region based on the Company's selling operation locations:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
North America$21,987 $15,391 $57,975 $47,037 
Europe7,272 6,462 18,879 15,357 
Total$29,259 $21,853 $76,854 $62,394 

In addition to the disaggregated revenue information provided above, approximately 39% and 47% of total net sales for the nine months ended June 30, 2024 and 2023, 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 beginning October 1, 2023 and ended June 30, 2024 compared to period beginning October 1, 2022 and ended June 30, 2023:
June 30,
2024
June 30,
2023
Contract assets - Beginning balance$10,091 $10,172 
Additional revenue recognized over-time30,272 28,955 
Less amounts billed to the customers(30,308)(30,108)
Contract assets - Ending balance$10,055 $9,019 

June 30,
2024
June 30,
2023
Contract liabilities - Beginning balance$(1,150)$(807)
Payments received in advance of performance obligations(4,369)(1,531)
Performance obligations satisfied1,639 1,435 
Contract liabilities - Ending balance$(3,880)$(903)

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Accounts receivable were $16,515 and $20,197 at September 30, 2022 and June 30, 2023, respectively. There were no impairment losses recorded on contract assets as of June 30, 2024 and September 30, 2023.

Remaining performance obligations
As of June 30, 2024, the Company has $139,203 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.

12.    Commitments and Contingencies
On December 30, 2022, the Company became aware of a cyber security issue involving unauthorized access to the Company's system (the "Cyber Incident"). The Company immediately began an investigation and engaged cyber security experts to assist with the assessment of the incident and to help determine what data was impacted. The Company's investigation uncovered that the threat actor had gained access to certain areas of the Company's systems on or about December 27, 2022. With the assistance of outside cyber security experts, the Company located and closed the unauthorized access to our systems, identified compromised information, and notified those impacted in accordance with state and federal requirements.

The Company maintains $3,000 of cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cyber Incident. The Company recorded a benefit of $605 to selling, general, and administrative expenses in the third quarter of fiscal 2024 due to credit of third party restoration fees related to last year's cybersecurity incident. The Company recorded expense of $1,209 to selling, general, and administrative expenses and recorded costs of $60 to other expense (income), net related to loss on insurance recovery in the nine months ended June 30, 2023. At June 30, 2024 and September 30, 2023, the Company recorded $197 and $965, respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.

13.    Related Party Transactions
On December 21, 2023, the Company entered into the Ninth Amendment and Fourth Amendment with its lender incurring a secured subordinated loan from GHI, in the original principal amount of $3,000. GHI is controlled by Mr. Silk, a member of the Board of Directors of the Company and considered a related party. The Company has recorded interest expense of $110 and $216 for the three and nine month periods ending June 30, 2024, which was included in the consolidated condensed balance sheets in the Promissory note - related party line. Additionally, Mr. Silk provided a Guaranty in favor of the Lender pursuant to which Mr. Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement. As part of the Guaranty and Promissory Note, the Company will pay GHI fees of $880 and $150, respectively, and has paid $30 of legal costs. The Company has a total of $397 deferred financing costs related to the Guaranty and Subordinated Promissory Note, which was included in the consolidated condensed balance sheets in current maturities of long-term, net of $663 amortization. See Note 7, Debt for further information.

14.    Subsequent Events
On August 1, 2024, the Company's Board of Directors approved, and management executed, a Share Purchase Agreement ("SPA") with TB2 S.r.l. ("Buyer"), under which the Buyer agreed to acquire 100% of the share capital of the Company’s Maniago, Italy location (C Blade S.p.A. Forging & Manufacturing). The SPA, among other things, is contingent upon meeting customary conditions, delivering required documents, and obtaining governmental authorization under the Golden Power rules of Italian law. Additionally, the SPA is subject to a Material Adverse Condition (“MAC”) clause. The Company committed to the plan to sell in August 2024, and the Maniago location is considered as held and used as of June 30, 2024.

The Company expects to consummate the sale in the fourth quarter of fiscal 2024, however, the Company cannot provide assurances that all closing conditions will be satisfied. Maniago's total assets were $23,657 and total liabilities were $16,498 on the consolidated condensed balance sheets at June 30, 2024.

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
19



"A&E") industries in particular, of the global economic outlook, including the continuation of military spending at or near current levels and the availability of capital and liquidity from banks, the financial markets and other providers of credit; (2) the future business environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost at comparable margins; (4) metals and commodities price increases and the Company’s ability to recover such price increases; (5) successful development and market introduction of new products and services; (6) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations; (11) cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners; (12) our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulations; (13) our 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 future sales from 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 Company's ability to restructure existing debt obligations prior to their stated maturity date through the execution of a strategic alternative transaction or obtaining acceptable alternative financing.

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

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

The Company operates within a cost structure that includes a significant fixed component. Therefore, higher net sales volumes are expected to result in greater operating income because such higher volumes allow the business operations to better leverage the fixed component of their respective cost structures. Conversely, the opposite effect is expected to occur at lower net sales and related production volumes.
A. Results of Operations
Overview
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications.

Backlog of Orders
SIFCO’s total backlog at June 30, 2024 was $139.2 million, of which $108.1 million are anticipated to be complete within the next 12 months, compared with total backlog of $122.8 million as of June 30, 2023. Orders may be subject to modification or cancellation by the customer with limited charges. Recovery in the A&E markets has resulted in increased bookings. Backlog information may not be indicative of future sales.

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Nine Months Ended June 30, 2024 compared with Nine Months Ended June 30, 2023
Net Sales
Net sales comparative information for the first nine months of fiscal 2024 and 2023 is as follows:
(Dollars in millions)Nine Months Ended
June 30,
Increase/ (Decrease)
Net Sales20242023
Aerospace components for:
Fixed wing aircraft$30.7 $28.3 $2.4 
Rotorcraft12.8 12.0 0.8 
Energy components for power generation units20.5 16.7 3.8 
Commercial product and other revenue12.9 5.4 7.5 
Total$76.9 $62.4 $14.5 

Net sales for the first nine months of fiscal 2024 increased $14.5 million to $76.9 million, compared with $62.4 million in the comparable period of fiscal 2023. In general, the production of the Company's products have lead times of varying lengths. Fixed wing sales increased $2.4 million due to 737, 787, F15 and F16 programs. Rotorcraft sales increased $0.8 million due to H60 program partially offset by V22 demand reduction. The energy components for power generation sales increased by $3.8 million due to growth in the steam turbine markets. Commercial products and other revenue increased by $7.5 million due to commercial space and M1 tank program.

Commercial net sales were 64.7% of total net sales and military net sales were 35.3% of total net sales in the first nine months of fiscal 2024, compared with 55.5% and 44.5%, respectively, in the comparable period in fiscal 2023. Military net sales decreased by $0.6 million to $27.1 million in the first nine months of fiscal 2024, compared with $27.8 million in the comparable period of fiscal 2023, primarily due to F35 program and V22 demand reduction. Commercial net sales increased $15.1 million to $49.7 million in the first nine months of fiscal 2024, compared with $34.6 million in the comparable period of fiscal 2023, primarily due to an increase in the power generation steam turbine market, commercial space and 737 and 787 programs.

Cost of Goods Sold
Cost of goods sold increased by $12.9 million, or 23.1%, to $68.8 million, or 89.6% of net sales, during the first nine months of fiscal 2024, compared with $55.9 million or 89.7% of net sales, in the comparable period of fiscal 2023. The increase is primarily due to higher sales volume, higher labor costs of $1.7 million, higher utility cost of $0.4 million and $0.1 million of hiring costs as the Company increased production to meet customer demands, partially offset by lower idle expense of $1.0 million. Prior year results included $1.5 million of ERC benefit and reduction of NRV reserve of $1.4 million.

Gross Profit
Gross profit increased $1.5 million to $8.0 million in the first nine months of fiscal 2024, compared with $6.5 million gross profit in the comparable period of fiscal 2023. Gross profit percent of sales was 10.4% during the first nine months of fiscal 2024 compared with 10.3% in fiscal 2023. The increase in gross profit compared to prior fiscal year was primarily due to higher volume, lower idle expense and lower outside services of $0.3 million, partially offset by higher labor costs of $1.7 million, utility costs of $0.4 million and hiring costs. Prior year results included $1.5 million of ERC benefit and reduction of NRV reserve of $1.4 million.

Selling, General and Administrative Expenses
Selling, general and administrative expenses were $9.9 million, or 12.9%, of net sales during the first nine months of fiscal 2024, compared with $10.5 million, or 16.9%, of net sales in the comparable period of fiscal 2023. The decrease in selling, general and administrative expenses is primarily due to benefit of $0.6 million for reversal of third party restoration fees related to the cybersecurity incident and lower commissions of $0.2 million, partially offset by higher wages, benefits and severance costs of $0.4 million and higher expenses related to the evaluation of strategic alternatives of $0.5 million. Prior year results included $1.2 million of costs related the cybersecurity incident and ERC net expense of $0.2 million.

Amortization of Intangibles
Amortization of intangibles was $0.1 million in the first nine months of fiscal 2024 compared with $0.2 million in fiscal 2023.

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Other/General
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the first nine months of both fiscal 2024 and 2023:

 Weighted Average
Interest Rate
Nine Months Ended
June 30,
Weighted Average
Outstanding Balance
Nine Months Ended
June 30,
 2024202320242023
Revolving credit agreement8.0 %6.6 %$ 16.8 million$ 12.6 million
Foreign term debt5.7 %4.4 %$ 9.6 million$ 7.3 million
Promissory note - related party8.9 %— %$ 3.3 million$ 0.0 million
Other debt0.6 %1.6 %$ 0.3 million$ 0.5 million

Income Taxes
The Company’s effective tax rate through the first nine months of fiscal 2024 was (3.2)%, compared with (2.3)% for the same period of fiscal 2023. The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period of fiscal 2023. 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 Loss
Net loss was $4.9 million during the first nine months of fiscal 2024 compared with net loss of $5.6 million in the comparable period of fiscal 2023. The decrease in net loss is due to higher sales volume and gross margin, offset by higher labor and interest expense as the Company invests to meet increased demand.

Three Months Ended June 30, 2024 compared with Three Months Ended June 30, 2023
Net Sales
Net sales comparative information for the third quarter of fiscal 2024 and 2023 is as follows:
(Dollars in millions)Three Months Ended
June 30,
Increase/ (Decrease)
Net Sales20242023
Aerospace components for:
Fixed wing aircraft$10.7 $8.7 $2.0 
Rotorcraft5.5 4.1 1.4 
Energy components for power generation units7.8 7.0 0.8 
Commercial product and other revenue5.3 2.1 3.2 
Total$29.3 $21.9 $7.4 

Net sales for the third quarter of fiscal 2024 increased $7.4 million to $29.3 million, compared with $21.9 million in the comparable period of fiscal 2023. Fixed wing sales increased $2.0 million compared with the same period last year primarily due to 767, 787 A320, F15, F16, F18 and other programs. Rotorcraft sales increased $1.4 million compared with the same period last year primarily due to the H60 program. Net sales of the energy components for power generation units increased by $0.8 million due to growth in the steam turbine markets. Commercial products and other revenue increased $3.2 million compared with the same period last year primarily due to commercial space.

Commercial net sales were 65.3% of total net sales and military net sales were 34.7% of total net sales in the third quarter of fiscal 2024, compared with 59.9% and 40.1%, respectively, in the comparable period in fiscal 2023. Military net sales increased by $1.4 million to $10.1 million in the third quarter of fiscal 2024, compared with $8.8 million in the comparable period of fiscal 2023, primarily due to the H60, F15, F16 and F18 programs partially offset by V22 demand reduction. Commercial net sales increased $6.0 million to $19.1 million in the third quarter of fiscal 2024, compared with $13.1 million in the comparable period of fiscal 2023, primarily due to an increase in the power generation steam turbine market, commercial space and 767, 787 and A320 programs.

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Cost of Goods Sold
Cost of goods sold increased by $6.4 million, or 34.6%, to $24.7 million, or 84.5% of net sales, during the third quarter of fiscal 2024, compared with $18.4 million or 84.1% of net sales, in the comparable period of fiscal 2023. The increase is primarily due to higher volume, higher labor costs of $0.7 million and utility costs of $0.4 million as the Company increased production to meet customer demands partially offset by lower idle expense $0.4 million. Prior year results included $1.5 million of ERC benefit.

Gross Profit
Gross profit increased $1.0 million to $4.5 million in the third quarter of fiscal 2024, compared with $3.5 million gross profit in the comparable period of fiscal 2023. Gross profit percent of sales was 15.5% during the third quarter of fiscal 2024, compared with 15.9% in the comparable period in fiscal 2023. The increase in gross profit compared to the prior fiscal year was primarily due to higher volume and reduction of idle expense. Prior year results included $1.5 million of ERC benefit.

Selling, General and Administrative Expenses
Selling, general and administrative expenses were $3.2 million, or 10.8%, of net sales, during the third quarter of fiscal 2024, compared with $3.4 million, or 15.5%, of net sales, in the comparable period of fiscal 2023. The decrease in selling, general and administrative expenses is primarily due to a credit due to last years cybersecurity incident of $0.6 million compared with expense of $0.2 million in 2023. The benefit was partially offset by $0.4 million of severance charges and higher costs related to the evaluation of strategic alternatives of $0.1 million.

Amortization of Intangibles
Amortization of intangibles were negligible in the third quarter of fiscal 2024 and fiscal 2023.

Other/General
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the third quarter of both fiscal 2024 and 2023:

 Weighted Average
Interest Rate
Three Months Ended
June 30,
Weighted Average
Outstanding Balance
Three Months Ended
June 30,
 2024202320242023
Revolving credit agreement8.1 %7.2 %$ 18.0 million$ 14.2 million
Foreign term debt7.1 %4.8 %$ 10.1 million$ 7.5 million
Promissory note - related party13.3 %— %$ 3.3 million$ 0.0 million
Other debt— %1.6 %$ 0.3 million$ 0.4 million

Income Taxes
The Company’s effective tax rate through the third quarter of fiscal 2024 was 43.8%, compared with (5.8)% for the same period of fiscal 2023. The increase in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period of fiscal 2023. 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 income was $0.1 million during the third quarter of fiscal 2024, compared with net loss of $0.6 million in the comparable period of fiscal 2023. Increase in net income is primarily due to higher sales volume and gross margin, including reduction of Cyber incident costs and idle expense of $0.8 million and $0.4 million, respectively, partially offset by higher severance, interest expense, and labor costs as the Company increased production to meet customer demands.


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.
23




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 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 income (loss) or cash flow from operations determined in accordance with GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA:
Dollars in thousandsThree Months EndedNine Months Ended
 June 30,June 30,
 2024202320242023
Net income (loss)$72 $(634)$(4,940)$(5,590)
Adjustments:
Depreciation and amortization expense1,499 1,623 4,567 4,820 
Interest expense, net1,078 305 2,471 919 
Income tax expense56 35 153 128 
EBITDA2,705 1,329 2,251 277 
Adjustments:
Foreign currency exchange loss, net (1)(1)11 
Other expense (income), net (2)78 295 184 149 
Gain (loss) on disposal of assets (3)— (3)— 
Equity compensation (4)72 85 243 292 
Pension settlement expense (5)60 78 60 78 
Severance expense (6)435 — 435 — 
LIFO impact (7)475 (73)826 (272)
IT incident (benefit) cost, net (8)(627)182 (605)1,269 
Strategic alternative expense (9)169 29 490 29 
Adjusted EBITDA$3,366 $1,923 $3,893 $1,833 

(1)Represents the gain or loss from changes in the exchange rates between the functional currency and the foreign currency in which the transaction is denominated.
(2)Represents miscellaneous non-operating income or expense, such as pension costs or grant income (prior year included $0.1 million in loss on insurance recovery, separately reclassed to IT incident costs, net line).
24



(3)Represents the difference between the proceeds from the sale of operating equipment and the carrying value shown on the Company's books.
(4)Represents the equity-based compensation expense recognized by the Company under the 2016 Plan due to granting of awards, awards not vesting and/or forfeitures.
(5)Represents expense incurred by its defined benefit pension plans related to settlement of pension obligations.
(6)Represents expense incurred for executive severance.
(7)Represents the change in the reserve for inventories for which cost is determined using the last-in, first-out ("LIFO") method.
(8)Represents incremental information technology costs as it relates to the cybersecurity incident and loss on insurance recovery.
(9)Represents expense related to evaluation of strategic alternatives.

B. Liquidity and Capital Resources
The main sources of liquidity for the Company have been cash flows from operations and borrowings under our Credit Agreement. The Company's liquidity could be negatively affected if the Company is unable to restructure existing debt obligations, obtain capital or enter into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreements, by customers extending payment terms to the Company and/or the decrease in demand for our products. The Company and management will continue to assess and actively manage liquidity needs. See Note 7, Debt.
Cash and cash equivalents was $1.7 million at June 30, 2024 and $0.4 million at September 30, 2023. At June 30, 2024, the majority of the Company’s cash and cash equivalents were in possession of its domestic subsidiaries. Short-term investments was $1.7 million at June 30, 2024 and zero at September 30, 2023. At June 30, 2024, the Company’s short-term investments were in the possession of its non-U.S. subsidiaries. See Note 7, Debt - Foreign subsidiary borrowings in USD. Distributions from the Company's non-U.S. subsidiaries to the Company may be subject to adverse tax consequences.
Operating Activities
The Company’s operating activities used $5.0 million of cash in the first nine months of fiscal 2024, primarily due to net loss of $4.9 million partially offset by non-cash adjustments for depreciation and amortization of $4.6 million, amortization of debt issuance costs of $0.8 million and change in inventory valuation accounts of $0.5 million and LIFO effect of $0.8 million. The uses of cash for working capital of $7.2 million was primarily due to increases in inventory of $5.6 million and accounts receivable of $6.6 million, partially offset by increases in contract liabilities of $2.7 million and accounts payable of $1.4 million. The increase in inventory is primarily due to increase in raw material and work in process to meet heightened customer demand. The increase in accounts receivable is due to increases in customer shipments. The increase in contract liabilities is due to advance raw material payments from customers. The increase in accounts payable is due to increases in raw material purchases and outside processing fees related to inventory build.

The Company’s operating activities for the first nine months of fiscal 2023 used $2.3 million primarily due to operating results and an increase in accounts receivable of $3.2 million partially offset by contract asset and inventory reductions of $1.2 million and $0.9 million, respectively.

Investing Activities
Cash used for investing activities was $3.8 million in the first nine months of fiscal 2024 primarily due to purchase of short-term investments, net of maturities, of $1.7 million and capital expenditures of $2.0 million. Cash used for investing activities was $1.9 million in the first nine months of fiscal 2023 due to capital expenditures. Capital commitments as of June 30, 2024 were $0.4 million. The Company anticipates that the remaining total fiscal 2024 capital expenditures will be within the range of $1.0 million to $1.5 million and will relate principally to the further enhancement of production and product offering capabilities and drive operating cost reductions.

Financing Activities
Cash provided by financing activities was $10.1 million in the first nine months of fiscal 2024, compared with $3.5 million in the first nine months of fiscal 2023.

As discussed in Note 7, Debt, the Company's Maniago location obtained borrowings from two separate lending sources and increased during the first nine months of fiscal 2024. The first was a bond for approximately $2.2 million with a seven year term. The proceeds from this loan are shown within cash and cash equivalents and short-term investments on the consolidated
25



condensed balance sheets and will be used for capital investment. A second loan for approximately $1.1 million with a term of eighteen months, will be for working capital purposes. Additionally, the Company increased three of its credit and factoring lines with existing lenders to support working capital needs. The Company had $2.6 million of net short-term debt borrowings in the first nine months of fiscal 2024 compared with $0.5 million in the first nine months of fiscal 2023.
The Company had net borrowings from the revolver under the Credit Agreement of $1.2 million in the first nine months of fiscal 2024 compared with net borrowings of $3.4 million in the first nine months of fiscal 2023. Under the Company's Credit Agreement, the Company is subject to certain customary loan covenants regarding availability. The availability at June 30, 2024 was $2.9 million, which exceeds reserve minimum threshold as of June 30, 2024, as such, no covenant calculations were required.

As noted in Note 7, Debt, on November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement with its Lender. The Eighth Amendment, among other things, reduced the Reserves under the Borrowing Base in the Credit Agreement to $1.5 million, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion.

As noted in Note 7, Debt, on December 21, 2023, the Company entered into the Ninth Amendment to the Credit Agreement and the Fourth Amendment to the Export Credit Agreement with its lender. The Ninth Amendment amends the Credit Agreement to, among other things, to: (i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk (Mr. Silk is a member of the Board of Directors of the Company and considered a related party) of the Subordinated Loan Documents, and the receipt by borrowers of $3.0 million in immediately available funds on the Ninth Amendment Effective Date; (ii) delay the maturity date from December 31, 2023 to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms of the Credit Agreement; (iii) reduce the Revolving Commitment to $19.0 million from $23.0 million; (iv) modify the definition of Borrowing Base to mean, at any time, the sum of (a) 85% of Eligible Accounts at such time, plus (b) the lesser of (1) 70% of Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time and (2) the product of 85% multiplied by the NOLV Percentage identified in the most recent inventory appraisal ordered by the Lender multiplied by Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time, minus (c) Reserves of $1.5 million, increasing on the first day of each month by $0.3 million, commencing on May 1, 2024 and continuing until (and including) August 1, 2024, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion (which may be by email from the Lender), plus (d) the PP&E Component; (v) modify the Applicable Margin schedule to reflect the following applicable rates: 2.75% (CBFR REVSOFR30), 0.25% (CBFR Spread (CB Floating Rate)), 2.75% (SOFR Spread), and 0.50% (Commitment Fee Rate); and (vi) amend and restate subsection (l) of the Reporting Schedule to require, by the 17th day of every month, the delivery of a rolling 13 week cash flow forecast in form acceptable to Lender, which must include a projected to actual results comparison for the week then ended and on a cumulative basis from the beginning of the cash flow forecast. The Fourth Amendment of the Export Credit Agreement, to, among other things, to: (i) reflect the incurrence by borrowers of the Subordinated Loan and the execution and delivery by borrowers, the Lender and Silk of the Subordinated Loan Documents, and the receipt by borrowers of $3.0 million in immediately available funds on the Ninth Amendment Effective Date; and (ii) delay the maturity date to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms thereof.

As noted in Note 7, Debt, on May 21, 2024, the Company entered into the Tenth Amendment to the Credit Agreement and the Fifth Amendment to the Export Credit Agreement with its lender. The Tenth and Fifth Amendments amend the Credit Agreement and the Export Credit Agreement to, among other things, to: (i) increase the Revolving Commitment, less the Availability Block, if applicable, to (y) the Borrowing Base, and (z) in combination with the Export Revolving Loans under the Export Credit Agreement, (i) $18.0 million through September 30, 2023, (ii) $19.0 million from and including October 1, 2023 through May 14, 2024, and (iii) $22.0 million thereafter until, and reducing to zero and terminating on, the Maturity Date; (ii) modify the definition of Borrowing Base Reserves to $1.5 million or such other amount, if any, as may be determined in writing by the Lender in its Permitted Discretion (which may be by email from the Lender); and (iii) the execution of the First Amendment of the Silk Guaranty.

Future cash flows from the Company’s operations may be used to pay down amounts outstanding under the Credit Agreement, the Export 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. In fiscal year 2024, the Company was able to obtain new financing at its Maniago location to provide Maniago with sufficient liquidity. 

Tightening of the credit market and standards, as well as capital market volatility, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing Credit Agreement. Capital market uncertainty and volatility,
26



together with the Company’s market capitalization and status as a smaller reporting company, could also negatively impact our ability to obtain equity financing.

C. Recent Accounting Standards
For recent accounting standards adopted and not yet adopted refer to Note 1, Summary of Significant Accounting Policies - Recent Accounting Standards Adopted and Recent Accounting Standards Not Yet Adopted for further detail. Additionally, the Company's significant accounting policies and procedures are explained in the Management's Discussion and Analysis section of the Company's Annual Report on Form 10-K for the year ended September 30, 2023.

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 June 30, 2024 (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 effective.

Changes in Internal Control over Financial Reporting
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 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
2.2
3.1
3.2
9.1
9.2
27



9.3
9.4
9.5
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
28



10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
14.1
*31.1
*31.2
*32.1
*32.2
29



*101The following financial information from SIFCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the SEC on August 12, 2024, formatted in XBRL includes: (i) Consolidated Condensed Statements of Operations for the fiscal periods ended June 30, 2024 and 2023, (ii) Consolidated Condensed Statements of Comprehensive Income for the fiscal periods ended June 30, 2024 and 2023, (iii) Consolidated Condensed Balance Sheets at June 30, 2024 and September 30, 2023, (iv) Consolidated Condensed Statements of Cash Flow for the fiscal periods ended June 30, 2024 and 2023, (iv) Consolidated Condensed Statements of Shareholders' Equity for the periods June 30, 2024 and 2023, and (v) the Notes to the Consolidated Condensed Financial Statements.
*104Cover Page Interactive Data File: the cover page XBRL tags are embedded within the Inline XBRL document and are contained with Exhibit 101
30



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: August 12, 2024 /s/ George Scherff
 George Scherff
 Chief Executive Officer
 (Principal Executive Officer)
Date: August 12, 2024 /s/ Thomas R. Kubera
 Thomas R. Kubera
 Chief Financial Officer
 (Principal Financial Officer)
31


Exhibit 31.1
CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER
RULE 13A-14(A) / 15D-14(A)
I, George Scherff, certify that:
1.I have read this Quarterly Report on Form 10-Q of SIFCO Industries, Inc.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: August 12, 2024 /s/ George Scherff
 George Scherff
 Chief Executive Officer


Exhibit 31.2
CERTIFICATION
OF THE CHIEF FINANCIAL OFFICER
RULE 13A-14(A) / 15D-14(A)
I, Thomas R. Kubera, certify that:
1.I have read this Quarterly Report on Form 10-Q of SIFCO Industries, Inc.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 12, 2024 /s/ Thomas R. Kubera
 Thomas R. Kubera
 Chief Financial Officer
 


Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of SIFCO Industries, Inc. (“Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (“Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 12, 2024/s/ George Scherff
George Scherff
Chief Executive Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by SIFCO Industries, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that SIFCO Industries, Inc. specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to SIFCO Industries, Inc. and will be retained by SIFCO Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.


Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of SIFCO Industries, Inc. (“Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (“Report”), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 12, 2024/s/ Thomas R. Kubera
Thomas R. Kubera
Chief Financial Officer
This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by SIFCO Industries, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that SIFCO Industries, Inc. specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to SIFCO Industries, Inc. and will be retained by SIFCO Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

v3.24.2.u1
Cover Page
9 Months Ended
Jun. 30, 2024
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Jun. 30, 2024
Document Transition Report false
Entity File Number 1-5978
Entity Registrant Name SIFCO Industries, Inc
Entity Incorporation, State or Country Code OH
Entity Tax Identification Number 34-0553950
Entity Address, Address Line One 970 East 64th Street,
Entity Address, City or Town Cleveland
Entity Address, State or Province OH
Entity Address, Postal Zip Code 44103
City Area Code (216)
Local Phone Number 881-8600
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Non-accelerated Filer
Entity Small Business true
Entity Emerging Growth Company false
Entity Shell Company false
Title of 12(b) Security Common Shares
Trading Symbol SIF
Security Exchange Name NYSEAMER
Entity Common Stock, Shares Outstanding (in shares) 6,179,881
Entity Central Index Key 0000090168
Current Fiscal Year End Date --09-30
Document Fiscal Year Focus 2024
Document Fiscal Period Focus Q3
Amendment Flag false
v3.24.2.u1
Consolidated Condensed Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Statement [Abstract]        
Net sales $ 29,259 $ 21,853 $ 76,854 $ 62,394
Cost of goods sold 24,725 18,375 68,857 55,935
Gross profit 4,534 3,478 7,997 6,459
Selling, general and administrative expenses 3,150 3,388 9,939 10,517
Amortization of intangible assets 40 63 121 187
(Gain) loss on disposal of operating assets 0 (3) 3 0
Operating profit (loss) 1,344 30 (2,066) (4,245)
Interest expense, net 1,078 305 2,471 919
Foreign currency exchange (gain) loss, net (1) 1 6 11
Other expense, net 139 323 244 287
Income (loss) before income tax expense 128 (599) (4,787) (5,462)
Income tax expense 56 35 153 128
Net income (loss) $ 72 $ (634) $ (4,940) $ (5,590)
Net income (loss) per share        
Basic (in dollars per share) $ 0.01 $ (0.11) $ (0.82) $ (0.94)
Diluted (in dollars per share) $ 0.01 $ (0.11) $ (0.82) $ (0.94)
Weighted-average number of common shares (basic) (in shares) 6,009 5,940 5,991 5,925
Weighted-average number of common shares (diluted) (in shares) 6,105 5,940 5,991 5,925
v3.24.2.u1
Consolidated Condensed Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 72 $ (634) $ (4,940) $ (5,590)
Other comprehensive income (loss):        
Foreign currency translation (loss) gain, net of tax (73) 20 52 436
Retirement plan liability adjustment, net of tax 104 153 190 305
Other (5) 0 (5) 1
Comprehensive income (loss) $ 98 $ (461) $ (4,703) $ (4,848)
v3.24.2.u1
Consolidated Condensed Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Current assets:    
Cash and cash equivalents $ 1,696 $ 368
Short-term investments 1,713 0
Receivables, net of allowance for credit losses of $124 and $242, respectively 26,831 20,196
Contract assets 10,055 10,091
Inventories, net 13,423 8,853
Refundable income taxes 84 84
Prepaid expenses and other current assets 1,200 1,882
Total current assets 55,002 41,474
Property, plant and equipment, net 33,914 36,287
Operating lease right-of-use assets, net 13,673 14,380
Intangible assets, net 161 278
Goodwill 3,493 3,493
Other assets 88 81
Total assets 106,331 95,993
Current liabilities:    
Current maturities of long-term debt 6,116 3,820
Promissory note - related party 3,366 0
Revolver 19,693 16,289
Short-term operating lease liabilities 906 869
Accounts payable 14,965 13,497
Contract liabilities 3,880 1,150
Accrued liabilities (Related party is $880 at June 30, 2024 and $0 at September 30, 2023) 6,506 5,327
Total current liabilities 55,432 40,952
Long-term debt, net of current maturities, net of unamortized debt issuance costs 3,620 2,457
Long-term operating lease liabilities, net of short-term 13,333 14,020
Deferred income taxes, net 0 142
Pension liability 3,469 3,417
Other long-term liabilities 651 670
Shareholders’ equity:    
Serial preferred shares, no par value, 1,000 shares authorized; 0 shares issued and outstanding at June 30, 2024 and September 30, 2023 0 0
Common shares, par value $1 per share, 10,000 shares authorized; issued and outstanding shares 6,180 at June 30, 2024 and 6,105 at September 30, 2023 6,180 6,105
Additional paid-in capital 11,745 11,626
Retained earnings 18,324 23,264
Accumulated other comprehensive loss (6,423) (6,660)
Total shareholders’ equity 29,826 34,335
Total liabilities and shareholders’ equity $ 106,331 $ 95,993
v3.24.2.u1
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Allowance for doubtful accounts $ 124 $ 242
Accrued liabilities $ 6,506 $ 5,327
Serial preferred shares, shares authorized (in shares) 1,000,000 1,000,000
Serial preferred shares, shares issued (in shares) 0 0
Serial preferred shares, shares outstanding (in shares) 0 0
Common shares, par value (in dollars per share) $ 1 $ 1
Common shares, shares authorized (in shares) 10,000,000 10,000,000
Common shares, shares issued (in shares) 6,180,000 6,105,000
Common shares, shares outstanding (in shares) 6,180,000 6,105,000
Director    
Accrued liabilities $ 880 $ 0
v3.24.2.u1
Consolidated Condensed Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash flows from operating activities:    
Net loss $ (4,940) $ (5,590)
Adjustments to reconcile net loss to net cash used for operating activities:    
Depreciation and amortization 4,568 4,821
Amortization of debt issuance costs 762 30
Loss on disposal of operating assets 3 0
Loss on insurance proceeds received for non-property claim 0 60
LIFO effect 826 (272)
Share transactions under company stock plan, net 194 221
Inventory valuation accounts 481 (1,793)
Interest added to promissory note - related party (paid-in-kind) 216 0
Other long-term liabilities 219 66
Deferred income taxes (142) (136)
Changes in operating assets and liabilities:    
Receivables (6,631) (3,160)
Contract assets 36 1,153
Inventories (5,598) 869
Prepaid expenses and other current assets 1,087 653
Other assets (703) 128
Accounts payable 1,449 585
Contract liabilities 2,730 96
Other accrued liabilities 372 (253)
Accrued income and other taxes 105 252
Net cash used for operating activities (4,966) (2,270)
Cash flows from investing activities:    
Proceeds from disposal of operating assets 1 13
Capital expenditures (2,044) (1,905)
Purchase of short-term investments (2,395) 0
Maturity of short-term investments 648 0
Net cash used for investing activities (3,790) (1,892)
Cash flows from financing activities:    
Proceeds from long-term debt 2,183 0
Payments on long-term debt (768) (809)
Proceeds from revolving credit agreement 70,706 60,087
Repayments of revolving credit agreement (67,302) (56,301)
Payment of debt issuance costs (228) 0
Proceeds from promissory note - related party 3,000 0
Short-term debt borrowings 7,652 4,459
Short-term debt repayments (5,141) (3,965)
Net cash provided by financing activities 10,102 3,471
Increase (decrease) in cash and cash equivalents 1,346 (691)
Cash and cash equivalents at the beginning of the period 367 1,174
Effect of exchange rate changes on cash and cash equivalents (17) 115
Cash and cash equivalents at the end of the period 1,696 598
Supplemental disclosure of cash flow information of operations:    
Cash paid for interest (1,463) (924)
Cash paid for income taxes, net (197) (16)
Non-cash investing activities:    
Additions to property, plant & equipment - incurred but not yet paid 240 306
Non-cash financing activities:    
Debt issuance cost due at maturity - related party 1,030 0
Interest added to promissory note - related party (paid-in-kind) $ 216 $ 0
v3.24.2.u1
Consolidated Condensed Statements of Shareholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Sep. 30, 2022   6,040      
Beginning balance at Sep. 30, 2022 $ 40,690 $ 6,040 $ 11,387 $ 31,956 $ (8,693)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Comprehensive (loss) income (4,848)     (5,590) 742
Performance and restricted share expense 292   292    
Share transactions under equity-based plans (in shares)   67      
Share transactions under equity-based plans (71) $ 67 (138)    
Ending balance (in shares) at Jun. 30, 2023   6,107      
Ending balance at Jun. 30, 2023 36,063 $ 6,107 11,541 26,366 (7,951)
Beginning balance (in shares) at Mar. 31, 2023   6,108      
Beginning balance at Mar. 31, 2023 36,439 $ 6,108 11,455 27,000 (8,124)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Comprehensive (loss) income (461)     (634) 173
Performance and restricted share expense 86   86    
Share transactions under equity-based plans (in shares)   (1)      
Share transactions under equity-based plans (1) $ (1)      
Ending balance (in shares) at Jun. 30, 2023   6,107      
Ending balance at Jun. 30, 2023 $ 36,063 $ 6,107 11,541 26,366 (7,951)
Beginning balance (in shares) at Sep. 30, 2023 6,105 6,105      
Beginning balance at Sep. 30, 2023 $ 34,335 $ 6,105 11,626 23,264 (6,660)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Comprehensive (loss) income (4,703)     (4,940) 237
Performance and restricted share expense 243   243    
Share transactions under equity-based plans (in shares)   75      
Share transactions under equity-based plans $ (49) $ 75 (124)    
Ending balance (in shares) at Jun. 30, 2024 6,180 6,180      
Ending balance at Jun. 30, 2024 $ 29,826 $ 6,180 11,745 18,324 (6,423)
Beginning balance (in shares) at Mar. 31, 2024   6,190      
Beginning balance at Mar. 31, 2024 29,656 $ 6,190 11,663 18,252 (6,449)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Comprehensive (loss) income 98     72 26
Performance and restricted share expense 72   72    
Share transactions under equity-based plans (in shares)   (10)      
Share transactions under equity-based plans $ 0 $ (10) 10    
Ending balance (in shares) at Jun. 30, 2024 6,180 6,180      
Ending balance at Jun. 30, 2024 $ 29,826 $ 6,180 $ 11,745 $ 18,324 $ (6,423)
v3.24.2.u1
Summary of Significant Accounting Policies
9 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies 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 (collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation.

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

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal 2023 Annual Report on Form 10-K. The year-end consolidated condensed balance sheet contained in these financial statements was derived from the audited financial statements and disclosures required by accounting principles generally accepted in the U.S. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and disclosures considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.

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

C. Short-term Investments
In general, short-term investments have a maturity of three months to one year at the date of purchase. Short-term investments classified as held-to-maturity are recorded at cost, which approximates fair value.

D. Accounts Receivable and Allowance for Credit Losses
Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment. Unbilled receivables are reflected under contract assets on the consolidated condensed balance sheets.

The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers.

Allowance for credit losses:Three Months Ended
June 30, 2024
Nine Months Ended
June 30, 2024
Opening allowance for credit losses$(131)$(242)
     Changes in estimate104 
     Write-offs14 
     Recoveries— — 
Total allowance for credit losses$(124)$(124)
E. Net Income (Loss) per Share
The Company’s net income (loss) per basic share has been computed based on the weighted-average number of common shares outstanding. 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 stock method. The dilutive effect is as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Net income (loss)$72 $(634)$(4,940)$(5,590)
Weighted-average common shares outstanding (basic and diluted)6,009 5,940 5,991 5,925 
Effect of dilutive securities:
Restricted shares 78 — — — 
Performance shares18 — — — 
Weighted-average common shares outstanding (diluted)6,105 5,940 5,991 5,925 
Net income (loss) per share – basic:$0.01 $(0.11)$(0.82)$(0.94)
Net income (loss) per share – diluted:$0.01 $(0.11)$(0.82)$(0.94)
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share151 211 251 187 

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

The Company has debt maturing in October 2024. As a result of this condition, there is substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to evaluate available financial alternatives, including obtaining acceptable alternative financing and the sale of its Maniago location. The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreement. See Note 7, Debt and Note 14, Subsequent Events.

G. Recent Accounting Standards Adopted
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the exposure, 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 qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, this ASU is effective for the Company beginning October 1, 2023. The effect of adopting this ASU did not have an impact to the Company's results within the consolidated condensed statements of operations and financial condition.

H. Recent Accounting Standards Not Yet Adopted
In July 2023, the FASB issued ASU 2023-03, "Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", to amend various SEC paragraphs in the Accounting Standards Codification (the "Codification") to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated condensed financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker ("CODM") uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments into reportable segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated condensed financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01 “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”) clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle. The amendments in ASU 2024-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements” (“ASU 2024-02”) amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are
extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities and is effective or fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.

I. Employee Retention Credit
Under the Employee Retention Credit ("ERC") program, eligible businesses, both for-profit and not-for-profit, that experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts in any quarter (more than 50% decrease in 2020 from 2019, and more than 20% in 2021) could receive a quarterly refundable payroll tax credit. The Company, with reasonably assured qualification, submitted for refunds under the ERC program on January 23, 2024. These submissions are still pending review and approval from the Internal Revenue Service ("IRS").

As no authoritative guidance exists under U.S. GAAP for reporting ERCs, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as other income or netting the credit against related expense. For the three and nine months ended June 30, 2024, there was no income or expense recorded. In the same periods of the prior year, the Company recorded a gross benefit of $1,772, which represented $1,688 claimed as refund and $84 in interest income. The ERC was recognized as a reduction in other manufacturing and selling, general and administrative expenses and allocated to the financial statement categories from which the payroll taxes were originally incurred. The Company recorded benefits to cost of goods sold of $1,452, selling, general and administrative expense of $236 and interest income $84, respectively and recorded selling, general and administrative expense of $354 for professional fees related to the tax credit in the consolidated condensed statements of operations during the three and nine months ended June 30, 2023. The Company received $1,246 of refunds on May 9, 2023 and recorded $526 in accounts receivable on the consolidated condensed balance sheets as of June 30, 2023.

J. Reclassification
Certain amounts in prior years have been reclassified to conform to the fiscal 2024 consolidated condensed statement presentation. In fiscal 2024, the Company revised its classification within the consolidated condensed balance sheets by moving a prior year amount of $1,150 of contract liabilities from accrued liabilities to contract liabilities to conform to current period presentation. The Company revised its classification within the consolidated condensed statements of cash flows by moving a prior year amount of $96, of contract liabilities from other accrued liabilities to conform to current period presentation.
v3.24.2.u1
Inventories
9 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Inventories Inventories
Inventories consist of:
June 30,
2024
September 30,
2023
Raw materials and supplies$2,964 $1,684 
Work-in-process7,342 4,061 
Finished goods3,117 3,108 
Total inventories, net$13,423 $8,853 
For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method. Approximately 31% and 19% of the Company’s inventories at June 30, 2024 and September 30, 2023, 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, the 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 ("NRV"). If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $10,460 and $9,634 higher than reported at June 30, 2024 and September 30, 2023, respectively. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. The Company estimates net realizable value, excess and obsolescence and shrink reserves for its inventory based upon historical experience, historical and projected sales trends and the age of inventory on hand. As of June 30, 2024 and September 30, 2023, our inventory valuation allowances were $3,849 and $4,049, respectively.
v3.24.2.u1
Long-lived Assets
9 Months Ended
Jun. 30, 2024
Property, Plant and Equipment [Abstract]  
Long-lived Assets Long-lived Assets
The Company reviews the carrying value of its long-lived assets ("asset groups"), when events and circumstances indicate a triggering event has occurred. A triggering event is a change in circumstances that indicates the carrying value of the asset group may not be recoverable. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. Under the Accounting Standard Codification ("ASC") 360 ("Topic 360"), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

The Company continuously monitors for indicators of impairment to determine if further testing is necessary. In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange, California ("Orange") location, triggered a recoverability test. The results indicated that the long-lived assets were recoverable and did not require further review for impairment.
v3.24.2.u1
Goodwill
9 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill GoodwillThe Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. In the third quarter of fiscal 2024, the Company evaluated potential triggering events and determined interim testing was not required.
v3.24.2.u1
Accumulated Other Comprehensive Loss
9 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
June 30,
2024
September 30,
2023
Foreign currency translation loss, net of tax$(5,875)$(5,927)
Retirement plan liability adjustment, net of tax(552)(742)
Interest rate swap agreement, net of tax
Total accumulated other comprehensive loss$(6,423)$(6,660)
v3.24.2.u1
Leases
9 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Leases Leases
The components of lease expense were as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Finance lease expense:
     Amortization of right-of use assets on finance leases$17 $11 $53 $47 
     Interest on lease liabilities
Operating lease expense424 421 1,277 1,243 
Variable lease cost19 29 59 89 
Total lease expense$461 $462 $1,393 $1,385 
The following table presents the impact of leasing on the consolidated condensed balance sheet.
Classification in the consolidated condensed balance sheetsJune 30,
2024
September 30,
2023
Assets:
Finance lease assets  Property, plant and equipment, net$97 $147 
Operating lease assets  Operating lease right-of-use assets, net13,673 14,380 
Total lease assets$13,770 $14,527 
Current liabilities:
Finance lease liabilities  Current maturities of long-term debt$41 $61 
Operating lease liabilities  Short-term operating lease liabilities906 869 
Non-current liabilities:
Finance lease liabilities  Long-term debt, net of current maturities55 81 
Operating lease liabilities  Long-term operating lease liabilities, net of short-term13,333 14,020 
Total lease liabilities$14,335 $15,031 

Supplemental cash flow and other information related to leases were as follows:
June 30,
2024
June 30,
2023
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases$1,280 $1,261 
     Operating cash flows from finance leases
     Financing cash flows from finance leases47 46 
Right-of-use assets obtained in exchange for new lease liabilities:
     Operating leases— 60 

June 30,
2024
September 30,
2023
Weighted-average remaining lease term (years):
     Finance leases2.62.9
     Operating leases11.912.5
Weighted-average discount rate:
     Finance leases5.1 %5.1 %
     Operating leases5.9 %5.9 %

Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the nine months ended June 30, 2024)$16 $420 
202536 1,696 
202629 1,694 
202721 1,703 
2028— 1,557 
Thereafter— 12,740 
Total lease payments$102 $19,810 
Less: Imputed interest(6)(5,571)
Present value of lease liabilities$96 $14,239 
Leases Leases
The components of lease expense were as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Finance lease expense:
     Amortization of right-of use assets on finance leases$17 $11 $53 $47 
     Interest on lease liabilities
Operating lease expense424 421 1,277 1,243 
Variable lease cost19 29 59 89 
Total lease expense$461 $462 $1,393 $1,385 
The following table presents the impact of leasing on the consolidated condensed balance sheet.
Classification in the consolidated condensed balance sheetsJune 30,
2024
September 30,
2023
Assets:
Finance lease assets  Property, plant and equipment, net$97 $147 
Operating lease assets  Operating lease right-of-use assets, net13,673 14,380 
Total lease assets$13,770 $14,527 
Current liabilities:
Finance lease liabilities  Current maturities of long-term debt$41 $61 
Operating lease liabilities  Short-term operating lease liabilities906 869 
Non-current liabilities:
Finance lease liabilities  Long-term debt, net of current maturities55 81 
Operating lease liabilities  Long-term operating lease liabilities, net of short-term13,333 14,020 
Total lease liabilities$14,335 $15,031 

Supplemental cash flow and other information related to leases were as follows:
June 30,
2024
June 30,
2023
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases$1,280 $1,261 
     Operating cash flows from finance leases
     Financing cash flows from finance leases47 46 
Right-of-use assets obtained in exchange for new lease liabilities:
     Operating leases— 60 

June 30,
2024
September 30,
2023
Weighted-average remaining lease term (years):
     Finance leases2.62.9
     Operating leases11.912.5
Weighted-average discount rate:
     Finance leases5.1 %5.1 %
     Operating leases5.9 %5.9 %

Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the nine months ended June 30, 2024)$16 $420 
202536 1,696 
202629 1,694 
202721 1,703 
2028— 1,557 
Thereafter— 12,740 
Total lease payments$102 $19,810 
Less: Imputed interest(6)(5,571)
Present value of lease liabilities$96 $14,239 
v3.24.2.u1
Debt
9 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
Debt consists of: 
June 30,
2024
September 30,
2023
Revolving credit agreement$19,693 $16,289 
Foreign subsidiary borrowings, net of unamortized debt issuance cost9,722 5,771 
Promissory note - related party3,366 — 
Finance lease obligations96 142 
Less: unamortized debt issuance cost - (Related party is $387)
(397)— 
Other, net of unamortized debt issuance costs $0 and $(9), respectively
314 364 
Total debt32,794 22,566 
Less – current maturities(29,174)(20,109)
Total long-term debt$3,620 $2,457 

Credit Agreement and Security Agreement
On November 8, 2023, the Company entered into the Eighth Amendment to the Credit Agreement (the "Eighth Amendment") with JPMorgan Chase Bank, N.A. ("Lender"). The Eighth Amendment, among other things, reduced the Reserves under the Borrowing Base in the Credit Agreement to $1,500, or such lesser amount, if any, as may be agreed upon in writing by the Lender in its sole discretion.

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

The Company entered into the Tenth Amendment (the "Tenth Amendment") to the Credit Agreement and the Fifth Amendment (the "Fifth Amendment") to the Export Credit Agreement with its lender on May 21, 2024. The Tenth and Fifth Amendments amend the Credit Agreement and the Export Credit Agreement to, among other things, to: (i) increase the Revolving Commitment, less the Availability Block, if applicable, (y) the Borrowing Base, and (z) in combination with the Export Revolving Loans under the Export Credit Agreement, (i) $18,000 through September 30, 2023, (ii) $19,000 from and including October 1, 2023 through May 14, 2024, and (iii) $22,000 thereafter until, and reducing to zero and terminating on, the Maturity Date; (ii) modify the definition of Borrowing Base Reserves to $1,500 or such other amount, if any, as may be determined in writing by the Lender in its Permitted Discretion (which may be by email from the Lender); and (iii) required the execution and delivery of the First Amendment of the Silk Guaranty discussed below.
The total collateral at June 30, 2024 and September 30, 2023 was $24,576 and $21,089, respectively, and the revolving commitment was $26,000 and $30,000, respectively. Total availability at June 30, 2024 and September 30, 2023 was $2,912 and $2,830, respectively, which exceeds both the collateral and total commitment threshold. The Credit Agreement contains affirmative and negative covenants and events of default. Since the availability exceeded the $1,500 reserve minimum as of June 30, 2024 and September 30, 2023, no covenant calculations were required. The Company had a letter of credit balance of $1,970 as of June 30, 2024 and September 30, 2023, respectively.

The revolving credit agreement (or "revolver"), as amended, has a rate based on SOFR plus a 2.75% spread, which was 8.2% at June 30, 2024 and a rate based on SOFR plus a 2.25% spread, which was 7.7% at September 30, 2023. The Export Credit Agreement as amended has a rate based on SOFR plus a 2.25% spread, which was 7.7% at June 30, 2024 and a rate based on SOFR plus a 1.75% spread, which was 7.2% at September 30, 2023. The Company also has a commitment fee of 0.50% under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Debt issuance costs - revolver
The Company incurred new debt issuance costs of $117 in the first quarter of fiscal 2024 as it pertains to the new amendments entered into, which are included in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $81 at June 30, 2024. The Company previously had debt issuance costs of $86, which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $86 and $78 at June 30, 2024 and September 30, 2023, respectively.

Subordinated Promissory Note and Guaranty
The Company, in connection with the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc. ("GHI"), a California corporation owned and controlled by Mark J. Silk ("Silk") (Mr. Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $3,000 (the "Subordinated Loan") on the terms and subject to the conditions of a Subordinated Secured Promissory Note (the "Subordinated Promissory Note"). The obligations of borrowers under the Subordinated Loan mature on October 4, 2024. Interest accrues on the then-outstanding principal amount at a rate of 14% per annum and shall be paid in kind (and not in cash) by capitalization as additional principal ("PIK Interest") each six-month period after the date hereof in arrears. The Company agreed to pay to Mr. Silk a fully earned and non-refundable fee in an amount equal to $150, which fee shall be included in the carrying value of the promissory note, due and payable in full on, and subject to the occurrence of, the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof. Borrower’s obligations under the Subordinated Promissory Note are secured by a first priority lien, subject to any liens granted to Lender as described in the Subordination Agreement, on all of borrowers’ accounts, deposit accounts, contract rights, documents, equipment, general intangibles, instruments, inventory, investment property, commercial tort claims, all other goods and personal property whether tangible or intangible and wherever located, and all proceeds of the foregoing. The Subordinated Promissory note carrying value was $3,366 and $0 at June 30, 2024 and September 30, 2023, respectively. The Subordinated Promissory Note interest rate was 14% and 0% at June 30, 2024 and September 2023, respectively.

The Ninth Amendment was also subject to the satisfaction of certain conditions, including, but not limited to, the execution and delivery by Silk, of a Guaranty Agreement (the "Guaranty") in favor of Lender pursuant to which Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement. The Fee Letter requires the borrowers to pay Silk a fee (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $760, which was included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities.

The Tenth Amendment was subject to the execution and delivery of the First Amendment of the Guaranty and an amendment to the Fee Letter, which required the borrowers to pay Silk an incremental fee of $120 in consideration for his agreement to execute and deliver the First Amendment to the Guaranty. Guaranty fees were included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities and become due and payable on the maturity date.
Foreign subsidiary borrowings in USD
Foreign debt consists of:
June 30,
2024
September 30,
2023
Term loan, net of unamortized debt issuance cost $(79) and $0, respectively
$4,693 $3,293 
Short-term borrowings4,708 1,862 
Factor321 616 
Total debt$9,722 $5,771 
Less – current maturities(6,157)(3,386)
Total long-term debt$3,565 $2,385 
Receivables pledged as collateral$2,710 $1,247 

Interest rates on foreign borrowings are based on Euribor rates, which range from 0.5% to 7.8%.

The Company's Maniago, Italy ("Maniago") location obtained borrowings from two separate lending sources in the first quarter of fiscal 2024. The first was a bond for $2,208 with repayment terms of seven years. Under the terms of the borrowing, repayments are made semi-annually in the amount of $200, beginning on June 29, 2024. The proceeds from this loan are shown within cash and cash equivalents and short-term investments on the consolidated condensed balance sheets and will be used for capital investment. A second loan with a term of 1 year, 6 months was obtained in the amount of $1,104. The proceeds from this loan were used for working capital purposes.

In the third quarter, the Company increased three of its credit and factoring lines with existing lenders to support working capital needs.
The Company factors receivables from one 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.
v3.24.2.u1
Income Taxes
9 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations. This estimated effective rate is used in providing for income taxes on a year-to-date basis. The Company’s effective tax rate through the first nine months of fiscal 2024 was (3.2)%, compared with (2.3)% for the same period of fiscal 2023. The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period of fiscal 2023. 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.
The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy, and various state and local jurisdictions. As of the third quarter of fiscal 2024, the Company maintains a full valuation allowance on the net deferred tax assets in the U.S., Ireland and Italy.
v3.24.2.u1
Retirement Benefit Plans
9 Months Ended
Jun. 30, 2024
Retirement Benefits [Abstract]  
Retirement Benefit Plans Retirement Benefit Plans
The Company and certain of its subsidiaries sponsor defined benefit pension plans covering some of its employees. The components of the net periodic benefit cost of the Company’s defined benefit plans are as follows:

Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Service cost$45 $$135 $18 
Interest cost271 274 813 824 
Expected return on plan assets(261)(277)(782)(831)
Amortization of net loss44 77 130 230 
Settlement cost60 78 60 78 
Net periodic pension cost$159 $158 $356 $319 
During the nine months ended June 30, 2024 and 2023, the Company made $32 and $13 in cash contributions, and $87 and $0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans. The Company anticipates making $42 in cash contributions to fund its defined benefit pension plans for the balance of fiscal 2024, 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 2024. The Company's ability to elect to use such carryover balance will be determined based on the actual funded status of each defined benefit pension plan relative to the plan's minimum regulatory funding requirements. The Company does not anticipate making cash contributions above the minimum funding requirement to fund its defined benefit pension plans during the balance of fiscal 2024.
v3.24.2.u1
Stock-Based Compensation
9 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
The Company has outstanding equity awards under the Company's 2007 Long-Term Incentive Plan (the "2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan"), and awards performance and restricted shares under the 2016 Plan.

In the first nine months of fiscal 2024, the Company granted 120 shares under the 2016 Plan to certain key employees. The awards were split into two tranches, comprised of 46 performance-based shares and 74 time-based restricted shares, with a grant date fair value of $3.60 per share. The awards vest over three years. There were 66 shares forfeited during the nine month period ended June 30, 2024.

In the first nine months of fiscal 2024, the Company granted its non-employee directors 39 restricted shares under the 2016 Plan, with a grant date fair value of $3.08 per share, which vest over one year. One award for 38 restricted shares vested in January 2024.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 327 shares that remain available for award at June 30, 2024. 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 150% of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was $243 and $292 during the first nine months of fiscal 2024 and 2023, respectively. As of June 30, 2024, there was $421 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 years.
v3.24.2.u1
Revenue
9 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications.

Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company's contracts are from purchase orders ("PO's"), which continue to be recognized as of a point in time when products are shipped from the Company's manufacturing facilities or at a later time when control of the products transfers to the customer. Under the revenue standard, the Company recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows:

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

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

As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based
on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred.

The following table represents a breakout of total revenue by customer type:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Commercial revenue$19,114 $13,086 $49,730 $34,629 
Military revenue10,145 8,767 27,124 27,765 
Total $29,259 $21,853 $76,854 $62,394 

The following table represents revenue by end market:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
Aerospace components for:
    Fixed wing aircraft$10,631 $8,726 $30,650 $28,307 
    Rotorcraft5,470 4,067 12,817 11,960 
Energy components for power generation units7,802 7,005 20,462 16,729 
Commercial product and other revenue5,356 2,055 12,925 5,398 
Total$29,259 $21,853 $76,854 $62,394 

The following table represents revenue by geographic region based on the Company's selling operation locations:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
North America$21,987 $15,391 $57,975 $47,037 
Europe7,272 6,462 18,879 15,357 
Total$29,259 $21,853 $76,854 $62,394 

In addition to the disaggregated revenue information provided above, approximately 39% and 47% of total net sales for the nine months ended June 30, 2024 and 2023, 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 beginning October 1, 2023 and ended June 30, 2024 compared to period beginning October 1, 2022 and ended June 30, 2023:
June 30,
2024
June 30,
2023
Contract assets - Beginning balance$10,091 $10,172 
Additional revenue recognized over-time30,272 28,955 
Less amounts billed to the customers(30,308)(30,108)
Contract assets - Ending balance$10,055 $9,019 

June 30,
2024
June 30,
2023
Contract liabilities - Beginning balance$(1,150)$(807)
Payments received in advance of performance obligations(4,369)(1,531)
Performance obligations satisfied1,639 1,435 
Contract liabilities - Ending balance$(3,880)$(903)
Accounts receivable were $16,515 and $20,197 at September 30, 2022 and June 30, 2023, respectively. There were no impairment losses recorded on contract assets as of June 30, 2024 and September 30, 2023.

Remaining performance obligations
As of June 30, 2024, the Company has $139,203 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.
v3.24.2.u1
Commitments and Contingencies
9 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
On December 30, 2022, the Company became aware of a cyber security issue involving unauthorized access to the Company's system (the "Cyber Incident"). The Company immediately began an investigation and engaged cyber security experts to assist with the assessment of the incident and to help determine what data was impacted. The Company's investigation uncovered that the threat actor had gained access to certain areas of the Company's systems on or about December 27, 2022. With the assistance of outside cyber security experts, the Company located and closed the unauthorized access to our systems, identified compromised information, and notified those impacted in accordance with state and federal requirements.

The Company maintains $3,000 of cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cyber Incident. The Company recorded a benefit of $605 to selling, general, and administrative expenses in the third quarter of fiscal 2024 due to credit of third party restoration fees related to last year's cybersecurity incident. The Company recorded expense of $1,209 to selling, general, and administrative expenses and recorded costs of $60 to other expense (income), net related to loss on insurance recovery in the nine months ended June 30, 2023. At June 30, 2024 and September 30, 2023, the Company recorded $197 and $965, respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.
v3.24.2.u1
Related Party Transactions
9 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
On December 21, 2023, the Company entered into the Ninth Amendment and Fourth Amendment with its lender incurring a secured subordinated loan from GHI, in the original principal amount of $3,000. GHI is controlled by Mr. Silk, a member of the Board of Directors of the Company and considered a related party. The Company has recorded interest expense of $110 and $216 for the three and nine month periods ending June 30, 2024, which was included in the consolidated condensed balance sheets in the Promissory note - related party line. Additionally, Mr. Silk provided a Guaranty in favor of the Lender pursuant to which Mr. Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement. As part of the Guaranty and Promissory Note, the Company will pay GHI fees of $880 and $150, respectively, and has paid $30 of legal costs. The Company has a total of $397 deferred financing costs related to the Guaranty and Subordinated Promissory Note, which was included in the consolidated condensed balance sheets in current maturities of long-term, net of $663 amortization. See Note 7, Debt for further information.
v3.24.2.u1
Subsequent Events
9 Months Ended
Jun. 30, 2024
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
On August 1, 2024, the Company's Board of Directors approved, and management executed, a Share Purchase Agreement ("SPA") with TB2 S.r.l. ("Buyer"), under which the Buyer agreed to acquire 100% of the share capital of the Company’s Maniago, Italy location (C Blade S.p.A. Forging & Manufacturing). The SPA, among other things, is contingent upon meeting customary conditions, delivering required documents, and obtaining governmental authorization under the Golden Power rules of Italian law. Additionally, the SPA is subject to a Material Adverse Condition (“MAC”) clause. The Company committed to the plan to sell in August 2024, and the Maniago location is considered as held and used as of June 30, 2024.

The Company expects to consummate the sale in the fourth quarter of fiscal 2024, however, the Company cannot provide assurances that all closing conditions will be satisfied. Maniago's total assets were $23,657 and total liabilities were $16,498 on the consolidated condensed balance sheets at June 30, 2024.
v3.24.2.u1
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Principles of Consolidation Principles of Consolidation
The accompanying unaudited consolidated condensed financial statements include the accounts of SIFCO Industries, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation.

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

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal 2023 Annual Report on Form 10-K. The year-end consolidated condensed balance sheet contained in these financial statements was derived from the audited financial statements and disclosures required by accounting principles generally accepted in the U.S. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and disclosures considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.
Short-term Investments Short-term Investments
In general, short-term investments have a maturity of three months to one year at the date of purchase. Short-term investments classified as held-to-maturity are recorded at cost, which approximates fair value.
Accounts Receivable and Allowance for Credit Losses Accounts Receivable and Allowance for Credit Losses
Accounts receivable represent the Company’s unconditional rights to consideration, subject to the payment terms of the contract, for which only the passage of time is required before payment. Unbilled receivables are reflected under contract assets on the consolidated condensed balance sheets.
The Company establishes allowances for credit losses on accounts receivable, customer financing receivables, and certain other financial assets. The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures. The Company determines the creditworthiness of each customer based upon publicly available information and information obtained directly from its customers.
Net Income (Loss) per Share Net Income (Loss) per ShareThe Company’s net income (loss) per basic share has been computed based on the weighted-average number of common shares outstanding.
Recent Accounting Standards Adopted/Not Yet Adopted Recent Accounting Standards Adopted
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the exposure, 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 qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, this ASU is effective for the Company beginning October 1, 2023. The effect of adopting this ASU did not have an impact to the Company's results within the consolidated condensed statements of operations and financial condition.

H. Recent Accounting Standards Not Yet Adopted
In July 2023, the FASB issued ASU 2023-03, "Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)", to amend various SEC paragraphs in the Accounting Standards Codification (the "Codification") to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated condensed financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker ("CODM") uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments into reportable segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of adopting ASU 2023-07 on the consolidated condensed financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01 “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”) clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle. The amendments in ASU 2024-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements” (“ASU 2024-02”) amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are
extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities and is effective or fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this standard on our consolidated condensed financial statements and related disclosures.
Employee Retention Credit Employee Retention Credit
Under the Employee Retention Credit ("ERC") program, eligible businesses, both for-profit and not-for-profit, that experienced a full or partial government-ordered suspension of operations or a "significant" decline in gross receipts in any quarter (more than 50% decrease in 2020 from 2019, and more than 20% in 2021) could receive a quarterly refundable payroll tax credit. The Company, with reasonably assured qualification, submitted for refunds under the ERC program on January 23, 2024. These submissions are still pending review and approval from the Internal Revenue Service ("IRS").
As no authoritative guidance exists under U.S. GAAP for reporting ERCs, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as other income or netting the credit against related expense.
Reclassification ReclassificationCertain amounts in prior years have been reclassified to conform to the fiscal 2024 consolidated condensed statement presentation.
Revenue
The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and other military applications; (ii) airframe applications for a variety of aircraft; (iii) industrial gas and steam turbine engines for power generation units; and (iv) commercial space, semiconductor and other commercial applications.

Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company's contracts are from purchase orders ("PO's"), which continue to be recognized as of a point in time when products are shipped from the Company's manufacturing facilities or at a later time when control of the products transfers to the customer. Under the revenue standard, the Company recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows:

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

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

As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based
on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred.
v3.24.2.u1
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Schedule of Allowance for Credit Losses
Allowance for credit losses:Three Months Ended
June 30, 2024
Nine Months Ended
June 30, 2024
Opening allowance for credit losses$(131)$(242)
     Changes in estimate104 
     Write-offs14 
     Recoveries— — 
Total allowance for credit losses$(124)$(124)
Schedule of Dilutive Effect The dilutive effect is as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Net income (loss)$72 $(634)$(4,940)$(5,590)
Weighted-average common shares outstanding (basic and diluted)6,009 5,940 5,991 5,925 
Effect of dilutive securities:
Restricted shares 78 — — — 
Performance shares18 — — — 
Weighted-average common shares outstanding (diluted)6,105 5,940 5,991 5,925 
Net income (loss) per share – basic:$0.01 $(0.11)$(0.82)$(0.94)
Net income (loss) per share – diluted:$0.01 $(0.11)$(0.82)$(0.94)
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share151 211 251 187 
v3.24.2.u1
Inventories (Tables)
9 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Schedule of Inventories
Inventories consist of:
June 30,
2024
September 30,
2023
Raw materials and supplies$2,964 $1,684 
Work-in-process7,342 4,061 
Finished goods3,117 3,108 
Total inventories, net$13,423 $8,853 
v3.24.2.u1
Accumulated Other Comprehensive Loss (Tables)
9 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Schedule of Components of Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
June 30,
2024
September 30,
2023
Foreign currency translation loss, net of tax$(5,875)$(5,927)
Retirement plan liability adjustment, net of tax(552)(742)
Interest rate swap agreement, net of tax
Total accumulated other comprehensive loss$(6,423)$(6,660)
v3.24.2.u1
Leases (Tables)
9 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Schedule of Lease Cost Components, Supplemental Cash Flow and Other information, and Weighted-Average Remaining Lease Term Schedules
The components of lease expense were as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Finance lease expense:
     Amortization of right-of use assets on finance leases$17 $11 $53 $47 
     Interest on lease liabilities
Operating lease expense424 421 1,277 1,243 
Variable lease cost19 29 59 89 
Total lease expense$461 $462 $1,393 $1,385 
Supplemental cash flow and other information related to leases were as follows:
June 30,
2024
June 30,
2023
Other Information
Cash paid for amounts included in measurement of liabilities:
     Operating cash flows from operating leases$1,280 $1,261 
     Operating cash flows from finance leases
     Financing cash flows from finance leases47 46 
Right-of-use assets obtained in exchange for new lease liabilities:
     Operating leases— 60 

June 30,
2024
September 30,
2023
Weighted-average remaining lease term (years):
     Finance leases2.62.9
     Operating leases11.912.5
Weighted-average discount rate:
     Finance leases5.1 %5.1 %
     Operating leases5.9 %5.9 %
Schedule of Supplemental Balance Sheet Information Schedule
The following table presents the impact of leasing on the consolidated condensed balance sheet.
Classification in the consolidated condensed balance sheetsJune 30,
2024
September 30,
2023
Assets:
Finance lease assets  Property, plant and equipment, net$97 $147 
Operating lease assets  Operating lease right-of-use assets, net13,673 14,380 
Total lease assets$13,770 $14,527 
Current liabilities:
Finance lease liabilities  Current maturities of long-term debt$41 $61 
Operating lease liabilities  Short-term operating lease liabilities906 869 
Non-current liabilities:
Finance lease liabilities  Long-term debt, net of current maturities55 81 
Operating lease liabilities  Long-term operating lease liabilities, net of short-term13,333 14,020 
Total lease liabilities$14,335 $15,031 
Schedule of Maturities of Finance Lease Liabilities by Fiscal Year Schedule
Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the nine months ended June 30, 2024)$16 $420 
202536 1,696 
202629 1,694 
202721 1,703 
2028— 1,557 
Thereafter— 12,740 
Total lease payments$102 $19,810 
Less: Imputed interest(6)(5,571)
Present value of lease liabilities$96 $14,239 
Schedule of Maturities of Operating Lease Liabilities by Fiscal Year Schedule
Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:
Finance LeasesOperating Leases
Year ending September 30,
2024 (excluding the nine months ended June 30, 2024)$16 $420 
202536 1,696 
202629 1,694 
202721 1,703 
2028— 1,557 
Thereafter— 12,740 
Total lease payments$102 $19,810 
Less: Imputed interest(6)(5,571)
Present value of lease liabilities$96 $14,239 
v3.24.2.u1
Debt (Tables)
9 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Debt
Debt consists of: 
June 30,
2024
September 30,
2023
Revolving credit agreement$19,693 $16,289 
Foreign subsidiary borrowings, net of unamortized debt issuance cost9,722 5,771 
Promissory note - related party3,366 — 
Finance lease obligations96 142 
Less: unamortized debt issuance cost - (Related party is $387)
(397)— 
Other, net of unamortized debt issuance costs $0 and $(9), respectively
314 364 
Total debt32,794 22,566 
Less – current maturities(29,174)(20,109)
Total long-term debt$3,620 $2,457 
Schedule of Foreign Debt
Foreign debt consists of:
June 30,
2024
September 30,
2023
Term loan, net of unamortized debt issuance cost $(79) and $0, respectively
$4,693 $3,293 
Short-term borrowings4,708 1,862 
Factor321 616 
Total debt$9,722 $5,771 
Less – current maturities(6,157)(3,386)
Total long-term debt$3,565 $2,385 
Receivables pledged as collateral$2,710 $1,247 
v3.24.2.u1
Retirement Benefit Plans (Tables)
9 Months Ended
Jun. 30, 2024
Retirement Benefits [Abstract]  
Schedule of Components of Net Periodic Benefit Cost The components of the net periodic benefit cost of the Company’s defined benefit plans are as follows:
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2024202320242023
Service cost$45 $$135 $18 
Interest cost271 274 813 824 
Expected return on plan assets(261)(277)(782)(831)
Amortization of net loss44 77 130 230 
Settlement cost60 78 60 78 
Net periodic pension cost$159 $158 $356 $319 
v3.24.2.u1
Revenue (Tables)
9 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Breakout of Total Revenue by Customer
The following table represents a breakout of total revenue by customer type:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2024202320242023
Commercial revenue$19,114 $13,086 $49,730 $34,629 
Military revenue10,145 8,767 27,124 27,765 
Total $29,259 $21,853 $76,854 $62,394 

The following table represents revenue by end market:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
Aerospace components for:
    Fixed wing aircraft$10,631 $8,726 $30,650 $28,307 
    Rotorcraft5,470 4,067 12,817 11,960 
Energy components for power generation units7,802 7,005 20,462 16,729 
Commercial product and other revenue5,356 2,055 12,925 5,398 
Total$29,259 $21,853 $76,854 $62,394 

The following table represents revenue by geographic region based on the Company's selling operation locations:
Three Months Ended
June 30,
Nine Months Ended
June 30,
Net Sales2024202320242023
North America$21,987 $15,391 $57,975 $47,037 
Europe7,272 6,462 18,879 15,357 
Total$29,259 $21,853 $76,854 $62,394 
Schedule of Contract Assets and Liabilities
The following table contains a roll forward of contract assets and contract liabilities for the period beginning October 1, 2023 and ended June 30, 2024 compared to period beginning October 1, 2022 and ended June 30, 2023:
June 30,
2024
June 30,
2023
Contract assets - Beginning balance$10,091 $10,172 
Additional revenue recognized over-time30,272 28,955 
Less amounts billed to the customers(30,308)(30,108)
Contract assets - Ending balance$10,055 $9,019 

June 30,
2024
June 30,
2023
Contract liabilities - Beginning balance$(1,150)$(807)
Payments received in advance of performance obligations(4,369)(1,531)
Performance obligations satisfied1,639 1,435 
Contract liabilities - Ending balance$(3,880)$(903)
v3.24.2.u1
Summary of Significant Accounting Policies - Allowance for Credit Loss (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2024
Allowance for credit losses:    
Opening allowance for credit losses $ (131) $ (242)
Changes in estimate 5 104
Write-offs 2 14
Recoveries 0 0
Total allowance for credit losses $ (124) $ (124)
v3.24.2.u1
Summary of Significant Accounting Policies - Narrative (Details) - USD ($)
3 Months Ended 9 Months Ended
May 09, 2023
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Contract liabilities   $ 3,880,000 $ 903,000 $ 3,880,000 $ 903,000 $ 1,150,000 $ 807,000
Contract liabilities       2,730,000 96,000    
Revision of prior period reclassification adjustment within consolidated condensed balance sheets              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Contract liabilities   1,150,000   1,150,000      
Contract liabilities       96,000      
Employee Retention Credit Program              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Income   0 1,772,000 0 1,772,000    
Expense   $ 0   $ 0      
Proceeds from employee retention credit refund $ 1,246,000   1,688,000   1,688,000    
Interest income     84,000   84,000    
Cost of goods sold     1,452,000   1,452,000    
Selling, general and administrative expense     236,000   236,000    
Professional fees     354,000   354,000    
Accounts receivable     $ 526,000   $ 526,000    
Restricted shares              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Restricted and performance shares (in shares)       0      
Performance shares              
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]              
Restricted and performance shares (in shares)       0      
v3.24.2.u1
Summary of Significant Accounting Policies - Net Income (Loss) per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Net income (loss) $ 72 $ (634) $ (4,940) $ (5,590)
Weighted-average common shares outstanding basic (in shares) 6,009 5,940 5,991 5,925
Effect of dilutive securities:        
Weighted-average common shares outstanding diluted (in shares) 6,105 5,940 5,991 5,925
Net income (loss) per share – basic: (in dollars per share) $ 0.01 $ (0.11) $ (0.82) $ (0.94)
Net income (loss) per share – diluted (in dollars per share) $ 0.01 $ (0.11) $ (0.82) $ (0.94)
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share (in shares) 151 211 251 187
Restricted shares        
Effect of dilutive securities:        
Restricted and performance shares (in shares) 78 0 0 0
Performance shares        
Effect of dilutive securities:        
Restricted and performance shares (in shares) 18 0 0 0
v3.24.2.u1
Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Inventory Disclosure [Abstract]    
Raw materials and supplies $ 2,964 $ 1,684
Work-in-process 7,342 4,061
Finished goods 3,117 3,108
Total inventories, net $ 13,423 $ 8,853
v3.24.2.u1
Inventories - Narrative (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Inventory Disclosure [Abstract]    
Percentage of inventories determined using LIFO method 31.00% 19.00%
Additional amount that would have been reported in inventory if FIFO method had been used $ 10,460 $ 9,634
Inventory valuation allowances $ 3,849 $ 4,049
v3.24.2.u1
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]            
Total accumulated other comprehensive loss $ 29,826 $ 29,656 $ 34,335 $ 36,063 $ 36,439 $ 40,690
Total accumulated other comprehensive loss            
Accumulated Other Comprehensive Income (Loss) [Line Items]            
Total accumulated other comprehensive loss (6,423) $ (6,449) (6,660) $ (7,951) $ (8,124) $ (8,693)
Foreign currency translation loss, net of tax            
Accumulated Other Comprehensive Income (Loss) [Line Items]            
Total accumulated other comprehensive loss (5,875)   (5,927)      
Retirement plan liability adjustment, net of tax            
Accumulated Other Comprehensive Income (Loss) [Line Items]            
Total accumulated other comprehensive loss (552)   (742)      
Interest rate swap agreement, net of tax            
Accumulated Other Comprehensive Income (Loss) [Line Items]            
Total accumulated other comprehensive loss $ 4   $ 9      
v3.24.2.u1
Leases - Lease Cost Components Schedule (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Finance lease expense:        
Amortization of right-of use assets on finance leases $ 17 $ 11 $ 53 $ 47
Interest on lease liabilities 1 1 4 6
Operating lease expense 424 421 1,277 1,243
Variable lease cost 19 29 59 89
Total lease expense $ 461 $ 462 $ 1,393 $ 1,385
v3.24.2.u1
Leases - Supplemental Balance Sheet Information Schedule (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Assets:    
Property, plant and equipment, net $ 97 $ 147
Operating lease right-of-use assets, net 13,673 14,380
Total lease assets 13,770 14,527
Current liabilities:    
Current maturities of long-term debt 41 61
Short-term operating lease liabilities 906 869
Non-current liabilities:    
Long-term debt, net of current maturities 55 81
Long-term operating lease liabilities, net of short-term 13,333 14,020
Total lease liabilities $ 14,335 $ 15,031
Finance lease, asset, statement of financial position [Extensible List] Property, plant and equipment, net Property, plant and equipment, net
Current finance lease, liability, statement of financial position [Extensible List] Current maturities of long-term debt Current maturities of long-term debt
Noncurrent finance lease, liability, statement of financial position [Extensible List] Total long-term debt Total long-term debt
v3.24.2.u1
Leases - Supplemental Cash Flow Information and Non-Cash Activity Schedule (Details) - USD ($)
$ in Thousands
9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash paid for amounts included in measurement of liabilities:    
Operating cash flows from operating leases $ 1,280 $ 1,261
Operating cash flows from finance leases 5 6
Financing cash flows from finance leases 47 46
Operating leases $ 0 $ 60
v3.24.2.u1
Leases - Weighted-Average Remaining Lease Term and Discount Rate Schedule (Details)
Jun. 30, 2024
Sep. 30, 2023
Weighted-average remaining lease term (years):    
Finance leases 2 years 7 months 6 days 2 years 10 months 24 days
Operating leases 11 years 10 months 24 days 12 years 6 months
Weighted-average discount rate:    
Finance leases 5.10% 5.10%
Operating leases 5.90% 5.90%
v3.24.2.u1
Leases - Maturities of Lease Liabilities by Fiscal Year Schedule (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Finance Leases    
2024 (excluding the nine months ended June 30, 2024) $ 16  
2025 36  
2026 29  
2027 21  
2028 0  
Thereafter 0  
Total lease payments 102  
Less: Imputed interest (6)  
Present value of lease liabilities 96 $ 142
Operating Leases    
2024 (excluding the nine months ended June 30, 2024) 420  
2025 1,696  
2026 1,694  
2027 1,703  
2028 1,557  
Thereafter 12,740  
Total lease payments 19,810  
Less: Imputed interest (5,571)  
Present value of lease liabilities $ 14,239  
v3.24.2.u1
Debt - Schedule of Debt (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Debt Instrument [Line Items]    
Finance lease obligations $ 96 $ 142
Less: unamortized debt issuance cost - (Related party is $387) (397) 0
Total debt 32,794 22,566
Less – current maturities (29,174) (20,109)
Total long-term debt 3,620 2,457
Promissory note - related party | Director    
Debt Instrument [Line Items]    
Long-term debt, gross 3,366 0
Less: unamortized debt issuance cost - (Related party is $387) (387)  
Other, net of unamortized debt issuance costs $0 and $(9), respectively    
Debt Instrument [Line Items]    
Long-term debt, gross 314 364
Unamortized debt issuance costs 0 (9)
Revolving credit agreement | Revolving credit agreement    
Debt Instrument [Line Items]    
Long-term debt, gross 19,693 16,289
Foreign subsidiary borrowings, net of unamortized debt issuance cost    
Debt Instrument [Line Items]    
Long-term debt, gross 9,722 5,771
Foreign subsidiary borrowings, net of unamortized debt issuance cost | Other, net of unamortized debt issuance costs $0 and $(9), respectively    
Debt Instrument [Line Items]    
Unamortized debt issuance costs $ (79) $ 0
v3.24.2.u1
Debt - Narrative (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Dec. 21, 2023
USD ($)
Dec. 31, 2023
USD ($)
lender
Jun. 30, 2024
USD ($)
customer
Sep. 30, 2023
USD ($)
May 21, 2024
USD ($)
Nov. 08, 2023
USD ($)
May 21, 2023
USD ($)
Line of Credit Facility [Line Items]              
Debt instrument, number of lenders | lender   2          
Number of customer invoices factored | customer     1        
Foreign subsidiary borrowings, net of unamortized debt issuance cost              
Line of Credit Facility [Line Items]              
Receivables pledged as collateral     $ 2,710,000 $ 1,247,000      
Long-term debt, gross     $ 9,722,000 5,771,000      
Foreign subsidiary borrowings, net of unamortized debt issuance cost | Euribor | Minimum              
Line of Credit Facility [Line Items]              
Euribor variable interest rates     0.50%        
Foreign subsidiary borrowings, net of unamortized debt issuance cost | Euribor | Maximum              
Line of Credit Facility [Line Items]              
Euribor variable interest rates     7.80%        
First Loan              
Line of Credit Facility [Line Items]              
Face amount   $ 2,208,000          
Debt instrument, term   7 years          
Quarterly payment   $ 200,000          
Second Loan              
Line of Credit Facility [Line Items]              
Face amount   $ 1,104,000          
Debt instrument, term   1 year 6 months          
Revolving credit agreement | Revolving credit agreement              
Line of Credit Facility [Line Items]              
Revolving line of credit, accumulated amortization of debt issuance costs     $ 86,000 78,000      
Remaining unamortized amount     86,000 86,000      
Long-term debt, gross     19,693,000 16,289,000      
Revolving credit agreement | Credit Agreement | Revolving credit agreement              
Line of Credit Facility [Line Items]              
Reserves under borrowing base     1,500,000 1,500,000 $ 1,500,000 $ 1,500,000  
Revolving credit facility, maximum borrowing capacity $ 19,000,000   $ 26,000,000 30,000,000      
Commitment fee percentage     0.50%        
Receivables pledged as collateral     $ 24,576,000 21,089,000      
Remaining borrowing capacity     2,912,000 2,830,000      
Letters of credit outstanding, amount     $ 1,970,000 $ 1,970,000      
Weighted average interest rate, revolving credit facility     8.20% 7.70%      
Debt issuance costs incurred in period   $ 117,000          
Revolving line of credit, accumulated amortization of debt issuance costs     $ 81,000        
Revolving credit agreement | Credit Agreement | Revolving credit agreement | SOFR              
Line of Credit Facility [Line Items]              
Basis spread     2.75% 2.25%      
Revolving credit agreement | Credit Agreement and Export Credit Facility | Revolving credit agreement              
Line of Credit Facility [Line Items]              
Revolving credit facility, maximum borrowing capacity 23,000,000            
Revolving credit agreement | Credit Agreement and Export Credit Facility | Revolving credit agreement | Debt Covenant Period One              
Line of Credit Facility [Line Items]              
Revolving credit facility, maximum borrowing capacity         18,000,000    
Revolving credit agreement | Credit Agreement and Export Credit Facility | Revolving credit agreement | Debt Covenant Period Two              
Line of Credit Facility [Line Items]              
Revolving credit facility, maximum borrowing capacity         19,000,000    
Revolving credit agreement | Credit Agreement and Export Credit Facility | Revolving credit agreement | Debt Covenant Period Three              
Line of Credit Facility [Line Items]              
Revolving credit facility, maximum borrowing capacity         22,000,000    
Revolving credit agreement | Credit Agreement and Export Credit Facility | Revolving credit agreement | Debt Covenant Period Four              
Line of Credit Facility [Line Items]              
Revolving credit facility, maximum borrowing capacity         $ 0    
Revolving credit agreement | Export Credit Facility | Revolving credit agreement              
Line of Credit Facility [Line Items]              
Weighted average interest rate, revolving credit facility     7.70% 7.20%      
Revolving credit agreement | Export Credit Facility | Revolving credit agreement | SOFR              
Line of Credit Facility [Line Items]              
Basis spread     2.25% 1.75%      
Subordinated note | Director              
Line of Credit Facility [Line Items]              
Long-term debt, gross     $ 3,366,000 $ 0      
Subordinated note | Subordinated Promissory Note | Director              
Line of Credit Facility [Line Items]              
Reserves under borrowing base 1,500,000            
Face amount $ 3,000,000            
Borrowing base calculation, percentage 85.00%            
Borrowing base, percentage of eligible inventory 70.00%            
Monthly increase in reserves under borrowing base $ 250,000            
Commitment fee percentage 0.50%            
Available funds paid to borrowers $ 3,000,000            
Interest rate 14.00%   14.00% 0.00%      
Fully earned and non-refundable fee $ 150,000            
Long-term debt, gross     $ 3,366,000 $ 0      
Guaranty fee $ 760,000   $ 880,000       $ 120,000
Subordinated note | Subordinated Promissory Note | CBFR | Director              
Line of Credit Facility [Line Items]              
Basis spread 2.75%            
Subordinated note | Subordinated Promissory Note | CB Floating Rate | Director              
Line of Credit Facility [Line Items]              
Basis spread 0.25%            
Subordinated note | Subordinated Promissory Note | SOFR | Director              
Line of Credit Facility [Line Items]              
Basis spread 2.75%            
v3.24.2.u1
Debt - Schedule of Foreign Subsidiary Borrowings (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Sep. 30, 2023
Line of Credit Facility [Line Items]    
Total long-term debt $ 3,620 $ 2,457
Foreign subsidiary borrowings, net of unamortized debt issuance cost    
Line of Credit Facility [Line Items]    
Total debt 9,722 5,771
Less – current maturities (6,157) (3,386)
Total long-term debt 3,565 2,385
Receivables pledged as collateral 2,710 1,247
Term loan, net of unamortized debt issuance cost $(79) and $0, respectively    
Line of Credit Facility [Line Items]    
Unamortized debt issuance costs 0 (9)
Term loan, net of unamortized debt issuance cost $(79) and $0, respectively | Foreign subsidiary borrowings, net of unamortized debt issuance cost    
Line of Credit Facility [Line Items]    
Unamortized debt issuance costs (79) 0
Total debt 4,693 3,293
Short-term borrowings | Foreign subsidiary borrowings, net of unamortized debt issuance cost    
Line of Credit Facility [Line Items]    
Total debt 4,708 1,862
Factor | Foreign subsidiary borrowings, net of unamortized debt issuance cost    
Line of Credit Facility [Line Items]    
Total debt $ 321 $ 616
v3.24.2.u1
Income Taxes (Details)
9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Income Tax Disclosure [Abstract]    
Effective tax rate, percent (3.20%) (2.30%)
v3.24.2.u1
Retirement Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Retirement Benefits [Abstract]        
Service cost $ 45 $ 6 $ 135 $ 18
Interest cost 271 274 813 824
Expected return on plan assets (261) (277) (782) (831)
Amortization of net loss 44 77 130 230
Settlement cost 60 78 60 78
Net periodic pension cost $ 159 $ 158 $ 356 $ 319
v3.24.2.u1
Retirement Benefit Plans - Narrative (Details) - USD ($)
$ in Thousands
9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Retirement Benefits [Abstract]    
Cash contribution $ 32 $ 13
Non-cash contribution 87 $ 0
Additional cash contributions planned for fiscal 2024 $ 42  
v3.24.2.u1
Stock-Based Compensation (Details) - 2016 Plan
$ / shares in Units, shares in Thousands, $ in Thousands
1 Months Ended 9 Months Ended
Jan. 30, 2024
shares
Jun. 30, 2024
USD ($)
tranche
$ / shares
shares
Jun. 30, 2023
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Outstanding share awards that may be awarded (in shares)   327  
Outstanding share awards earned and issued at greater than the target number of shares next fiscal year   150.00%  
Share-based compensation expense | $   $ 243 $ 292
Total unrecognized compensation cost related to performance and restricted shares | $   $ 421  
Period of recognized compensation cost (in years)   1 year 6 months  
Key employees | Performance and Restricted Shares      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares granted in period (in shares)   120  
Number of tranches in award | tranche   2  
Shares granted in period, grant date fair value (in dollars per share) | $ / shares   $ 3.60  
Vesting period   3 years  
Shares forfeited (in shares)   66  
Key employees | Performance shares      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares granted in period (in shares)   46  
Key employees | Restricted shares      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares granted in period (in shares)   74  
Non-employee directors | Restricted shares      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares granted in period (in shares)   39  
Shares granted in period, grant date fair value (in dollars per share) | $ / shares   $ 3.08  
Vesting period   1 year  
Vested in period (in shares) 38    
v3.24.2.u1
Revenue - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 29,259 $ 21,853 $ 76,854 $ 62,394
North America        
Disaggregation of Revenue [Line Items]        
Revenue 21,987 15,391 57,975 47,037
Europe        
Disaggregation of Revenue [Line Items]        
Revenue 7,272 6,462 18,879 15,357
Fixed wing aircraft        
Disaggregation of Revenue [Line Items]        
Revenue 10,631 8,726 30,650 28,307
Rotorcraft        
Disaggregation of Revenue [Line Items]        
Revenue 5,470 4,067 12,817 11,960
Energy components for power generation units        
Disaggregation of Revenue [Line Items]        
Revenue 7,802 7,005 20,462 16,729
Commercial product and other revenue        
Disaggregation of Revenue [Line Items]        
Revenue 5,356 2,055 12,925 5,398
Commercial revenue        
Disaggregation of Revenue [Line Items]        
Revenue 19,114 13,086 49,730 34,629
Military revenue        
Disaggregation of Revenue [Line Items]        
Revenue $ 10,145 $ 8,767 $ 27,124 $ 27,765
v3.24.2.u1
Revenue - Narrative (Details) - USD ($)
9 Months Ended 12 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Disaggregation of Revenue [Line Items]        
Accounts receivable   $ 20,197,000   $ 16,515,000
Impairment loss on contract assets $ 0   $ 0  
Revenue from Contract with Customer | Customer Concentration Risk | Transferred over Time        
Disaggregation of Revenue [Line Items]        
Concentration risk 39.00% 47.00%    
v3.24.2.u1
Revenue - Contract Balances (Details) - USD ($)
$ in Thousands
9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Change In Contract With Customer, Assets [Roll Forward]    
Contract assets - Beginning balance $ 10,091 $ 10,172
Additional revenue recognized over-time 30,272 28,955
Less amounts billed to the customers (30,308) (30,108)
Contract assets - Ending balance 10,055 9,019
Change In Contract With Customer, Liability [Roll Forward]    
Contract liabilities - Beginning balance (1,150) (807)
Payments received in advance of performance obligations (4,369) (1,531)
Performance obligations satisfied 1,639 1,435
Contract liabilities - Ending balance $ (3,880) $ (903)
v3.24.2.u1
Revenue - Performance Obligation (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 139,203
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Timing of satisfaction, period 12 months
v3.24.2.u1
Commitments and Contingencies (Details) - Cybersecurity Insurance Claims - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Sep. 30, 2023
Loss Contingencies [Line Items]      
Insurance coverage $ 3,000    
Liability for costs incurred related to attack 197   $ 965
Selling, General and Administrative Expenses      
Loss Contingencies [Line Items]      
Loss contingency accrual, (benefit) costs $ (605) $ 1,209  
Other Nonoperating Income (Expense)      
Loss Contingencies [Line Items]      
Loss contingency accrual, (benefit) costs   $ 60  
v3.24.2.u1
Related Party Transactions (Details) - USD ($)
3 Months Ended 9 Months Ended
Dec. 21, 2023
Jun. 30, 2024
Jun. 30, 2024
Jun. 30, 2023
Sep. 30, 2023
May 21, 2023
Related Party Transaction [Line Items]            
Interest added to promissory note - related party (paid-in-kind)     $ 216,000 $ 0    
Deferred financing costs   $ 397,000 397,000   $ 0  
Subordinated note | Director            
Related Party Transaction [Line Items]            
Deferred financing costs   387,000 387,000      
Subordinated Promissory Note | Subordinated note | Director            
Related Party Transaction [Line Items]            
Face amount $ 3,000,000          
Interest added to promissory note - related party (paid-in-kind)   110,000 216,000      
Guaranty fee 760,000 880,000 880,000     $ 120,000
Fully earned and non-refundable fee 150,000          
Legal costs $ 30,000          
Deferred financing costs   397,000 397,000      
Amortization of deferred financing costs   $ 663,000 $ 663,000      
v3.24.2.u1
Subsequent Events (Details) - USD ($)
$ in Thousands
Aug. 01, 2024
Jun. 30, 2024
Sep. 30, 2023
Subsequent Event [Line Items]      
Assets   $ 106,331 $ 95,993
Maniago      
Subsequent Event [Line Items]      
Assets   23,657  
Liabilities   $ 16,498  
Subsequent Event | Maniago      
Subsequent Event [Line Items]      
Share purchase agreement, percentage to be acquired 100.00%    

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