SIFCO INDUSTRIES INC

To the Shareholders and the Board of Directors of SIFCO Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of SIFCO Industries, Inc. and its subsidiaries (the Company) as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company’s goodwill balance was $3.5 million at September 30, 2024 and is recorded at the Cleveland, Ohio (“Cleveland”) reporting unit. At July 31, 2024, the Company performed its annual goodwill impairment test by performing a quantitative analysis in lieu of a qualitative analysis and concluded there was no impairment of goodwill. The fair value of the Cleveland reporting unit for the goodwill impairment assessment is estimated utilizing a combination of income (discounted cash flow method) and market valuation (market comparable method) approaches. The income approach involves using cash flow projections developed by management to calculate discounted cash flows, the sum of which is subject to certain adjustments to estimate the business enterprise value. The market approach involves performing research on guideline public companies that are similar in nature to the Company to develop an appropriate valuation multiple to estimate the business enterprise value. The estimated fair values determined by the income approach and market approach are then weighted to estimate the fair value of the Cleveland reporting unit. Significant judgment is required to forecast future cash flows, determine the discount rate applicable to the Cleveland reporting unit, select the appropriate guideline public companies and determine the appropriate market multiples from those guideline public companies.

We identified the Company’s annual goodwill impairment test for the Cleveland reporting unit as a critical audit matter because of the significant assumptions management used in its annual impairment test, including the revenue growth rates and margin percentages used in the projected cash flows, the determination of the discount rate applicable to the reporting unit, the identification of comparable guideline public companies and the determination of the appropriate market multiples. Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions could have on the accounting estimate.

Our audit procedures related to the Company’s annual goodwill impairment test included the following, among others:

•We tested the underlying data used by management in its model for completeness and accuracy.

•We developed an independent estimate of the Cleveland reporting unit’s fair value under both the income and market valuation approaches using publicly available market data for the Cleveland reporting unit’s industry and compared our independent estimate to management’s estimate of fair value.

•We utilized our valuation specialists to assist in the following procedures, among others:

◦Testing the reasonableness of the discount rate by comparing the inputs used by management to publicly available market data.

◦Evaluating the comparability of the guideline public companies identified by management based upon publicly available market data.

◦Corroborating the market multiples selected by the Company by comparing them publicly available market data.

◦Evaluating the appropriateness of the valuation models used by management and testing their mathematical accuracy.

Recoverability of Long-Lived Assets at Orange, California

As described in Note 1 to the consolidated financial statements, the Company assesses long-lived assets for impairment at the asset group level when events or changes in circumstances indicate that the carrying value of the asset group may not be recoverable (Step 1). When indicators of impairment are identified, the Company tests the recoverability of the asset group by comparing estimates of future undiscounted cash flows expected to be generated by the asset group to the carrying value of the asset group (Step 2). If the carrying value of the asset group is greater than the estimated undiscounted future cash flows, the asset group is considered impaired, and an impairment charge is recorded for the amount by which the carrying value of the asset group exceeds its fair value (Step 3). During the year ended September 30, 2024, the Company concluded that the Orange, California asset group exhibited indicators of impairment, which required management to perform a Step 2 test of recoverability.

We identified the Step 2 test of recoverability of the Orange, California asset group to be a critical audit matter due to the significant assumptions used by management in determining the estimated future undiscounted cash flows of the asset group, including revenue and cash flow projections as well as the estimated residual value of the asset group. Auditing management’s assumptions involved a high degree of auditor judgment and increased audit effort, including the use of our valuation specialists, due to the impact these assumptions could have on the accounting conclusion.

Our audit procedures related to the Company’s Step 2 test of recoverability of the Orange, California asset group included the following, among others:

•We evaluated the reasonableness of management’s revenue and cash flow projections by comparing the assumptions used by management to the asset group’s historical results, underlying source documents, and publicly available industry information.

•We tested the clerical accuracy of the Company’s calculation of the undiscounted cash flows.

•We tested the completeness and accuracy of the historical source data by agreeing it to the underlying support.

•We utilized our valuation specialists to assist in the following procedures, among others:

◦Evaluating the appropriateness of the model used by management to estimate the future undiscounted cash flows.

◦Corroborating the market multiple used by management to estimate the residual value of the Orange, California asset group by comparing it to publicly available market data.

/s/RSM US LLP

We have served as the Company’s auditor since 2023.

Cleveland, Ohio

December 23, 2024