AEBI

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended September 30, 2025, for Aebi Schmidt Holding AG (Aebi Schmidt), a Swiss corporation listed on the NASDAQ. The Company provides technical products for cleaning and clearing traffic areas, mowing green spaces, and manufacturing specialty vehicles. A pivotal event during this period was the acquisition of The Shyft Group, Inc. (Shyft) on July 1, 2025, which significantly expanded the Company's North American operations and product portfolio to include walk-in vans, truck bodies, and luxury motorhome chassis.

Key Financial Metrics

Note: Net Income for the nine months ended Sept 30, 2025, was significantly impacted by non-recurring transaction costs and amortization related to the Shyft acquisition.

Material Changes vs. Prior Period

• Revenue Growth: Sales increased 80% year-over-year for the quarter and 27% for the nine-month period. The increase was primarily driven by the inclusion of Shyft sales ($186.4 million for the quarter).
• Profitability Compression: While Operating Income increased slightly for the quarter (7%), it decreased 18% for the nine-month period. Net Income attributable to Aebi Schmidt dropped 72% for the quarter and 95% for the nine-month period compared to 2024, largely due to transaction-related expenses, increased interest costs, and amortization of acquired intangibles.
• Balance Sheet Expansion: Total assets nearly doubled from $1.09 billion to $2.08 billion, driven by the acquisition of Shyft's assets, including $194.0 million in goodwill and $181.1 million in intangible assets.
• Debt Refinancing: The Company entered a new $600 million credit facility in March 2025, effective upon the Shyft merger closing. Proceeds were used to repay approximately $572 million in prior debt obligations.

Guidance, Outlook, and Risks

Management Commentary: Management expects the Shyft acquisition to enhance product offerings, expand North American market share, and generate synergies. The Company believes its liquidity is sufficient to meet obligations for at least 12 months. No specific numerical guidance for future periods was provided in this filing.

Material Weaknesses in Internal Controls: The Company disclosed that its disclosure controls and procedures were not effective due to identified material weaknesses. These include a lack of sufficient professionals with U.S. GAAP expertise, inadequate formal accounting policies, and failures in IT general controls (user access and segregation of duties). Remediation plans are underway but not yet complete.

Key Risks:

• Integration Risk: Challenges in integrating Shyft's operations could disrupt the business.
• Trade Policy: Changes in U.S. trade policy and tariffs could materially impact costs and demand.
• Supply Chain: Disruptions in critical component supply (chassis, engines) could affect sales.
• Regulatory: Risks related to U.S. tax residency status and potential classification as a Passive Foreign Investment Company (PFIC).

Investor Verification Checklist

• Internal Control Remediation: Verify the progress and timeline for remedying the material weaknesses in internal controls over financial reporting.
• Shyft Integration Synergies: Monitor the realization of anticipated cost savings and operational synergies from the Shyft merger.
• Debt Covenants: Confirm continued compliance with the leverage ratio covenants (max 3.75x) under the new $600 million credit facility.
• Working Capital Trends: Track the normalization of working capital, specifically the high inventory levels ($384.4 million) and accounts receivable ($297.3 million) post-acquisition.
• Non-GAAP Reconciliation: Review the reconciliation of Adjusted EBITDA to Net Income to understand the magnitude of non-recurring transaction costs and amortization impacting GAAP earnings.