SIFCO INDUSTRIES INC
For the period ended Mar 31, 2026. Filed May 8, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
SIF$16.77-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-11.
0000090168-26-000011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0000090168-26-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 63 current paragraphs.
22 unchanged; 17 reworded; 20 added; 3 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 2 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Cost of goods sold (“COGS”) increased by $3.3 million, or 19.1%, to $20.8 million, or 78.6% of net sales, during the second quarter of fiscal 2026, compared with $17.5 million, or 91.7% of net sales, in the comparable period of fiscal 2025. The increase is primarily as a result of higher sales volume. However, the increase in COGS was partially offset by the impact of customer-supplied raw materials, which reduced material costs by the Company (generally neutral impact on gross profit).
Current report
Gross profit increased by $4.1 million to $5.7 million in the second quarter of fiscal 2026, compared with $1.6 million gross profit in the comparable period of fiscal 2025. The margin expansion was primarily driven by improved pricing and more favorable customer and product mix, including increased volumes on higher-margin programs, improved overhead absorption resulting from higher production volumes, and the benefit of pricing actions.
Current report
The revolving credit agreement weighted average interest rate for the three months ended reflects the impact of a provision within the Company's Loan Agreement that requires interest be calculated on a specified minimum borrowing level, regardless of actual outstanding borrowings. As average borrowings during the period were below threshold, the Company incurred interest expense in amounts in excess of the actual debt outstanding. As a result, the Company's effective interest rate was higher than would be expected based solely on the stated contractual rates applied to its outstanding borrowings. Excluding the impact to this provision, the Company's effective interest rate for the period would have been approximately 9.3%, compared to the reported rate of 37.6%. The impact of this provision may continue in future periods to the extent that outstanding borrowings remain below the specified minimum level.
Current report
The Company continues to maintain a full valuation allowance against its U.S. deferred tax assets. It is reasonably possible that, if the Company continues to generate sufficient U.S. taxable income, all or a portion of the valuation allowance could be released within the next 12 months.
Current report
Six Months Ended March 31, 2026 compared with Six Months Ended March 31, 2025
Current report
Net Sales
Current report
Commercial net sales and military net sales were 33.9% and 66.1%, respectively, of total net sales in the first six months of fiscal 2026, compared with 48.8% and 51.2%, respectively, in the comparable period in fiscal 2025. Commercial net sales decreased $2.4 million to $17.1 million in the first six months of fiscal 2026, compared with $19.5 million in the comparable period of fiscal 2025, reflecting reduced demand in commercial space market and reduced procurement of components the Company provides for the power generation market. Military net sales increased by $12.9 million to $33.3 million in the first six months of fiscal 2026, compared with $20.4 million in the comparable period of fiscal 2025, primarily due to increased demand across most programs.
Current report
Cost of Goods Sold
Current report
COGS increased by $2.2 million, or 5.8%, to $39.6 million, or 78.5% of net sales, during the first six months of fiscal 2026, compared with $37.4 million, or 93.7% of net sales, in the comparable period of fiscal 2025. The increase in COGS was primarily attributable to higher production and sales volumes. As a percentage of net sales, COGS decreased, reflecting improved overhead absorption on higher volumes and the impact of pricing actions.
Current report
Gross Profit
Current report
Gross profit increased $8.4 million to $10.9 million in the first six months of fiscal 2026, compared with $2.5 million gross profit in the comparable period of fiscal 2025. The increase was primarily driven by higher sales volumes, favorable product mix, and improved pricing. Gross margin also increased, reflecting the benefit of these factors, as well as improved cost absorption and impact of cost drivers noted above.
Current report
Selling, General and Administrative Expenses
Current report
SG&A expenses were $5.6 million, or 11.2% of net sales, during the first six months of fiscal 2026, compared with $5.2 million, or 13.0% of net sales, in the comparable period of fiscal 2025. The increase in SG&A expenses was primarily driven by $0.4 million related to environmental reserve and associated legal and professional fees as discussed in Note 10 —Commitments and Contingenciesof the notes to unaudited consolidated condensed financial statements, $0.2 million increase in incentive compensation and $0.1 million in severance-related costs, partially offset by $0.3 million in lower legal and professional and consulting fees.
Current report
Interest Expense, Net
Current report
Interest expense for the six months ended reflects the impact of a provision within the Company's Loan Agreement that requires interest be calculated on a specified minimum borrowing level, regardless of actual outstanding borrowings. As average borrowings during the period were below threshold, the Company incurred interest expense in amounts in excess of the actual debt outstanding. As a result, the Company's effective interest rate was higher than would be expected based solely on the stated contractual rates applied to its outstanding borrowings. Excluding the impact to this provision, the Company's effective interest rate for the period would have been approximately 9.9%, compared to the reported rate of 15.7%. The impact of this provision may continue in future periods to the extent that outstanding borrowings remain below the specified minimum level.
Current report
Income Taxes
Current report
The Company continues to maintain a full valuation allowance against its U.S. deferred tax assets. While the Company has generated U.S. pretax income during fiscal 2026, it has not yet concluded that sufficient positive evidence exists to support a release of the valuation allowance. The Company will continue to evaluate all available evidence, including the sustainability of earnings. It is reasonably possible that, if sufficient positive evidence is obtained, all or a portion of the valuation allowance could be released within the next 12 months, which could result in a material income tax benefit in the period in which it is recognized.
Current report
Income (Loss) from Continuing Operations
Current report
Income from continuing operations was $4.4 million during the first six months of fiscal 2026, compared with a loss of $3.7 million in the comparable period of fiscal 2025 due to higher sales volumes and gross margin improvements as referenced above.
Current report
Net cash provided by operating activities was $5.2 million for the first six months of fiscal 2026, compared to net cash used of $1.0 million in the first six months of fiscal 2025. The increase was primarily driven by improved operating results, with net income of $4.4 million compared to a net loss of $3.7 million in the prior year period. Non-cash adjustments included $2.1 million of depreciation and amortization and $1.2 million of LIFO expense in the current period, partially offset by a $0.6 million decrease in related inventory valuation accounts. Changes in working capital resulted in a net use of cash of approximately $2.2 million during the period. This use was primarily driven by increases in operating assets, including a $3.1 million increase in accounts receivable, $3.3 million increase in inventories, and a $1.7 million increase in contract assets, reflecting higher business activity and the timing of billings and production. These uses were partially offset by increases in operating liabilities, including a $4.4 million increase in contract liabilities and a $1.3 million increase in accounts payable, reflecting the timing of customer advance payments and vendor disbursements.
Removed paragraphs (3)
Previous report
Cost of goods sold (“COGS”) decreased by $1.2 million, or 5.9%, to $18.8 million, or 78.4% of net sales, during the first quarter of fiscal 2026, compared with $20.0 million, or 95.6% of net sales, in the comparable period of fiscal 2025. The decrease is due to improved absorption of fixed manufacturing costs. In addition, customer-supplied raw material reduced both reported net sales and COGS as customer-provided materials are excluded, with a generally neutral impact on gross profit.
Previous report
Gross profit increased by $4.3 million to $5.2 million in the first quarter of fiscal 2026, compared with $0.9 million gross profit in the comparable period of fiscal 2025, primarily attributable to increased throughput, favorable pricing and shift in sales mix resulting from the exit of lower-margin business, partially offset by higher manufacturing costs.
Previous report
The Company’s operating activities provided $8.1 million of cash in the first three months of fiscal 2026. The cash provided by operating activities was primarily due to $4.5 million of cash generated from working capital, primarily due to increases in inventory due to timing of raw material receipts, contract liabilities due to receipt of milestone payment from a customer, and accounts payable due to timing of payments, along with $1.8 million of net income from continuing operations and $1.8 million adjusted for non-cash items, such as depreciation.
Reworded paragraphs (17)
Previous wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain various forward-looking statements and includes assumptions concerning the Company’s operations, future results and prospects. The words “will,” “may,” “designed to,” “outlook,” “believes,” “should,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “forecasts” and similar expressions identify certain of these forward-looking statements. These forward-looking statements are based on current expectations and are subject to risk and uncertainties. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions in general, and on the demand for product in the aerospace and energy (or “A&E”), defense, and commercial space industries in particular, of the global economic outlook, including the continuation of military spending at or near current levels and the availability of capital and liquidity from banks, the financial markets and other providers of credit; (2) the future business environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost at comparable margins; (4) metals and commodities price increases and the Company’s ability to recover such price increases; (5) successful development and market introduction of new products and services; (6) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations; (11) cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners; (12) our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulatory compliance, and trade measures such as significant tariffs - including recently announced U.S. tariffs on aluminum and steel; (13) the ability to maintain a qualified workforce; (14) the adequacy and availability of our insurance coverage; (15) our ability to develop new produ…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain various forward-looking statements and includes assumptions concerning the Company’s operations, future results and prospects. The words “will,” “may,” “designed to,” “outlook,” “believes,” “should,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “forecasts” and similar expressions identify certain of these forward-looking statements. These forward-looking statements are based on current expectations and are subject to risk and uncertainties. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions in general, and on the demand for product in the aerospace and energy (or “A&E”), defense, and commercial space industries in particular, of the global economic outlook, including the continuation of military spending at or near current levels and the availability of capital and liquidity from banks, the financial markets and other providers of credit; (2) the future business environment, including capital and consumer spending; (3) competitive factors, including the ability to replace business that may be lost at comparable margins; (4) metals and commodities price increases and the Company’s ability to recover such price increases; (5) successful development and market introduction of new products and services; (6) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines; (7) continued reliance on military spending, in general, and/or several major customers, in particular, for revenues; (8) the impact on future contributions to the Company’s defined benefit pension plans due to changes in actuarial assumptions, government regulations and the market value of plan assets; (9) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted; (10) the ability to successfully integrate businesses that may be acquired into the Company’s operations; (11) cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners; (12) our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulatory compliance, and trade measures such as significant tariffs - including U.S. tariffs on aluminum and steel; (13) the ability to maintain a qualified workforce; (14) the adequacy and availability of our insurance coverage; (15) our ability to develop new products and technologie…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
SIFCO’s total backlog as of December 31, 2025 was $139.5 million, compared with total backlog of $121.9 million as of December 31, 2024. Orders may be subject to modification or cancellation by the customer with limited charges. Recovery in the aerospace markets was the primary contributor to the increased bookings. Backlog information may not be indicative of future sales.
Current wording
SIFCO’s total backlog as of March 31, 2026 was $157.7 million, compared with total backlog of $129.2 million as of March 31, 2025. Orders may be subject to modification or cancellation by the customer with limited charges. Recovery in the aerospace markets was the primary contributor to the increased bookings. Backlog information may not be indicative of future sales.
Previous wording
Net sales comparative information for the first quarter of fiscal 2026 and 2025 is as follows:
Current wording
Net sales comparative information for the second quarter of fiscal 2026 and 2025 is as follows:
Previous wording
Net sales for the first quarter of fiscal 2026 increased $3.1 million to $24.0 million, compared with $20.9 million in the comparable period of fiscal 2025. The increase is attributable to increased throughput and favorable pricing, partially offset by the impact of customer-supplied raw materials. Under these arrangements, net sales excludes the value of materials provided by customers, resulting in lower reported sales relative to comparable programs utilizing company-procured materials. Fixed wing sales decreased $2.3 million compared with the same period last year, primarily due to timing across most programs, such as F-35. Rotorcraft sales increased compared with the same period last year primarily due to the timing of orders for UH-60 Black Hawk and CH47 Chinook programs. Commercial space products decreased by $1.3 million year-over-year due to reduced procurement activity in the commercial space market. Net sales for the energy components for power generation units decreased by $0.7 million. Commercial products and other revenue increased $1.6 million compared with the same period last year mostly due to the timing of orders related to munitions programs.
Current wording
Net sales for the second quarter of fiscal 2026 increased $7.4 million to $26.4 million, compared with $19.0 million in the comparable period of fiscal 2025. The increase is driven by higher production volumes and favorable pricing, partially offset by the impact of customer-supplied raw materials. Under these arrangements, the Company does not recognize revenue for materials provided by customers, resulting in lower reported net sales relative to comparable programs utilizing company-procured materials. Fixed wing sales increased $1.9 million compared with the same period last year, primarily due to timing across most programs, including the F-15 and C-130 and increased market share in the F-35CV programs. Rotorcraft sales increased compared with the same period last year primarily due to the timing of orders for CH53K and CH47 Chinook programs. Commercial space products increased by $0.2 million due to timing of orders in the commercial space market. Net sales for the energy components for power generation units decreased by $0.6 million, primarily due to lower customer demand. Commercial products and other revenue increased $1.5 million compared with the same period last year mostly due to the timing of orders related to munitions programs.
Previous wording
Commercial net sales and military net sales were 36.2% and 63.8%, respectively, of total net sales in the first quarter of fiscal 2026, compared with 53.4% and 46.6%, respectively, in the comparable period in fiscal 2025. Commercial net sales decreased $2.5 million to $8.7 million in the first quarter of fiscal 2026, compared with $11.2 million in the comparable period of fiscal 2025, primarily due to reduced procurement activity in the commercial space market, partially offset by higher demand in the commercial aerospace market. Military net sales increased by $5.6 million to $15.3 million in the first quarter of fiscal 2026, compared with $9.7 million in the comparable period of fiscal 2025, primarily due to increased demand across multiple programs, such as munitions and UH-60.
Current wording
Commercial net sales and military net sales were 31.9% and 68.1%, respectively, of total net sales in the second quarter of fiscal 2026, compared with 43.7% and 56.3%, respectively, in the comparable period in fiscal 2025. Commercial net sales increased $0.1 million to $8.4 million in the second quarter of fiscal 2026, compared with $8.3 million in the comparable period of fiscal 2025, primarily due to higher demand in the commercial aerospace market, partially offset by reduced procurement of components the Company provides for the power generation market. Military net sales increased by $7.3 million to $18.0 million in the second quarter of fiscal 2026, compared with $10.7 million in the comparable period of fiscal 2025, primarily due to increased demand across multiple programs, such as munitions, CH47 and CH53K.
Previous wording
Selling, general and administrative (“SG&A”) expenses were $2.6 million, or 11.0% of net sales, during the first quarter of fiscal 2026, compared with $2.8 million, or 13.6% of net sales, in the comparable period of fiscal 2025. The decrease is primarily driven by lower legal and professional fees.
Current wording
Selling, general and administrative (“SG&A”) expenses were $3.0 million, or 11.3% of net sales, during the second quarter of fiscal 2026, compared with $2.4 million, or 12.4% of net sales, in the comparable period of fiscal 2025. The increase is primarily driven by $0.2 million of environmental reserve and associated legal and professional fees, $0.1 million in incentive compensation accruals and $0.1 million increase in the provision for expected credit losses.
Previous wording
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreements in the first quarter of fiscal 2026 and 2025:
Current wording
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreements in the second quarter of fiscal 2026 and 2025:
Previous wording
The Company’s effective tax rate through the first quarter of fiscal 2026 was 18.5%, compared with (0.2)% for the same period of fiscal 2025. The increase in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2026 compared with the same period of fiscal 2025 along with the Company's transition from a pre-tax loss to a pre-tax income position. 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.
Current wording
The Company’s effective tax rate through the second quarter of fiscal 2026 was (13.0)%, compared with (5.9)% for the same period of fiscal 2025. The change in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2026 compared with the same period of fiscal 2025 along with the Company's transition from a pre-tax loss to a pre-tax income position. 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.
Previous wording
Income from continuing operations was $1.8 million during the first quarter of fiscal 2026, compared with a loss from continuing operations of $2.4 million in the comparable period of fiscal 2025. The improvement is primarily attributable to increased gross profit and lower SG&A expenses as noted above.
Current wording
Income from continuing operations was $2.7 million during the second quarter of fiscal 2026, compared with a loss from continuing operations of $1.3 million in the comparable period of fiscal 2025. The improvement is primarily attributable to increased gross profit as noted above.
Previous wording
Cash and cash equivalents were $1.1 million and $0.5 million as of December 31, 2025 and September 30, 2025, respectively. A nominal amount of the Company’s cash and cash equivalents were in the possession of its non-U.S. holding company subsidiary, and certain distributions from which to the Company may be subject to adverse tax consequences.
Current wording
Cash and cash equivalents were $0.3 million and $0.5 million as of March 31, 2026 and September 30, 2025, respectively. A nominal amount of the Company’s cash and cash equivalents were in the possession of its non-U.S. holding company subsidiary, and certain distributions from which to the Company may be subject to adverse tax consequences.
Previous wording
Our primary requirements for liquidity and capital resources besides our growth initiatives, are working capital, capital expenditures, principal and interest payments on our outstanding debt, fulfilling obligations under our loan agreements, and other general corporate needs. Historically, the main sources of liquidity of the Company have been cash flows from operations and borrowings under our debt agreements. As of December 31, 2025, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the upcoming fiscal year relate to payments on our outstanding debt and leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. For information regarding the Company’s expected cash requirements and timing of payments related to leases and noncancellable purchase commitments, see Note 11 —Leases and Note 12 —Commitments and Contingencies of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025 (the “2025 Annual Report”). Additionally, refer to Note 9 —Retirement Benefit Plans of the Notes to Consolidated Financial Statements in the Company’s 2025 Annual Report for more information related to the Company’s pension and defined contribution plans.
Current wording
Our primary requirements for liquidity and capital resources besides our growth initiatives, are working capital, capital expenditures, principal and interest payments on our outstanding debt, fulfilling obligations under our loan agreements, and other general corporate needs. Historically, the main sources of liquidity of the Company have been cash flows from operations and borrowings under our debt agreements. As of March 31, 2026, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The Company's primary cash requirements consist of obligations related to outstanding debt and lease payments, operating and capital purchase commitments, and contributions to our defined benefit and contribution plans. These requirements are expected to be funded through a combination of cash on hand, cash generated from operations, and availability under the Company's credit facilities. For additional information regarding the Company’s contractual obligations, including leases and noncancellable purchase commitments, see Note 11 —Leases and Note 12 —Commitments and Contingencies of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025 (the “2025 Annual Report”). Additionally, refer to Note 9 —Retirement Benefit Plans of the Notes to Consolidated Financial Statements in the Company’s 2025 Annual Report for more information related to the Company’s pension and defined contribution plans.
Previous wording
We believe that our existing cash and available credit lines will be sufficient to finance our continued operations, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months. In order to support and achieve our future growth plans, we may need or advantageously seek to obtain additional funding through equity or debt financing. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our loan agreement or seek additional financing. The Company’s liquidity could be negatively affected if the Company is unable to obtain capital, by customers extending payment terms to the Company and/or the decrease in demand for our products. The Company and management will continue to assess and actively manage liquidity needs. For details regarding our debt agreements, see Note 5 —Debtof the notes to unaudited consolidated condensed financial statements.
Current wording
We believe that our existing cash and available credit lines will be sufficient to finance our continued operations and planned capital expenditures for the next 12 months. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our loan agreement or seek additional financing. The Company and management will continue to assess and actively manage liquidity needs. For details regarding our debt agreements, see Note 5 —Debtof the notes to unaudited consolidated condensed financial statements.
Previous wording
The Company’s operating activities used $3.8 million of cash in the first three months of fiscal 2025, primarily due to net operating loss of $2.4 million partially offset by depreciation and amortization of $1.2 million and change in inventory valuation accounts of $0.3 million and LIFO effect of $0.5 million. The uses of cash from working capital of $3.5 million was primarily due to decreases in accounts payable and accrued liabilities due to timing of payments, higher prepaid expenses attributable to deferred financing costs related to the refinanced revolver, decreases in contract liabilities due to satisfaction of performance obligations in sales contracts, and higher inventories due to timing of raw material receipts, partially offset by decreases in accounts receivable and contract assets mostly due to timing of receipts and higher billings to customers, respectively.
Current wording
In contrast, during the six months of fiscal 2025, operating activities used $1.0 million of cash, primarily due to net loss of $3.7 million, partially offset by of $2.4 million depreciation and amortization and $0.3 million related to inventory valuation accounts. Changes in working capital resulted in a net use in cash, primarily driven by decreases in accounts payable and accrued liabilities due to timing of payments, increases in prepaid expenses related to deferred financing costs associated with the refinancing of the revolving credit facility, decreases in contract liabilities due to satisfaction of performance obligations, and increase in inventories due to timing of raw material receipts. These uses were partially offset by a decrease in accounts receivable, reflecting the timing of customer receipts and billings.
Previous wording
During the first three months of fiscal 2026 and 2025, cash used for investing activities was $0.1 million, respectively, attributable to capital expenditures. Capital commitments as of December 31, 2025 were $0.3 million. The Company anticipates that the remaining total fiscal 2026 capital expenditures will be within the range of $1.0 million to $2.0 million and will relate principally to the further enhancement of production and product offering capabilities and drive operating cost reductions.
Current wording
During the first six months of fiscal 2026 and 2025, cash used for investing activities was $0.2 million and $0.3 million, respectively, attributable to capital expenditures. Capital commitments as of March 31, 2026 were $0.4 million. The Company anticipates that the remaining fiscal 2026 capital expenditures will be within the range of $1.0 million to $1.4 million and will relate principally to the further enhancement of production and product offering capabilities and drive operating cost reductions.
Previous wording
Cash used for financing activities was $7.9 million in the first three months of fiscal 2026, compared with $9.2 million in the first three months of fiscal 2025. The year-over-year decrease in cash used from financing was primarily related to lower repayments on debt obligations during fiscal 2026.
Current wording
Cash used for financing activities was $5.6 million in the first six months of fiscal 2026, compared with $13.1 million in the first six months of fiscal 2025. The year-over-year decrease in cash used from financing was primarily related to lower repayments on debt obligations during fiscal 2026.
Previous wording
Refer to Note 5 —Debtof the notes to unaudited consolidated condensed financial statements for details regarding our financing activities during the three months ended December 31, 2025.
Current wording
Refer to Note 5 —Debtof the notes to unaudited consolidated condensed financial statements for details regarding our financing activities during the six months ended March 31, 2026.
Previous wording
ASU 2024-01 was adopted during the three months ended December 31, 2025. Refer to Note 1 —Summary of Significant Accounting Policiesfor further detail. Additionally, the Company’s significant accounting policies and procedures are explained in the Management’s Discussion and Analysis section of the Company’s 2025 Annual Report.
Current wording
ASU 2024-01 was adopted during the six months ended March 31, 2026. Refer to Note 1 —Summary of Significant Accounting Policiesfor further detail. Additionally, the Company’s significant accounting policies and procedures are explained in the Management’s Discussion and Analysis section of the Company’s 2025 Annual Report.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net sales comparative information for the first six months of fiscal 2026 and 2025 is as follows:
Current report — wording carried from elsewhere
Net sales for the first six months of fiscal 2026 increased $10.5 million to $50.4 million, compared with $39.9 million in the comparable period of fiscal 2025. The increase was primarily driven by higher volumes in military programs, partially offset by declines in certain commercial markets. Fixed wing sales decreased $0.4 million compared with the same period last year due to program timing. Rotorcraft sales increased $10.2 million compared with the same period last year primarily due to the timing of orders in the CH47 and CH53K programs. Commercial space products decreased by $1.1 million year-over-year due to reduced procurement activity, including one specific customer significantly scaling back orders to manage excess inventory. Net sales for the energy components for power generation units decreased by $1.3 million due to lower customer demand. Commercial products and other revenue increased $3.1 million compared with the same period last year mostly due to the timing of orders related to munitions programs.
Current report — wording carried from elsewhere
The following table sets forth the weighted average interest rates and weighted average outstanding balances under the Company’s debt agreement in the first six months of both fiscal 2026 and 2025:
Current report — wording carried from elsewhere
The Company’s effective tax rate through the first six months of fiscal 2026 was 2.2%, compared with (2.2)% for the same period of fiscal 2025. The change in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2026 compared with the same period of fiscal 2025, as well as the Company's transition from a pre-tax loss to a pre-tax income position. 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.