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” or “Aebi Schmidt” 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 merged 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 (“July 1, 2025”), each share of common stock, no par value, of Shyft (“Shyft Common Stock”) that was 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) automatically 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.

Immediately following the Effective Time, the holders of shares of Shyft Common Stock as of immediately prior to the Effective Time owned 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 owned approximately 52% of the issued and outstanding shares of Aebi Schmidt Common Stock.

Following the Effective Time, the Board of Directors of the Combined Company is composed ofeleven members, six of whom were designated by Aebi Schmidt andfive of whom were designated by Shyft. James A. Sharman, the Chairman of the Shyft Board of Directors as of immediately prior to the Effective Time, serves 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, serves as Vice Chairman and Peter Spuhler, current Chairman of Aebi Schmidt, serves on the Combined Company Board.

The Merger is accounted for as a forward merger using the acquisition method of accounting, pursuant to Financial Accounting Standards Board (“FASB”) 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. For further information regarding the Shyft Transaction please refer to Note 13 – Subsequent Events.

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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.

Forward Stock Split

On July 1, 2025, the Company effected a forward stock split of its issued and outstanding common stock, par value $1.00 per share, at a ratio of 1-for-7.5 (the “2025 Forward Stock Split”). Shares of common stock were proportionately increased.

All of the Company’s historical share and per share information related to issued and outstanding common stock in these condensed consolidated financial statements have been adjusted, on a retroactive basis, to reflect the 2025 Forward Stock Split.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to Consolidated Financial Statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the Consolidated Financial Statements. Early adoption is also permitted. This ASU will result in the required additional disclosures being included in the Consolidated Financial Statements, once adopted. The Company is currently evaluating the provisions of this ASU.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 intends to provide investors with enhanced information about an entity’s income taxes by requiring disclosure of items such as disaggregation of the effective tax rate reconciliation as well as information regarding income taxes paid. This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued. This ASU will result in additional disclosures for the Company beginning with the 2025 annual reporting and interim periods beginning in 2026.

NOTE 2 – REVENUE

Contract Assets and Liabilities

The tables below disclose changes in contract assets and liabilities for the six months ended June 30, 2025 and 2024.

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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 $510,022 and $235,364 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.

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.

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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 $2,589 and $2,105 during the three months ended June 30, 2025 and 2024, respectively, and $5,434 and $4,951 during the six months ended June 30, 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 June 30, 2025, and December 31, 2024, assets recorded under finance leases were immaterial.

Operating lease expenses are classified as cost of products sold 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:

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Supplemental cash flow information related to leases was as follows:

Maturities of lease liabilities as of June 30, 2025, are as follows:

(1)Excluding the six months ended June 30, 2025.

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 (benefit) was $(890) and $3,131 for the three months ended June 30, 2025, and 2024, respectively. The tax expense represented a 27.7% and 27.7% effective tax rate for the three months ended June 30, 2025, and 2024, respectively. Income tax expense (benefit) was $(103) and $7,102 for six months ended June 30, 2025 and 2024, respectively. The tax expense represented a 28.4% effective tax rate and 29.5% effective tax rate for the six months ended June 30, 2025 and 2024, respectively.

There were neither unusual or infrequent items, nor significant changes of income tax contingencies and also no revised judgments on the realizability of beginning-of-the-year deferred tax assets that had a material impact on the income tax expense for the periods presented.

On July 4, 2025, the United States enacted the One Big Beautiful Bill Act of 2025 (“OBBBA”) into law. The OBBBA includes provisions allowing accelerated tax deductions for qualified property and research expenditures and limitations on business interest deductions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others being implemented through 2027. We are currently evaluating the impact of the OBBBA on our consolidated financial statements and disclosures.

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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 $2,040 and $812 as of June 30, 2025 and 2024, respectively is included within the Other non-current liabilities in the Condensed Consolidated Balance Sheets.

Chassis Pool Agreements

As of June 30, 2025, and December 31, 2024, chassis consigned inventory was approximately $60,210 and $36,573 respectively. The Company incurred $155 and $243 of interest expense related to the chassis on hand during the three months ended June 30, 2025 and 2024, respectively, and $464 and $941 during the six months ended June 30, 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.

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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.

Investments measured at Net Asset Value (NAV) as of June 30, 2025 and December 31, 2024 are as follows:

The following valuation methodologies were used to measure these assets:

(1) Equity securities (equities) - Common Stocks and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded and are classified as Level 1.

(2) Fixed income securities (bonds) - Debt securities include government and corporate bonds which are generally quoted in active markets or as units in mutual funds are classified as Level 1. Debt securities for which market prices are not available are valued based on yields reflecting the perceived risk of the issuer and the maturity of the security, recent disposals in the market or other modelling techniques, which may involve judgment. Units in mutual funds which are not directly quoted on a public stock exchange and/or for which a fair value is not readily determinable are measured at fair value using NAV. They are therefore classified as Level 2.

(3) Cash and cash equivalents (liquidity) - Cash and cash equivalents include money market instruments and commingled funds. Valuations are generally based on observable inputs. They are categorized as Level 1.

(4) Real estate - Real estate investments are classified as Level 2 and are measured at fair value using discounted cash flow.

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NOTE 9 – DEBT

Debt consists of the following:

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 ($52,740).

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 ($33,522).

The interest rate is variable defined based on EURIBOR (EUR) compounded with SOFR (USD) plus a given interest margin. The average interest margin of Facility A and B was 2.134% and 2.200% for the three months ended June 30, 2025 and 2024, respectively, and 2.183% and 2.400% during the six months ended June 30, 2025 and 2024, respectively. The average interest rate margin for Facility C was 2.674% and 2.700% for three months ended June 30, 2025 and 2024, respectively, and 2.675% and 2.900% during the six months ended June 30, 2025 and 2024, respectively. Debt issuance costs of $1,417 as of June 30, 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 June 30, 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 ($193,380) 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.

Bilateral Credit Lines

In addition to the syndicated loan agreement, the Company has bilateral credit lines with two banks with a total commitment of EUR 12,500 ($14,650) each. The average interest margin has been 2.269% for the three months ended June 30, 2025 and 2.622% for the six months ended June 30, 2025.

On March 10, 2025, the Company entered into a syndicated $600,000 credit facilities agreement (“New Credit Facilities Agreement”) consisting of a multicurrency senior secured amortizing term loan facility in an aggregate principal amount of up to $350,000 (Facility A) and a multicurrency senior secured revolving loan facility in an aggregate principal amount of up to $250,000 (Revolving Facility). With the closing of the Merger on July 1, 2025, the New Credit Facilities Agreement became effective. As of June 30, 2025 fees paid in advance of $2,445 have been deferred as prepaid expenses upon the issuance of debt.

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Shareholder loans

As of June 30, 2025, and December 31, 2024, there were subordinated shareholder loans totaling CHF 13,563 (2025: $17,006, 2024: $14,970) and EUR 15,000 (2025: $17,580, 2024: $15,584) from PCS Holding AG, as well as CHF 10,000 (2025: $12,539, 2024: $11,038) and EUR 10,000 (2025: $11,720, 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 June 30, 2025 and December 31, 2024, is solely due to foreign exchange rate fluctuations. These shareholder loans were renewed and amended in connection with the New Credit Facilities Agreement and survived the Closing.

The Company has mortgage loans related to the expansion of its plant in Chilton, Wisconsin of $10,187 as of June 30, 2025, and $10,348 as of December 31, 2024.

Off-balance sheet arrangements

The contingent liabilities include guarantees (“performance bonds”) amounting to $15,211 and $13,202 as of June 30, 2025 and December 31, 2024, respectively. 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 been no significant amounts reimbursed to financial institutions under these types of arrangements for the six months ended June 30, 2025 and 2024.

NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME

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

NOTE 11 – STOCK BASED COMPENSATION AND EQUITY

2025 Restricted Stock – Retention Awards

On June 24, 2025, the company granted 250,000 equity classified restricted stock awards (“2025 Restricted Stock Awards”) with a grant date fair value of $11.72 that cliff vest three years from the grant date. In addition, vesting of the 2025 Restricted Stock Awards is contingent on a performance condition related to the closing of the Merger. As of the end of the period, the Merger was not completed, so the performance condition was not probable. As such, no cost was recognized in the period for the 2025 Restricted Stock Awards. The 2025 Restricted Stock Awards units will be anti-dilutive in the calculation of potential common shares in future filings once the shares are issued.

NOTE 12 – 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 net income before interest, taxes, depreciation, and amortization, further adjusted for foreign exchange gains and losses on external debt, restructuring and other related expenses, transaction related expenses, bargain purchase gains on acquisitions, changes in repurchase liabilities for Aebi Schmidt’s employee share plan, non-service cost related pension expenses, legacy legal matters, sales executive transition costs, changes in provisions for contingencies, and other non-recurring items.

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.

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Sales and other financial information by reportable segment for the three months ended June 30, 2025, and June 30, 2024, are as follows:

Segment Adjusted EBITDA is as follows:

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

Sales and other financial information by reportable segment for the six months ended June 30, 2025, and June 30, 2024, are as follows:

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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 13 – SUBSEQUENT EVENTS

Business Combination with Shyft

On July 1, 2025 (“Acquisition Date”), the Company closed on the acquisition of all outstanding stock of Shyft, a niche market leader in specialty vehicle manufacturing and assembly for the commercial and recreational vehicle industries, pursuant to the Merger Agreement. For further information regarding the Merger please refer to Note 1.

The Company acquired 100% of Shyft’s voting equity interests, with the primary motivations being to enhance the Company’s product offerings in specialty vehicle solutions, expand market share in North America, and leverage Shyft’s innovative design and manufacturing capabilities. Shyft will expand the Company’s ability to provide customized vehicle solutions, including walk-in vans, truck bodies, and luxury Class A diesel motorhome custom chassis to a diverse clientele, including commercial users, original equipment manufacturers, dealers, and governmental entities, thereby providing a diversified portfolio that mitigates risk across various market cycles.

The preliminary total consideration transferred was approximately $442,460. The Company will record the assets acquired and liabilities assumed at their fair values as of the Acquisition Date. Due to the limited amount of time since the closing of the Merger, the initial purchase accounting for the Merger has yet to be completed, including determining the fair value, as of the Acquisition Date, of recognized and previously unrecognized assets and liabilities. Shyft was headquartered in Novi, Michigan, and will be integrated into the North America Segment. Shyft’s annual sales in 2024 were $786,176. We will provide additional disclosures for the initial purchase accounting of Shyft in our future filings.

The Company (i) issued and delivered to Shyft shareholders an aggregate of 36,350,634 shares of Aebi Schmidt Common Stock at $12.06 per share, (ii) paid to Shyft fractional shareholders an aggregate amount in cash equal to $2 (the “Cash Consideration”) and (iii) replaced Shyft equity awards amounting to $4,224 that are allocated to consideration transferred as they relate to the pre-acquisition period. The $438,234 of common stock was entirely comprised of Aebi Schmidt Common Stock, par value $1.00.

Acquisition costs in connection with the Merger incurred by the Company include acquisition-related legal and other professional fees in the total amount of $15,112 as of the Acquisition Date, which are recognized as $4,404 in the income statement for the year ended December 31, 2024 and $10,708 and $6,065 in the income statement for the six and three months ended June 30, 2025, respectively.

With the closing of the Merger, the New Credit Facilities Agreement became effective and new debt of $572,050 has been obtained on July 1, 2025. The proceeds were utilized to fully repay the Revolving Credit Facility, Term Loan and Bilateral Credit Lines of the Company as well as the Revolving Credit Facility of Shyft ($120,000). For further information regarding the New Credit Facilities Agreement please refer to Note 9.

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 by purported shareholders. The complaints allege that the Proxy Statement was materially incomplete due to certain misrepresentations and omissions, violating the New York State common law. The complaints name Shyft and its directors as defendants and seek, among other relief, and seek an injunction against the consummation of the Merger.

On July 25, 2025, the Combined Company reached an agreement to resolve the litigation filed by the purported shareholders in the Supreme Court of the State of New York. The agreement fully resolves all claims related to the matter without any admission of liability by the Company. As of June 30, 2025 the Company accrued a liability for this litigation. The financial impact of the agreement is not expected to have a material effect on the Company’s consolidated financial statements.

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