Aebi Schmidt Holding AG

(Dollar amounts in thousands, except per share data)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

As used herein, the term “the Company” refers to Aebi Schmidt Holding AG and its subsidiaries unless designated or identified otherwise.

Nature of Operations

The Company is a provider of innovative technical products for cleaning and clearing traffic areas as well as mowing green spaces in particularly challenging terrain. The range of products comprises vehicles, attachable and demountable devices for individual vehicle equipment as well as related services. Aebi Schmidt Holding AG covers the European and North American Markets with its own sales organizations while clients outside of these markets are served either directly by the exporting subsidiary or indirectly by the worldwide dealer network.

The Shyft Transaction

On December 16, 2024, the Company entered into an Agreement and Plan of Merger, dated as of December 16, 2024 (the “Merger Agreement”), by and among The Shyft Group, Inc., a Michigan corporation (“Shyft”), the Company, ASH U.S. Group, LLC, a Delaware limited liability company and direct, wholly owned subsidiary of Aebi Schmidt (“Holdco”), and Badger Merger Sub, Inc., a Michigan corporation and direct, wholly owned subsidiary of Holdco (“Merger Sub”), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Shyft (the “Merger”, and the time at which the Merger is effective, the “Effective Time”), with Shyft surviving the Merger as a direct, wholly owned subsidiary of Holdco and as an indirect, wholly owned subsidiary of Aebi Schmidt (the transactions contemplated by the Merger Agreement, the “Transactions”). “Combined Company” refers to Aebi Schmidt as of and following the Effective Time.

At the Effective Time, each share of common stock, no par value, of Shyft (“Shyft Common Stock”) issued and outstanding as of immediately prior to the Effective Time (other than any shares of Shyft Common Stock that are held as of immediately prior to the Effective Time by Holdco, Aebi Schmidt, Merger Sub or any of their respective subsidiaries) will automatically be converted into the right to receive 1.040166432 (the “Exchange Ratio”) shares of fully paid and nonassessable shares of common stock, par value $1.00 per share, of Aebi Schmidt (“Aebi Schmidt Common Stock”), on the terms and subject to the conditions set forth in the Merger Agreement.

As of immediately following the Effective Time, the holders of shares of Shyft Common Stock as of immediately prior to the Effective Time will own approximately 48% of the issued and outstanding shares of Aebi Schmidt Common Stock and the holders of shares of Aebi Schmidt Common Stock as of immediately prior to the Effective Time will own approximately 52% of the issued and outstanding shares of Aebi Schmidt Common Stock

As of immediately following the Effective Time, the Board of Directors of the Combined Company will be composed ofeleven members, six of whom will be designated by Aebi Schmidt andfive of whom will be designated by Shyft. James A. Sharman, the Chairman of the Shyft Board of Directors as of immediately prior to the Effective Time, will serve as the Chairman of the Board of Directors of the Combined Company (the “Combined Company Board”) following the Effective Time. Barend Fruithof, current CEO of Aebi Schmidt, will serve as Vice Chairman and Peter Spuhler, current Chairman of Aebi Schmidt, will also serve on the board. The Merger Agreement includes a covenant requiring Shyft and Aebi Schmidt to cooperate in good faith until the Closing to agree on a new name and ticker symbol for Aebi Schmidt.

The Closing is expected to occur on July 1, 2025, as the necessary closing conditions have already been satisfied or waived, or are expected to be satisfied or waived before then. Those conditions include: (a) the affirmative vote of the holders of a majority of the outstanding shares of Shyft common stock, (b) the approval bytwo-thirds of the shares of Aebi Schmidt Common Stock represented at an extraordinary meeting of the shareholders of Aebi Schmidt for all matters requiring shareholder approval to consummate the Transactions in accordance with the Merger Agreement, and (c) the receipt of certain required regulatory consents, approvals, non-disapprovals, and other authorizations under applicable antitrust and foreign direct investment laws and regulations specified in the Merger Agreement. The Merger will be accounted for as a forward merger using the acquisition method of accounting, pursuant to Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), with Aebi Schmidt treated as the legal and accounting acquirer and Shyft treated as the legal and accounting acquiree.

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Basis of Presentation and Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Aebi Schmidt Holding AG and its subsidiaries and have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by GAAP for complete consolidated financial statements are not included herein. The results of operations for any interim period are not necessarily indicative of the results of operations for the full year. All inter-company transactions and balances have been eliminated. The accompanying unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair statement of these interim financial statements. These interim financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended December 31, 2024 included in our Form S-4 filed with the Securities and Exchange Commission (“SEC”) on April 4, 2025.

For a description of key accounting policies followed, refer to the footnotes to Aebi Schmidt Holding AG consolidated financial statements for the year ended December 31, 2024, included in our Form S-4.

NOTE 2 – REVENUE

Contract Assets and Liabilities

The tables below disclose changes in contract assets and liabilities for the three months ended March 31, 2025 and 2024.

The aggregate amount of the transaction price allocated to remaining performance obligations in existing contracts that are yet to be completed in the North America and Europe and Rest of the World (“ROW”) segments are $483,395 and $205,871 respectively.

For performance obligations that are satisfied over time, revenue is expected to be recognized over the period to complete the contract. For performance obligations that are satisfied at a point in time, revenue is expected to be recognized when the customer obtains control of the product, which is generally upon shipment from our facility. No amounts have been excluded from the transaction prices above related to the guidance on constraining estimates of variable consideration.

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In the following tables, revenue is disaggregated by primary geographical market and timing of revenue recognition. The tables also include a reconciliation of the disaggregated revenue with the reportable segments.

NOTE 3 – INVENTORIES

Inventories are summarized as follows:

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NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are summarized by major classifications as follows:

The Company recorded depreciation expense of $2,845 and $2,846 during the three months ended March 31, 2025 and 2024, respectively.

NOTE 5 – LEASES

The Company has both operating and finance leases for land, buildings, machinery, vehicles and certain equipment. Our leases have remaining lease terms of 1 to 25 years, some of which include options to extend the lease agreements for up to 12 years. Our leases do not contain residual value guarantees. As of March 31, 2025, and December 31, 2024, assets recorded under finance leases were immaterial.

Operating lease expenses are classified as cost of product sales and selling, general and administrative on the Consolidated Statements of Operations. The components of lease expense were as follows:

The weighted average remaining lease term and weighted average discount rate were as follows:

Supplemental cash flow information related to leases was as follows:

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Maturities of lease liabilities as of March 31, 2025, are as follows:

NOTE 6 – INCOME TAXES

At the end of each interim period, the Company makes its best estimate of the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to unusual or infrequent items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or income tax contingencies is recognized in the interim period in which the change occurs.

Our income tax expense was $787 and $3,971 for the three months ended March 31, 2025, and 2024, respectively. The tax expense represented a 27.6% and 31.2% effective tax rate for the three months ended March 31, 2025, and 2024, respectively. There were neither unusual or infrequent items, nor significant changes of income tax contingencies and also no revised judgements on the realizability of beginning-of-the-year deferred tax assets that had a material impact on the income tax expense for the quarters.

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NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES

Warranty Related

We provide limited warranties against assembly or construction defects. These warranties generally provide for the replacement or repair of defective parts or workmanship for a specified period following the date of sale. The end users also may receive limited warranties from suppliers of components that are incorporated into our chassis and vehicles.

Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. Infrequently, a material warranty issue can arise which is beyond the scope of our historical experience. We provide for any such warranty issues as they become known and are estimable. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters beyond the scope of our historical experience. An estimate of possible penalty or loss, if any, cannot be made at this time.

Changes in the warranty liability are summarized below:

Long-term warranty provision amounting to $1,807 and $782 as of March 31, 2025 and 2024, respectively is included within the Other non-current liabilities in the Condensed Consolidated Balance Sheets.

Chassis Pool Agreements

As of March 31, 2025, and December 31, 2024, chassis consigned inventory was approximately $23,982 and $36,573 respectively. The Company incurred $309 and $698 of interest expense related to the chassis on hand during the three months ended March 31, 2025 and 2024, respectively. For additional information regarding our chassis pool agreements refer to our audited consolidated financial statements and footnotes included in our Form S-4.

NOTE 8 – DEFINED BENEFIT PENSION PLANS

The components of net periodic pension and other postretirement cost, other than service cost, are included in Other income (expense) in our Condensed Consolidated Statements of Operations.

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Investments measured at Net Asset Value (NAV) as of December 31, 2024, and 2023 are as follows:

The following valuation methodologies were used to measure these assets:

NOTE 9 – DEBT

Debt consists of the following:

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Term Loan

In November 2021, the Company entered a syndicated loan agreement with various banks for financing acquisitions. The term loan is split into the following facilities:

Facility A - A senior amortizing term loan facility with a total commitment of EUR 45,000 ($48,670).

Facility B -A senior amortizing term loan facility with a total commitment of $60,000.

Facility C - A senior non-amortizing term loan facility with a total commitment of $90,000 and EUR 28,602 ($30,934).

The interest rate is variable defined based on EURIBOR (EUR) compounded with SOFR (USD) plus a given interest margin. The interest margin of Facility A and B was 2.200% and 2.200% for the three months ended March 31, 2025 and 2024, respectively. The interest rate margin for Facility C was 2.700% and 2.700% for three months ended March 31, 2025 and 2024, respectively. Debt issuance costs of $2,016 as of March 31, 2025, and $2,219 as of December 31, 2024, are deferred and amortized based on the effective interest method. The Company is committed to fulfill certain financial covenants throughout the credit contract period. As of March 31, 2025, and December 31, 2024, the Company was in compliance with all covenants.

Revolving Credit Facility Commitment

The aggregate of the Revolving Credit Facility Commitment is EUR 165,000 ($178,456) which is primarily used for refinancing existing debt obligations, excluding those related to Facility A. In addition, the Revolving Credit Facility supports the broader financial needs of the Company, including general corporate purposes and working capital requirements, as well as funding permissible acquisitions aligned with the Company’s strategic objectives.

New Credit Facilities Agreement

On March 10, 2025, the Company entered into a syndicated $600 million credit facilities agreement consisting of a multicurrency senior secured amortizing term loan facility in an aggregate amount of up to $350 million and a multicurrency senior secured revolving loan facility in an aggregate amount of up to $250 million. The proceeds of the New Credit Facilities shall be used to refinance existing interest-bearing financial indebtedness after the Shyft Transaction (see Note 1 –Nature of Operations and Basis of Presentation) as well as pay costs and expenses incurred in connection with the Refinancing and the Transaction (as each is defined in the Form S-4). The obligations of the lenders to consummate the debt financing under the new credit facilities agreement are subject to certain closing conditions, including the consummation of the Merger. As of March 31, 2025, no debt financing has been obtained and fees incurred ($2,137) in connection with the new credit facilities agreement have been deferred as prepaid expenses upon the issuance of debt.

Shareholder loans

As of March 31, 2025, and December 31, 2024, there were subordinated shareholder loans totaling CHF 13,563 (2025: $15,390, 2024: $14,970) and EUR 15,000 (2025: $16,223, 2024: $15,584) from PCS Holding AG, as well as CHF 10,000 (2025: $11,347, 2024: $11,038) and EUR 10,000 (2025: $10, 2024: $10,390) from Gebuka AG. The loans are originally granted for a fixed term, but the term will be extended if the loan agreement is not terminated 90 days prior to the end date or if an extension agreement is signed. The change in the loan balance as of March 31, 2025 and December 31, 2024, is solely due to foreign exchange rate fluctuations.

The Company has mortgage loans related to the expansion of its plant in Chilton, Wisconsin, U.S. of $10,266 as of March 31, 2025, and $10,348 as of December 31, 2024.

Off-balance sheet arrangements

The contingent liabilities include guarantees (“performance bonds”) amounting to $14,775 and $13,202 as of March 31, 2025 and December 31, 2024. Through the normal course of bidding for and executing certain projects, the Company has entered into bid/performance bonds and surety bonds (collectively “performance bonds”) with various financial institutions. Customers can draw on such performance bonds if the Company does not fulfil its contractual obligations. If a performance bond is drawn the Company would have an obligation to reimburse the financial institution for amounts paid. There have beenno significant amounts reimbursed to financial institutions under these types of arrangements for the three months ended Mach 31, 2025 and 2024.

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NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of AOCI, net of tax are as follows:

NOTE 11 – SEGMENTS

The Company identifies their operating and reportable segments based on the management structure and the financial data utilized by the chief operating decision maker (“CODM”), which was determined to be the Board of Directors, to assess segment performance and allocate resources among the operating units.

The Company’s segment reporting policy identifiestwo operating segments, North America and Europe, including Rest of the World, (“ROW”), as reportable segments. Financial results for each segment are presented separately to provide transparency and insight into the performance and resources of each geographic area, consistent with how the CODM reviews and assesses the Company’s operations.

The CODM evaluates the performance of their reportable segments based on Segment Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which is defined as income from operations before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments and other gains and losses not reflective of the ongoing operations.

Interest expense and taxes on income are not included in the information utilized by the CODM to assess segment performance and allocate resources, and accordingly, are excluded from the segment results presented below.

The Company’s Board of Directors assesses the Segment Adjusted EBITDA to compare to historical trends and the forecast to assess segment results, allocate capital, make strategic decisions and identify areas of opportunity.

Sales and other financial information by reportable segment are as follows:

Three Months Ended March 31, 2025

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Segment Adjusted EBITDA is as follows:

The reconciliation of total Segment Adjusted EBITDA to Income before income taxes as follows:

Three Months Ended March 31, 2025

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Segment Adjusted EBITDA is as follows:

The reconciliation of total Segment Adjusted EBITDA to Income before income taxes as follows:

The following table presents sales disaggregated by geography which exceed 10% of total sales:

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NOTE 12 – SUBSEQUENT EVENTS

Litigation Relating to the Merger

On May 27 and May 28, 2025, Shyft was notified oftwo complaints filed with the Supreme Court of the State of New York County of New York by purported shareholders. The complaints allege that the Proxy Statement was materially incomplete due to certain misrepresentations and omissions, violating New York State law. The complaints name Shyft and its directors as defendants and seek, among other relief, an injunction against the consummation of the Merger.

The company believes that the likelihood of a materially unfavorable outcome is currently not probable, and any potential loss cannot be reasonably estimated at this time. Therefore, no liability has been recognized in the financial statements. However, the Company will continue to monitor the situation and may reassess this evaluation as further developments occur.

Shyft Executive Retention: Employment Matters

In connection with the Merger Agreement and the Transactions, Shyft’s Board and the Human Resources and Compensation Committee (the “HRCC”) reviewed, among other things, executive retention matters. Retention compensation arrangements were approved for key executives Joshua Sherbin and Jacob Farmer to facilitate the Merger's closing.

In May 2025, Mr. Sherbin indicated his intention to resign for Good Reason under the Company’s Executive Severance Plan if the Merger is consummated. Subsequently, on May 19, 2025, Shyft and Mr. Sherbin entered into a transition and separation agreement.

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