UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~December 31, 2017~~June 30, 2020



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

For the transition period from to

Commission file number 1-5978

SIFCO Industries, Inc.

(Exact name of registrant as specified in its charter)



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

970 East 64th Street, Cleveland Ohio		44103
(Address of principal executive offices)		(Zip Code)

(216) 881-8600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	ý

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	SIF	NYSE American

The number of the Registrant’s Common Shares, par value $1.00, outstanding at ~~December 31, 2017~~June 30, 2020 was ~~5,644,414.~~5,916,123.

Part I. Financial Information

Item 1. Financial Statements

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)

(Amounts in thousands, except per share data)


	Three Months Ended December 31,						Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2020			2019			2020			2019
Net sales	$	24,251		$	31,473		$	27,777		$	24,873		$	84,521		$	81,331
Cost of goods sold	22,222			27,305			23,628			23,486			70,771			75,119
Gross profit	2,029			4,168			4,149			1,387			13,750			6,212
Selling, general and administrative expenses	4,072			5,303			2,864			3,481			10,393			11,375
Goodwill impairment							—			8,294			—			8,294
Amortization of intangible assets	425			592			408			411			1,224			1,239
Gain on disposal of operating assets	(1,400		)	(6		)
Operating loss	(1,068		)	(1,721		)
Loss (gain) on disposal or impairment of operating assets							55			—			98			(282		)
Gain on insurance proceeds received							(1,683		)	(3,304		)	(2,683		)	(4,468		)
Operating income (loss)							2,505			(7,495		)	4,718			(9,946		)
Interest income	(9		)	(14		)	—			(1		)	—			(3		)
Interest expense	444			678			183			230			697			838
Foreign currency exchange (gain) loss, net	(36		)	4
Other income, net	(316		)	(107		)
Loss from operations before income tax expense	(1,151		)	(2,282		)
Income tax expense (benefit)	(240		)	327
Net loss	$	(911	)	$	(2,609	)
Foreign currency exchange gain (loss), net							12			(3		)	12			(4		)
Other loss (income), net							27			(15		)	(58		)	(50		)
Income (loss) before income tax (benefit) expense							2,283			(7,706		)	4,067			(10,727		)
Income tax (benefit) expense							33			(336		)	(101		)	(816		)
Net income (loss)							$	2,250		$	(7,370	)	$	4,168		$	(9,911	)


Net loss per share
Net income (loss) per share
Basic	$	(0.17	)	$	(0.48	)	$	0.40		$	(1.32	)	$	0.74		$	(1.78	)
Diluted	$	(0.17	)	$	(0.48	)	$	0.39		$	(1.32	)	$	0.72		$	(1.78	)

Weighted-average number of common shares (basic)	5,502			5,467			5,676			5,571			5,656			5,556
Weighted-average number of common shares (diluted)	5,502			5,467			5,807			5,571			5,768			5,556

See notes to unaudited consolidated condensed financial statements.

~~SIFCO~~-SIFCO Industries, Inc. and Subsidiaries

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

(Unaudited)

(Amounts in thousands)


	Three Months Ended December 31,						Three Months Ended June 30,					Nine Months Ended June 30,
	2017			2016			2020		2019			2020		2019
Net loss	$	(911	)	$	(2,609	)
Net income (loss)							$	2,250	$	(7,370	)	$	4,168	$	(9,911	)
Other comprehensive income (loss):
Foreign currency translation adjustment	296			(1,048		)	113		146			175		(441		)
Retirement plan liability adjustment	162			234			188		108			626		322
Interest rate swap agreement adjustment	20			16
Comprehensive loss	$	(433	)	$	(3,407	)
Comprehensive income (loss)							$	2,551	$	(7,116	)	$	4,969	$	(10,030	)

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Balance Sheets

(Amounts in thousands, except per share data)


	December 31, 2017			September 30, 2017			June 30, 2020			September 30, 2019
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,131		$	1,399		$	289		$	341
Receivables, net of allowance for doubtful accounts of $298 and $330, respectively	24,590			25,894
Receivables, net of allowance for doubtful accounts of $229 and $592, respectively							18,961			23,159
Other receivables	2,969			—			—			3,500
Contract asset							13,134			10,349
Inventories, net	19,362			20,381			15,288			10,509
Refundable income taxes	100			292			131			141
Prepaid expenses and other current assets	1,824			1,644			1,518			1,459
Assets held for sale	1,076			2,524
Total current assets	51,052			52,134			49,321			49,458
Property, plant and equipment, net	38,855			39,508			42,929			39,610
Operating lease right-of-use assets, net							17,363			—
Intangible assets, net	6,432			6,814			2,128			3,320
Goodwill	12,305			12,170			3,493			3,493
Other assets	225			261			115			218
Total assets	$	108,869		$	110,887		$	115,349		$	96,099
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	8,084		$	7,560		$	6,682		$	5,786
Revolving credit agreement	18,755			18,557
Revolver							11,302			15,542
Short-term operating lease liabilities							1,111			—
Accounts payable	11,739			12,817			15,781			19,799
Accrued liabilities	7,136			6,791			7,222			5,557
Total current liabilities	45,714			45,725			42,098			46,684
Long-term debt, net of current maturities	4,509			5,151			4,490			2,052
Long-term operating lease liabilities, net of short-term							16,383			—
Deferred income taxes	2,548			3,266			1,650			1,718
Pension liability	6,059			6,184			8,627			9,528
Other long-term liabilities	148			430			778			63
Shareholders’ equity:
Serial preferred shares, no par value, authorized 1,000 shares	—			—			—			—
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares –5,644 at December 31, 2017 and 5,596 at September 30, 2017	5,644			5,596
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 5,916 at June 30, 2020 and 5,777 at September 30, 2019							5,916			5,777
Additional paid-in capital	9,664			9,519			10,599			10,438
Retained earnings	43,356			44,267			37,316			33,148
Accumulated other comprehensive loss	(8,773		)	(9,251		)	(12,508		)	(13,309		)
Total shareholders’ equity	49,891			50,131			41,323			36,054
Total liabilities and shareholders’ equity	$	108,869		$	110,887		$	115,349		$	96,099

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(Unaudited, Amounts in thousands)


	Three Months Ended December 31,						Nine Months Ended June 30,
	2017			2016			2020			2019
Cash flows from operating activities:
Net loss	$	(911	)	$	(2,609	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Net income (loss)							$	4,168		$	(9,911	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,191			2,515			5,576			5,735
Amortization and write-off of debt issuance cost	53			273
Gain on disposal of operating assets	(1,400		)	(6		)
LIFO expense	52			107
Amortization of debt issuance cost							79			72
Loss (gain) on disposal of operating assets or impairment of operating assets							98			(282		)
Gain on insurance proceeds received							(2,683		)	(4,468		)
Goodwill impairment							—			8,294
LIFO effect							(16		)	98
Share transactions under company stock plan	194			138			253			367
Other long-term liabilities	(234		)	2			(291		)	(80		)
Deferred income taxes	(756		)	189			(116		)	(251		)
Changes in operating assets and liabilities:
Receivables	1,415			(1,556		)	4,347			7,602
Contract assets							(2,785		)	1,230
Inventories	1,041			818			(4,623		)	(411		)
Refundable taxes	194			—
Refundable income taxes							10			(533		)
Prepaid expenses and other current assets	(228		)	(197		)	(125		)	400
Other assets	35			302			142			1
Accounts payable	(1,474		)	(1,411		)	(4,175		)	235
Other accrued liabilities	(222		)	555			2,465			1,295
Accrued income and other taxes	508			92			(30		)	(21		)
Net cash provided (used) by operating activities	458			(788		)
Net cash provided by operating activities							2,294			9,372
Cash flows from investing activities:
Insurance proceeds received							6,183			5,574
Proceeds from disposal of operating assets	25			48			—			317
Capital expenditures	(703		)	(457		)	(7,441		)	(7,036		)
Net cash used for investing activities	(678		)	(409		)	(1,258		)	(1,145		)
Cash flows from financing activities:
Payments on long term debt	(743		)	(12,223		)
Proceeds from long-term debt							5,161			2,748
Payments on long-term debt							(839		)	(1,127		)
Proceeds from revolving credit agreement	17,901			29,622			85,082			50,818
Repayments of revolving credit agreement	(17,703		)	(17,036		)	(89,323		)	(59,383		)
Payment of debt issue costs	—			(498		)	—			(132		)
Short-term debt borrowings	1,600			2,330			2,139			3,447
Short-term debt repayments	(1,105		)	(454		)	(3,319		)	(5,093		)
Net cash provided (used) for financing activities	(50		)	1,741
(Decrease) Increase in cash and cash equivalents	(270		)	544
Share retirement							—			(62		)
Net cash used for financing activities							(1,099		)	(8,784		)
Decrease in cash and cash equivalents							(63		)	(557		)
Cash and cash equivalents at the beginning of the period	1,399			471			341			1,252
Effect of exchange rate changes on cash and cash equivalents	2			4			11			6
Cash and cash equivalents at the end of the period	$	1,131		$	1,019		$	289		$	701
Supplemental disclosure of cash flow information of operations:
Cash paid for interest	$	(366	)	$	(369	)	$	(583	)	$	(781	)
Cash refund (paid) for income taxes, net	183			(25		)
Cash paid for income taxes, net							$	(41	)	$	(103	)
Non-cash investing activities:
Additions to property, plant & equipment - incurred but not yet paid							$	20		$	848

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Shareholders’ Equity

(Unaudited, Amounts in thousands)



	Nine Months Ended June 30, 2020
	Common			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares	Amount		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance - September 30, 2019	5,777	$	5,777	$	10,438		$	33,148	$	(13,309	)	$	36,054

Comprehensive income	—	—		—			4,168		801			4,969
Other		—		46			—		—			46
Performance and restricted share expense	—	—		262			—		—			262
Share transactions under equity based plans	139	139		(147		)	—		—			(8		)
Balance - June 30, 2020	5,916	$	5,916	$	10,599		$	37,316	$	(12,508	)	$	41,323



	Three Months Ended June 30, 2020
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance - March 31, 2020	5,916	$	5,916	$	10,516	$	35,066	$	(12,809	)	$	38,689

Comprehensive income	—	—		—		2,250		301			2,551
Other	—	—		46		—		—			46
Performance and restricted share expense	—	—		37		—		—			37
Balance - June 30, 2020	5,916	$	5,916	$	10,599	$	37,316	$	(12,508	)	$	41,323



	Nine Months Ended June 30, 2019
	Common					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance - September 30, 2018	5,690		$	5,690		$	10,031		$	37,097		$	(8,629	)	$	44,189

Cumulative effect for the adoption of ASC 606	—		—			—			3,598			—			3,598
Comprehensive loss	—		—			—			(9,911		)	(119		)	(10,030		)
Share retirement	(21	)	(21		)	—			(41		)	—			(62		)
Performance and restricted share expense	—		—			367			—			—			367
Share transactions under equity based plans	104		104			(104		)	—			—			—
Balance - June 30, 2019	5,773		$	5,773		$	10,294		$	30,743		$	(8,748	)	$	38,062



	Three Months Ended June 30, 2019
	Common			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance - March 31, 2019	5,773	$	5,773	$	10,353		$	38,113		$	(9,002	)	$	45,237

Comprehensive loss	—	—		—			(7,370		)	254			(7,116		)
Performance and restricted share expense	—	—		(59		)	—			—			(59		)
Balance - June 30, 2019	5,773	$	5,773	$	10,294		$	30,743		$	(8,748	)	$	38,062

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Notes to Unaudited Consolidated Condensed Financial Statements

(Amounts in thousands, except per share data)


1.	Summary of Significant Accounting Policies

A. Principles of Consolidation

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

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

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s fiscal ~~2017~~2019 Annual Report on Form 10-K. The year-end consolidated balance sheet data was derived from the audited financial statements and disclosures required by accounting principles generally accepted ~~accounting~~ in the United States ("U.S."). The results of operations for any interim period are not necessarily indicative of the results to be expected for other interim periods or the full year.

COVID-19

In March 2020, the novel strain of coronavirus ("COVID-19") was recognized as a pandemic by the World Health Organization, and the outbreak subsequently became increasingly widespread in the United States and other countries in which the Company operates.

The Company has taken proactive steps to ensure the safety of its employees and customers as well as to preserve the Company’s financial flexibility. The Company continues to monitor the development of and responses to the COVID-19 pandemic and the impact of COVID-19 on its business and respond accordingly. The full impact of the COVID-19 outbreak on the Company continues to evolve and the full magnitude that the pandemic will have on the Company’s financial condition, liquidity and future results of operations is uncertain. As the pandemic continues to impact operations of businesses across the world, our ability to meet customer demands for products may be impaired or, similarly, our customers have experienced and may continue to experience adverse business consequences. Reduced demand for products or impaired ability to meet customer demand (including as a result of disruptions at our facilities, in the transportation of products, and/or in the operations of our vendors) could have a material adverse effect on our business, operations and financial performance. Given the continuing evolution of the COVID-19 pandemic and the varied global responses to curb its spread, the Company is not presently able to estimate the effects of the COVID-19 outbreak on its future results of operations, financial condition or liquidity for fiscal year 2020.

B. Accounting Policies

A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company's fiscal ~~2017~~2019 Annual Report on Form ~~10-K, except for~~10-K. Since the ~~following:~~

~~Income taxes~~

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

The Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate in general. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under the U.S. generally accepted accounting principles wherein companies are allowed to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently,Annual Report, the Company has ~~not elected a method~~implemented Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)" and ~~will only do so after its completion of the analysis of the GILTI provisions and its election method will depend, in part, on analyzing its global income to determine whether~~ASU 2018-11, "Leases (Topic 842) Targeted Improvements," (collectively with ASU 2016-02, "Topic 842"), which was adopted by the Company ~~expects~~on October 1, 2019 using the cumulative-effect adjustment transition method. Significant changes to ~~have future material U.S. inclusions~~the Company's accounting policies as a result of adopting Topic 842 are referenced below within section E. Recently Adopted Accounting Standards and in ~~its taxable income related to GILTI and, if so, the impact that is expected.~~

~~Refer to~~ Note ~~5, Income Taxes.~~4, Leases.

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

The Company’s net income and loss per basic share has been computed based on the weighted-average number of common shares outstanding. ~~Due~~Net income in the current period, per diluted share reflects the effect of the Company's outstanding restricted shares and performance shares under the treasury method. In the prior period, due to the net loss for each reporting period, nozero restricted shares are included in the calculation of ~~basic or~~ diluted earnings per share because the effect would be anti-dilutive. The dilutive effect ~~of the Company’s restricted shares and performance shares were~~is as follows:

Three Months Ended
December 31,
2017 2016
Net loss $ (911 ) $ (2,609 )

Weighted-average common shares outstanding (basic and diluted) 5,502
5,467

Net loss per share – basic and diluted:
Net loss per share (0.17 ) $ (0.48 )

Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 110
59

~~D. Derivative Financial Instruments~~

The Company entered into an interest rate swap agreement on March 29, 2016 to reduce risk related to variable-rate debt, which was subject to changes in market rates of interest. The interest rate swap was designated as a cash flow hedge. The agreement was canceled as part of the debt modification on November 9, 2016, as further discussed in Note 4, ~~Debt~~. The Company accounted for the interest rate swap termination by recording the loss in accumulated other comprehensive loss as of December 31, 2016. The amount incurred in interest expense was nominal. As part of the new Credit Facility, described further in Note 4, ~~Debt,~~ on November 9, 2016, the Company entered into a new interest rate swap on November 30, 2016 to reduce risk related to the variable debt over the life of the new term loan. At December 31, 2017, the Company held one interest rate swap agreement with a notional amount of $3,816. Cash flows related to the interest rate swap agreement are included in interest expense. The Company’s interest rate swap agreement and its variable-rate term debt were based upon LIBOR. At December 31, 2017 and September 30, 2017, the Company’s interest rate swap agreement qualified as a fully effective cash flow hedge against the Company’s variable-rate term note. The mark-to-market valuation was a $24 asset and a $4 asset at December 31, 2017 and September 30, 2017, respectively.

~~E. Impact of Recently Issued Accounting Standards~~

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

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

F. ~~Recently Adopted Accounting Standards~~

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



	Three Months Ended June 30,					Nine Months Ended June 30,
	2020		2019			2020		2019
Net Income (loss)	$	2,250	$	(7,370	)	$	4,168	$	(9,911	)

Weighted-average common shares outstanding (basic and diluted)	5,676		5,571			5,656		5,556
Effect of dilutive securities:
Restricted shares	115		—			106		—
Performance shares	16		—			6		—
Weighted-average common shares outstanding (basic and diluted)	5,807		5,571			5,768		5,556

Net income (loss) per share – basic:	$	0.40	$	(1.32	)	$	0.74	$	(1.78	)

Net income (loss) per share – diluted:	$	0.39	$	(1.32	)	$	0.72	$	(1.78	)

Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share	306		214			200		200

D. Impact of Recently Issued Accounting Standards

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 are considered smaller reporting companies ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is considered a SRC, the Company does not need to implement ASU 2016-13 until October 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results within the consolidated condensed statements of operations and financial condition.

In December 2019, ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" was issued to (i) reduce the complexity of the standard by removing certain exceptions to the general principles in Topic 740 and (ii) improve consistency and simplify other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, ~~2016,~~2020. The Company continues to evaluate the effect adopting this ASU will have on the Company's results within the consolidated condensed statements of operations and ~~early adoption is permitted. ASU 2016-09 was~~financial condition.

E. Recently Adopted Accounting Standards

The Company adopted Topic 842 as of October 1, 2019, using the cumulative effective method. Under the transition method selected by the Company, ~~effective~~leases that are not short-term in nature existing at, or entered on October 1, ~~2017.~~

~~This guidance requires all excess tax benefits and tax deficiencies~~2019 were required to be recognized ~~as income tax expense or benefit~~and measured. Prior period amounts were not adjusted and continue to be reflected with the Company's historical accounting. The adoption of Topic 842 resulted in the ~~income statement~~Company recording right-of-use ("ROU") assets and ~~also requires a policy election to either estimate the number~~operating lease liabilities of ~~awards that are expected to vest or account for forfeitures when they occur. The Company changed its policy to recognize the impact of forfeitures when they actually occur. There was no impact~~approximately $18,059 to the consolidated condensed ~~financial statements~~balance sheet as of October 1, 2017. Also, this guidance requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified in the consolidated condensed statement of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. The Company applied this provision retrospectively, and for the first quarter of fiscal 2017, the impact between operating activities to financing activities was nominal. This guidance also requires the tax effects of exercised or vested awards to be treated as discrete items in the reporting period in which they occur, which was applied prospectively, beginning October 1, 2017 by the Company. Due to the Company having recorded a domestic valuation allowance, the tax impact upon adoption of this ASU was not material to the consolidated condensed financial statements. Lastly, the guidance requires that excess tax benefits should be classified along2019, with other income tax cash flows as an operating activity on the statement of cash flows, which differs from the Company’s historical classification of excess tax benefits as cash inflows from financing activities. The Company elected to apply this provision using the prospective transition method.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Simplifying the Measurement of Inventory~~, which provides new guidance to simplify the measurement of inventory valuation at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no related impact on the Company's consolidated condensed ~~financial statements.~~statement of comprehensive income (loss) or consolidated condensed statement of cash flows.


2.	Inventories

Inventories consist of:


	December 31, 2017		September 30, 2017		June 30, 2020		September 30, 2019
Raw materials and supplies	$	4,867	$	6,108	$	5,629	$	4,512
Work-in-process	7,129		7,650		4,052		2,721
Finished goods	7,366		6,623		5,607		3,276
Total inventories	$	19,362	$	20,381	$	15,288	$	10,509

~~Inventories are stated at~~For a portion of the ~~lower of~~Company's inventory, cost ~~or market. Cost~~ is determined using the last-in, first-out ~~(“LIFO”~~("LIFO") ~~method for 40%~~method. Approximately 41% and ~~38%~~27% of the Company’s inventories at ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017, respectively.~~2019, respectively, use the LIFO method. An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs existing at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because the actual results may vary from these estimates, calculations are subject to many factors beyond management’s control, 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.~~inventories, which are stated at the lower of cost or net realizable value. If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been ~~$8,371~~$8,280 and ~~$8,319~~$8,296 higher than reported at ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017~~2019, respectively.

3.3. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:


	December 31, 2017			September 30, 2017			June 30, 2020			September 30, 2019
Foreign currency translation adjustment	$	(4,311	)	$	(4,607	)	$	(5,492	)	$	(5,667	)
Retirement plan liability adjustment, net of tax	(4,486		)	(4,648		)	(7,016		)	(7,642		)
Interest rate swap agreement adjustment, net of tax	24			4
Total accumulated other comprehensive loss	$	(8,773	)	$	(9,251	)	$	(12,508	)	$	(13,309	)

4. Leases

The adoption of Topic 842 requires lessees to recognize a ROU asset and a lease liability on the consolidated condensed balance sheet, with the exception of short-term leases. The Company primarily leases its manufacturing buildings, specifically at its Orange location, machinery and office equipment. The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration. Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability. Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated condensed balance sheets. Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated condensed balance sheets.

The Company has remaining lease terms ranging from one to 17 years, some of which include options to renew the lease. The total lease term is determined by considering the initial lease term per the lease agreement, which is adjusted to include any renewal options that the Company is reasonably certain to exercise as well as any period that the Company has control before the stated initial term of the agreement. If the Company determines there exists a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts. A portion of our real estate leases include rents that are generally subject to annual changes in the Consumer Price Index ("CPI"). Such changes to the CPI are treated as variable lease payments.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease classification.

The Company has made an accounting policy election to not separate non-lease components from lease components when allocating consideration for the buildings and machinery and equipment ROU asset classes. The election was made to reduce the administrative burden that would be imposed on the Company.

ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date and duration of the lease term in determining the present value of the future payments. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition.

A lease asset and lease liability are not recorded for leases with an initial term of 12 months or less and the lease expense related to these leases is recognized as incurred over the lease term.

The components of lease expense were as follows:



	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020
Lease expense
Finance lease expense:
Amortization of right-of use assets on finance leases	$	14	41
Interest on lease liabilities	1		4
Operating lease expense:	664		1,743
Variable lease cost:	39		118
Total lease expense	$	718	$	1,906

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



	Classification to the consolidated condensed balance sheets	June 30, 2020
Assets:
Finance lease assets	Property, plant and equipment, net	$	102
Operating lease assets	Operating lease right-of-use assets, net	17,363
Total lease assets		$	17,465

Current liabilities:
Finance lease liabilities	Current maturities of long-term debt	$	59
Operating lease liabilities	Short-term operating lease liabilities	1,111
Non-current liabilities:
Finance lease liabilities	Long-term debt, net of current maturities	35
Operating lease liabilities	Long-term operating lease liabilities, net of short-term	16,383
Total lease liabilities		$	17,588

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



	June 30, 2020
Other Information
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	1,628
Operating cash flows from finance leases	4
Financing cash flows from finance leases	42
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	278



	June 30, 2020
Weighted-average remaining lease term (years):
Finance leases	1.9
Operating leases	15.2
Weighted-average discount rate:
Finance leases	5.0	%
Operating leases	5.9	%

Future minimum lease under non-cancellable leases at June 30, 2020 were as follows:



	Finance Leases			Operating Leases
Year ending September 30,
2020 (excluding the nine months ended June 30, 2020)	15			543
2021	55			1,933
2022	21			1,683
2023	6			1,623
2024	—			1,638
Thereafter	—			19,179
Total lease payments	$	97		$	26,599
Less: Imputed interest	(3		)	(9,105		)
Present value of lease liabilities	$	94		$	17,494

As previously disclosed in the Company's 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments under initial or remaining non-cancellable lease terms in excess of one year would have been as follows:



	Finance Leases			Operating Leases
Year ending September 30,
2020	$	61		$	2,172
2021	61			1,865
2022	21			1,583
2023	6			1,502
2024	—			1,498
Thereafter	—			16,711
Total lease payments	$	149		$	25,331
Less: Interest	(11		)
Present value of lease liabilities	$	138

4.5. Debt

Debt consists of:


	December 31, 2017			September 30, 2017			June 30, 2020			September 30, 2019
Revolving credit agreement	$	18,755		$	18,557		$	11,302		$	15,542
Foreign subsidiary borrowings	8,492			8,346			5,159			6,592
Capital lease obligations	328			352

Term loan	3,815			4,060
Less: unamortized debt issuance cost	(42		)	(47		)
Term loan less unamortized debt issuance cost	3,773			4,013
Finance lease obligations							94			138
Other, net of unamortized debt issuance costs ($23) and ($25), respectively							5,919			1,108
Total debt	31,348			31,268			22,474			23,380

Less – current maturities	(26,839		)	(26,117		)	(17,984		)	(21,328		)
Total long-term debt	$	4,509		$	5,151		$	4,490		$	2,052

Credit Agreement and Security Agreement of 2018

On ~~November 9, 2016,~~August 8, 2018, the Company entered into an ~~Amended~~asset-based Credit Agreement ("Credit Agreement") and ~~Restated Credit and~~a Security Agreement ~~("Credit Facility"~~(“Security Agreement”) with its ~~Lender.~~current lender (the "Lender"). The Credit ~~Facility~~Agreement matures on ~~June 25, 2020~~August 6, 2021 and ~~consisted of secured loans in an aggregate principal amount of up to $39,871. The Credit Facility was~~is comprised of ~~(i)~~ a senior secured revolving credit facility ofwith a maximum borrowing ~~amount~~ of ~~$35,000, including swing line loans and letters~~$30,000. The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of ~~credit provided by~~ the Lender ~~and (ii) senior secured term loan facility in~~or upon additional lenders joining the ~~amount of $4,871 (the "Term Facility"). The Term Facility is repayable in monthly installments of $81, which commenced December 1, 2016.~~Credit Agreement. The terms of the Credit ~~Facility~~Agreement contain both a ~~lock-box~~lock box arrangement and subjective acceleration clause. As a result, the ~~amounts~~amount outstanding on the revolving credit facility ~~are~~is classified as a short-term

liability. The ~~amounts borrowed under~~proceeds from the Credit ~~Facility~~Agreement were used ~~to repay the amounts outstanding under the Company's previous Credit Agreement, for working capital, for general corporate purposes and~~ to pay fees and expenses ~~associated with this transaction. In~~incurred in connection with ~~entering into~~ the Credit ~~Facility, the Company terminated its interest rate swap agreement with the Lender, as referenced in Note 1,~~ ~~Summary~~Agreement and continue to be used for working capital purposes and general corporate purposes.

The Credit Agreement contains affirmative and negative covenants and events of ~~Significant Accounting Policies - Derivative Financial Instruments~~.

~~Borrowings bear interest at the LIBOR rate, prime rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case, plus the applicable margin as~~defaults. As set forth in the Credit Facility. The revolver has a rate based on LIBOR plus a 3.75% spread and a prime rate, which resulted in a weighted average rate of 5.4% at December 31, 2017 and the term loan has a rate of 5.6% at December 31, 2017, which was based on LIBOR plus a 4.25% spread. This rate becomes an effective fixed rate of 5.8% after giving effect to the interest rate swap agreement. There is also a commitment fee ranging from 0.15% to 0.375% to be incurred on the unused balance.

~~The Company entered into its First Amendment~~ Agreement, ("First Amendment") to the Credit Facility on February 16, 2017. The First Amendment assigned its Lender as Administrative Agent and assigned a portion of its Credit Facility to a participating Lender.

~~Under the Company's Credit Facility,~~ the Company is ~~subject~~required to ~~certain customary loan covenants. These include, without limitation, covenants that require maintenance of certain specified financial ratios, including that the Company meeting~~maintain a ~~minimum EBITDA and the maintenance of a minimum~~ fixed charge coverage ~~ratio.~~ratio ("FCCR") of 1.1:1.0 any time the availability is equal to or less than 12.5% of the revolving commitment. In the event of a default, wethe Company may not be able to access ~~our~~the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.

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

On November ~~28, 2017, the Company obtained a consent letter from its Lender which extended to December 31, 2017 the date to consummate such sale of the Irish property.~~

~~On February 8,~~5, 2018, the Company entered into the ~~Third~~First Amendment (the "First Amendment") to the Credit Agreement and Security Agreement with its Lender. The First Amendment retroactively amended certain definitions and provisions effective as of the original closing date to clarify the parties' original understanding.

On December 17, 2018, the Company entered into an Export Credit Agreement (the ~~“Third~~“Export Credit Agreement”) with its Lender. Pursuant to the terms of the Export Credit Agreement, the Lender will lend amounts to the Company on foreign receivables that are guaranteed by the Export-Import Bank of the United States of America. The Export Credit Agreement provides for a revolving commitment of $5,000, therefore increasing the maximum borrowing of the revolver to $35,000. The borrowings under the Export Credit Agreement will bear interest at (depending on the type of borrowing) the Prime or LIBOR Rate, plus the applicable margin as set forth in the Export Credit Agreement. The maturity date under the Export Credit Agreement is August 6, 2021 (or such earlier date as the revolving commitments under the Export Credit Agreement are reduced to zero or otherwise terminated). The Export Credit Agreement contains customary representations, warranties, covenants and events of default, including, without limitation, the affirmative covenants under the Company’s Credit Agreement dated August 8, 2018, as amended with the Lender. In connection with entering into the Export Credit Agreement, the Company also entered into the Second Amendment (the “Second Amendment”) to its Credit ~~Facility~~Agreement. The Second Amendment amends certain definitions and provisions to provide for the Company’s entrance into the Export Credit Agreement.

On March 29, 2019, the Company entered into a Third Amendment with its Lender. This amendment extended the ~~Agent~~time frame for when certain post-closing requirements would be satisfied by March 31, 2019 to June 30, 2019. These post-closing requirements were completed by June 30, 2019.

On September 20, 2019, the Company entered into a Fourth Amendment with its Lender. As previously stated, the Company is subject to certain customary loan covenants if availability is less than or equal to 12.5% of the revolving commitment for three or more business days in any consecutive 30 day period; however, the Fourth Amendment to the Credit Agreement resulted in the reduction of its availability from 12.5% of the revolving commitment to 10% of the lesser of collateral or total revolving commitment, with a $2,000 floor through June 30, 2020. In determining the availability, the Lender looks at the total collateral. If the total collateral is less than $20,000, then the $2,000 floor will apply; however, if the total collateral is greater than or equal to $20,000, but less than the $35,000 (revolving commitment); then 10% of the total collateral is used, but if the collateral exceeds $35,000, then 10% of the total commitment is used as lending will not exceed the $35,000 revolving commitment unless the accordion feature is enacted. Commencing July 1, 2020, the terms reverted back to the requirements in place prior to the Fourth Amendment. The total collateral at June 30, 2020 and ~~Lenders~~September 30, 2019 was $25,603 and $24,000, respectively and the revolving commitment was $35,000 for both periods. The measurement at 10% was $2,560 and $2,400, respectively. Total availability at June 30, 2020 and September 30, 2019 was $13,492 and $7,709, respectively, which exceed both the collateral and total commitment threshold. If availability had fallen short, the Company would be required to meet the FCCR covenant, which must not be less than 1.1 to 1.0. Because the availability was greater than the 10.0% of the revolving commitment as of June 30, 2020 and September 30, 2019, the FCCR calculation was not required.

Amounts borrowed under the Credit ~~Facility, in which~~Agreement are secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67% of the ~~Agent~~stock of its first-tier non-U.S. subsidiaries. Borrowings will bear interest at the Lender's established domestic rate or LIBOR, plus the applicable margin as set forth in the Credit Agreement. The revolver has a rate based on LIBOR plus 1.50%, which was 1.7% at June 30, 2020 and 3.6% at September 30, 2019, and the ~~Lenders agreed~~Export Credit Agreement has a rate based on LIBOR plus 1.00% spread at June 30, 2020 and 1.25% spread at September 30, 2019, which was 1.2% and 3.4% at June 30, 2020 and September 30, 2019, respectively. The Company also has a commitment fee of 0.25% under the Credit Agreement to ~~among other things, (i) amend~~be incurred on the ~~interest rate pricing spreads, (ii) add an owned real property location as part~~unused balance of the ~~collateral and sell certain identified assets at our closed location in Alliance, (iii) adjust the calculation of EBITDA and certain financial covenants,~~revolver.

912

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

Foreign subsidiary borrowings

~~As of December 31, 2017 and September 30, 2017, the total foreign~~Foreign debt borrowings (excluding capital leases) were $8,492 and $8,346, respectively, of which $6,298 and $5,805, respectively is the current portion. Current debt as of December 31, 2017 and September 30, 2017, consist of $3,369 and $2,618 of short-term borrowings, $1,222 and $1,340 is the current portion of long-term debt, and $1,707 and $1,847 of factoring. consists of:



	June 30, 2020			September 30, 2019
Term loan	$	1,890		$	2,318
Short-term borrowings	3,071			3,744
Factor	198			530
Total debt	$	5,159		$	6,592

Less – current maturities	(4,323		)	(5,501		)
Total long-term debt	$	836		$	1,091

Receivables pledged as collateral	$	1,322		$	672

Interest rates on ~~the term note~~foreign borrowings are based on Euribor rates which range from 1.0% to ~~4.0%~~4.2%. In December 2018, the Company entered into a six month short-term debt arrangement of $1,137 to be used for working capital purposes at Maniago, which was subsequently repaid in fiscal 2019. In September 2019, Maniago modified its repayment schedule for one tranche of its existing term debt by reducing its next two payments by approximately $96 and extending the loan for an additional six months in which the final payment will be made at that time (to be paid by October 2020). The Company continues to have discussions with its lenders and other potential partners to refinance certain debt obligations at its Maniago location to provide Maniago with sufficient future liquidity. If Maniago is unsuccessful in obtaining additional financing, it may experience challenges in meeting certain current loan obligations. This foreign debt is collateralized by Maniago’s assets. The Company has not pledged any assets as collateral or guaranteed Maniago’s debt. The consolidated condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of the Maniago assets or the amounts and classifications of the Maniago liabilities that may result from the outcome of this uncertainty. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan will provide adequate liquidity to finance its Maniago operations.

The Company factors receivables from one of its customers. The factoring programs are uncommitted, whereby the Company offers receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution. Following the sale and transfer of the receivables to the unaffiliated financial institution, the receivables are not isolated from the Company, and effective control of the receivables is not passed to the unaffiliated financial institution, which does not have the right to pledge or sell the receivables. The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated condensed balance ~~sheet. The carrying value of the receivables pledged as collateral were $3,658 and $3,548 at December 31, 2017 and September 30, 2017, respectively.~~sheets.

Debt issuance costs

The Company incurred debt issuance costs ~~related~~as it pertains to the ~~prior~~ Credit Agreement in the amount of ~~$724. The Company~~$212, and incurred an additional ~~$562 of debt issuance~~ costs in ~~November 2016 and August 2017 and wrote off a combined amount~~fiscal 2019 of ~~$323 of debt issuance costs during fiscal 2017 due~~$75 related to the ~~debt modification accounting for deferred financing costs as it relates to the Term Facility~~First and ~~due to the~~ Second ~~Amendment. The costs are~~Amendments, which is included in interest expense in the accompanying consolidated condensed financial statements. Total debt issuance cost in the amount of $768 is split between the Term Facility and the revolving credit facility. The portion noted above within the debt table relates to the Term Facility in the amount of $61, net of amortization of $19 at December 31, 2017. The remaining $707 of debt issuance cost relates to the revolving credit facility. This portion is shown in the consolidated condensed balance ~~sheet~~sheets as a deferred charge in other current assets, net of amortization of ~~$217~~$180 and $106 at ~~December 31, 2017.~~June 30, 2020 and September 30, 2019, respectively.

Other

In response to the economic uncertainty created by the COVID-19 pandemic, as described above in Note 1, Summary of Significant Accounting Policies, and taking into consideration the Company’s market capitalization, status as a smaller reporting company, and uncertainties and volatility in, and disruptions to, the capital markets, as well as the terms of the Company’s Credit Agreement, the Company applied for and received funds under Paycheck Protection Program (or "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). On April 10, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP Loan”). The PPP Loan to the Company was made through JPMorgan Chase Bank, N.A., a national banking association and the Company’s existing lender. The note has an aggregate principal amount of approximately $5,025 and a two year term. The interest rate on the PPP Loan is 0.98%, which shall be deferred for the first six months of the term of the loan. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company. The loan proceeds were received on April 10, 2020 and were used for payroll, interest on mortgage obligations, rents on leases and utility payments. As of June, 30, 2020, the Company

repaid $261 proceeds back to its lender, leaving a remaining balance of $4,764 , of which $2,382 will be paid in the next twelve months and the remaining $2,382 in the following twelve months after.

Under the terms of the CARES Act, PPP Loan recipients can apply for and potentially be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels. Although the Company intends to file for forgiveness, no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. As of June 30, 2020, the Company is waiting for further guidance regarding how to apply for the forgiveness for all or a portion of the PPP loan.

5.6.Income Taxes

For each interim reporting period, the Company makes an estimate of the effective tax rate it expects to be applicable for the full fiscal year for its operations. This estimated effective rate is used in providing for income taxes on a year-to-date basis. The Company’s effective tax rate through the first ~~three~~nine months of fiscal ~~2018~~2020 was ~~21%~~(2)%, compared with ~~(14)%~~8% for the same period of fiscal ~~2017. This increase is~~2019. The decrease in the effective rate was primarily ~~driven by discrete tax benefits~~attributable to changes in jurisdictional mix of ~~$718 primarily related to tax legislation enacted during the first quarter of fiscal 2018 and tax impacts related to the sale of the Cork, Ireland building discussed further in Note 10,~~ ~~Assets Held for Sale and Disposal, partially offset by an increase in year-to-date non-U.S.~~ income in ~~the first quarter of~~ fiscal ~~2018~~2020 compared with the ~~first quarter~~same period of fiscal ~~2017.~~2019. The effective tax rate differs from the U.S. federal statutory rate due primarily to the valuation allowance against the ~~Company's~~Company’s U.S. deferred tax assets and income in foreign jurisdictions that are taxed at different rates ~~that~~than the U.S. statutory tax rate.

InAs previously mentioned, the ~~first~~CARES Act was enacted and signed into law, which includes provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not materially affect the Company’s third quarter of fiscal ~~2018, the U.S. enacted the Act which, among other items, reduces the U.S. corporate~~2020 income tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. The decrease in the U.S. federal corporate tax rate from 35% to 21% results in a blended statutory tax rate of 24.5% for the fiscal year ending September 30, 2018. The new taxes for certain foreign-sourced earnings under the Act are effective for the Company after the fiscal year ending September 30, 2018.

The Company revalued its gross U.S. deferred taxes and the related valuation allowance, as a result of the Act. The revaluation, which is considered complete, resulted in a discrete tax benefit of $198 during the first quarter of fiscal 2018. Other provisions of the Act, including the one-time transition tax, are considered provisional as final transition impacts of the Act may differ from the above estimate, due to changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. As a result of the valuation allowance in the U.S. on tax attribute carryforwards, as of the first quarter of fiscal 2018 no charge to tax expense was recorded related to the one-time transition tax. Additionally, the Company released $305 of valuation allowance in the first quarter of fiscal 2018 on a portion of its U.S.provision, deferred tax assets ~~as a result~~and liabilities, or related taxes payable. The Company continues to assess the future implications of ~~deferred tax liabilities for indefinite lived intangible assets now available as a source of income as a result of~~these provisions within the ~~Act. The change in assessment of~~CARES Act on its consolidated condensed financial statements but does not expect the ~~realization of deferred taxes as a result of the Act is provisional as of the first quarter of fiscal 2018 as the Company will continue~~impact to ~~analyze the necessary information and evaluate assumptions made in its assessment of the realization of its deferred tax assets.~~

be material.

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


6.7.	Retirement Benefit Plans

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


	Three Months Ended December 31,						Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2020			2019			2020			2019
Service cost	$	63		$	78		$	85		$	74		$	255		$	224
Interest cost	240			220			208			264			624			791
Expected return on plan assets	(402		)	(404		)	(363		)	(393		)	(1,090		)	(1,180		)
Amortization of net loss	161			216			188			107			564			322
Net periodic cost	$	62		$	110		$	118		$	52		$	353		$	157

During the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2020 and ~~2016,~~2019, the Company made no$604 and $48 in contributions, respectively, to its defined benefit pension plans. The Company ~~anticipates~~does not anticipate making ~~$45 of~~ additional cash contributions to fund its defined benefit pension plans ~~during~~for the balance of fiscal ~~2018~~2020 and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal ~~2018.~~2020. The Company's ability to elect to use such carryover balance will be determined based on the actual funded status of each defined benefit pension plan relative to the plan's minimum regulatory funding requirements. The Company does not anticipate making cash contributions above the minimum funding requirement to fund its defined benefit pension plans during the balance of fiscal ~~2018.~~2020.

On November 26, 2019, the Company ratified a new collective bargaining agreement with one of its bargaining units. Included within the agreement was a provision to withdraw from its existing multi-employer plan resulting in the imposition of a withdrawal liability. The withdrawal liability of $739 was recorded within the cost of goods sold line of the consolidated condensed statement of operations and is included in other long-term liabilities and the current portion (next four quarterly installments) in accrued liabilities of the consolidated condensed balance sheets, payable in quarterly installments over the next 20 years.


7.8.	Stock-Based Compensation

The Company has awarded performance and restricted shares under its ~~shareholder approved~~shareholder-approved amended and restated 2007 Long-Term Incentive Plan ("2007 Plan"), which was further amended and restated under the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (the "2016 Plan"). At the Annual Meeting of Shareholders held on January 30, 2020, the shareholders of the Company approved the first amendment (the “Amendment”) to the 2016 ~~Long-Term Incentive~~Plan. The Amendment increased the number of shares available for award under the 2016 Plan ~~("2016 Plan").~~by 550 shares. The ~~amendment increased the~~ aggregate number of shares that may be awarded ~~under~~by the ~~2016 Plan~~Company was increased to ~~646~~1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested ~~shares.~~shares, pursuant to the 2016 Plan. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms, including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. Any such award is exercisable no later than ten years from the date of the grant.

The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the making of such award. The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200% (for awards granted in fiscal 2020, the maximum is 150%) of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives.

With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. The Company is currently recognizing compensation expense for one of its tranches of awards where it has concluded it is probable that the performance criteria for that award will be met, while the Company is not currently recognizing compensation expense for two tranches of awards where it had concluded that it is not probable that the performance criteria for those awards will be met. During each future reporting period, such expense may be subject to adjustment based upon the Company's financial performance, which impacts the number of common shares that it expects to vest upon the completion of the performance period. The performance shares were valued at the closing market price of the Company’s common shares on the date of the grant. The vesting of such shares is determined at the end of the performance period.

During the first ~~three~~nine months of fiscal ~~2018,~~2020, the Company granted ~~119~~134 shares under the 2016 Plan to certain key employees. The ~~award was~~awards were split into two tranches, 6847 performance shares and 5187 shares of time-based restricted shares, with a grant date fair value of ~~$6.70.~~$2.50 per share. The ~~award vests~~awards vest over three years. ~~5 performance shares and 3 time-based restricted shares were forfeited.~~

The Company has awarded restricted shares to its directors, officers, and other employees of the Company. The restricted shares were valued at the closing market price of the Company’s common shares on the date of the grant, and such value was recorded as unearned compensation. The unearned compensation is being amortized ratably over the restricted stock vesting period of one year or three years.

During the first nine months of fiscal 2020, the Company granted its non-employee directors 57 restricted shares under the 2016 Plan, with a grant date fair value of $4.39, which vest over one year. One award for 61 restricted shares vested.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately ~~302~~524 shares that remain available for award at ~~December 31, 2017.~~June 30, 2020. If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to a maximum of 200% (decreased to 150% for awards starting in fiscal 2020) of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was ~~$194~~$262 and ~~$158~~$367 during the first ~~three~~nine months of fiscal ~~2017~~2020 and ~~2016,~~2019, respectively and $37 expense and $59 benefit during the third quarter of fiscal 2020 and 2019, respectively. As of ~~December 31, 2017,~~June 30, 2020, there was ~~$1,242~~$495 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan. The Company expects to recognize this cost over the next ~~1.8~~1.3 years.


8.9.	Revenue

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

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



	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019

Commercial revenue	$	12,266	$	14,713	$	34,954	$	41,213
Military revenue	15,511		10,160		49,567		40,118
Total	$	27,777	$	24,873	$	84,521	$	81,331

The following table represents revenue by the various components:



	Three Months Ended June 30,				Nine Months Ended June 30,
Net Sales	2020		2019		2020		2019
Aerospace components for:
Fixed wing aircraft	$	13,730	$	12,557	$	39,130	$	38,949
Rotorcraft	8,687		5,088		22,348		17,261
Energy components for power generation units	3,804		4,887		9,879		13,347
Commercial product and other revenue	1,556		2,341		13,164		11,774
Total	$	27,777	$	24,873	$	84,521	$	81,331

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 Sales	2020		2019		2020		2019
North America	24,261		20,301		75,532		68,745
Europe	3,516		4,572		8,989		12,586
Total	$	27,777	$	24,873	$	84,521	$	81,331

In addition to the disaggregating revenue information provided above, approximately 60% of total net sales as of June 30, 2020 are recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

Contract Balances

Generally, payment is due shortly after the shipment of goods. For performance obligations recognized at a point in time, a contract asset is not established as the billing and revenue recognition occur at the same time. For performance obligations recognized over-time, a contract asset is established as revenue is recognized prior to billing and shipment. Upon shipment and billing, the value of the contract asset is reversed and accounts receivable is recorded. In circumstances where prepayments are required and payment is made prior to satisfaction of performance obligations, a contract liability is established. If the performance obligation occurs over-time, the contract liability is reversed over the course of production. If the performance obligation is point in time, the contract liability reverses upon shipment.

The following table contains a roll forward of contract assets and contract liabilities for the period ended June 30, 2020:




Contract assets - Beginning balance, October 1, 2019	$	10,349
Additional revenue recognized over-time	51,132
Less amounts billed to the customers	(48,347		)
Contract assets - Ending balance, June 30, 2020	$	13,134




Contract liabilities (included within Accrued liabilities) - Beginning balance, October 1, 2019	$	(382	)
Payments received in advance of performance obligations	—
Performance obligations satisfied	382
Contract liabilities (included within Accrued liabilities) - Ending balance, June 30, 2020	$	—

There were no impairment losses recorded on contract assets as of June 30, 2020.

Remaining performance obligations

As of June 30, 2020, the Company has $100,880 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.


10.	Commitments and Contingencies

In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters; however, it does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation.

~~The~~

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), is currently a defendant in a ~~class action~~ lawsuit filed by Avco Corporation (“Avco”) in the ~~Superior~~Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco. Avco also sued Arconic, Inc. (“Arconic”), which was the raw material supplier. No specific amount of ~~California, County~~damages was claimed by Avco and discovery has only recently begun.

Orange disagrees with the allegations made by Avco and has made cross claims against Arconic. Previously, Orange was a defendant with respect to the same action in the United States District Court for the District of Orange, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations; and unfair competition.Rhode Island, which action was dismissed in connection with the movement of the matter to Pennsylvania State Court. Although the Company records reserves for legal disputes and other matters in accordance with ~~generally accepted accounting principles in the United States of America ("GAAP"),~~GAAP, the ultimate outcomes of these types of matters are inherently uncertain. Actual results may differ significantly from current estimates. Given the current status of this matter, the Company has not recorded a charge, as the Company does not have a reasonable basis on which to establish an ~~estimated loss~~estimate.

The Company is a defendant in a purported class action lawsuit filed in the Superior Court of ~~$385 as~~California, County of ~~September 30,~~Orange, which was filed in August 2017, ~~of which $10 was paid as of September 30, 2017~~arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations; failure to maintain required wage records and furnish accurate wage statements; and unfair competition. A settlement has been reached and the ~~remaining balance~~Company received preliminary court approval on July 13, 2020, following a brief COVID-19 delay. The Company previously recorded adequate reserves to cover the settlement.

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

Recovery on the insurance claim related to the fire on December 26, 2018 at the Orange location continues in fiscal 2020. The Company continues to work diligently to restore the site back to full service as safely and quickly as possible. The 2500 ton press from storage that was placed in service in fiscal 2019 continues to run and the press located in Michigan was taken off-line at the end of November 2019, relocated to Orange and was placed into service in March 2020. Restoration is ~~expected~~nearly complete for the structure of the manufacturing building and the presses damaged in the fire. The Company began running one restored press at the end of December 2019, while another restored press began running at the end of July 2020, allowing Orange to ~~be paid within~~have 6 out of 8 presses in production going into the ~~second~~fourth quarter. Two of the six presses damaged in the fire are still in the restoration process. The Company anticipates having those restored at the end of fourth quarter of fiscal ~~2018.~~2020.


9.	~~Restructuring Costs~~

During the first nine months of fiscal 2020, the Company received cash proceeds from insurance of $8,787 and, separately, the insurance carrier provided $713 of proceeds directly to the landlord for the continued restoration of the damaged building as prescribed under the lease arrangement. The table below reflects the receipt of proceeds and how they were expended as of June

30, 2020. Any additional recoveries in excess of recognized losses are treated as gain contingencies and will be recognized when the gain is realized or realizable. The Company ~~completed~~also maintains business interruption insurance coverage and continues to work with the ~~closure~~insurance company to reach an agreement on the recoverable amounts of the Alliance, Ohio ("Alliance") location in October 2017. Orders after September 30, 2017 are processed and manufactured by the Cleveland, Ohio location. As a result of the closure, Alliance incurred non-cash charges as of September 30, 2017. The remaining estimated exit costs are to be expensed as incurred, which included workforce reduction costs. Workforce reduction costs incurred at September 30, 2017 were approximately $215,business interruption expenses, of which ~~a $15~~$915 was ~~paid by September 30, 2017 and the remainder was paid~~realized in the first ~~quarter~~nine months of fiscal ~~2018.~~2020.

~~10.~~ ~~Assets Held for Sale and Disposal~~



Balance sheet (Other receivables):

September 30, 2019		$	3,500
	Cash proceeds	(8,787		)
	Capital expenditures (equipment)	2,683
	Other expenses	1,689
	Business interruption	915
June 30, 2020		$	—

The ~~Company had assets held for sale as it related to~~tables below reflect how the Cork, Ireland building and the Alliance building and certain machinery and equipment. In the first quarter of fiscal 2018, the Company signed a purchase agreement with a buyer for the sale of the building located in Cork, Ireland. The sale transaction was finalized on December 15, 2017 for cash proceeds ~~of approximately $3,078, resulting in an approximate gain of $1,521. The cash proceeds were~~ received by our legal counsel and have not been transferred to the Company as of December 31, 2017. As such, the $2,969, (the cash proceeds of the sale, net of legal and professional fees paid) is separately shown within other receivables toimpacted the consolidated condensed ~~balance sheets as~~statements of ~~December 31, 2017. The net cash proceeds after legal~~operations for the nine months ended and ~~professional fees and taxes have been considered, are expected to be used to be used to pay down the Term Facility and revolving credit facility as further discussed in Note 4,~~ ~~Debt.~~three months ended June 30,2020.



	Nine Months Ended June 30, 2020
	Balance without insurance proceeds			Insurance recoveries		Balance with insurance proceeds
Cost of goods sold	$	73,374		(2,603	)	$	70,771
Gain on insurance proceeds received	$	—		(2,683	)	$	(2,683	)
Income (loss) before income tax (benefit) expense	$	(1,219	)	(5,286	)	$	4,067

The Alliance building and machinery and equipment are recorded as assets held for sale in the consolidated condensed balance sheets. The assets held for sale balance at December 31, 2017 and September 30, 2017 were $1,076 and $2,524, respectively. The balance at December 31, 2017 represents the Alliance building and certain machinery and equipment that continues to meet the asset held for sale classification due to the circumstances of the closure of Alliance and expected plan to sell. The Alliance assets fair value are stated at its orderly liquidation value. The Company expects to sell these assets within the next 12 months.



	Three Months Ended June 30, 2020
	Balance without insurance proceeds		Insurance recoveries		Balance with insurance proceeds
Cost of goods sold	$	23,944	(316	)	$	23,628
Gain on insurance proceeds received	$	—	(1,683	)	$	(1,683	)
Income (loss) before income tax (benefit) expense	$	284	(1,999	)	$	2,283


~~11.~~	~~Subsequent Events~~

~~On February 8, 2018, the Company entered into its Third Amendment with its lender. See Note 4,~~ ~~Debt~~ ~~for further discussion on the Third Amendment.~~

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. 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 products in the Aerospace and Energy ("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 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; (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 turbine engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; ~~and~~ (10) the ability to successfully integrate businesses that may be acquired into the Company’s ~~operations.~~operations; (11) extraordinary or force majeure events affecting the business or operations of our business; and (12) the impact of the novel coronavirus ("COVID-19") pandemic and related impact on the global economy, which may exacerbate the above factors and/or impact our results of operations and financial condition.

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

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

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

A. Results of Operations

Overview

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

Fire Restoration

Recovery on the insurance claim related to the fire on December 26, 2018 at the Orange location continues in fiscal 2020. The Company ~~finalized~~continues to work diligently to restore the ~~closure~~site back to full service as safely and quickly as possible. The 2500 ton press from storage that was placed in service in fiscal 2019 continues to run and the press located in Michigan was taken off-line at the end of ~~its Alliance, Ohio ("Alliance") location~~November 2019 relocated to Orange and placed in ~~October 2017. Orders after September 30, 2017 are~~service in March 2020. Restoration is nearly complete for the structure of the manufacturing building and presses damaged in the fire. The Company began running one restored press at the end of December 2019, while another finished being ~~processed and manufactured by its Cleveland, Ohio ("Cleveland") location. As~~restored at the end of July 2020. During the first nine months of fiscal 2020, the Company received cash proceeds from insurance of $8.8 million, of which $3.5 million was recognized in fiscal 2019, $2.6 million was used to offset expense incurred as a result of the ~~closure~~fire and business interruption and $2.7 million used for capital; and, separately, $0.7 million in proceeds from the insurance carrier went directly to the landlord for the continued restoration of ~~Alliance, impairment costs~~the damaged building as prescribed under the lease arrangement. The table below reflects the receipt of proceeds and ~~restructuring costs~~how they were ~~recorded~~expended as of June 30, 2020. Any additional recoveries in ~~fiscal 2017.~~excess of recognized losses are treated as gain contingencies and will be recognized when the gain is realized or realizable. The ~~remaining estimated exit costs are~~Company also maintains business interruption insurance coverage and continues to ~~be expensed as incurred,~~work with the insurance company to reach an agreement on the recoverable amounts of business interruption expenses, which ~~include workforce reduction costs of $0.2~~$0.9 million ~~which were paid~~was realized in the first ~~quarter~~nine months of fiscal ~~2018. Certain machinery~~2020.



Balance sheet (Other receivables - dollars in millions):

September 30, 2019		$	3.5
	Cash proceeds	(8.8		)
	Capital expenditures	2.7
	Other expenses	1.7
	Business interruption	0.9
June 30, 2020		$	—

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

COVID-19

In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the ~~building remain classified as assets held for sale as~~outbreak became widespread in the United States and other countries in which we operate. The Company has continued to take proactive steps to ensure the safety of ~~December 31, 2017.~~its employees and customers and to preserve the Company’s financial flexibility. We have enacted operating protocols to ensure the safety of our employees and adopted precautions in compliance with various regulatory orders and recommendations imposed in the jurisdictions in which we operate. We may decide to take further actions that we determine to be in the best interest of our employees and customers, or are required by federal, state or local authorities.

The ~~Company completed~~A&E industry in which we operate has been impacted by the ~~sale~~COVID-19 pandemic and the impact of this pandemic on this industry as well as the global economy continues to evolve. The extent of the ~~Cork, Ireland building~~pandemic’s effect on ~~December 15, 2017.~~Company’s financial condition, liquidity and future results of operations, as well as the A&E industry generally, depends on future developments, which cannot be predicted at this time. These future developments include, without limitation, the scope and severity of the pandemic, mitigation actions taken in response to the pandemic, the length of time involved in resuming economic activity, and the impact on government programs and budgets. Reduced demand for products or impaired ability to meet customer demand as a result of the pandemic or future developments could have a material adverse effect on our business, operations and financial performance. Given the evolution of the COVID-19 pandemic and the varied global responses to curb its spread, the Company is not presently able to estimate the effects of the COVID-19 outbreak on its future results of operations, financial condition or liquidity.

~~Three~~Backlog of Orders

SIFCO’s total backlog at June 30, 2020 was $100.9 million, compared with $104.4 million as of June 30, 2019 and $117.6 million as of September 30, 2019. Orders may be subject to modification or cancellation by the customer with limited charges. Sales in the A&E markets continue to be impacted by the general economy, newly acquired part numbers won and continued sales recovery from the fire at Orange and may be affected by the COVID-19 pandemic, which has created increased pressure in these markets. If the COVID-19 pandemic continues to have a material impact on the A&E markets, including with regards to our more significant customers, it could materially affect our business and results of operations. Backlog may decline as customers adjust orders in response to the ongoing COVID-19 pandemic and its impact on their operations. Backlog information may not be indicative of future sales.

Nine Months Ended ~~December 31, 2017~~June 30, 2020 compared with ~~Three~~Nine Months Ended ~~December 31, 2016~~June 30, 2019

Net Sales

Net sales for the first ~~three~~nine months of fiscal ~~2018 decreased 23.0%~~2020 increased to ~~$24.3~~$84.5 million, compared with ~~$31.5~~$81.3 million in the comparable period of fiscal ~~2017.~~2019. Net sales comparative information for the first ~~three~~nine months of fiscal ~~2018~~2020 and ~~2017~~2019 is as follows:


(Dollars in millions)	Three Months Ended December 31,				Increase/(Decrease)			Nine Months Ended June 30,				Increase/ (Decrease)
Net Sales	2017		2016		Increase/(Decrease)			2020		2019		Increase/ (Decrease)
Aerospace components for:
Fixed wing aircraft	$	12.5	$	14.6	$	(2.1	)	$	39.1	$	39.0	$	0.1
Rotorcraft	5.6		4.9		0.7			22.3		17.2		5.1
Energy components for power generation units	6.1		7.8		(1.7		)	9.9		13.3		(3.4		)
Commercial product and other revenue	0.1		4.2		(4.1		)	13.2		11.8		1.4
Total	$	24.3	$	31.5	$	(7.2	)	$	84.5	$	81.3	$	3.2

The ~~decrease~~increase of $5.1 million in ~~commercial product~~rotorcraft sales in the first nine months of fiscal 2020 compared to the same period in fiscal 2019 is primarily due to increased shipments relating to certain military programs, such as the Black Hawk and CH53. Commercial products and other revenue ~~sales is largely driven by a decrease~~increased $1.4 million in the first nine months of fiscal 2020 compared to the same period in fiscal 2019, primarily due to timing of shipments for the Hellfire II missile program due to timing of orders. The decrease in fixed wing aircraft sales is primarily due to changes in build demand of Rolls Royce AE Engines due to a buffering plan for a customer plant closure which increasedand other ordnance work along with new product sales. Net sales in ~~fiscal 2017. Energy~~energy components for power generation units decreased by ~~$1.7~~$3.4 million compared with the same period last year ~~of which $1.2 million related~~due to the ~~closure~~continued softening of the ~~Alliance location~~energy market and ~~$0.5 million~~some impact due to ~~planned refurbishment~~the global outbreak of ~~a hammer at~~COVID-19. In response to the outbreak of COVID-19, the Italian government restricted the operations of businesses within Italy, including the Company’s operations in Maniago, Italy ("Maniago") ~~location.~~

~~Rotorcraft sales increased $0.7 million~~. The Company received an exemption from these government restrictions based on the nature of its operations, and temporarily reduced its operations in Maniago and undertook a temporary shutdown from March 17 through March 22 to perform a deep cleaning of the facility for employee safety due to ~~recovery~~the COVID-19 outbreak. Since the temporary cessation of ~~sales from~~operations in Maniago that occurred in March, Maniago has resumed operations and has experienced other disruptions, such as border closures to other countries, resulting in a ~~customer that had previously taken measures~~delay in product shipments as of ~~inventory destocking in~~ the ~~comparable period.~~end of June, which impacted the quarter by approximately $1.3 million. With countries subsequently beginning to reopen, Maniago expects to complete such shipments within the upcoming quarter.

Commercial net sales were ~~56.6%~~41.4% of total net sales and military net sales were ~~43.4%~~58.6% of total net sales in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~53.6%~~50.7% and ~~46.4%~~49.3%, respectively, in the comparable period in fiscal ~~2017.~~2019. A shift in mix between commercial versus military sales in comparable periods is due to an increase in military programs, such as the Black Hawk program, partially offset by the decline in energy sales and continued delays in production due to the ongoing recovery efforts at the Orange location and the impact to the commercial aerospace industries due to COVID-19. Military net sales ~~decreased~~increased by ~~$4.0~~$9.5 million to ~~$10.6~~$49.6 million in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$14.6~~$40.1 million in the comparable period of fiscal ~~2017,~~2019, primarily due to the timing of shipments for the Hellfire II missile ~~program.~~program and other programs such as the Black Hawk and CH53. Commercial

net sales decreased ~~$3.2~~$6.3 million to ~~$13.7~~$34.9 million in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$16.9~~$41.2 million in the comparable period of fiscal ~~2017~~2019 primarily due to ~~changes in program build rates~~the continued business interruption created by the fire at the Orange location and ~~closure of~~timing related to certain programs as they were impacted by COVID-19 and the ~~Alliance location mentioned above.~~soft energy market.

Cost of Goods Sold

Cost of goods sold decreased by ~~$5.1~~$4.3 million, or ~~18.6%~~5.8%, to ~~$22.2~~$70.8 million, or ~~91.6%~~83.7% of net sales, during the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$27.3~~$75.1 million or ~~86.8%~~92.4% of net sales, in the comparable period of fiscal ~~2017.~~2019. The decrease was due primarily to ~~lower volumes~~improved productivity and the receipt of $2.7 million in insurance proceeds related to business interruption and expense incurred related to the fire, partially offset by $1.7 million of unabsorbed costs related to the Orange location due to the fire and the one-time pension withdrawal liability charge of $0.8 million incurred for exiting its multi-employer plan as ~~previously mentioned, lower labor costs of $1.6 million and lower scrap expense of $0.3 million.~~further explained in Note 7, Retirement Benefit Plans.

Gross Profit

Gross profit ~~decreased $2.1~~increased $7.5 million to ~~$2.0~~$13.8 million during the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$4.2~~$6.2 million in the comparable period of fiscal ~~2017.~~2019. Gross margin percent of sales was ~~8.4%~~16.3% during the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~13.2%~~7.6% in the comparable period in fiscal ~~2017.~~2019. The ~~decrease~~increase in gross profit was primarily due to ~~lower~~the reduced cost of goods sold as a percentage of sales, ~~volume and mix.~~as outlined above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were ~~$4.1~~$10.4 million, or ~~16.8%~~12.3% of net sales during the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$5.3~~$11.4 million, or ~~16.8%~~14.0% of net sales in the comparable period of fiscal ~~2017.~~2019. The decrease in selling, general and administrative expenses is ~~primarily~~ due to ~~$1.0 million~~the continued cost reduction efforts by management in ~~lower expansion costs related~~response to ~~one~~COVID-19 and other effects of the ~~Company's plant locations~~COVID-19 pandemic and ~~$0.1 million in~~its impact on operations such as reduced bank fees, less travel expense, lower ~~sales~~legal and professional costs (prior year included arbitration costs), lower equity compensation and commissions, ~~attributed to changes in the Company's sales organization.~~partially offset by higher incentive compensation accrual of $0.5 million.

Amortization of Intangibles ~~and Asset Impairment of Long-lived Assets~~

Amortization of intangibles ~~decreased $0.2~~was $1.2 million ~~to $0.4 million during~~in the first ~~three~~nine months of fiscal ~~2018,~~2020 and fiscal 2019, respectively.

Other/General

The Company recorded operating income of $4.7 million in the first nine months of fiscal 2020, compared with ~~$0.6~~an operating loss of $9.9 million in the first nine months of fiscal 2019.

The prior year's operating loss includes an $8.3 million non-cash charge related to the Maniago reporting unit as its goodwill was impaired.

In the first nine months ended June 30, 2020, results included $2.7 million gain on insurance proceeds, compared to a gain of $4.5 million in the comparable period, ~~of fiscal 2017. The decrease was due to the impairment of certain definite-lived intangible assets~~both periods related to the ~~Alliance location in~~net gain on insurance proceeds related to the ~~third quarter of fiscal 2017.~~fire at the Orange location.

~~Other/General~~

Interest expense ~~decreased $0.2 million to $0.4~~was $0.7 million in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared ~~with $0.7~~to $0.8 million in the ~~same period in~~first nine months of fiscal 2017. The decrease is primarily due to a $0.2 million prior period write-off of deferred financing costs associated with the Company’s Amended and Restated Credit and Security Agreement ("Credit Facility") with its lender in fiscal 2017. See Note 4, ~~Debt~~ ~~for further information.~~2019.

The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the first ~~three~~nine months of both fiscal ~~2018~~2020 and ~~2017. The Company entered into an interest rate swap in the prior year as discussed in Note 1,~~ ~~Summary of Significant Accounting Policies - Derivatives Financial Instruments~~ ~~of the notes to the unaudited consolidated condensed statements:~~2019:

Weighted Average
Interest Rate
Three Months Ended
December 31, Weighted Average
Outstanding Balance
Three Months Ended
December 31,
2017 2016 2017 2016
Revolving credit agreement 5.4 % 4.4 % $ 19.6 million $ 20.3 million
Term note 5.8 % 4.6 % $ 3.9 million $ 9.7 million
Foreign term debt 2.7 % 4.2 % $ 8.1 million $ 10.3 million

Other income, net, consists principally of $0.3 million of rental income earned from the lease of the Company's Cork, Ireland ("Irish building") facility and grant income realized due to the sale of the Irish building in the first three months of fiscal 2018 compared with $0.1 million in the first three months of fiscal 2017. The Company also had a gain of $1.4 million in the first three months of fiscal 2018 compared with a nominal amount in the first three months of fiscal 2017. The majority of the gain recognized was due to the sale of the Irish building. See Note 10, ~~Assets Held for Sale and Disposal~~ ~~for further discussion on the sale of the Irish building in the first three months of fiscal 2018.~~



	Weighted Average Interest Rate Nine Months Ended June 30,				Weighted Average Outstanding Balance Nine Months Ended June 30,
	2020		2019		2020	2019
Revolving credit agreement	3.2	%	4.1	%	$ 14.8 million	$ 17.9 million
Foreign term debt	3.9	%	2.7	%	$ 5.5 million	$ 7.2 million
Other debt	0.4	%	—	%	$ 6.1 million	$ 0.0 million

Income Taxes

The Company’s effective tax rate inthrough the first ~~three~~nine months of fiscal ~~2018~~2020 was ~~21%~~(2%), compared with ~~(14)%~~8% for the same period of fiscal 2019. The decrease in the ~~comparable period~~effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal ~~2017. This increase is primarily driven by discrete tax benefits of $0.7 million, primarily related to tax legislation enacted in~~2020 compared with the ~~first quarter~~same period of fiscal 2018 and tax impacts related to the sale of the Irish building, partially offset by an increase in year-to-date non-U.S. income in the first quarter of fiscal 2018 compared to the first quarter in fiscal 2017.2019. The effective tax rate differs from the U.S. federal statutory rate ~~primarily~~ 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.

In the first quarter of fiscal 2018, the U.S. enacted the Act which, among other items, reduces the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, creates a participation exemption regime for future distributions of foreign earnings, imposes a one-time transition tax on a taxpayer’s foreign subsidiaries’ earnings not previously subject to U.S. taxation and creates new taxes on certain foreign-sourced earnings. The decrease in the U.S. federal corporate tax rate from 35% to 21% results in a blended statutory tax rate of 24.5% for the fiscal year ending September 30, 2018. The new taxes for certain foreign-sourced earnings under the Act are effective for the Company after the fiscal year ending September 30, 2018.Net Income (Loss)

The Company revalued its gross U.S. deferred taxes and the related valuation allowance, as a result of the Act. The revaluation, which is considered complete, resulted in a discrete tax benefit of $0.2Net income was $4.2 million during the first quarter of fiscal 2018. Other provisions of the Act, including the one-time transition tax, are considered provisional as final transition impacts of the Act may differ from the above estimate, due to changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. As a result of the valuation allowance in the U.S. on tax attribute carryforwards, as of the first quarter of fiscal 2018 no charge to tax expense was recorded related to the one-time transition tax. Additionally, the Company released $0.3 million of valuation allowance in the first quarter of fiscal 2018 on a portion of its U.S. deferred tax assets as a result of deferred tax liabilities for indefinite lived intangible assets now available as a source of income as a result of the Act. The change in assessment of the realization of deferred taxes as a result of the Act is provisional as of the first quarter of fiscal 2018 as the Company will continue to analyze the necessary information and evaluate assumptions made in its assessment of the realization of its deferred tax assets.

~~Net Loss~~

~~Net loss was $0.9 million during the first three~~nine months of fiscal ~~2018,~~2020, compared with a net loss of ~~$2.6~~$9.9 million in fiscal 2019, respectively. The increase in income is primarily due to higher gross profit, attributed to continued improved productivity and insurance proceeds received in the first nine months of fiscal 2020 and lower selling, general and administrative expenses. Additionally, the Company did not experience a non-cash charge to goodwill as it did in the prior year.

Three Months Ended June 30, 2020 compared with Three Months Ended June 30, 2019

Net Sales

Net sales for the third quarter of fiscal 2020 increased 11.7% to $27.8 million, compared with $24.9 million in the comparable period of fiscal ~~2017.~~2019. Net ~~loss decreased~~sales comparative information for the third quarter of fiscal 2020 and 2019 is as follows:



(Dollars in millions)	Three Months Ended June 30,				Increase (Decrease)
Net Sales	2020		2019		Increase (Decrease)
Aerospace components for:
Fixed wing aircraft	$	13.7	$	12.6	$	1.1
Rotorcraft	8.7		5.1		3.6
Energy components for power generation units	3.8		4.9		(1.1		)
Commercial product and other revenue	1.6		2.3		(0.7		)
Total	$	27.8	$	24.9	$	2.9

The majority of the increase was attributed to a $3.6 million increase in rotorcraft sales in the third quarter of fiscal 2020 compared to the same period in fiscal 2019 and is primarily due to increased shipments relating to certain military programs, such as the Black Hawk and Apache. The $1.1 million increase in fixed wing aircraft sales is due to increased shipments coming from the Orange location as it increases its production and its capabilities are restored when compared to the same period in fiscal 2019. Net sales in energy components for power generation units decreased by $1.1 million compared with the same period last year due to the continued softening of the energy market and as previously discussed within the nine months management and analysis section and due to the global outbreak of COVID-19. Sales were impacted in the quarter by approximately $1.3 million attributable to the inability to ship to its customers due to border closures, which have subsequently reopened.

Commercial net sales were 44.2% of total net sales and military net sales were 55.8% of total net sales in the third quarter of fiscal 2020, compared with 59.2% and 40.8%, respectively, in the comparable period of fiscal 2019. Military net sales increased by $5.4 million to $15.5 million in the third quarter of fiscal 2020, compared with $10.1 million in the comparable period of fiscal 2019. Commercial net sales decreased $2.4 million to $12.3 million in the third quarter of fiscal 2020, compared with $14.7 million in the comparable period of fiscal 2019 primarily due to lower sales in the energy market.

Cost of Goods Sold

Cost of goods sold was $23.6 million, or 85.1% of net sales, during the third quarter of fiscal 2020, compared with $23.5 million or 94.4% of net sales, in the comparable period of fiscal 2019, primarily driven by improved productivity as the Orange location completes restoration on certain presses and receipt of insurance proceeds of $0.3 million related to extra expense coverage.

Gross Profit

Gross profit increased $2.8 million to $4.1 million during the third quarter of fiscal 2020, compared with $1.4 million in the comparable period of fiscal 2019. Gross margin was 14.9% during the third quarter of fiscal 2020, compared with 5.6% in the comparable period in fiscal 2019. The increase in gross margin was primarily due to higher sales volume, improved productivity and receipt of insurance proceeds related to extra expense from the Orange fire.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2.9 million, or 10.3% of net sales, during the third quarter of fiscal 2020, compared with $3.5 million, or 14.0% of net sales, in the comparable period of fiscal 2019. The decrease is primarily due to a decrease in legal and professional costs of $0.3 million.

Amortization of Intangibles

Amortization of intangibles was $0.4 million for both the third quarter of fiscal 2020 and fiscal 2019, respectively.

Other/General

The Company recorded an operating income of $2.5 million in the third quarter of fiscal 2020, compared to an operating loss of $7.5 million in the third quarter of fiscal 2019.

Current period results include a $1.7 million gain in insurance proceeds compared to $3.3 million in the third quarter of fiscal 2019 related to insurance recovery from the damage that occurred related to the fire at the Orange location.

The results from the third quarter of the prior year include an $8.3 million non-cash charge related to the Maniago reporting unit as its goodwill was impaired.

Interest expense was $0.2 million in the third quarter of fiscal 2020 and fiscal 2019.

The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s Credit Agreement in the third quarter of both fiscal 2020 and 2019:



	Weighted Average Interest Rate Three Months Ended June 30,				Weighted Average Outstanding Balance Three Months Ended June 30,
	2020		2019		2020	2019
Revolving credit agreement	2.0	%	4.1	%	$ 12.5 million	$ 12.5 million
Foreign term debt	3.9	%	2.9	%	$ 5.3 million	$ 6.7 million
Other debt	0.9	%	—	%	$ 6.1 million	$ 0.0 million

Income Taxes

The Company's effective tax rate in the third quarter of fiscal 2020 was 2%, compared with 4% for the same period of fiscal 2019. The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income during the three months ended June 30, 2020 compared to the same period of fiscal 2019, partially offset by an increase in discrete tax. 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 $2.3 million during the third quarter of fiscal 2020, compared with net loss of $7.4 million in the comparable period of fiscal 2019. Net income increased primarily due to higher sales and increased gross profit, lower selling, general and administrative ~~costs,~~expenses along with the gain on property recovered by insurance of $1.7 million as the ~~sale~~Company continues to work through the restoration of the ~~Irish building and~~Orange location, while results from the ~~tax benefits realized as noted above.~~third quarter of the prior year includes $8.3 million non-cash charge due to goodwill impairment at one of its reporting units.

Non-GAAP Financial Measures

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

Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under generally accepted accounting principles in the United States of America (“GAAP”). The Company presents EBITDA and Adjusted EBITDA because itmanagement believes that they are useful indicators for evaluating operating performance and liquidity, including the Company’s ability to incur and service debt and it uses EBITDA to evaluate prospective acquisitions. Although the Company uses EBITDA and Adjusted EBITDA for the reasons noted above, the use of these non-GAAP financial measures as analytical tools has limitations. Therefore, reviewers of the Company’s financial information should not consider them in isolation, or as a substitute for analysis of the Company's results of operations as reported in accordance with GAAP. Some of these limitations include:

Neither EBITDA nor Adjusted EBITDA reflects the interest expense, or the cash requirements necessary to service interest payments on indebtedness;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements;

The omission of the substantial amortization expense associated with the Company’s intangible assets further limits the usefulness of EBITDA and Adjusted EBITDA; and

Neither EBITDA nor Adjusted EBITDA includes the payment of taxes, which is a necessary element of operations.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to the Company to invest in the growth of its businesses. Management compensates for these limitations by not viewing EBITDA or Adjusted EBITDA in isolation and specifically by using other GAAP measures, such as net income (loss), net sales, and operating

income (loss), to measure operating performance. Neither EBITDA nor Adjusted EBITDA is a measurement of financial performance under GAAP, and neither should be considered as an alternative to net loss or cash flow from operations determined in accordance with GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net ~~income~~loss to EBITDA and Adjusted EBITDA:


Dollars in thousands	Three Months Ended						Three Months Ended						Nine Months Ended
	December 31,						June 30,						June 30,
	2017			2016			2020			2019			2020			2019
Net loss	$	(911	)	$	(2,609	)
Net income (loss)							$	2,250		$	(7,370	)	$	4,168		$	(9,911	)
Adjustments:
Depreciation and amortization expense	2,191			2,515			1,845			1,896			5,576			5,735
Interest expense, net	435			664			183			229			697			835
Income tax expense (benefit)	(240		)	327
Income tax (benefit)							33			(336		)	(101		)	(816		)
EBITDA	1,475			897			4,311			(5,581		)	10,340			(4,157		)
Adjustments:
Foreign currency exchange (gain) loss, net (1)	(36		)	4
Foreign currency exchange loss (gain), net (1)							12			(3		)	12			(4		)
Other income, net (2)	(316		)	(107		)	27			(15		)	(58		)	(50		)
Gain on disposal of operating assets (3)	(1,400		)	(6		)
Equity compensation (4)	194			158
LIFO impact (5)	52			107
Orange expansion (6)	—			953
Loss (gain) on disposal and impairment of assets (3)							55			—			98			(282		)
Gain on insurance proceeds received (4)							(1,683		)	(3,304		)	(2,683		)	(4,468		)
Equity compensation (5)							37			(59		)	262			367
LIFO impact (6)							(5		)	154			(16		)	98
Goodwill impairment (7)							—			8,294			—			8,294
Adjusted EBITDA	$	(31	)	$	2,006		$	2,754		$	(514	)	$	7,955		$	(202	)


(1)	Represents the gain or loss from changes in the exchange rates between the functional currency and the foreign currency in which the transaction is denominated.


(2)	Represents miscellaneous non-operating income or expense, ~~primarily rental income from the Company's Irish subsidiary and in the three months ended 2018,~~such as pension costs or grant ~~income was realized as it relates to the Company's Irish subsidiary.~~income.


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


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


(5)	Represents the equity-based compensation ~~benefit and~~ expense recognized by the Company under its 2016 Long-Term Incentive Plan (as the amendment and restatement of, and successor to, the 2007 Long-Term Incentive ~~Plan~~Plan) due to granting of awards, awards not vesting and/or forfeitures.


~~(5)~~(6)	Represents the ~~increase~~change in the reserve for inventories for which cost is determined using the last-in, first-out (“LIFO”) method.


~~(6)~~(7)	Represents ~~costs related to expansion~~non-cash charge of ~~one of the plant locations that are required to be expensed as incurred.~~goodwill impairment experienced at its reporting unit level.

B. Liquidity and Capital Resources

Cash and cash equivalents were ~~$1.1~~both $0.3 million at ~~December 31, 2017 compared with $1.4 million at~~June 30, 2020 and September 30, ~~2017.~~2019. At ~~December 31, 2017, approximately $0.9~~June 30, 2020, the majority of the $0.3 million of the Company’s cash and cash equivalents ~~was~~were in the possession of its non-U.S. subsidiaries. Distributions from the Company's non-U.S. subsidiaries to the Company may be subject to adverse tax consequences.

Historically, the main sources of liquidity have been cash flows from operations and borrowings under our Credit Agreement. However, the continued impact of the COVID-19 pandemic (and the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak) is highly uncertain, with disruptions to the business of our customers and suppliers, which in turn is likely to impact our business, operations and results as well as our liquidity and capital resources. The Company's

liquidity could be negatively affected by customers extending payment terms to the Company and/or a decrease in demand for our products as a result of the COVID-19 pandemic. Since the start of the pandemic, management has continued to evaluate the Company’s liquidity and capital resources and has taken a number of steps to help preserve financial flexibility in light of uncertainty resulting from the COVID-19 pandemic by deferring wage increases to non-union employees, increased oversight of all capital expenditure approval, working with vendors to reduce costs and obtained a Paycheck Protection Program Loan as referenced in Note 5, Debt and for the reasons described below. As the impact of the COVID-19 pandemic on the economy and the Company's operations continues to evolve, the Company and management will continue to assess liquidity needs.

Operating Activities

The Company’s operating activities ~~from operations~~ provided ~~$0.5~~$2.3 million of cash in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with ~~$0.8~~providing cash of $9.4 million ~~of cash used by operating activities~~ in the first ~~three~~nine months of fiscal ~~2017.~~2019. The cash provided by operating activities in the first ~~three~~nine months of fiscal ~~2018~~2020 was primarily due to net income of $4.2 million and $2.9 million in non-cash items, such as depreciation and amortization, equity based compensation, deferred income taxes and LIFO effect, partially offset by the use of working capital of $4.8 million (increase in inventory of $4.6 million, $2.8 million in contract assets, net accruals of $1.7 million offset by $4.3 million decrease in receivables). The use of cash from working capital was primarily due to increase in inventories to support orders and customer adjustments for the remaining fiscal 2020 and payments to suppliers and disbursements related to the fire recovery, partially offset by decreased receivables resulting from improved collections.

The Company’s operating activities provided $9.4 million of cash in the first nine months of fiscal 2019. The cash provided by operating activities in the first nine months of fiscal 2019 was primarily due to a reduction in working capital of $9.8 million, a result in non-cash items such as the goodwill impairment charge of $8.3 million, depreciation and amortization of ~~$2.2~~$5.7 million, ~~offset by a gain on sale of Irish building~~ and ~~other assets of $1.4 million, a net source of working capital of $1.3 million, and $0.7 million of~~ other non-cash items, such as equity based compensation, deferred income taxes and LIFO effect, partially offset by a gain on insurance recovery combined with a disposal of asset of $4.8 million and a net loss of ~~$0.9~~$9.9 million. The increase in cash ~~provided for~~from working capital was primarily due to ~~a $1.4 million decrease in accounts~~decreased receivables ~~and $1.0 million decrease in inventory.~~

~~The Company’s operating activities used $0.8 million of cash in the first three months of fiscal 2017. The cash used by operating activities in the first three months of fiscal 2017 was primarily~~ due to ~~a net loss of $2.6 million and a net use of working capital of $1.4 million,~~collections, partially offset by ~~$2.5 million~~timing of ~~depreciation and amortization and $0.7 million of other non-cash items, such as equity based compensation and LIFO effect. The cash used for working capital was primarily due~~payments to ~~a $1.6 million increase in accounts receivables as a result to higher sales.~~

suppliers.

Investing Activities

Cash used for investing activities was ~~$0.7~~$1.3 million in the first ~~three~~nine months of fiscal ~~2018,~~2020, which includes $6.2 million of insurance proceeds received due to the Orange location fire, compared with ~~$0.4~~cash used for investing activities of $1.2 million in the first ~~three~~nine months of fiscal ~~2017.~~2019. In addition to the ~~$0.7~~$7.4 million expended for capital expenditures during the first ~~three~~nine months of fiscal ~~2018, $0.4~~2020, $2.6 million was committed for future capital ~~expense~~expenditures as of ~~December 31, 2017.~~June 30, 2020. The Company anticipates that the total fiscal ~~2018~~2020 capital expenditures will be within the range of ~~$3.5~~$4.0 million to ~~$4.0~~$5.0 million (exclusive of fire related expenditures) and will relate principally to the further enhancement of production and product offering capabilities and operating cost reductions. Separate from the amounts given above, the Company anticipates incurring additional costs in fiscal 2020 of approximately $4.5 million to $6.5 million in capital expenditures at the Orange location as the result of the fire and resulting damage that took place. These costs are expected to be offset by insurance proceeds, approximately of which $8.8 million of insurance proceeds have been received as of June 30, 2020. Of the proceeds received, $6.2 million have been used towards capital expenditures and the remaining $2.6 million received is offsetting operating costs.

Financing Activities

Cash used by financing activities was ~~$0.1~~$1.1 million in the first ~~three~~nine months of fiscal ~~2018,~~2020, compared with cash ~~provided~~used by financing activities of ~~$1.7~~$8.7 million in the first ~~three~~nine months of fiscal ~~2017.~~2019.

~~The~~As discussed in Note 5, Debt, of the consolidated condensed statementsthe Company ~~had~~received cash proceeds of $5.0 million as it relates to the Paycheck Protection Program (or "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and made repayments of ~~$0.7~~$0.8 million of long-term debt, of which ~~$0.2~~$0.5 million ~~is a repayment under its~~were from the Company's foreign term loan, ~~and~~compared with repayments of ~~$0.5~~$1.1 million ~~under its foreign long-term loan, compared to $12.2 million in repayments~~ in the comparable ~~prior period~~ period.

In August 2018, the Company entered into an asset-based Credit Agreement ("Credit Agreement") and Security Agreement ("Security Agreement") with a lender. See Note 5, Debt, of ~~which $11.6 million of repayments~~the consolidated condensed statements for further discussion related to the ~~term loan after entering into~~Credit Agreement and the ~~November 9, 2016 Credit Facility~~First, Second, Third and ~~$0.6 million under its foreign long-term loan in fiscal 2017. The principal reason for the term loan repayment in the prior period was due~~Fourth Amendment to the ~~modification of the debt structure, as discussed herein.~~Credit Agreement.

The Company had net ~~borrowings~~repayments from the revolver under the Credit ~~Facility~~Agreement of ~~$0.2~~$4.2 million and $8.6 million in the first ~~three~~nine months of fiscal ~~2018, compared with $12.6 million of net borrowings in the first three months of fiscal 2017. The net borrowings in the first three months in fiscal 2017 were used to repay long-term debt.~~

~~On November 9, 2016, the Company entered into a Credit Facility with its Lender. The new Credit Facility matures on June 25,~~ 2020 and consisted of senior secured loans in the aggregate principal amount of up to $39.9 million. The Credit Facility was comprised of (i) a senior secured revolving credit facility of a maximum borrowing amount of $35.0 million, including swing line loans and letters of credit provided by the Lender and (ii) senior secured term loan facility in the amount of $4.9 million (the “Term Facility”). The new Term Facility is repayable in monthly installments of $0.1 million which began December 1, 2016. The terms of the Credit Facility contain both a lock-box arrangement and a subjective acceleration clause. As a result, the amounts outstanding on the revolving credit facility are classified as a short-term liability. The amountsfiscal 2019, respectively.

Amounts borrowed under the Credit ~~Facility were used to repay~~Agreement are secured by substantially all the amounts previously outstanding under the Company’s previous Credit Agreement and for working capital, general corporate purposes and to pay fees and expenses associated with this transaction. In connection with entering into the Credit Facility,assets of the Company ~~terminated~~and its ~~interest rate swap agreement with~~U.S. subsidiaries and a pledge of 66.67% of the ~~Lender. See Note 1,~~ ~~Summary~~stock of ~~Significant Accounting Policies - Derivative Financial Instruments~~ ~~for further discussion.~~

its first-tier non-U.S. subsidiaries. Borrowings ~~bears~~will bear interest at the ~~LIBOR rate, prime rate,~~lender's established domestic rates or ~~the eurocurrency reference rate depending on the type of loan requested by the Company, in each case,~~LIBOR, plus the applicable margin as set forth in the Credit ~~Facility.~~Agreement. The revolver has a rate based on LIBOR plus ~~a 3.75%~~1.5% spread, ~~and a prime rate~~ which ~~resulted in a weighted average rate of 5.4%~~was 1.7% at ~~December 31, 2017~~June 30, 2020 and the ~~term loan~~Export Credit Agreement as discussed in Note 5, Debt, has a rate ~~of 5.6% at December 31, 2017, which was~~

based on LIBOR plus ~~a 4.25% spread. This rate becomes an effective fixed rate of 5.8% after giving effect to the interest rate swap agreement. There is~~1.0% spread, which was 1.2% at June 30, 2020. The Company also has a commitment fee ~~ranging from 0.15% to 0.375%~~of 0.25% under the Credit Agreement to be incurred on the unused ~~balance.~~balance of the revolver.

~~The Company entered into its First Amendment~~As the Company’s Credit Agreement ~~("First Amendment") to~~is asset-based, a sustained significant decrease in revenue in the U.S. or excessive aging of the underlying receivables as a result of the impact of the COVID-19 pandemic could materially affect the collateral capacity limitation of the availability under the Credit ~~Facility on February 16, 2017. The First Amendment assigned its Lender as Administrative Agent~~Agreement and ~~assigned portion of its~~could impact our ability to comply with covenants in our Credit ~~Facility to another participating Lender.~~Agreement.

Under the Company's Credit ~~Facility,~~Agreement, the Company is subject to certain customary loan ~~covenants. These include, without limitation,~~ covenants ~~that require maintenance of certain specified financial ratios, including that~~regarding availability as discussed in Note 5, Debt. The availability at June 30, 2020 was $13.5 million. If availability had fallen short, the Company ~~meeting a minimum EBITDA and~~would be required to meet the ~~maintenance of a minimum~~ fixed charge coverage ratio ("FCCR") covenant, which must not be less than 1.1 to ~~commence on September 30, 2017.~~1.0. In the event of a default, we may not be able to access our revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.

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

On February 8, 2018, the Company entered into the Third Amendment Agreement (the “Third Amendment”) to its Credit Facility with the Agent and Lenders under the Credit Facility, in which the Company and the Agent and the Lenders agreed to, among other things, (i) amend the interest rate pricing spreads, (ii) add an owned real property location as part of the collateral and sell certain identified assets at our closed location in Alliance, (iii) adjust the calculation of EBITDA and certain financial covenants, and (iv) revise the financial covenants by adding a new minimum EBITDA test for a specific location and changing the timing of the tests and some of the covenant levels. The Company is in compliance with its loan covenantsRevolving Commitment as of ~~December 31, 2017. Absent~~June 30, 2020, the ~~Third Amendment, the Company would~~FCCR calculation was not ~~have been in compliance with its financial loan covenant as of December 31, 2017.~~

~~The Company incurred debt issuance costs and certain costs were written off during the first quarter of fiscal 2017. See Note 4,~~ ~~Debt~~ ~~for further discussion.~~required.

Future cash flows from the Company’s operations ~~will~~may be used to pay down amounts outstanding under the Credit ~~Facility. The cash proceeds from the sale of the Irish building approximate $3.1 million, of which $2.4 million, net proceeds after taxes~~Agreement and ~~fees, will be used to pay down the Credit Facility, $0.7 million will reduce Term Facility and the remaining balance is expected to reduce the revolving credit facility.~~its foreign related debts. The Company believes it has adequate cash/liquidity available to finance its operations from the combination of (i) the Company’s expected cash flows from operations, ~~and~~ (ii) funds available under the Credit ~~Facility.~~Agreement for its domestic locations and (iii) funds received pursuant to the Paycheck Protection Program Loan. The Company continues to seek alternatives with its lenders and other potential partners to refinance certain debt obligations at its Maniago location to provide Maniago with sufficient future liquidity. If Maniago is unsuccessful in obtaining additional financing, it may experience certain challenges in meeting certain obligations. This foreign debt is collateralized by Maniago’s assets. The U.S. operations of the Company have not pledged any assets as collateral or guaranteed Maniago’s debt. The consolidated condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of the Maniago assets or the amounts and classifications of the Maniago liabilities that may result from the outcome of this uncertainty. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan will provide adequate liquidity to finance Maniago operations.

Additionally, the tightening of the credit market and standards, as well as capital market volatility, could negatively impact our ability to obtain additional debt financing on terms equivalent to our existing Credit Agreement, in the event the Company seeks additional liquidity sources as a result of the continued impact of COVID-19. Capital market uncertainty and volatility, together with the Company’s market capitalization and status as a smaller reporting company could also negatively impact our ability to obtain equity financing.

C. Critical Accounting Policies and Estimates

The Company's disclosures of critical accounting policies in its Annual Report on Form 10-K for the year ended September 30, ~~2017~~2019 have not materially changed since that report was filed, except for the following:

~~Income taxes~~Effective October 1, 2019, the Company adopted ASC 842 Leases ("Topic 842"). Prior to the adoption of Topic 842, operating leases were maintained as off balance sheet arrangements. Under the transition method selected by the Company, leases that are not short-term in nature existing at, or entered on October 1, 2019 were required to be recognized and measured. Prior period amounts were not adjusted and continue to be reflected with the Company's historical accounting.

~~On December 22, 2017,~~

The Company determines if a contract contains a lease when the ~~U.S. enacted~~contract conveys the ~~Tax Cut~~right to control the use of identified assets for a period in exchange for consideration. Upon identification and ~~Jobs Act (the "Act"~~commencement of a lease, the Company establishes a right of use ("ROU") asset and a lease liability. Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated condensed balance sheets. Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated condensed balance sheets.

The total lease term is determined by considering the initial lease term per the lease agreement, which is adjusted to include any renewal options that the Company is reasonably certain to exercise as well as any period that the Company has control before the stated initial term of the agreement. If the Company determines there exists a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts.

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

ROU assets and liabilities are recognized based on the present value of ~~tax expense in~~ the ~~period in which~~future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company ~~is subject to~~uses the ~~rules (the “period cost method”), or (ii) account for GILTI~~incremental borrowing rate based on the information available at commencement date in determining the ~~Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after its completion~~present value of the ~~analysis~~future payments. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. A lease asset and lease liability are not recorded for leases with an initial term of 12 months or less and the ~~GILTI provisions and its election method will depend, in part, on analyzing its global income to determine whether the Company expects to have future material U.S. inclusions in its taxable income~~lease expense related to ~~GILTI and, if so,~~these leases is recognized as incurred over the ~~impact that is expected.~~lease term.

D. Impact of Recently Issued Accounting Standards

In ~~February~~June 2016, the FASB issued ASU 2016-13, "Financial ~~Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, “~~Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~Leases~~ ~~(Topic 842).” This~~" and subsequent updates. ASU ~~requires lessees~~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 ~~recognize a lease liability~~most financial assets measured at amortized cost and ~~a right-of-use asset on the balance sheet~~certain other instruments, including trade and ~~aligns many~~other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the ~~underlying principles~~exposure, the expected credit loss model requires entities to estimate the credit losses expected over the life of ~~the new lessor model~~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 those in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but itsimilar 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 ~~transition accounting for leases that expire prior to the date of initial adoption. The~~significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, ~~2018,~~2019, including interim periods within those fiscal years. ~~Early adoption~~However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that are considered smaller reporting companies ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Because SIFCO is ~~permitted.~~considered a SRC, the Company does not need to implement until October 1, 2023. The Company ~~is currently evaluating~~will continue to evaluate the ~~requirements~~effect of adopting ASU ~~2016-02 and anticipates that~~2016-13 will have on the ~~adoption will impact~~Company's results within the consolidated condensed ~~balance sheets due to the recognition~~statements of ~~the right-to-use asset~~operations and ~~lease liability related to its current operating leases.~~financial condition.

In ~~May 2014,~~December 2019, ASU 2019-12, "Income Taxes (Topic 740): Simplifying the ~~FASB~~Accounting for Income Taxes" was issued ~~ASU 2014-09, “Revenue from Contracts with Customers~~ ~~(Topic 606).” ASU 2014-09 completes~~to (i) reduce the ~~joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common~~

~~revenue recognition guidance for GAAP and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.~~” This ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs, along with subsequent updates, apply to all companies that enter into contracts with customers to transfer goods or services, and are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The Company will adopt the new guidance on October 1, 2018. The Company is executing a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue streams. The Company has determined that many of its long-term agreements contain variable consideration clauses and is in the process of quantifying the impact to its consolidated financial statements. In addition, some of the Company's agreements have clauses which may require the Company to recognize revenue over time. The majority of the Company's current revenue is recognized at a point-in-time. As such, SIFCO continues to evaluate the impactcomplexity of the standard ~~on its financial reporting, disclosures~~by removing certain exceptions to the general principles in Topic 740 and ~~related systems~~(ii) improve consistency and ~~internal controls. The Company has engaged a third party to assist with its efforts.~~

~~E. Recently Adopted Accounting Standards~~

~~In March 2016, the FASB issued~~simplify other areas of Topic 740 by clarifying and amending existing guidance. This ASU ~~2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting,~~ which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, ~~2016, and early adoption~~2020. The Company is ~~permitted. ASU 2016-09 was adopted by the Company effective October 1, 2017.~~

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

E. Recently Adopted Accounting Standards

~~In July 2015, the FASB issued ASU No. 2015-11,~~ For recently adopted accounting standards refer to Note 1,~~Simplifying the Measurement~~ Summary of ~~Inventory~~Significant Accounting Policies - Recently Adopted Accounting Standards, which provides new guidance to simplify the measurement of inventory valuation at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no impact on the Company's consolidated condensed financial statements. for further detail.

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 ~~December 31, 2017~~June 30, 2020 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were not effective, as a result of the continuing existence

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~~existence~~ of the material ~~weaknesses~~weakness in the Company's internal controls over financial reporting described in Item 9A of the Company's ~~2017~~2019 Annual ~~Report.~~Report on Form 10-K.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

The following material ~~weaknesses~~weakness related to our control environment existed as of ~~December 31, 2017.~~June 30, 2020.

Key controls around segregation of duties and periodic access reviews within IT general and application controls for ~~domestic operations were not operating effectively.~~

~~Key controls within business and IT processes~~the Cleveland operation were not designed ~~and~~or operating ~~effectively at Maniago.~~effectively.

~~Due to a lack of resources in accounting personnel, the Company did not evaluate a complex accounting issue in a timely manner.~~

The control environment deficiencies described above could have resulted in a failure to prevent or detect a material misstatement in our financial statements due to the omission of information or inappropriate conclusions regarding information required to be recorded, processed, summarized, and reported in the Company’s SEC reports. Notwithstanding the identified material ~~weaknesses,~~weakness, management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting

Management and the Company's Board of Directors are committed to improving the Company's overall system of internal controls over financial reporting.

To address the material ~~weaknesses~~weakness identified in our control environment, ~~management~~the Company is taking the following actions to remediate the material ~~weaknesses:~~weakness:

Implement robust security and access reviews at a level of precision necessary to ensure they are timely and ~~appropriate, including monitoring activities for users with privileged access.~~appropriate. The Company is making progress ~~and~~by utilizing external assistance. Using a risk-based approach, management will ~~continue to explore other information technology tools with additional~~implement detective and monitoring business process controls to further mitigate ~~this risk.~~

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

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

With the oversight of senior management and the Company's Board of Directors, the Company continues to take steps and additional measures to remediate the underlying causes of the identified material ~~weaknesses,~~weakness, including but not limited to (i) evaluating our information technology systems or invest in improvements to our technology sufficient to generate accurate, transparent, and timely financial information, and (ii) continue to strengthen organizational structure by holding individuals accountable for their internal control responsibilities.

Although we ~~expect~~continue to make meaningful progress inon our remediation plan during fiscal year ~~2018,~~2020, we cannot estimate how long it will take to complete the process or the costs of actions required. There is no assurance that the aforementioned plans will be sufficient and that additional steps may not be necessary.

Changes in Internal Control over Financial Reporting and other Remediation

~~Except as for the remediation items described in Item 4 related to prior year findings, there have been no~~No material changes in ~~the Company’s~~our internal ~~controls~~control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) occurred during the ~~Company’s most recent fiscal quarter~~period covered by this Quarterly Report on Form 10‑Q that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, ~~the Company’s~~our internal ~~controls~~control over financial reporting.

Part II. Other Information

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

Item 1. Legal Proceedings

In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters and does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation. For a more ~~complete description of~~information regarding our outstanding material legal proceedings, see Note 8,10, Commitments and Contingencies.

Item ~~5. Other Information~~1A. Risk Factors

~~On February 8, 2018,~~The Company is subject to various risks and uncertainties, including, without limitation, (1) the ~~Company entered~~impact on business conditions in general, and on the demand for products in the 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 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; (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 turbine 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 ~~its Third Amendment Agreement ("Third Amendment") to its Credit Facility, as further~~the Company’s operations; and (11) extraordinary or force majeure events affecting the business or operations of our business, any of which could have a material effect on us. Investors should consider the risks described ~~under Part I – Financial Information – Item 2. Management’s~~below and all of the other information set forth in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and the related notes and “Management's Discussion and Analysis of Financial Condition and Results of Operations, ~~– B. Liquidity~~” in evaluating our business and ~~Capital Resources~~prospects. If any of the risks described herein occurs, our business, financial condition or results of operations could be negatively affected. Additional risks and uncertainties, including risks not currently known or that are currently deemed immaterial may also adversely affect our business financial conditions or results of operations.

Our business is subject to risks associated with widespread public health crises, including the current COVID-19 pandemic.

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization, and the outbreak subsequently became increasingly widespread in the United States and other countries in which we operate. While we are actively monitoring the pandemic and taking steps to mitigate the risks posed by its spread, there is no guarantee that our efforts will mitigate the adverse impacts of COVID-19 or will be effective. Uncertain factors relating to the COVID-19 pandemic include the duration of the outbreak, the severity of the disease, and the actions, or perception of actions that may be taken, to contain or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.

The pandemic is affecting and is expected to continue to affect certain elements of our operations and business. We have experienced operational interruptions as a result of COVID-19, including the temporary suspension of operations at our facilities in Maniago, Italy and border closures that have resulted in delayed shipments. Further or more prolonged operational disruptions in the U.S. or other locations in which we or our customers operate could have a material impact on our consolidated results of operations.

We have experienced and expect to continue to experience unpredictable changes in demand from the markets we serve. The A&E industries have been negatively impacted by the COVID-19 pandemic as a result of various restrictions on air travel and concern regarding air travel during a pandemic. These factors have caused reductions in demand for commercial aircraft, which will adversely impact our net sales and operating results and may continue to do so for an extended period of time. Further, an overall reduction in business activity as a result of the disruption has led to a continued softening of the energy market. If the pandemic continues and conditions worsen, we may experience additional adverse impacts on our operations, costs, customer orders, and collections of accounts receivable, which may be material. While we are unable to predict the magnitude of the impact of these factors at this ~~Quarterly Report~~time, the loss of, or significant reduction in, purchases by our large customers could have a material adverse effect on ~~Form 10-Q,~~our business, financial condition, and results of operations.

Additionally, the pandemic could lead to an extended disruption of economic activity whereby the impact on our consolidated results of operations, financial position and cash flows could be material. While the potential economic impact brought by and the duration of the coronavirus outbreak may be difficult to assess or predict, the continuation of a widespread pandemic could result in significant or sustained disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. Although the Company intends to apply for forgiveness of all or a portion of its PPP Loan proceeds, we make no representations that we will qualify for forgiveness of all or part of the PPP Loan. Further, as a consequence of post-PPP Loan rule making by the Small Business Administration, shifting regulatory guidance and/or other factors, we may be required to repay the PPP Loan before its expected maturity date. While the Company believes it has adequate cash/liquidity available to finance its operations, our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is ~~incorporated herein~~subject to general economic, financial, competitive and other factors (including the continued impact of COVID-19) beyond our control. In addition, while we believe we have taken appropriate steps to maintain a safe workplace to protect our employees from contracting and spreading the coronavirus, we may not be able to prevent the spread of the virus among our employees, face litigation or other proceedings making claims related to unsafe

working conditions, inadequate protection of our employees or other claims. Any of these claims, even if without merit, could result in costly litigation or divert management's attention and resources. Furthermore, we may face a sustained disruption to our operations due to one or more of the factors described above.

The impact of the COVID-19 pandemic may also exacerbate other risks and uncertainties the Company faces or may face. The impact depends on the severity and duration of the current COVID-19 pandemic and actions taken by ~~reference. The Third Amendment~~governmental authorities and other third parties in response, each of which is ~~included as Exhibit 10.11~~uncertain, rapidly changing and difficult to ~~this Quarterly Report on Form 10-Q.~~predict.

Item 6. (a) Exhibits

The following exhibits are filed with this report or are incorporated herein by reference to a prior filing in accordance with Rule 12b-32 under the Securities and Exchange Act of 1934 (Asterisk denotes exhibits filed with this report.)



Exhibit No.		Description
2.1		Stock Purchase Agreement between Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons and SIFCO Italy Holdings S.R.L (a wholly-owned subsidiary of SIFCO Industries Inc.) dated March 16, 2015 filed as Exhibit 2.1 to the Company’s Form 8-K dated July 2, 2015, and incorporated herein by reference
2.2		Amendment to the Stock Purchase Agreement Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons and SIFCO Italy Holdings S.R.L (a wholly-owned subsidiary of SIFCO Industries Inc.) dated June 30, 2015 filed as Exhibit 2.2 to the Company’s Form 8-K dated July 2, 2015, and incorporated herein by reference
3.1		Third Amended Articles of Incorporation of SIFCO Industries, Inc., filed as Exhibit 3(a) of the Company’s Form 10-Q dated March 31, 2002, and incorporated herein by reference
3.2		SIFCO Industries, Inc. Amended and Restated Code of Regulations dated January 28, 2016, filed as Exhibit 3.2 of the Company’s Form 10-K dated September 30, 2015, and incorporated herein by reference
9.1		Voting Trust Agreement dated January 31, 2013, filed as Exhibit 9.1 to the Company’s Form 10-Q dated February 11, 2013 and incorporated herein by reference
9.2		Voting Trust Extension Agreement dated January 15, 2015, filed as Exhibit 9.2 to the Company's Form 10-Q dated February 3, 2015 and incorporated herein by reference
9.3		Voting Trust Agreement dated January 31, 2017, filed as Exhibit 9.3 to the Company's Form 10-Q dated December 31, 2016 and incorporated herein by reference
9.4		Voting Trust Extension Agreement dated January ~~31, 2017~~18, 2019, filed as Exhibit 9.4 to the Company's Form 10-Q dated February 14, 2019, and incorporated herein by reference
10.1		SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2008 Annual Meeting to Shareholders dated December 14, 2007, and incorporated herein by reference
10.2		Letter Agreement between the Company and Jeffrey P. Gotschall, dated August 12, 2009 filed as Exhibit 10.1 of the Company’s Form 8-K dated August 12, 2009 and incorporated herein by reference
10.3		Amendment No. 1 to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2011 Annual Meeting to Shareholders dated December 15, 2010, and incorporated herein by reference
10.4		Change in ~~Control~~control Agreement and Separation Agreement between the Company and Peter W. Knapper, effective June 29, ~~2016,~~2019, filed as Exhibit ~~10.2~~10.1 to the Company's Form 8-K dated ~~June 17, 2016,~~July 1, 2019 and incorporated herein by ~~reference~~reference.
10.5		Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.6 to the Company's Form 10-Q dated May 16, 2016, and incorporated herein by reference



10.6		Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.7 to the Company's Form 10-Q dated May 16, 2016, and incorporated herein by reference
10.7		Award agreement between the Company and Peter W. Knapper, ~~granted~~dated June 16, 2016, effective June 29, 2016, filed as Exhibit 10.1 to the Company's Form 8-K dated June 17, 2016, and incorporated herein by reference
10.8		~~Amended and Restated~~ Credit ~~and Security~~ Agreement, dated November 9, 2016, by and among SIFCO Industries, Inc., the Lenders named therein and KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender, filed as Exhibit 10.1 to the Company's Form 8-K dated November 15, 2016, and incorporated herein by reference
~~10.9~~		First Amendment to the Amended and Restated Credit and Security Agreement, dated February 16, 2017, by and among SIFCO Industries, Inc., the Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender; and Presidential Financial Corporation, as Assignee, and incorporated herein by reference
~~10.10~~		~~Second Amendment to the Amended and Restated Credit and Security Agreement, dated~~ August 4, 2017, by and among SIFCO Industries, Inc., the Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender; and Presidential Financial Corporation, as Assignee, and incorporated herein by reference
*10.11		~~Third Amendment to the Amended and Restated Credit and Security Agreement, dated February~~ 8, 2018, by and among SIFCO Industries, Inc. and Lender named therein and J.P. Morgan Chase Bank, N.A., filed as Exhibit 10.12 to the ~~Lenders named therein; KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender~~Company's Form 10-Q dated August 9, 2018, and ~~Issuing Lender; and Presidential Financial Corporation, as Assignee~~incorporated herein by reference

~~10.12~~

10.9		Amendment and Restatement to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan, filed as Exhibit A of the Company’s Proxy and Notice of 2017 Annual Meeting to Shareholders dated December 6, 2016, and incorporated herein by reference
~~10.13~~10.10		Form of SIFCO Industries, Inc. Long-term incentive plan performance share award, filed as Exhibit 10.14 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
~~10.14~~10.11		Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.15 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
~~10.15~~10.12		Form of SIFCO Industries, Inc. Long-term incentive plan restricted share award, filed as Exhibit 10.16 to the Company's Form 10-Q dated January 31, 2017, and incorporated herein by reference
10.13		Amended and Restated Relocation Agreement, dated February 15, 2018, by and between SIFCO Industries, Inc. and Peter Knapper, filed as Exhibit 10.1 to the Company's Form 8-K dated February 15, 2018, and incorporated herein by reference
10.18		Change in Control Agreement and Separation Agreement between the Company and Thomas R. Kubera, effective June 29, 2019, filed as Exhibit 10.2 to the Company's Form 8-K dated July 1, 2019 and incorporated herein by reference
10.19		First Amendment to Credit Agreement, dated November 5, 2018, by and among SIFCO Industries, Inc., T&W Forge, LLC., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated November 8, 2018, and incorporated herein by reference
10.20		Economic Development Administration Title IX Loan Agreement, dated November 8, 2018, by and between the City of Cleveland and SIFCO Industries, Inc., filed as exhibit 10.2 to the Company's Form 8-K dated November 8, 2018, and incorporated herein by reference
10.21		Second Amendment to Credit Agreement, dated December 17, 2018, by and among SIFCO Industries, Inc., T&W Forge, LLC., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.2 to the Company's Form 8-K dated December 19, 2018, and incorporated herein by reference
10.22		Export Credit Agreement, dated December 17, 2018, by and among SIFCO Industries, Inc., T & W Forge, LLC, Quality Aluminum Forge, LLC, and JPMorgan Chase Bank, N.A., a national banking association filed as Exhibit 10.1 to the Company's Form 8-K dated December 19, 2018 and incorporated herein by reference
10.23		Third Amendment to Credit Agreement, dated March 29, 2019, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.19 to the Company's Form 10-Q dated May 10, 2019
10.24		Fourth Amendment to Credit Agreement, dated March 29, 2019, by and among SIFCO Industries, Inc., Quality Aluminum Forge, LLC., and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated September 24, 2019
10.25		First Amendment to the SIFCO Industries, Inc. 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) filed as Exhibit A of the Company’s Definitive Proxy Statement dated December 16, 2019, and incorporated herein by reference.
10.26		Promissory Note, dated April 10, 2020, by and between SIFCO Industries, Inc. and JPMorgan Chase Bank, N.A., a national banking association, filed as exhibit 10.1 to the Company's Form 8-K dated April 13, 2020
14.1		Code of Ethics, filed as Exhibit 14.1 of the Company’s Form 8-K dated February 6, 2018, and incorporated herein by reference
*31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15d-14(a)
*31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15d-14(a)
*32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
*32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
*101		The following financial information from SIFCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2017~~June 30, 2020 filed with the SEC on ~~February 8, 2018,~~August 6, 2020, formatted in XBRL includes: (i) Consolidated Condensed Statements of Operations for the fiscal periods ended ~~December 31, 2017~~June 30, 2020 and ~~2016,~~2019, (ii) Consolidated Condensed Statements of Comprehensive Income for the fiscal periods ended ~~December 31, 2017~~June 30, 2020 and ~~2016,~~2019, (iii) Consolidated Condensed Balance Sheets at ~~December 31, 2017~~June 30, 2020 and September 30, ~~2017,~~2019, (iv) Consolidated Condensed Statements of Cash Flow for the fiscal periods ended ~~December 31, 2017~~June 30, 2020 and ~~2016,~~2019, (iv) Consolidated Condensed Statements of Shareholders' Equity for the periods June 30, 2020 and ~~(iv)~~2019, and (v) the Notes to the Consolidated Condensed Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SIFCO Industries, Inc.
		(Registrant)

Date: ~~February 8, 2018~~August 6, 2020		/s/ Peter W. Knapper
		Peter W. Knapper
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~February 8, 2018~~August 6, 2020		/s/ Thomas R. Kubera
		Thomas R. Kubera
		~~Interim~~ Chief Financial ~~Officer & Chief Accounting~~ Officer
		(Principal Financial Officer)

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