[10-Q] Aebi Schmidt Holding AG Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Aebi Schmidt Holding AG reported mixed second-quarter results for the period ended June 30, 2025, with sales rising to $277.7 million, a 4.2% increase from a year earlier, while the company recorded a net loss of $2.3 million ($0.06 per share) for the quarter and a small net loss of $0.3 million for the six months. Adjusted EBITDA for the six months was $42.6 million, down from $52.1 million a year earlier, and adjusted EBITDA margin declined to 8.1%.
The balance sheet shows $63.6 million in cash, inventories increased to $297.5 million, and total debt of $468.0 million as of June 30, 2025. Subsequent to the period, Aebi Schmidt closed the acquisition of Shyft on July 1, 2025, for preliminary total consideration of approximately $442.5 million, issued 36,350,634 shares and obtained a new $600 million credit facilities agreement that became effective at closing.
Aebi Schmidt Holding AG ha comunicato risultati contrastanti per il secondo trimestre chiuso il 30 giugno 2025: i ricavi sono saliti a $277.7 million, in aumento del 4,2% rispetto all鈥檃nno precedente, mentre la societ脿 ha registrato una perdita netta di $2.3 million ($0.06 per azione) nel trimestre e una piccola perdita netta di $0.3 million nel semestre. L'EBITDA rettificato per i sei mesi 猫 stato di $42.6 million, in calo rispetto ai $52.1 million dell鈥檃nno precedente, e il margine di EBITDA rettificato 猫 sceso all'8,1%.
Lo stato patrimoniale evidenzia $63.6 million in cassa, le rimanenze sono aumentate a $297.5 million e il debito totale ammontava a $468.0 million al 30 giugno 2025. Successivamente al periodo, Aebi Schmidt ha finalizzato l'acquisizione di Shyft il 1掳 luglio 2025 per un corrispettivo preliminare totale di circa $442.5 million, ha emesso 36,350,634 azioni e ha ottenuto un nuovo accordo di linee di credito da $600 million entrato in vigore al closing.
Aebi Schmidt Holding AG present贸 resultados mixtos del segundo trimestre cerrado el 30 de junio de 2025: las ventas aumentaron a $277.7 million, un 4,2% m谩s que un a帽o antes, mientras que la compa帽铆a registr贸 una p茅rdida neta de $2.3 million ($0.06 por acci贸n) en el trimestre y una peque帽a p茅rdida neta de $0.3 million en el semestre. El EBITDA ajustado para los seis meses fue de $42.6 million, frente a $52.1 million un a帽o antes, y el margen de EBITDA ajustado se redujo al 8,1%.
El balance refleja $63.6 million en efectivo, las existencias aumentaron a $297.5 million y la deuda total era de $468.0 million al 30 de junio de 2025. Posteriormente al periodo, Aebi Schmidt cerr贸 la adquisici贸n de Shyft el 1 de julio de 2025 por una contraprestaci贸n preliminar total de aproximadamente $442.5 million, emiti贸 36,350,634 acciones y obtuvo un nuevo acuerdo de l铆neas de cr茅dito por $600 million que entr贸 en vigor al cierre.
Aebi Schmidt Holding AG電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 2攵勱赴 鞁れ爜鞚� 氚滍憸頄堨姷雼堧嫟. 毵れ稖鞚� $277.7 million鞙茧 鞝勲厔 雽�牍� 4.2% 歃濌皜頄堨溂雮�, 攵勱赴 靾滌啇鞁れ潃 $2.3 million(欤茧嫻 $0.06), 靸侂皹旮� 靾滌啇鞁れ潃 靻岇暋鞚� $0.3 million鞚� 旮半頄堨姷雼堧嫟. 靸侂皹旮� 臁办爼 EBITDA電� $42.6 million鞙茧 鞝勲厔 $52.1 million氤措嫟 臧愳唽頄堨溂氅�, 臁办爼 EBITDA 毵堨鞚� 8.1%搿� 頃橂澖頄堨姷雼堧嫟.
雽�彀寑臁绊憸靸� 順勱笀鞚� $63.6 million, 鞛碃電� $297.5 million鞙茧 歃濌皜頄堦碃, 齑濍秬毂勲姅 2025雲� 6鞗� 30鞚� 旮办 $468.0 million鞛呺媹雼�. 氤搓碃旮瓣皠 鞚错泟 Aebi Schmidt電� 2025雲� 7鞗� 1鞚� Shyft 鞚胳垬毳� 膦呹舶頄堨溂氅�, 鞓堧箘 齑濍寑臧�電� 鞎� $442.5 million, 36,350,634欤茧ゼ 氚滍枆頄堦碃, 韥措歆� 鞁� 須牓鞚� 氚滌儩頃橂姅 $600 million 攴滊鞚� 鞁犼窚 鞁犾毄瓿奠棳 鞎届爼鞚� 觳搓舶頄堨姷雼堧嫟.
Aebi Schmidt Holding AG a publi茅 des r茅sultats mitig茅s pour le deuxi猫me trimestre clos le 30 juin 2025 : le chiffre d'affaires a augment茅 脿 $277.7 million, soit une hausse de 4,2% par rapport 脿 l'ann茅e pr茅c茅dente, tandis que le groupe a enregistr茅 une perte nette de $2.3 million ($0.06 par action) pour le trimestre et une l茅g猫re perte nette de $0.3 million sur six mois. L'EBITDA ajust茅 pour les six mois s'est 茅lev茅 脿 $42.6 million, en baisse par rapport 脿 $52.1 million un an plus t么t, et la marge d'EBITDA ajust茅e a recul茅 脿 8,1%.
Le bilan fait 茅tat de $63.6 million de tr茅sorerie, les stocks ont augment茅 脿 $297.5 million et l'endettement total s'茅levait 脿 $468.0 million au 30 juin 2025. Apr猫s la p茅riode, Aebi Schmidt a finalis茅 l'acquisition de Shyft le 1er juillet 2025 pour une contrepartie pr茅liminaire totale d'environ $442.5 million, a 茅mis 36,350,634 actions et a obtenu une nouvelle facilit茅 de cr茅dit de $600 million devenue effective 脿 la cl么ture.
Aebi Schmidt Holding AG meldete gemischte Ergebnisse f眉r das zweite Quartal, das am 30. Juni 2025 endete: der Umsatz stieg auf $277.7 million, ein Anstieg von 4,2% gegen眉ber dem Vorjahr, w盲hrend das Unternehmen im Quartal einen Nettoverlust von $2.3 million ($0.06 je Aktie) und f眉r das Halbjahr einen kleinen Nettoverlust von $0.3 million verzeichnete. Das bereinigte EBITDA f眉r die sechs Monate betrug $42.6 million und lag damit unter $52.1 million des Vorjahres; die bereinigte EBITDA-Marge sank auf 8,1%.
Die Bilanz weist $63.6 million an liquiden Mitteln aus, die Vorr盲te stiegen auf $297.5 million und die Gesamtverschuldung belief sich zum 30. Juni 2025 auf $468.0 million. Nach dem Berichtszeitraum schloss Aebi Schmidt am 1. Juli 2025 die 脺bernahme von Shyft ab 鈥� mit einer vorl盲ufigen Gesamtgegenleistung von rund $442.5 million, der Ausgabe von 36,350,634 Aktien und dem Abschluss einer neuen Kreditfazilit盲t 眉ber $600 million, die beim Closing wirksam wurde.
Positive
- Quarterly revenue growth of 4.2% to $277.7 million versus prior year quarter
- Six-month Adjusted EBITDA of $42.6 million demonstrating positive operating cash-generating capacity on an adjusted basis
- Completed acquisition of Shyft for approximately $442.5 million, adding Shyft's reported 2024 sales of $786.2 million to the Combined Company
- New $600 million credit facilities agreement became effective at the closing, providing committed financing for the transaction
- Significant remaining performance obligations (transaction prices allocated: $510.0M North America, $235.4M Europe/ROW) indicating backlog revenue visibility
Negative
- Net loss for the quarter of $2.3 million and a six鈥憁onth net loss of $0.3 million, versus net income of $16.9 million in the prior six months
- Adjusted EBITDA decline from $52.1 million to $42.6 million year-over-year (six months), with margin compression to 8.1%
- Rising leverage and financing costs: total debt $467.96 million as of June 30, 2025 and significant new debt drawn in connection with the Shyft closing
- Material acquisition-related costs and foreign exchange losses increased other expense and pressured reported profitability
- Inventory build-up to $297.5 million from $231.4 million, increasing working capital requirements
- Identified material weaknesses in internal control over financial reporting related to the Shyft acquisition (disclosed risk)
Insights
TL;DR: Quarter shows modest revenue growth but reduced profitability and higher leverage; Shyft acquisition is material and will reshape scale and risks.
The quarter delivered a 4% revenue increase to $277.7M but operating income fell and the company reported a quarterly net loss of $2.3M. Six-month Adjusted EBITDA declined from $52.1M to $42.6M and margin compressed to 8.1%. Working capital intensity rose as inventories climbed to $297.5M and contract assets increased, while cash stood at $63.6M. Reported total debt was $468.0M at period end; after-period financing and the Shyft acquisition add substantial post-period leverage. These trends suggest near-term margin pressure and greater financing risk despite revenue resilience.
TL;DR: The July 1, 2025 acquisition of Shyft for ~$442.5M is transformative in scale and immediately material to Aebi Schmidt's North America footprint.
Aebi Schmidt completed the Shyft merger, issuing 36.35M shares and transferring approximately $442.5M consideration; Shyft's 2024 sales were reported as $786.2M, indicating a major increase in pro forma scale for the Combined Company. The deal was accounted for as a forward merger with Aebi Schmidt as acquirer. Acquisition costs and integration will pressure near-term results and the company secured a new $600M credit facilities agreement effective at closing, which funded repayment of legacy facilities and Shyft debt. Integration execution, purchase accounting and covenant management will be key monitoring points.
Aebi Schmidt Holding AG ha comunicato risultati contrastanti per il secondo trimestre chiuso il 30 giugno 2025: i ricavi sono saliti a $277.7 million, in aumento del 4,2% rispetto all鈥檃nno precedente, mentre la societ脿 ha registrato una perdita netta di $2.3 million ($0.06 per azione) nel trimestre e una piccola perdita netta di $0.3 million nel semestre. L'EBITDA rettificato per i sei mesi 猫 stato di $42.6 million, in calo rispetto ai $52.1 million dell鈥檃nno precedente, e il margine di EBITDA rettificato 猫 sceso all'8,1%.
Lo stato patrimoniale evidenzia $63.6 million in cassa, le rimanenze sono aumentate a $297.5 million e il debito totale ammontava a $468.0 million al 30 giugno 2025. Successivamente al periodo, Aebi Schmidt ha finalizzato l'acquisizione di Shyft il 1掳 luglio 2025 per un corrispettivo preliminare totale di circa $442.5 million, ha emesso 36,350,634 azioni e ha ottenuto un nuovo accordo di linee di credito da $600 million entrato in vigore al closing.
Aebi Schmidt Holding AG present贸 resultados mixtos del segundo trimestre cerrado el 30 de junio de 2025: las ventas aumentaron a $277.7 million, un 4,2% m谩s que un a帽o antes, mientras que la compa帽铆a registr贸 una p茅rdida neta de $2.3 million ($0.06 por acci贸n) en el trimestre y una peque帽a p茅rdida neta de $0.3 million en el semestre. El EBITDA ajustado para los seis meses fue de $42.6 million, frente a $52.1 million un a帽o antes, y el margen de EBITDA ajustado se redujo al 8,1%.
El balance refleja $63.6 million en efectivo, las existencias aumentaron a $297.5 million y la deuda total era de $468.0 million al 30 de junio de 2025. Posteriormente al periodo, Aebi Schmidt cerr贸 la adquisici贸n de Shyft el 1 de julio de 2025 por una contraprestaci贸n preliminar total de aproximadamente $442.5 million, emiti贸 36,350,634 acciones y obtuvo un nuevo acuerdo de l铆neas de cr茅dito por $600 million que entr贸 en vigor al cierre.
Aebi Schmidt Holding AG電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 2攵勱赴 鞁れ爜鞚� 氚滍憸頄堨姷雼堧嫟. 毵れ稖鞚� $277.7 million鞙茧 鞝勲厔 雽�牍� 4.2% 歃濌皜頄堨溂雮�, 攵勱赴 靾滌啇鞁れ潃 $2.3 million(欤茧嫻 $0.06), 靸侂皹旮� 靾滌啇鞁れ潃 靻岇暋鞚� $0.3 million鞚� 旮半頄堨姷雼堧嫟. 靸侂皹旮� 臁办爼 EBITDA電� $42.6 million鞙茧 鞝勲厔 $52.1 million氤措嫟 臧愳唽頄堨溂氅�, 臁办爼 EBITDA 毵堨鞚� 8.1%搿� 頃橂澖頄堨姷雼堧嫟.
雽�彀寑臁绊憸靸� 順勱笀鞚� $63.6 million, 鞛碃電� $297.5 million鞙茧 歃濌皜頄堦碃, 齑濍秬毂勲姅 2025雲� 6鞗� 30鞚� 旮办 $468.0 million鞛呺媹雼�. 氤搓碃旮瓣皠 鞚错泟 Aebi Schmidt電� 2025雲� 7鞗� 1鞚� Shyft 鞚胳垬毳� 膦呹舶頄堨溂氅�, 鞓堧箘 齑濍寑臧�電� 鞎� $442.5 million, 36,350,634欤茧ゼ 氚滍枆頄堦碃, 韥措歆� 鞁� 須牓鞚� 氚滌儩頃橂姅 $600 million 攴滊鞚� 鞁犼窚 鞁犾毄瓿奠棳 鞎届爼鞚� 觳搓舶頄堨姷雼堧嫟.
Aebi Schmidt Holding AG a publi茅 des r茅sultats mitig茅s pour le deuxi猫me trimestre clos le 30 juin 2025 : le chiffre d'affaires a augment茅 脿 $277.7 million, soit une hausse de 4,2% par rapport 脿 l'ann茅e pr茅c茅dente, tandis que le groupe a enregistr茅 une perte nette de $2.3 million ($0.06 par action) pour le trimestre et une l茅g猫re perte nette de $0.3 million sur six mois. L'EBITDA ajust茅 pour les six mois s'est 茅lev茅 脿 $42.6 million, en baisse par rapport 脿 $52.1 million un an plus t么t, et la marge d'EBITDA ajust茅e a recul茅 脿 8,1%.
Le bilan fait 茅tat de $63.6 million de tr茅sorerie, les stocks ont augment茅 脿 $297.5 million et l'endettement total s'茅levait 脿 $468.0 million au 30 juin 2025. Apr猫s la p茅riode, Aebi Schmidt a finalis茅 l'acquisition de Shyft le 1er juillet 2025 pour une contrepartie pr茅liminaire totale d'environ $442.5 million, a 茅mis 36,350,634 actions et a obtenu une nouvelle facilit茅 de cr茅dit de $600 million devenue effective 脿 la cl么ture.
Aebi Schmidt Holding AG meldete gemischte Ergebnisse f眉r das zweite Quartal, das am 30. Juni 2025 endete: der Umsatz stieg auf $277.7 million, ein Anstieg von 4,2% gegen眉ber dem Vorjahr, w盲hrend das Unternehmen im Quartal einen Nettoverlust von $2.3 million ($0.06 je Aktie) und f眉r das Halbjahr einen kleinen Nettoverlust von $0.3 million verzeichnete. Das bereinigte EBITDA f眉r die sechs Monate betrug $42.6 million und lag damit unter $52.1 million des Vorjahres; die bereinigte EBITDA-Marge sank auf 8,1%.
Die Bilanz weist $63.6 million an liquiden Mitteln aus, die Vorr盲te stiegen auf $297.5 million und die Gesamtverschuldung belief sich zum 30. Juni 2025 auf $468.0 million. Nach dem Berichtszeitraum schloss Aebi Schmidt am 1. Juli 2025 die 脺bernahme von Shyft ab 鈥� mit einer vorl盲ufigen Gesamtgegenleistung von rund $442.5 million, der Ausgabe von 36,350,634 Aktien und dem Abschluss einer neuen Kreditfazilit盲t 眉ber $600 million, die beim Closing wirksam wurde.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2025
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to .
Commission File Number: 001-42662
(Exact name of registrant as specified in its charter)
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3531
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Not Applicable
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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CH-8500 Frauenfeld , Switzerland
+41 44 -308-5800
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
ASH North America, Inc.
201 MB Lane
Chilton, WI 53014
+1 800-558-5800
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s):
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Name of each exchange on which registered
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The
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class
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Outstanding as of August 12, 2025
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Common Stock
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Index
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains some statements that are not historical facts. These statements are called “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve important known and unknown risks, uncertainties and other factors and generally can be
identified by phrases using “estimate,” “anticipate,” “believe,” “project,” “expect,” “intend,” “predict,” “potential,” “future,” “may,” “will,” “should” or similar expressions or words. Aebi Schmidt Holding AG (“Aebi Schmidt,” the “Company,”
“we,” “us” or “our”) future results, performance or achievements may differ materially from the results, performance or achievements discussed in the forward-looking statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be
expressed or forecasted in such forward-looking statements.
Risk Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are
not limited to, those described below in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report, as well as risk factors that we
have discussed in previous public reports and other documents filed with the Securities and Exchange Commission (the “SEC”), including without limitation those included in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the proxy statement/prospectus (the “Proxy Statement/Prospectus”) which forms a part of our registration
statement on Form S-4 (Registration No. 333-286373) filed with the SEC on April 4, 2025, as subsequently amended (the “Registration Statement”). Such Risk Factors includes the primary risks our management believes could materially affect the
potential results described by forward-looking statements contained in this Quarterly Report. However, these risks may not be the only risks we face. Our business, operations and financial performance could also be affected by additional
factors that are not presently known to us or that we currently consider to be immaterial to our operations. In addition, new Risk Factors may emerge from time to time that may cause actual results to differ materially from those contained in
any forward-looking statements. Given these risks and uncertainties, although we believe that the forward-looking statements contained in this Quarterly Report are reasonable, we cannot provide you with any guarantee that the results
described in those forward-looking statements will be achieved. All forward-looking statements in this Quarterly Report are expressly qualified in their entirety by the cautionary statements contained in this section and “Risk Factors Summary” and the “Risk Factors” section in this
Quarterly Report, and investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company undertakes no obligation to update or revise any forward-looking statements to reflect developments
or information obtained after the date this Quarterly Report is filed with the SEC, except as required by applicable law.
RISK FACTORS SUMMARY
Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative
or risky, all of which are further described below in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report. This summary should be read in conjunction with the “Risk Factors”
section and should not be relied upon as an exhaustive summary of the material risks facing our business. In addition to the following summary, you should consider the information set forth in the “Risk Factors” section and the other information
contained in this Quarterly Report before investing in our securities. Term used but not defined in this Risk Factors Summary have the meanings given to them further below in this Quarterly Report.
Risks Relating to Our Company and Business
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Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
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A disruption, termination or alteration of the supply of critical components from third-party suppliers could materially adversely affect the sales of our products.
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Increases in the price of commodities would impact the cost or price of our products, which may impact our ability to sustain and grow earnings.
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The unavailability, reduction, elimination or adverse application of government funding could have an adverse effect on our business, prospects, financial condition and operating
results.
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The integration of businesses or assets we have acquired or may acquire in the future involves challenges that could disrupt our business and harm our financial condition.
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We may be unsuccessful in implementing our growth strategy.
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Index
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We may discover defects in our vehicles, potentially resulting in delaying new model launches, recall campaigns, increased warranty costs, liability or other costs.
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Increases in the cost of labor, deterioration in employee relations, union organizing activity and work stoppages at our facilities could have a negative effect on our business.
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Our ability to execute our strategy is dependent upon our ability to attract, retain, and develop qualified personnel, including our ability to execute proper succession plans
for senior management and key employees.
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Risks associated with international sales and contracts could have a negative effect on our business.
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Our EVs rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design defects, or if we are unsuccessful in
addressing or mitigating technical limitations in our systems, our EV business could be adversely affected.
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Our businesses are cyclical, and this can lead to fluctuations in our operating results.
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Fuel shortages, or higher prices for fuel, could have a negative effect on sales.
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Emerging issues related to the development and use of artificial intelligence could give rise to legal or regulatory action, damage our reputation or otherwise materially harm
our business.
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Fluctuations in foreign currency exchange rates have adversely affected and could continue to adversely affect our operating results.
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Weather conditions, including conditions exacerbated by global climate change, present chronic and acute physical risks, and have previously impacted, and may continue to impact,
demand for some of our products and/or cause disruptions in our operations.
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Our business is subject to risks arising from our indebtedness, contingent obligations, liquidity and financial position.
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Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effects on
our business.
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Risks Relating to Tax Matters
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The IRS may assert that Aebi Schmidt is a “domestic corporation” or a “surrogate foreign corporation” for U.S. federal income tax purposes.
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If Aebi Schmidt is a passive foreign investment company, U.S. holders of shares of our Common Stock could be subject to adverse U.S. federal income tax consequences.
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If a U.S. investor is treated for U.S. federal income tax purposes as owning directly or indirectly at least 10% of our Common Stock, such U.S. investor may be subject to adverse
U.S. federal income tax consequences.
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Dividends on shares of our capital stock may subject U.S. shareholders to Swiss withholding tax.
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Risks Relating to the Recent Acquisition of Shyft
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Our future results may be adversely impacted if we do not effectively manage our expanded operations.
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We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or fail to maintain an
effective system of internal control over financial reporting. If our remediation of the material weaknesses is not effective, or we fails to develop and maintain effective internal control over financial reporting, our ability to produce
timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which could harm our business and negatively impact the value of our Common Stock.
|
| • |
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company
responsibilities and corporate governance practices.
|
| • |
The New Credit Facilities Agreement contains, and agreements governing future indebtedness may contain, restrictive covenants that may impair our ability to access sufficient
capital and operate our business.
|
Index
Risks Relating to our Common Stock
| • |
Our Common Stock has only a short history of trading and the market price and trading volume may be volatile.
|
| • |
We are parties to the Relationship Agreements with PCS Holdings AG and Peter Spuhler, Gebuka AG and Barend Fruithof (the “Specified Stockholders”), which provide the Specified
Stockholders with certain rights over company matters.
|
| • |
Aebi Schmidt is a Swiss corporation, so shareholders may not have the same rights and protections generally afforded to shareholders of U.S. corporations.
|
| • |
The PCS Parties control a significant number of shares of our Common Stock, providing them substantial influence over our business.
|
Index
| • |
Our shares are not listed in Switzerland, our home jurisdiction. As a result, shareholders may not benefit from certain provisions of Swiss law that are designed to protect
shareholders in a public takeover offer or a change-of-control transaction.
|
| • |
The Amended Articles designate the courts at the location of our registered seat as the exclusive forum for certain types of actions and proceedings that may be initiated by our
shareholders.
|
| • |
We cannot guarantee the timing, amount or payment of dividends on shares of our capital stock.
|
| • |
Certain provisions of the Amended Articles and Swiss law may limit our flexibility to raise capital, issue dividends and otherwise manage ongoing capital needs.
|
| • |
Holders of shares of our capital stock may not be able to exercise certain shareholder rights if they are not registered as shareholders of record on our Share Register.
|
| • |
U.S. shareholders may not be able to obtain judgments or enforce civil liabilities against us or our executive officers or members of our Board.
|
Index
INDEX
PART I—FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements.
|
3 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
|
3
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
4
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
|
5
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)
|
6
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
7
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
8
|
|
|
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
|
8
|
|
|
NOTE 2 – REVENUE
|
9
|
|
|
NOTE 3 – INVENTORIES
|
11
|
|
|
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
|
12
|
|
|
NOTE 5 – LEASES
|
12
|
|
|
NOTE 6 – INCOME TAXES
|
13
|
|
|
NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES
|
14
|
|
|
NOTE 8 – DEFINED BENEFIT PENSION PLANS
|
15
|
|
|
NOTE 9 – DEBT
|
16
|
|
|
NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME
|
17
|
|
| NOTE 11 - STOCK BASED COMPENSATION AND EQUITY |
17 |
|
|
NOTE 12 – SEGMENTS
|
17
|
|
|
NOTE 13 – SUBSEQUENT EVENTS
|
21 | |
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
22 |
|
Item 3.
|
Quantitative and Qualitative Disclosure About Market Risk
|
34 |
|
Item 4.
|
Controls and Procedures
|
34 |
|
PART II—OTHER INFORMATION
|
||
|
Item 1.
|
Legal Proceedings
|
37 |
|
Item 1A.
|
Risk Factors
|
37 |
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
58 |
|
Item 5.
|
Other Information
|
58 |
|
Item 6.
|
Exhibits
|
59 |
|
Signatures
|
60 | |
Index
PART I – FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements.
|
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited)
(In thousands, except share data)
|
June 30,
2025
|
December 31,
2024
|
|||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Accounts receivable, less allowance for credit losses of $
|
|
|
||||||
|
Contract assets
|
|
|
||||||
|
Inventories
|
|
|
||||||
|
Prepaid expense and other current assets
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
Property, plant and equipment, net
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Intangible assets, net
|
|
|
||||||
|
Deferred tax assets
|
|
|
||||||
|
Right of use assets operating leases
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
TOTAL ASSETS
|
$
|
|
$
|
|
||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
|
$
|
|
||||
|
Accrued warranty
|
|
|
||||||
|
Accrued compensation and related taxes
|
|
|
||||||
|
Contract liabilities
|
|
|
||||||
|
Operating lease liabilities
|
|
|
||||||
|
Other current liabilities and accrued expenses
|
|
|
||||||
|
Current portion of long-term debt
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
Other non-current liabilities
|
|
|
||||||
|
Long-term operating lease liabilities
|
|
|
||||||
|
Long-term debt, less current portion
|
|
|
||||||
|
Deferred tax liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Commitments and contingent liabilities
|
||||||||
|
Equity:
|
||||||||
|
Common stock, $
June 30, 2025 and December 31, 2024; and
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Treasury shares, at cost
|
(
|
)
|
(
|
)
|
||||
|
Retained earnings
|
|
|
||||||
|
Accumulated other comprehensive income
|
|
|
||||||
|
Total Shareholders’ equity
|
|
|
||||||
|
Non-controlling interest
|
|
|
||||||
|
Total equity
|
|
|
||||||
|
TOTAL LIABILITIES AND EQUITY
|
$
|
|
$
|
|
||||
See accompanying Notes to Condensed Consolidated Financial Statements
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective July 1, 2025, but not the
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective July 1, 2025, but not the
subsequent issuance of shares to Shyft on July 1, 2025, see Note 1 and Note 13)
Page 3 of 60
Index
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
|
2025
|
2024
|
2025 |
2024 | |||||||||||||
|
Sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
Cost of products sold
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Gross profit
|
|
|
||||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Selling, general and administrative
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Amortization of purchased intangibles
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Other operating expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Total operating expenses
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Operating income
|
|
|
||||||||||||||
|
Other income (expense):
|
||||||||||||||||
|
Interest expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Other income (expense)
|
(
|
)
|
|
( |
) | |||||||||||
|
Total other expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Income (expense) before income taxes
|
(
|
)
|
|
( |
) | |||||||||||
|
Income tax expense (benefit)
|
(
|
)
|
|
( |
) | |||||||||||
|
Net income (loss)
|
(
|
)
|
|
( |
) | |||||||||||
|
Less: Net income (loss) attributable to non-controlling interest
|
(
|
)
|
|
( |
) | |||||||||||
|
Net income (loss) attributable to Aebi Schmidt Holding AG
|
$
|
(
|
)
|
$
|
|
$ | ( |
) | $ | |||||||
|
Earnings per share
|
||||||||||||||||
|
Basic and diluted earnings per share
|
$
|
(
|
)
|
$
|
|
$ | ( |
) | $ | |||||||
|
Basic and diluted weighted average common shares outstanding
|
|
|
||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective
July 1, 2025, but not the
subsequent issuance of shares to Shyft on July 1, 2025, see Note 1 and Note 13)
Page 4 of 60
Index
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
|
Three Months Ended
June 30,
|
Six Month Ended
June 30,
|
|||||||||||||||
|
2025
|
2024
|
2025 |
2024 |
|||||||||||||
|
Net income (loss)
|
$
|
(
|
)
|
$
|
|
$ | ( |
) | $ | |||||||
|
Other comprehensive income:
|
||||||||||||||||
|
Foreign currency translation adjustments
|
|
|
( |
) | ||||||||||||
|
Pension benefit (loss), net of tax
|
(
|
)
|
(
|
)
|
( |
) | ||||||||||
|
Other comprehensive income (loss), net of tax
|
(
|
)
|
|
( |
) | |||||||||||
|
Comprehensive income (loss)
|
(
|
)
|
|
|||||||||||||
|
Less: Comprehensive income (loss) attributable to non-controlling interests
|
(
|
)
|
|
( |
) | |||||||||||
|
Comprehensive income (loss) attributable to Aebi Schmidt Holding AG
|
$
|
(
|
)
|
$
|
|
$ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective
July 1, 2025, but not the
subsequent issuance of shares to Shyft on July 1, 2025, see Note 1 and Note 13)
Page 5 of 60
Index
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)
(In thousands, except share data)
|
Number
of shares
|
Common
stock
|
Additional
Paid-in
Capital
|
Treasury
shares
|
Retained
earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
Shareholders’
equity
|
Non-
controlling
interest
|
Total equity
|
||||||||||||||||||||||||||||
|
Balance at January 1, 2025
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
Translation adjustments in the reporting period
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Pension benefit
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Net income (loss)
|
|
|
(
|
)
|
|
|||||||||||||||||||||||||||||||
|
Balance at March 31, 2025
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
Translation adjustments in the reporting period
|
||||||||||||||||||||||||||||||||||||
| Pension loss | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Dividends declared ($
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( |
) | $ | $ | $ | $ |
$ | ||||||||||||||||||||||||||
|
Number
of shares
|
Common
stock
|
Additional
Paid-in Capital
|
Treasury
shares
|
Retained
earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
Shareholders’
equity
|
Non-
controlling
interest
|
Total equity | ||||||||||||||||||||||||||||
|
Balance at January 1, 2024
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||
|
Translation adjustments in
the reporting period
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Pension loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Net income
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Balance at March 31, 2024
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||
|
Translation adjustments in the reporting period
|
||||||||||||||||||||||||||||||||||||
| Pension loss | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||
|
Dividends declared ($
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective
July 1, 2025, but not the
subsequent issuance of shares to Shyft on July 1, 2025, see Note 1 and Note 13)
Page 6 of 60
Index
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In thousands)
|
Six Months Ended June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
|
Depreciation and amortization
|
|
|
||||||
|
Foreign exchange (gains) losses on debt
|
|
(
|
)
|
|||||
|
Deferred taxes
|
|
(
|
)
|
|||||
|
Pension
|
(
|
)
|
(
|
)
|
||||
|
Other, net
|
(
|
)
|
(
|
)
|
||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable and contract assets
|
(
|
)
|
|
|||||
|
Inventories
|
(
|
)
|
(
|
)
|
||||
|
Accounts payable
|
|
|
||||||
|
Contract liabilities
|
(
|
)
|
(
|
)
|
||||
|
Income tax payable and receivable
|
(
|
)
|
(
|
)
|
||||
|
Other assets and liabilities
|
(
|
)
|
|
|||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Cash flows from investing activities:
|
||||||||
|
Purchases of property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
|
Purchases of intangible assets
|
(
|
)
|
(
|
)
|
||||
|
Proceeds from sale of property, plant and equipment
|
|
|
||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds on long-term debt
|
|
|
||||||
|
Deferred payments related to historical transactions
|
(
|
)
|
(
|
)
|
||||
|
Payment of finance lease principal
|
(
|
)
|
(
|
)
|
||||
|
Payments of dividends
|
( |
) | ( |
) | ||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(
|
)
|
|||||
|
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|||||
|
Cash and cash equivalents at beginning of period
|
|
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
|
Supplemental disclosures of cash flow information
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Interest
|
|
|
||||||
|
Income taxes
|
|
|
||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective July 1, 2025, but not the
(Reflects the retrospective application of the 1-for-7.5 forward stock split effective July 1, 2025, but not the
subsequent issuance of shares to Shyft on July 1, 2025, see Note 1 and Note 13)
Page 7 of 60
Index
AEBI SCHMIDT HOLDING AG AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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 of eleven members, six of whom were designated by Aebi Schmidt and five 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.
Page 8 of 60
Index
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.
|
Contract Assets
|
June 30,
2025
|
June 30,
2024
|
||||||
|
Contract assets, beginning of period
|
$
|
|
$
|
|
||||
|
Reclassification of the beginning contract assets to receivables, as the result of rights to consideration becoming unconditional
|
(
|
)
|
(
|
)
|
||||
|
Contract assets recognized, net of reclassification to receivables
|
|
|
||||||
|
Contract assets, end of period
|
$
|
|
$
|
|
||||
Page 9 of 60
Index
|
Contract Liabilities
|
||||||||
|
Contract liabilities, beginning of period
|
$
|
|
$
|
|
||||
|
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied
|
(
|
)
|
(
|
)
|
||||
|
Cash received in advance and not recognized in revenue
|
|
|
||||||
|
Contract liabilities, end of period
|
$
|
|
$
|
|
||||
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.
|
Three Months Ended June 30, 2025
|
||||||||||||
|
New Business
|
After Sales
|
Total
|
||||||||||
|
Primary geographical markets
|
||||||||||||
|
North America
|
$
|
|
$
|
|
$
|
|
||||||
|
Europe and ROW
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Timing of revenue recognition
|
||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
||||||
|
Products and services transferred over time
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Three Months Ended June 30, 2024
|
||||||||||||
|
New Business
|
After Sales
|
Total
|
||||||||||
|
Primary geographical markets
|
||||||||||||
|
North America
|
$
|
|
$
|
|
$
|
|
||||||
|
Europe and ROW
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Timing of revenue recognition
|
||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
||||||
|
Products and services transferred over time
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
Page 10 of 60
Index
|
Six Months Ended
June 30, 2025
|
||||||||||||
|
New Business
|
After Sales
|
Total
|
||||||||||
|
Primary geographical markets
|
||||||||||||
|
North America
|
$
|
|
$
|
|
$
|
|
||||||
|
Europe and ROW
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Timing of revenue recognition
|
||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
||||||
|
Products and services transferred over time
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Six Months Ended
June 30, 2024
|
||||||||||||
|
New Business
|
After Sales
|
Total
|
||||||||||
|
Primary geographical markets
|
||||||||||||
|
North America
|
$
|
|
$
|
|
$
|
|
||||||
|
Europe and ROW
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Timing of revenue recognition
|
||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
||||||
|
Products and services transferred over time
|
|
|
|
|||||||||
|
Total Sales
|
$
|
|
$
|
|
$
|
|
||||||
NOTE 3 – INVENTORIES
Inventories are summarized as follows:
|
June 30,
2025
|
December 31,
2024
|
|||||||
|
Finished goods
|
$
|
|
$
|
|
||||
|
Work in process
|
|
|
||||||
|
Raw materials and purchased components
|
|
|
||||||
|
Total Inventories
|
$
|
|
$
|
|
||||
Page 11 of 60
Index
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized by major classifications as follows:
|
June 30,
2025
|
December 31,
2024
|
|||||||
|
Land and Building
|
$
|
|
$
|
|
||||
|
Technical installation and machinery
|
|
|
||||||
|
Plant and office equipment
|
|
|
||||||
|
Assets under construction
|
|
|
||||||
|
Subtotal
|
|
|
||||||
|
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Total Property, plant and equipment, net
|
$
|
|
$
|
|
||||
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 25 years 12 years
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:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
|
2025
|
2024
|
2025 | 2024 | |||||||||||||
|
Operating leases
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
Finance leases
|
||||||||||||||||
|
Amortization of right of use assets
|
|
|
||||||||||||||
|
Interest on lease liabilities
|
|
|
||||||||||||||
|
Short-term leases
|
|
|
||||||||||||||
|
Variable lease expense
|
|
|
||||||||||||||
|
Sublease income
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Total lease expense
|
$
|
|
$
|
|
$ | $ | ||||||||||
The weighted average remaining lease term and weighted average discount rate were as follows:
|
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Weighted average remaining lease term (in years)
|
||||||||
|
Finance leases
|
|
|
||||||
|
Operating leases
|
|
|
||||||
|
Weighted average discount rate
|
||||||||
|
Finance leases
|
|
%
|
|
%
|
||||
|
Operating leases
|
|
%
|
|
%
|
||||
Page 12 of 60
Index
Supplemental cash flow information related to leases was as follows:
|
Six Months Ended
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||
|
Finance leases - Financing cash flows
|
$
|
|
$
|
|
||||
|
Finance leases - Operating cash flows
|
|
|
||||||
|
Operating leases - Operating cash flows
|
|
|
||||||
|
Right of use assets obtained in exchange for lease obligations:
|
||||||||
|
Operating leases
|
|
|
||||||
|
Finance leases
|
|
|
||||||
|
$
|
|
$
|
|
|||||
Maturities of lease liabilities as of June 30, 2025, are as follows:
|
Years ending December 31:
|
Finance
|
Operating
|
||||||
|
2025(1)
|
$
|
|
$
|
|
||||
|
2026
|
|
|
||||||
|
2027
|
|
|
||||||
|
2028
|
|
|
||||||
|
2029
|
|
|
||||||
|
2030
|
|
|
||||||
|
Thereafter
|
|
|
||||||
|
Total lease payments
|
|
|
||||||
|
Less: imputed interest
|
|
|
||||||
|
Total lease liabilities
|
$
|
|
$
|
|
||||
(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.
Page 13 of 60
Index
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:
|
Six Months Ended
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Balance of warranty liability, beginning of period
|
$
|
|
$
|
|
||||
|
Accruals for current period sales
|
|
|
||||||
|
Cash settlements
|
(
|
)
|
(
|
)
|
||||
|
Changes in liability for pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Translation adjustment
|
|
(
|
)
|
|||||
|
Balance of warranty liability, end of period
|
$
|
|
$
|
|
||||
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.
Page 14 of 60
Index
NOTE 8 – DEFINED BENEFIT PENSION PLANS
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2025
|
2024
|
2025
|
2024
|
|||||||||||||
|
Service cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest cost
|
|
|
|
|
||||||||||||
|
Interest income
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Amortization of net gain
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Administrative expenses
|
|
|
|
|
||||||||||||
|
Total Benefit cost
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
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:
|
June 30,
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
AG真人官方 estate collective funds
|
$
|
|
$
|
|
||||
|
Total Investments at Fair Value
|
$
|
|
$
|
|
||||
|
Total Plan Assets
|
|
|
||||||
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)
AG真人官方 estate - AG真人官方 estate investments are classified as Level 2 and are measured at fair value using discounted cash flow.
Page 15 of 60
Index
NOTE 9 – DEBT
Debt consists of the following:
|
June 30,
2025
|
December 31,
2024
|
|||||||
|
Revolving credit facility, due 2026
|
$
|
|
$
|
|
||||
|
Term loan:
|
||||||||
|
Facility A, due 2026
|
|
|
||||||
|
Facility B, due 2026
|
|
|
||||||
|
Facility C, due 2026
|
|
|
||||||
|
Shareholder loan
|
|
|
||||||
| Bilateral credit lines |
||||||||
|
Mortgage loan
|
|
|
||||||
|
Finance lease obligations
|
|
|
||||||
|
Other local credit lines
|
|
|
||||||
|
Total debt
|
|
|
||||||
|
Less current portion of long-term debt
|
(
|
)
|
(
|
)
|
||||
|
Total long-term debt
|
$
|
|
$
|
|
||||
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 2.200 2.183 2.400 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
New Credit Facilities
Agreement
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.
Page 16 of 60
Index
Shareholder loans
As of June 30, 2025, and December 31, 2024, there were subordinated shareholder loans totaling CHF 13,563 17,006 , 2024: $14,970 ) and EUR 15,000 17,580 , 2024: $15,584 ) from PCS Holding
AG, as well as CHF 10,000 12,539 ,
2024: $11,038 ) and EUR 10,000 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:
|
June 30,
2025
|
June 30,
2024
|
|||||||
|
Foreign currency translation adjustments
|
$
|
|
$
|
|
||||
|
Pension benefits
|
|
|
||||||
|
Total accumulated other comprehensive income
|
$
|
|
$
|
|
||||
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 identifies two
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.
Page 17 of 60
Index
Sales and other financial information by reportable segment for the three months ended June 30, 2025, and June 30, 2024, are as follows:
| |
Three Months Ended
June 30, 2025
|
|||||||||||
| Segment |
||||||||||||
|
North America
|
Europe and
ROW
|
Total
|
||||||||||
|
New Business
|
$
|
|
$
|
|
$
|
|
||||||
|
After Sales
|
|
|
|
|||||||||
|
Segment sales
|
$
|
|
$
|
|
$
|
|
||||||
| Depreciation and amortization expense |
$ | $ | $ | |||||||||
| Segment assets |
$ | $ | $ | |||||||||
| Capital expenditures |
$ | $ | $ | |||||||||
|
Three Months Ended
June 30, 2024
|
||||||||||||
| Segment |
||||||||||||
|
North America
|
Europe and
ROW
|
Total
|
||||||||||
| New Business |
$ | $ | $ | |||||||||
| After Sales |
||||||||||||
| Segment sales |
$ | $ | $ | |||||||||
|
Depreciation and amortization expense
|
$
|
|
$
|
|
$
|
|
||||||
|
Segment assets
|
$
|
|
$
|
|
$
|
|
||||||
|
Capital expenditures
|
$
|
|
$
|
|
$
|
|
||||||
Segment Adjusted EBITDA is as follows:
|
Three Month Ended
June 30, 2025
|
Three Month Ended
June 30, 2024
|
|||||||||||||||
|
North
America
|
Europe and
ROW
|
North America |
Europe and
ROW
|
|||||||||||||
|
Sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
Cost of products sold
|
|
|
||||||||||||||
|
Research and development
|
|
|
||||||||||||||
|
Selling, general and administrative
|
|
|
||||||||||||||
|
Other segment items(1)
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Segment Adjusted EBITDA
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
(1)
|
|
Page 18 of 60
Index
The reconciliation of total Segment Adjusted EBITDA to Income before income taxes as follows:
|
Three Months Ended
June 30,
|
||||||||
| 2025 | 2024 |
|||||||
|
Total Segment Adjusted EBITDA
|
$
|
|
$ | |||||
|
Interest expense
|
(
|
)
|
( |
) | ||||
|
Foreign exchange losses on external debt
|
(
|
)
|
( |
) | ||||
|
Depreciation and amortization
|
(
|
)
|
( |
) | ||||
|
Restructuring and other related expenses
|
(
|
)
|
||||||
|
Transaction related expenses
|
(
|
)
|
||||||
|
Settlement of acquisition
|
(
|
)
|
||||||
|
Pension related income, net
|
|
|||||||
| Legal matters |
( |
) | ( |
) | ||||
| Sales executive transition |
( |
) | ||||||
|
Change in provision for contingencies
|
|
|||||||
|
Other non-operating one-off items
|
(
|
)
|
( |
) | ||||
|
Income (loss) before income taxes
|
$
|
(
|
)
|
$ | ||||
Sales and other financial information by reportable segment for the six months ended June 30, 2025, and June 30, 2024, are as follows:
|
Six Months Ended
June 30, 2025
|
||||||||||||
| |
Segment |
|||||||||||
|
North America
|
Europe and
ROW
|
Total
|
||||||||||
|
New Business
|
$
|
|
$
|
|
$
|
|
||||||
|
After Sales
|
|
|
|
|||||||||
|
Segment sales
|
$
|
|
$
|
|
$
|
|
||||||
| Depreciation and amortization expense |
$ | $ | $ | |||||||||
| Segment assets |
$ | $ | $ | |||||||||
| Capital expenditures |
$ | $ | $ | |||||||||
|
Six Months Ended
June 30, 2024
|
||||||||||||
| Segment |
||||||||||||
|
North America
|
Europe and
ROW
|
Total
|
||||||||||
| New Business |
$ | $ | $ | |||||||||
| After Sales |
||||||||||||
| Segment sales |
$ | $ | $ | |||||||||
|
Depreciation and amortization expense
|
$
|
|
$
|
|
$
|
|
||||||
|
Segment assets
|
$
|
|
$
|
|
$
|
|
||||||
|
Capital expenditures
|
$
|
|
$
|
|
$
|
|
||||||
Page 19 of 60
Index
Segment Adjusted EBITDA is as follows:
|
Six Month Ended
June 30, 2025
|
Six Month Ended
June 30, 2024
|
|||||||||||||||
|
North
America
|
Europe and
ROW
|
North
America
|
Europe and
ROW
|
|||||||||||||
|
Sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
Cost of products sold
|
|
|
||||||||||||||
|
Research and development
|
|
|
||||||||||||||
|
Selling, general and administrative
|
|
|
||||||||||||||
|
Other segment items(1)
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Segment Adjusted EBITDA
|
$
|
|
$
|
|
$ | $ | ||||||||||
| (1) |
Other segment items include, other operating income and expenses, other income and expenses, depreciation and amortization, transaction related expenses, non-service cost related pension expense and legacy plan, foreign exchange gain
on external debts and other non-recurring.
|
The reconciliation of total Segment Adjusted EBITDA to Income before income taxes as follows:
|
Six Months Ended
June 30,
|
||||||||
| 2025 |
2024 |
|||||||
|
Total Segment Adjusted EBITDA
|
$
|
|
$ | |||||
|
Interest expense
|
(
|
)
|
( |
) | ||||
|
Foreign exchange gains/losses on external debt
|
(
|
)
|
||||||
|
Depreciation and amortization
|
(
|
)
|
( |
) | ||||
| Restructuring and other related expenses |
( |
) | ||||||
| Transaction related expenses |
( |
) | ||||||
| Settlement of acquisition |
( |
) | ||||||
|
Pension related income, net
|
|
|||||||
|
Legal matters
|
(
|
)
|
( |
) | ||||
| Sales executive transition |
( |
) | ||||||
|
Change in provision for contingencies
|
|
( |
) | |||||
|
Other non-operating one-off items
|
(
|
)
|
( |
) | ||||
|
Income (loss) before income taxes
|
$
|
(
|
)
|
$ | ||||
The following table presents sales disaggregated by geography which exceed 10% of total sales:
|
Three Months Ended June 30,
|
Six Months Ended June 30, |
|||||||||||||||
|
2025
|
2024
|
2025 |
2024 |
|||||||||||||
|
Switzerland
|
$
|
|
$
|
|
$ | $ | ||||||||||
|
U.S.
|
|
|
||||||||||||||
|
Other
|
|
|
||||||||||||||
|
Total sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
Page 20 of 60
Index
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 acquired100 % 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 of36,350,634 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.
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
The preliminary total consideration transferred was approximately $
The Company (i) issued and delivered to Shyft shareholders an aggregate of
Acquisition costs in connection with the Merger incurred by the Company include acquisition-related legal and other professional fees in the total amount of $
New Credit
Facilities Agreement
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.
With the closing of the Merger, the New Credit Facilities Agreement became effective and new debt of $
Litigation Relating to the Merger
On May 27 and May 28,
2025, Shyft was notified of two 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.
Page 21 of 60
Index
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Forward-Looking Statements
The following discussion and analysis of the financial condition and results of operations of Aebi Schmidt should be read together with Aebi Schmidt’s unaudited condensed
consolidated financial statements included elsewhere in this Quarterly Report. Unless the context requires otherwise, references to “Aebi Schmidt” in this section of the Quarterly Report refer to Aebi Schmidt and its consolidated subsidiaries.
The information presented herein is based on management’s perspective of Aebi Schmidt’s results of operations. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance.
The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of Aebi Schmidt’s control. Aebi Schmidt’s actual results may differ significantly from those projected in the forward-looking statements.
Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section entitled following the cover page to this Quarterly Report
entitled “Forward-Looking Statements”, and Part II, Item 1A of this Quarterly Report (“Risk Factors”).
Overview
Aebi Schmidt is a global leader in intelligent and innovative solutions for clean and safe infrastructure with a strong presence in over 90 countries in North America, Europe,
and the rest of the world. Aebi Schmidt is a provider of a wide range of innovative technical products designed for effective maintenance of public and private infrastructure, including products in Snow and Ice Clearing, Airport Runway
Clearing, Street Sweeping and Marking, Commercial Trucks and Trailers, and Agriculture. Aebi Schmidt is committed to innovation and technology, often integrating features into its products to enhance performance and continue to maintain its
competitive market position amongst competitors. Based on its strategy and strong customer orientation, Aebi Schmidt is prepared to continue the growth path in the foreseeable future.
Aebi Schmidt operates in two reportable segments, which consist of (i) North America, and (ii) Europe including the rest of the world (collectively referred to as “Europe and
the Rest of the World”). Operating results for the three months ended and six months ended June 30, 2025 are not necessarily indicative of the results we may achieve for the full year ending December 31, 2025.
North America
Aebi Schmidt’s North America Segment offers leading brands in Commercial Trucks and Trailers, Snow and Ice Clearing, and Airport Snow and Ice Clearing markets. Aebi Schmidt
operates as a key player in providing innovative solutions for snow removal, street cleaning, and other essential services that enhance infrastructure and public safety.
Europe and the Rest of the World
Aebi Schmidt maintains a strong presence in Europe and the Rest of the World through its Street Sweeping and Marking and Environmental Maintenance, Airport Snow and Ice
Clearing, and Agriculture products. Aebi Schmidt has long-lasting relationships with airports and municipalities across Europe and with international customers.
Recent Developments
Business Combination with Shyft
On July 1, 2025 (“Acquisition Date”), Aebi Schmidt (“Acquirer”) acquired 100% of the outstanding equity interests of
Shyft (“Acquiree”), a niche market leader in specialty vehicle manufacturing and assembly for the commercial and recreational vehicle industries, through a merger (the “Merger”). The Merger involved 100% of the voting equity interests of
Shyft, with the primary reasons for the combination being to enhance the Company’s product offerings in specialty vehicle solutions, develop the Company’s market share in North America, as well as to leverage Shyft’s innovative design and
manufacturing capabilities.
Page 22 of 60
Index
The Merger was accounted for as a business combination in accordance with U.S. GAAP, with Aebi Schmidt treated as the legal and accounting acquirer and Shyft as the legal and
accounting acquiree for financial reporting purposes. As a result of the Shyft acquisition, Aebi Schmidt expects to benefit from continued operational efficiency and cash flow generation from the Combined Company’s full suite of offerings,
scaled platform, and expanded portfolio. The acquisition will facilitate Aebi Schmidt’s growth plans, including strengthening its financial profile and delivering significant value for its shareholders by unlocking synergies between Shyft and
Aebi Schmidt.
Key Performance Indicators
Aebi Schmidt reviews the following key performance indicators on a regular basis in order to evaluate the financial and operating performance of its business, identify trends
affecting its performance, prepare financial projections, and make strategic decisions. Aebi Schmidt’s key performance indicators are not based on any standardized industry methodology and are not necessarily calculated in the same manner or
comparable to similarly titled measures presented by other companies. Similarly, Aebi Schmidt’s key metrics may differ from estimates published by third parties or from similarly titled metrics of its competitors due to differences in
methodology. The numbers that Aebi Schmidt uses to calculate its key performance indicators are based on internal data. While these numbers are based on what Aebi Schmidt believes to be reasonable judgments and estimates for the applicable
period of measurement, there are inherent challenges in measuring usage and engagement. Increases or decreases in Aebi Schmidt’s key performance indicators may not correspond with increases or decreases in its revenue. Aebi Schmidt regularly
reviews and may adjust its processes for calculating its internal metrics to improve their accuracy. In addition to the key performance indicators summarized below, Aebi Schmidt also evaluates certain non-GAAP financial measures (i.e. Adjusted
EBITDA and Adjusted EBITDA margin), which are further summarized in the Non-GAAP Financial Measures section below.
The following table presents a summary of Aebi Schmidt’s key performance indicators for the six months ended June 30, 2025, and June 30, 2024.
|
Six Months Ended June 30,
|
||||||||
|
(in thousands, except percentages)
|
2025
|
2024
|
||||||
|
Sales
|
$ 526,929
|
$
|
525,280
|
|||||
|
Net (loss) income
|
(260
|
)
|
16,934
|
|||||
|
Net (loss) income margin
|
(0.04
|
)%
|
3.2
|
%
|
||||
|
Adjusted EBITDA(1)
|
42,570
|
52,066
|
||||||
|
Adjusted EBITDA margin(1)
|
8.1
|
%
|
9.9
|
%
|
||||
|
Net cash used in operating activities
|
(21,216
|
)
|
(7,145
|
)
|
||||
|
(1)
|
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See the section titled “Non-GAAP Financial Measures” below for the
definitions of these measures and the reconciliations to the most directly comparable U.S. GAAP financial measure.
|
Page 23 of 60
Index
Results of Operations
Three months ended June 30, 2025 compared with three months ended June 30, 2024
Results for Aebi Schmidt for the three months ended June 30, 2025, compared to results for the three months ended June 30, 2024.
|
|
For the Three Months Ended June 30,
|
|||||||||||||||
|
2025
|
2024
|
$ Change
|
% Change
|
|||||||||||||
|
Sales
|
$
|
277,743
|
$
|
266,479
|
$
|
11,264
|
4.2
|
%
|
||||||||
|
Cost of products sold
|
220,911
|
209,097
|
11,814
|
6
|
%
|
|||||||||||
|
Gross profit
|
56,832
|
57,382
|
(550
|
)
|
(1
|
)%
|
||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
5,432
|
4,636
|
796
|
17
|
%
|
|||||||||||
|
Selling, general and administrative
|
33,574
|
29,800
|
3,774
|
13
|
%
|
|||||||||||
|
Amortization of purchased intangibles
|
3,574
|
3,516
|
58
|
2
|
%
|
|||||||||||
|
Other operating (income) expense
|
393
|
56
|
337
|
602
|
%
|
|||||||||||
|
Total operating expenses
|
42,973
|
38,008
|
4,965
|
13
|
%
|
|||||||||||
|
Operating income
|
13,859
|
19,374
|
(5,515
|
)
|
(28
|
)%
|
||||||||||
|
Other income (expense):
|
||||||||||||||||
|
Interest expense
|
(9,303
|
)
|
(8,465
|
)
|
(838
|
)
|
10
|
%
|
||||||||
|
Other income (expense)
|
(7,768
|
)
|
409
|
(8,177
|
)
|
n.m.
|
||||||||||
|
Total other income (expense)
|
(17,071
|
)
|
(8,056
|
)
|
(9,015
|
)
|
112
|
%
|
||||||||
|
Income from continuing operations before income taxes
|
(3,212
|
)
|
11,318
|
(14,530
|
)
|
(128
|
)%
|
|||||||||
|
Income tax expense (benefit)
|
(890
|
)
|
3,131
|
(4,021
|
)
|
(128
|
)%
|
|||||||||
|
Net income
|
(2,322
|
)
|
8,187
|
(10,509
|
)
|
(128
|
)%
|
|||||||||
|
Less: Net income attributable to non-controlling interest
|
(12
|
)
|
21
|
(33
|
)
|
n.m.
|
||||||||||
|
Net income attributable to Aebi Schmidt Holding AG
|
$
|
(2,310
|
)
|
$
|
8,166
|
$
|
(10,476
|
)
|
(128
|
)%
|
||||||
|
n.m. – not meaningful
|
||||||||||||||||
Sales
Sales increased by $11.3 million, or 4%, to $277.7 million in the three months ended June 30, 2025, from $266.5 million in the three months ended June 30, 2024. The increase in
sales was primarily driven by an increase in gross new business sales of $10.0 million and an increase in gross after sales of $7.7 million. The increase in sales was partially offset by an increase in sales deductions related to new business
sales and after sales of $2.9 million and $3.6 million, respectively.
Cost of products sold
Cost of products sold increased by $11.8 million, or 6%, to $220.9 million in the three months ended June 30, 2025, from $209.1 million in the three months ended June 30, 2024.
The increase in cost of products sold was driven by an increase of $7.6 million in costs related to new business sales, an increase of $3.2 million in costs related to after sales, and an increase of $1.1 million in other costs. This was
partially offset by a decrease in under-absorption costs of $1.8 million due to lower overhead costs incurred compared to the prior period.
Research and development expense
Research and development expense increased by $0.8 million, or 17%, to $5.4 million in the three months ended June 30,
2025, from $4.6 million in the three months ended June 30, 2024 driven by slightly lower expenses incurred with respect to development of new products.
Selling, general and administrative expense
Selling, general and administrative expense increased by $3.8 million, or 13%, to $33.6 million in the three months ended June 30, 2025,
from $29.8 million in the three months ended June 30, 2024. The increase in selling, general and administrative expense was primarily driven by increases in administrative costs related to management, human resources, finance, IT, and other
functions of $3.0 million, partially due to additional costs incurred as a public company.
Page 24 of 60
Index
Amortization of purchased intangibles
Amortization of purchased intangibles increased by $0.1 million, or 2%, to $3.6 million in the three months ended June 30, 2025, from $3.5 million in the three months ended June
30, 2024.
Other operating (income) expense
Other operating expense increased by $0.3 million, or
602%, to $0.4 million in the three months ended June 30, 2025, from other operating expense of $0.1 million in the three months ended June 30, 2024. The increase in other operating expense was primarily driven by an increase of
foreign exchange losses of $0.5 million, and the increase was partially offset by a decrease of $0.2 million in other operating expense.
Interest expense
Interest expense increased by $0.8 million, or 10%, to $9.3 million in the three months ended June 30, 2025, from $8.5 million
in the three months ended June 30, 2024. The increase in interest expense was primarily driven by an increase in costs due to refinancing of $2.9 million, partially offset by a decrease in interest of $2.1 million due to lower interest rates on
our term loans compared to prior periods.
Other income (expense)
Other expense increased by $8.2 million to $7.8 million in the three months ended June 30, 2025, from other income of $0.4
million in the three months ended June 30, 2024. The increase in other expense was driven by an increase in net foreign exchange losses on financial positions of $2.5 million and an increase in other expenses of $5.9 million related to
acquisition-related legal and professional fees incurred as part of our acquisition of Shyft.
Income tax expense (benefit)
Income tax benefit increased by $4.0 million, or 128%, to $0.9 million in the three months ended June 30, 2025, from income tax
expenses of $3.1 million in the three months ended June 30, 2024. The decrease in income tax expense was primarily driven by a decrease in current income taxes of $5.6 million due to lower taxable income in the three months ended June 30, 2025.
The increase was partially offset by a lowered deferred tax benefit of $1.5 million.
Six months ended June 30, 2025 compared with six months ended June 30, 2024
Results for Aebi Schmidt for the six months ended June 30, 2025, compared to results for the six months ended June 30, 2024.
|
|
For the Six Months Ended June 30,
|
|||||||||||||||
|
2025
|
2024
|
$ Change
|
% Change
|
|||||||||||||
|
Sales
|
$
|
526,929
|
$ 525,280
|
$
|
1,649
|
0.3
|
%
|
|||||||||
|
Cost of products sold
|
416,791
|
409,374
|
7,417
|
2
|
%
|
|||||||||||
|
Gross profit
|
110,138
|
115,906
|
(5,768
|
)
|
(5
|
)%
|
||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
10,059
|
10,353
|
(294
|
)
|
(3
|
)%
|
||||||||||
|
Selling, general and administrative
|
64,298
|
58,518
|
5,780
|
10
|
%
|
|||||||||||
|
Amortization of purchased intangibles
|
7,148
|
7,032
|
116
|
2
|
%
|
|||||||||||
|
Other operating (income) expense
|
380
|
554
|
(174
|
)
|
(31
|
)%
|
||||||||||
|
Total operating expenses
|
81,885
|
76,457
|
5,428
|
7
|
%
|
|||||||||||
|
Operating income
|
28,253
|
39,449
|
(11,196
|
)
|
(28
|
)%
|
||||||||||
|
Other income (expense):
|
||||||||||||||||
|
Interest expense
|
(15,806
|
)
|
(17,577
|
)
|
1,771
|
(10
|
)%
|
|||||||||
|
Other income (expense)
|
(12,810
|
)
|
2,164
|
(14,974
|
)
|
(692
|
)%
|
|||||||||
|
Total other income (expense)
|
(28,616
|
)
|
(15,413
|
)
|
(13,203
|
)
|
86
|
%
|
||||||||
|
Income from continuing operations before income taxes
|
(363
|
)
|
24,036
|
(24,399
|
)
|
(102
|
)%
|
|||||||||
|
Income tax expense (benefit)
|
(103
|
)
|
7,102
|
(7,205
|
)
|
(101
|
)%
|
|||||||||
|
Net income
|
(260
|
)
|
16,934
|
(17,194
|
)
|
(102
|
)%
|
|||||||||
|
Less: Net income attributable to non-controlling interest
|
(25
|
)
|
23
|
(48
|
)
|
n.m.
|
||||||||||
|
Net income attributable to Aebi Schmidt Holding AG
|
$
|
(235
|
)
|
$
|
16,911
|
$ (17,146)
|
(101
|
)%
|
||||||||
|
n.m. – not meaningful
|
||||||||||||||||
Page 25 of 60
Index
Sales
Sales increased by $1.6 million, or 0.3%, to $526.9 million in the six months ended June 30, 2025, from $525.3 million in
the six months ended June 30, 2024. The increase in sales was primarily driven by an increase in gross after sales of $9.1 million, net of sales deductions related to after sales of $4.6 million. The increase was partially offset by a
decrease in gross new business sales of $5.7 million, net of sales deductions related to new business sales of $2.9 million.
Cost of products sold
Cost of products sold increased by $7.4 million, or 2%, to $416.8 million in the six months ended June 30, 2025, from
$409.4 million in the six months ended June 30, 2024. The increase in cost of products sold was driven by an increase of $1.6 million in costs related to new business sales and an increase of $4.5 million in costs related to after sales. This
was partially offset by a decrease of $2.0 million in under-absorption costs due to lower overhead costs during the six months ended June 30, 2025.
Research and development expense
Research and development expense decreased by $0.3 million, or 3%, to $10.1 million in the six months ended June 30,
2025, from $10.4 million in the six months ended June 30, 2024. The decrease in research and development expense was primarily driven by slightly lower expenses incurred with respect to development of new products.
Selling, general and administrative expense
Selling, general and administrative expense increased by $5.8 million, or 10%, to $64.3 million in the six months ended June 30, 2025,
from $58.5 million in the six months ended June 30, 2024. The increase in selling, general and administrative expense was driven by increases in finance expenses of $2.1 million, other general and administrative costs of $1.5 million and
management costs of $1.1 million partially due to additional costs incurred as a public company. The increase was partially offset by a decrease in product management and purchasing costs of $0.4 million.
Amortization of purchased intangibles
Amortization of purchased intangibles increased by $0.1 million, or 2%, to $7.1 million in the six months ended June 30, 2025, from $7.0 million in the six months ended June 30,
2024.
Page 26 of 60
Index
Other operating (income) expense
Other operating expense decreased by
$0.2 million, or 31%, to $0.4 million in the six months ended June 30, 2025, from other operating expense of $0.6 million in the six months ended June 30, 2024. The decrease in other operating expense was driven by an increase of $0.2
million of other operating income and a decrease of $0.1 million in other operating expense due to an increase of foreign exchange losses and changes in the balances of other provisions.
Interest expense
Interest expense decreased by $1.7 million, or 10%, to $15.8 million in the six months ended June 30,
2025, from $17.6 million in the six months ended June 30, 2024. The decrease in interest expense was primarily driven by a decrease in interest of $4.4 million due to lower interest rates on our term loans and partially offset by an increase
in costs paid for refinancing of $2.9 million.
Other income (expense)
Other expense increased by $15.0 million, or 692%, to $12.8 million in the six months ended June 30,
2025, from other income of $2.2 million in the six months ended June 30, 2024. The increase in other expense was driven by an increase in net foreign exchange losses on financial positions of $5.7 million and an increase in other expenses of
$10.5 million related to acquisition-related legal and other professional fees incurred as part of our acquisition of Shyft. The increase in other expense was partially offset by an increase of other income of $0.9 million related to unusual
and non-recurring transactions.
Income tax expense (benefit)
Income tax expense decreased by $7.2 million, or 101%, to a benefit of $0.1 million in the six months
ended June 30, 2025, from an expense of $7.1 million in the six months ended June 30, 2024. The decrease in income tax expense was primarily driven by a decrease in current income taxes of $10.5 million due to lower taxable income. The
increase was partially offset by a lower deferred tax benefit of $3.5 million.
Segment Results of Operations
Aebi Schmidt operates its business as two reportable segments: (i) North America and (ii) Europe including the Rest of
the World. Both segments operate separately with limited cross-selling activities. The information below includes Sales and Adjusted EBITDA by reportable segment, consistent with information presented for financial reporting purposes in Note
12 – Segments to Aebi Schmidt’s unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Three months ended June 30, 2025 compared with three months ended June 30, 2024
|
For the Three Months Ended June 30, 2025
|
||||||||||||
|
(in thousands)
|
North
America
|
Europe and the
Rest of the World
|
Total
|
|||||||||
|
Segment sales
|
$
|
146,244
|
$
|
131,499
|
$
|
277,743
|
||||||
|
Segment Adjusted EBITDA
|
$16,024
|
$5,269
|
$21,293
|
|||||||||
Page 27 of 60
Index
|
For the Three Months Ended June 30, 2024
|
||||||||||||
|
North
America
|
Europe and the
Rest of the World
|
Total
|
||||||||||
|
Segment sales
|
$
|
152,551
|
$
|
113,928
|
$
|
266,479
|
||||||
|
Segment Adjusted EBITDA
|
$18,661
|
$7,269
|
$25,930
|
|||||||||
North America
Sales for Aebi Schmidt’s North America segment decreased by $6.3 million, or 4.1%, to $146.2 million in the three months
ended June 30, 2025, from $152.6 million in the three months ended June 30, 2024. The decrease in sales was primarily driven by lower sales of new products of $6.9 million, net of increases in after sales of $0.5 million.
Adjusted EBITDA for Aebi Schmidt’s North America segment decreased by $2.6 million, or 14.1%, to $16.0 million for the
three months ended June 30, 2025, from $18.7 million for the three months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by an increase in sales and administrative expenses of $3.8 million which was offset by an
increase of gross margin of $0.4 million and a decrease in other operating income and other expenses of $0.3 million.
Europe and the Rest of the World
Sales for Aebi Schmidt’s Europe and the Rest of the World segment increased by $17.6 million, or 15.4%, to $131.5 million
in the three months ended June 30, 2025, from $113.9 million in the three months ended June 30, 2024. The increase in sales was driven by an increase in sales of new products of $14.0 million and an increase in after sales of $3.6 million.
Adjusted EBITDA for Aebi Schmidt’s Europe and the Rest of the World segment decreased by $2.0 million, or 27.5%, to $5.3
million in the three months ended June 30, 2025, from $7.3 million in the three months ended June 30, 2024. The decrease in Adjusted EBITDA was driven by a decrease in gross margin of $1.0 million and an increase of R&D expenses of $1.0
million.
Six months ended June 30, 2025 compared with six months ended June 30, 2024
|
For the Six Months Ended June 30, 2025
|
||||||||||||
|
(in thousands)
|
North
America
|
Europe and the
Rest of the World
|
Total
|
|||||||||
|
Segment sales
|
$
|
293,535
|
$
|
233,394
|
$
|
526,929
|
||||||
|
Segment Adjusted EBITDA
|
$35,060
|
$7,510
|
$42,570
|
|||||||||
|
For the Six Months Ended June 30, 2024
|
||||||||||||
|
North
America
|
Europe and the
Rest of the World
|
Total
|
||||||||||
|
Segment sales
|
$
|
297,518
|
$
|
227,792
|
$
|
525,280
|
||||||
|
Segment Adjusted EBITDA
|
$36,310
|
$15,756
|
$52,066
|
|||||||||
Page 28 of 60
Index
North America
Sales for Aebi Schmidt’s North America segment decreased by $4.0 million, or 1.3%, to $293.5 in the six months ended
June 30, 2025, from $297.5 million in the six months ended June 30, 2024. The decrease in sales was primarily driven by a decrease in sales of new products of $5.4 million which was offset by an increase in after sales of $1.3 million.
Adjusted EBITDA for Aebi Schmidt’s North America segment decreased by $1.3 million, or 3.4%, to $35.1 million for the six
months ended June 30, 2025, from $36.3 million for the six months ended June 30, 2024. The decrease in Adjusted EBITDA was primarily driven by an increase in sales and administrative expenses of $3.8 million, which was offset by an increase in
gross margin of $1.0 million and an increase of other items of $1.2 million.
Europe and the Rest of the World
Sales for Aebi Schmidt’s Europe and the Rest of the World segment increased by $5.6 million, or 2.5%, to $233.4 million in
the six months ended June 30, 2025, from $227.8 million in the six months ended June 30, 2024. The increase in sales was driven by an increase in sales of new products of $2.5 million and an increase in after sales of 3.5 million.
Adjusted EBITDA for Aebi Schmidt’s Europe and the Rest of the World segment decreased by $8.2 million, or 52.3%, to $7.5
million in the six months ended June 30, 2025, from $15.8 million in the six months ended June 30, 2024. The decrease in Adjusted EBITDA was driven by a decrease in gross margin of $6.9 million, an increase in sales and administrative expenses
of $2.0 million, which were offset by a positive impact of other items of $0.6 million.
Non-GAAP Financial Measures
Aebi Schmidt utilizes non-GAAP financial measures, Adjusted EBITDA and Adjusted EBITDA margin, to complement its U.S.
GAAP reporting and to assist stakeholders in evaluating and comparing its financial and operational performance over multiple periods, identifying trends affecting its business, formulating business plans, and making strategic decisions.
There can be no assurance that Aebi Schmidt will not modify the presentation of its non-GAAP financial measures in the future, and any such modification may be material.
Aebi Schmidt defines Adjusted EBITDA 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. Aebi Schmidt defines Adjusted EBITDA margin as a ratio of Adjusted EBITDA as a percentage of sales. Management uses
Adjusted EBITDA to assess Aebi Schmidt’s financial performance because it allows management and stakeholders to compare its operating performance on a consistent basis across periods by removing the effects of its capital structure (such as
varying levels of interest expense and income), asset base (such as depreciation and amortization) and other items (such as non-recurring costs) that impact the comparability of financial results from period to period.
In evaluating Adjusted EBITDA, you should be aware that in the future Aebi Schmidt may incur expenses that are the same as or similar to some of the adjustments in such
presentation. Aebi Schmidt’s presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA and Adjusted EBITDA margin
have important limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of Aebi Schmidt’s operating results as reported under U.S. GAAP. Adjusted EBITDA and Adjusted EBITDA
margin may be defined differently by other companies in its industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Page 29 of 60
Index
|
For the Six months ended June 30,
|
|||
|
(in thousands, except percentages)
|
2025
|
2024
|
|
|
Net (loss) income
|
$(260)
|
$16,934
|
|
|
Adjusted for:
|
|||
|
Income tax (benefit) expense
|
(103)
|
7,102
|
|
|
Interest expense
|
15,806
|
17,577
|
|
|
Foreign exchange (gain) / losses on external debt
|
3,582
|
(2,154)
|
|
|
Depreciation and amortization
|
13,051
|
12,827
|
|
|
Restructuring and other related expenses
|
767
|
—
|
|
|
Transaction related expenses
|
10,708
|
—
|
|
|
Settlement of acquisition
|
868
|
—
|
|
|
Pension related income, net
|
(1,954)
|
(1,256)
|
|
|
Legacy legal matters
|
586
|
518
|
|
|
Change in provision for contingencies
|
(539)
|
348
|
|
|
Other non-operating one-off items
|
58
|
57
|
|
|
Adjusted EBITDA
|
$42,570
|
$52,066
|
|
|
Sales
|
526,929
|
525,280
|
|
|
Net (Loss) Income Margin
|
(0.04)%
|
3.2%
|
|
|
Adjusted EBITDA Margin
|
8.1%
|
9.9%
|
|
Liquidity and Capital Resources
Aebi Schmidt’s primary liquidity needs are to fund general business requirements, including working capital, capital
expenditures, restructuring costs and debt service requirements. Aebi Schmidt’s principal sources of liquidity are cash flows from operating activities, the Revolving Credit Facility and other debt issuances, and existing cash balances of
$63.6 million as of June 30, 2025. Aebi Schmidt actively manages its working capital and associated cash requirements and continually seeks more effective uses of cash.
As of June 30, 2025, Aebi Schmidt had $297.1 million of net working capital (i.e., current assets minus current liabilities) compared to $281.5 million of net working capital as
of June 30, 2024.
Aebi Schmidt believes that its available liquidity will be sufficient to meet its current obligations for a period of at least 12 months from the date of the filing of this
Quarterly Report, and its liquidity will be sufficient to finance its operating and capital needs, including day to day operations, capital expenditures, research and development, investments in information technology systems, dividends and
potential future acquisitions.
Cash Flows
Aebi Schmidt’s cash flows from operating, investing and financing activities, as reflected in the Aebi Schmidt Consolidated Statements of Cash Flows are summarized in the
following table:
|
For the Six Months Ended June 30,
|
||||||||||||||||
|
(in thousands)
|
2025
|
2024
|
$
Change
|
%
Change
|
||||||||||||
|
Net cash used in operating activities
|
$ (21,216)
|
$
|
(7,145
|
)
|
$
|
(14,071
|
)
|
197
|
%
|
|||||||
|
Net cash used in investing activities
|
(4,545
|
)
|
(6,377
|
)
|
1,832
|
-29
|
%
|
|||||||||
|
Net cash provided by financing activities
|
21,612
|
20,287
|
1,325
|
7
|
%
|
|||||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
2,555
|
(880
|
)
|
3,435
|
-390
|
%
|
||||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(1,594
|
)
|
5,885
|
(7,479
|
)
|
-127
|
%
|
|||||||||
|
Cash and cash equivalents at beginning of the period
|
65,173
|
42,698
|
22,475
|
53
|
%
|
|||||||||||
|
Cash and cash equivalents at end of the period
|
$ 63,579
|
$
|
48,583
|
$
|
14,996
|
31
|
%
|
|||||||||
Page 30 of 60
Index
Net cash used in operating activities
Net cash used in operating activities increased by $14.1
million, or 196%, to $21.2 million in the six months ended June 30, 2025, from $7.2 million in the six months ended June 30, 2024. The increase was primarily driven by a decrease in net income of $17.2 million, an increase of $16.6 million
in inventory levels, and an increase of other assets and liabilities of $9.2 million. These increases were primarily offset by an increase in accounts payable of $23.4 million due to increased costs of production and purchases of
raw materials. The increase in net cash used in operating activities was partially offset by a decrease in accounts receivable of 5.7 million, a decrease in deferred taxes of $5.3 million, and an increase in contract liabilities of $1.7 million.
Net cash used in investing activities
Net cash used in investing activities decreased by $1.8 million, or 29%, to $4.5 million in the six months ended June 30, 2025, from $6.4 million in the six months
ended June 30, 2024. The decrease was primarily driven by a decrease in cash spent on purchases of property, plant, and equipment of $1.2 million and an increase in proceeds from the sale of property, plant, and equipment of $0.6
million.
Net cash provided by financing activities
Net cash provided by financing activities increased by $1.3 million, or 6%, to $21.6 million in the six months ended June 30, 2025, from $20.3 million in the six months ended
June 30, 2024. The increase was primarily driven by an increase of $12.4 million in proceeds from long-term debt. The increase was partially offset by a decrease of $6.3 million in dividend payments and a decrease of $4.7 million in deferred
payments related to Aebi Schmidt’s historical transactions.
Debt
|
In thousands
|
|
|
June 30,
|
|
December 31,
|
|
2025
|
2024
|
||||
|
Revolving credit facility, due 2026
|
$
|
184,222
|
|
$152,787
|
|
|
Term loan
|
|
|
|||
|
Facility A, due 2026
|
|
23,440
|
|
20,778
|
|
|
Facility B, due 2026
|
|
40,000
|
|
40,000
|
|
|
Facility C, due 2026
|
|
123,522
|
|
119,715
|
|
|
Shareholder loans
|
|
58,845
|
|
51,982
|
|
|
Bilateral credit lines
|
21,096
|
|
-
|
||
|
Mortgage loan
|
|
10,187
|
|
10,348
|
|
|
Finance lease obligations
|
|
1,971
|
|
2,003
|
|
|
Other local credit lines
|
|
4,672
|
|
2,240
|
|
|
Total debt
|
|
467,955
|
|
399,853
|
|
|
Less: current portion of long-term debt
|
|
(26,973)
|
|
(23,259)
|
|
|
Total long-term debt
|
|
$
|
440,982
|
|
$376,594
|
Page 31 of 60
Index
Term Loan
In November 2021, Aebi Schmidt entered a syndicated loan agreement with various banks for financing acquisitions. The term loan is split into the following facilities:
| • |
Total Facility A Commitments: A senior amortizing
term loan facility with a total commitment of EUR 45.0 million ($52.7 million).
|
| • |
Total Facility B Commitments: A senior amortizing term loan facility with a total commitment of $60.0 million.
|
| • |
Total Facility C Commitments: A senior
non-amortizing term loan facility with a total commitment of $90.0 million and EUR 28.6 million ($33.5 million).
|
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 $1.4 million as of
June 30, 2025, and $2.2 million as of December 31, 2024, are deferred and amortized based on the effective interest method. Aebi Schmidt is committed to fulfill certain financial covenants throughout the credit contract period. As of June 30,
2025, and December 31, 2024, Aebi Schmidt was in compliance with all covenants.
Revolving Credit Facility Commitment
The aggregate of the Revolving Credit Facility Commitment is EUR 165.0 million ($193.4 million) 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 Aebi Schmidt, including general corporate purposes and working capital
requirements, as well as funding permissible acquisitions aligned with Aebi Schmidt’s strategic objectives.
Bilateral credit lines
In addition to the syndicated loan agreement, Aebi Schmidt has bilateral credit lines with two banks with a total
commitment of EUR 12.5 million ($14.7 million) 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.
New Credit Facilities Agreement
On March 10, 2025, Aebi Schmidt entered into a syndicated $600.0 million 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 $350.0 million (Facility A) and a multicurrency senior secured revolving loan facility in an aggregate
principal amount of up to $250.0 million (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 $2.4 million have been deferred as
prepaid expenses upon the issuance of debt.
Shareholder Loans
As of June 30, 2025, and December 31, 2024, there were subordinated shareholder loans totaling CHF 13.6 million (2025: $17.0 million, 2024:
$15.0 million) and EUR 15.0 million (2025: $17.6 million, 2024: $15.6 million) from PCS Holding AG, as well as CHF 10.0 million (2025: $12.5 million, 2024: $11.0 million) and EUR 10.0 million (2025: $11.7 million 2024: $10.4 million) 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 have been renewed and amended in connection with the New Credit Facilities Agreement and survived the Closing.
Aebi Schmidt has mortgage loans related to the expansion of the plant in Chilton Wisconsin US of $10.2 million as of
June 30, 2025 and $10.3 million as of December 31, 2024.
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Contingent Liabilities
Changes in Aebi Schmidt’s warranty liability during the periods ended June 30, 2025, and 2024 were as follows:
|
(in thousands)
|
June 30,
2025
|
June 30,
2024
|
||||||
|
Balance of accrued warranty, beginning of period
|
$ 10,206
|
$
|
8,022
|
|||||
|
Accruals for current period sales
|
2,778
|
2,485
|
||||||
|
Cash settlements
|
(968
|
)
|
(896
|
)
|
||||
|
Changes in liability for pre-existing warranties
|
(18
|
)
|
(17
|
)
|
||||
|
Translation adjustment
|
978
|
(279
|
)
|
|||||
|
Balance of accrued warranty, end of period
|
$ 12,976
|
$
|
9,315
|
|||||
Aebi Schmidt’s long-term warranty provisions amounting to $2.0 million and $0.8 million for the periods ended June 30, 2025
and 2024, respectively, are included within other non-current liabilities on its Condensed Consolidated Balance Sheet.
Contractual and Other Obligations
Aebi Schmidt is party to contractual and other material obligations (including any material cash obligations) involving
commitments to make payments to third parties, and such commitments require a material amount of cash. As part of its normal course of business, Aebi Schmidt enters into contracts with suppliers for purchases of certain raw materials,
components, and services to facilitate adequate supply of these materials and services. These arrangements may contain fixed or minimum quantity purchase requirements.
Refer to Note 7 – Commitments and Contingent Liabilities to Aebi Schmidt’s unaudited condensed consolidated financial
statements for details on its cash obligations.
Off-Balance Sheet Arrangements
The contingent liabilities include guarantees (“performance bonds”) amounting to $15.2 million and $13.2 million as of June
30, 2025, and December 31, 2024, respectively. Through the normal course of bidding for and executing certain projects, Aebi Schmidt has entered into bid/performance bonds and surety bonds (collectively “performance bonds”) with various
financial institutions. Customers can draw on such performance bonds if Aebi Schmidt does not fulfil its contractual obligations. If a performance bond is drawn, Aebi Schmidt 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.
Critical Accounting Policies and Estimates
There have been no changes to our critical accounting policies during the six months ended June 30, 2025. Refer to our audited consolidated financial statements and
footnotes included in our Form S-4 for a summary of our policies.
Quantitative and Qualitative Disclosures About Market Risk
Aebi Schmidt is exposed to market risks in the ordinary course of business, which primarily relate to fluctuations in foreign currency exchange and commodity prices. Since
December 31, 2024, there have been no material changes in our foreign currency exposures, commodity prices, or interest rates. For a discussion of our exposure to market risk, refer to “Quantitative and
Qualitative Disclosures about Market Risk” in our registration statement on Form S-4.
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|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Aebi Schmidt is exposed to market risks in the ordinary course of business, which primarily relate to fluctuations in foreign currency exchange and commodity prices. Since
December 31, 2024, there have been no material changes in our foreign currency exposures, which is incorporated herein by reference, commodity prices, or interest rates. For a discussion of our exposure to market risk, refer to “Quantitative and Qualitative Disclosures about Market Risk” in the Registration Statement, which is incorporated herein by reference.
|
Item 4.
|
Controls and Procedures.
|
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) were not effective at a reasonable assurance level.
As previously disclosed, in connection with the preparation of Aebi Schmidt’s Consolidated Financial Statements as of December 31, 2024 and 2023 and for the years then ended for
purposes of the Registration Statement, Aebi Schmidt identified material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of Aebi Schmidt’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Aebi Schmidt’s management identified the following material weaknesses in its internal control over financial reporting:
| i. |
Lack of designing and maintaining an effective control environment commensurate with Aebi Schmidt’s financial reporting requirements due to a lack of sufficient number of professionals with an appropriate level
of internal controls and technical U.S. GAAP knowledge, experience and training to appropriately analyze, record and disclose accounting matters, including complex, non-routine transactions accurately and timely;
|
| ii. |
Lack of maintaining formal accounting policies and procedures, and designing and maintaining controls related to significant accounts and disclosures to achieve complete, accurate and timely financial
accounting, reporting and disclosures;
|
| iii. |
Lack of consistently establishing appropriate authorities and responsibilities related to the segregation of duties in our finance and accounting functions;
|
| iv. |
A failure to design and maintain effective information technology (“IT”) general controls over user access, change management and segregation of duties for SAP information systems in Europe that are relevant to
the preparation of its financial statements.
|
| v. |
A failure to design and maintain effective IT general controls over user access, change management and segregation of duties for the remaining information systems that are relevant to the preparation of its
financial statements.
|
The above IT general control deficiencies did not result in a material misstatement to the financial statements. However, these IT general control deficiencies could impact maintaining effective
segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the
effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.
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Aebi Schmidt’s management is developing a plan to remediate the material weaknesses identified, including: (a) providing relevant U.S. GAAP technical accounting, internal controls
over financial reporting and SEC financial reporting requirements training for personnel, including hiring additional personnel to strengthen the accounting and finance functions; (b) designing and implementing a financial reporting control
framework, including management review controls, together with IT general and application controls for all systems which materially impact financial reporting.
Aebi Schmidt’s management cannot assure that it will be successful in remediating the material weaknesses identified above. The failure to correct the material weaknesses or the
failure to discover and address any other material weaknesses or deficiencies could result in inaccuracies in the financial statements and impair the ability to comply with applicable financial reporting requirements and related regulatory
filings on a timely basis.
Aebi Schmidt was a Swiss private company and was not required to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as
amended (the “Sarbanes-Oxley Act”). Therefore, neither management nor an independent registered public accounting firm had performed an evaluation of the effectiveness of Aebi Schmidt’s internal control over financial reporting in accordance
with the provisions of the Sarbanes-Oxley Act. Following the Closing and Aebi Schmidt’s U.S. listing as a public company, Aebi Schmidt’s management will be required to report on the effectiveness of Aebi Schmidt’s internal control over
financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act and is expected to become subject to auditor attestation requirements pursuant to Section 404(b) of the Sarbanes-Oxley Act, beginning with the filing of Aebi Schmidt’s
Annual Report on Form 10-K for the year ending December 31, 2026.
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Changes in Internal Control over Financial Reporting
We are taking actions to complete the remediation of the material weaknesses relating to our internal control over financial
reporting, as described above. Except as otherwise described herein, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our
most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error or overriding of controls, and therefore can
provide only reasonable assurance with respect to reliable financial reporting. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements, including the possibility of human
error, the circumvention or overriding of controls, or fraud. Effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
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PART II—OTHER INFORMATION
| Item 1. |
Legal Proceedings.
|
As of the date of this Quarterly Report, Aebi Schmidt was party, both as plaintiff or defendant, to a number of lawsuits and claims arising out of the normal conduct of its
businesses. Aebi Schmidt’s management does not currently expect its financial position, future operating results or cash flows to be materially affected by the final outcome of these legal proceedings.
Please refer to the disclosure under “Litigation
Relating to the Merger” in Note 13 (Subsequent Events) to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for certain information regarding litigation relating to the Merger.
| Item 1A. |
Risk Factors.
|
Our business, financial condition, results of operations and cash flows are subject to various risks which may cause actual performance to differ materially from historical or
projected future performance, many of which are not exclusively within our control. The risks described below are the primary risks known to us which we believe could materially affect our business, financial condition, results of operations, or
cashflows. However, these risks may not be the only risks that could impact us. Our business could also be affected by other factors which are not presently known to us, factors we currently consider to be immaterial to our operations, or factors
that could emerge as new risks in the future. Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.
Risks Relating to Our Company and Business
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our
business and results of operations.
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences of such imposition, may have a material adverse impact on our business and results
of operations and of our business partners and suppliers. In particular, the U.S. government has adopted a new approach to trade policy and in many cases is renegotiating, or potentially terminating, certain existing bilateral or multi-lateral
trade agreements. It has also imposed or is considering the imposition of tariffs on certain foreign goods, including certain products imported into the United States from Mexico, Canada, China and numerous other jurisdictions. These measures
have resulted in, and are likely to continue to result in, increased costs for goods imported into the United States, particularly if these measures are implemented in regions where we or our suppliers source components or raw materials. This in
turn has required and may continue to require us to increase the prices we charge to our customers, which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold. Further, changes in U.S. trade
policy have resulted in, and likely will continue to result in one or more of the United States’ trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries. Countries
may also adopt other measures, such as controls on imports or exports of goods, technology or data, which could adversely impact our operations and supply chain. Any such volatility and disruptions may adversely affect our business or the third
parties on whom we rely. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on
global economic conditions and the stability of global financial markets.
There is substantial uncertainty about the duration of existing tariffs and whether additional tariffs may be imposed, modified or suspended. We cannot predict future trade policy
or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, reciprocal tariffs, the occurrence of a trade war, or other governmental action related to tariffs or trade
agreements or policies has the potential to adversely impact demand for our products, costs, customers, suppliers, and the U.S. economy, which in turn could adversely impact our business, financial condition and results of operations.
A disruption, termination or alteration of the supply of critical components from third-party suppliers could materially adversely affect
the sales of our products.
Our sales and manufacturing processes depend on the supply of critical components such as vehicle chassis, engines, transmissions, wire harnesses, axles and hydraulic pumps from
major vehicle manufacturers and other suppliers. If our suppliers experience production delays, if the quality or design of their products change, if they implement recalls or change or discontinue the specific type of products they manufacture,
or terminate their relationships with us, we could incur significant costs or disruptions to our business, which could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows. At various times, we may
carry increased inventory to protect against these concerns, which may negatively impact our results of operations.
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The steel, stainless steel, aluminum and other raw materials and components for our U.S. business are predominantly manufactured in the U.S. and purchased from U.S. domestic
suppliers. However, to the extent tariffs increase the price of imported products, others in the industry may choose to increase their orders from U.S. domestic suppliers, which could strain the capacity of our U.S. domestic suppliers, putting
the normal, uninterrupted supply of components to us at risk. In addition, U.S. domestic suppliers that currently incorporate imported components in their products may be subject to the same issues, i.e., increased costs of those imported
components and limited availability of U.S. domestic supplier sources. Our suppliers could also experience operational delays or disruptions, including as a result of reacting to the imposition of tariffs, the outbreak of epidemics or other
public health crises, which could in turn affect our manufacturing processes and sales. Additionally, certain important components that we use in our vehicles, such as engines and transmissions, are produced by a limited number of qualified
suppliers and for some components may be limited to a single source of supply, so any disruption in their supply to us of such components could have a negative impact on our business.
Volatility in the financial markets generally, and in the truck and automotive sectors in particular, could impact the financial viability of certain of our key third-party
suppliers, or could cause them to exit certain business lines, or change the terms on which they are willing to provide products. During 2018 and 2019, many of our suppliers encountered production issues and delivery delays due to factors which
included a vendor factory fire, new plant location inefficiencies, unplanned work stoppages and indirect impacts from the implementation of tariffs. A recurrence of any of these events or another similar development could lead to difficulties in
meeting our customers’ demands and reduce our overall sales volume. Further, any changes in quality or design, capacity limitations, shortages of raw materials or other problems could result in shortages or delays in the supply of vehicle chassis
or components to us. Our business, operating results and financial condition could suffer if our suppliers reduce output or make changes to chassis models that are unpopular with customers or are incompatible with current product designs or
production process.
In addition, a growth in popularity of EVs without a significant expansion in battery cell production capacity could result in shortages, which could result in increased materials
costs and could adversely impact our projected manufacturing and delivery timelines.
Increases in the price of commodities would impact the cost or price of our products, which may impact our ability to sustain and grow
earnings.
Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond
our control, including continuing inflation. Raw material price fluctuations may adversely affect our results. We purchase, directly and indirectly through component purchases, significant amounts of aluminum, stainless steel, nickel (in
particular as part of stainless steel), plastics and other resins, wood, electronic components, cables, and fiberglass products as well as other commodity-sensitive raw materials annually. In particular, in past years, steel and aluminum prices
have experienced volatility which has been unforeseen and unexpected. Further, tariffs enacted or proposed by the U.S. government, or retaliatory tariffs, could further increase the price of components imported from international suppliers, and
lift prices of certain commodities generally, regardless of origin. For example, tariffs increasing the cost of wood imported from Canada would likely lead to commercial and price pressures from U.S. producers as the result of consumers moving
purchases to U.S. producers. Although at times we purchase steel, aluminum and other raw materials in advance to provide certainty regarding portions of our pricing and supply, for the majority of our raw material purchases we do not typically
enter into any fixed-price contracts and may not be able to accurately anticipate future raw material prices for those inputs, including the impacts of inflation. Commodity pricing has fluctuated significantly over the past few years and may
continue to do so in the future. In addition, the cost of land and sea transportation is impacted by fluctuations in the cost of crude oil and diesel.
Such fluctuations in commodity prices could have a material effect on our results of operations, balance sheets and cash flows and impact the comparability of our results between
financial periods.
Any negative change in our relationship with major customers could have significant adverse effects on revenues and profits.
Our financial success is directly related to customers continuing to purchase our products. Failure to fill customers’ orders in a timely manner or on the terms and conditions of
sale could harm our relationships with customers. The importance of maintaining excellent relationships with our major customers may also give those customers leverage in their negotiations with us, including pricing and other supply terms, as
well as post-sale disputes. This leverage may lead to increased costs or reduced profitability for us. Furthermore, if any of our major customers experience a significant downturn in their business or fail to remain committed to their products or
brands, these customers may reduce or discontinue purchases from us, which could have an adverse effect on our business, results of operations and financial condition.
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The unavailability, reduction, elimination or adverse application of government funding could have an adverse effect on our business,
prospects, financial condition and operating results.
The risk associated with government customers is linked to fluctuations in their tax revenues and budgets. While many of our products are often prioritized - being either
safety-critical equipment for street maintenance (e.g., ice and snow removal) or mission-critical airport equipment - there remains a risk that budget constraints could lead to delays in funding allocations, impacting order timelines. Although
government and municipal customers typically are required by law to maintain these operations, financial pressures may result in postponed or deferred purchases, as witnessed during the COVID-19 pandemic.
The agricultural sector faces a similar risk related to funding. Farmers typically rely on subsidies from public institutions, and spending in this sector is heavily dependent on
the availability of those funds. Any reduction or delay in subsidies could directly impact purchasing decisions, posing a risk to demand for our products. For example, the U.S. federal government recently has frozen or otherwise refused to honor
certain promised payments and subsidies to farmers and others, which poses such a risk.
Our U.S. airport customers operate under FAA regulations, so any failure of our equipment could have significant operational consequences. Funding for airport improvements comes
from the FAA’s Airport Improvement Program (AIP), which requires compliance with the Buy American Act. A government shutdown or budget cuts would pose a direct risk, leading to delays in funding approvals and project execution. The Airport &
Airway Trust Fund (AATF), a key funding source within the AIP, is government-funded and closely tied to federal budget decisions. Any reductions in government spending could negatively impact AATF allocations, directly affecting purchase
decisions and potentially delaying orders.
We may not be able to remain competitive in the rapidly changing markets in which we compete.
We operate in a highly competitive environment in each of the markets we serve, and face competition in each of our product segments from numerous competitors. We compete
principally on the basis of customer loyalty and repeat buyers, client-specific customization, product quality and reliability, breadth of product offering, manufacturing capability and flexibility, technical capability, product innovation,
customer service, after-sales support, delivery times and price.
The markets we serve are undergoing rapid transformation, particularly with respect to electric vehicles (“EV”) and autonomous vehicles. Our current and potential
competitors include companies that have significantly greater financial, technical, manufacturing, marketing and other resources than we do, including OEMs and certain of their customers who are highly motivated by market opportunities to deploy
those resources to the design, development, manufacturing, distribution, promotion, sale and support of their products, including their EVs and autonomous vehicles. As a result of these market opportunities, OEMs and other companies have taken
actions to reduce costs, including through in-sourcing, supply base consolidation and vertical integration. We expect these trends to continue and even accelerate. We expect competition for EVs and autonomous vehicles to intensify due to
increased demand and a regulatory push for alternative fuel vehicles, continuing globalization, and consolidation in the worldwide vehicle industry. Increased competition may lead to lower vehicle unit sales and increased inventory, which may
result in downward price pressure and adversely affect our business, financial condition, operating results, and prospects. Our business will be adversely affected if we are unable to adequately respond to these pressures or otherwise continue to
compete in these markets.
Amounts included in order backlog may not result in actual revenue and are an uncertain indicator of our future revenue.
Backlog is generally comprised of agreements and purchase orders from customers that are subject to modification, cancellation, or rescheduling. We report these orders in our
backlog at aggregate selling prices, net of discounts or allowances, and for certain products we recognize revenues based upon percentage completion. While realization of revenue related to order backlog has not been a major issue in the past, we
cannot assure that we will recognize revenue with respect to each order included in order backlog. Should a cancellation occur, our order backlog and anticipated revenue would be reduced unless we are able to replace the cancelled order. As a
result, the order backlog is not entirely within our control, and may not be indicative of future sales and can vary significantly from period to period. Reductions in our order backlog could negatively impact our future results of operations.
We evaluate our order backlog at least quarterly to determine if the orders continue to meet our criteria for inclusion in order backlog and to verify percentage of completion. We
may adjust our reported order backlog to account for any changes, including those arising from continued customer intent and ability to fulfill order, supply base capacity, and changes in our ability, or the methodology used, to determine whether
an order is likely to be completed. We cannot assure that our order backlog will result in revenue on a timely basis or at all, or that any cancelled contracts will be replaced. As a result, the order backlog may not be indicative of future sales
and can vary significantly from period to period. In addition, it is possible that the methodology for determining the order backlog may not be comparable to methods used by other companies.
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In addition, as a result of firm purchase orders from our customers, we may enter into agreements to produce and sell vehicles at a specified price with certain adjustments for
changes and options based upon our estimation of the cost to produce and the timing of delivery. Due to the nature of these product cost estimates and the fluctuations in input costs and availability, we may underestimate the costs of production
and therefore overestimate the profitability in the backlog. As a result, the actual profitability of those sales in the future may differ materially from the initial estimates when we recorded the firm purchase orders in backlog.
Our ability to meet customer delivery schedules is dependent on a number of factors including, but not limited to, access to components and raw materials, an adequate and capable
workforce, assembling/engineering expertise for certain projects and sufficient manufacturing capacity. The availability of these factors may in some cases be subject to conditions outside of our control. A failure by us to deliver in accordance
with our performance obligations may result in financial penalties under certain of our contracts and damage to existing customer relationships, damage to our reputation and loss of future bidding opportunities, which could cause the loss of
future business and could negatively impact our financial performance.
The integration of businesses or assets we have acquired or may acquire in the future involves challenges that could disrupt our business
and harm our financial condition.
As part of our growth strategy, we have pursued and expect to continue to selectively pursue acquisitions of businesses or assets to diversify, expand our capabilities, enter new
markets, or increase our market share. Integrating any newly acquired business or assets can be expensive and can require a great deal of management time and other resources. We cannot guarantee that we will be able to identify attractive
acquisition targets or assets. If we are unable to successfully integrate newly acquired businesses (including Shyft) with our existing business, we will not realize the synergies we expect from the acquisition and our business and results of
operations would be adversely impacted.
Reconfiguration or relocation of our production operations could negatively impact our earnings.
We may, from time to time, reconfigure our production lines or relocate production of products between buildings or locations or to new locations to maximize the efficient
utilization of our existing production capacity or take advantage of opportunities to increase manufacturing efficiencies. Costs incurred to affect these reconfigurations or relocations may exceed our estimates, and the efficiencies gained may be
less than anticipated, each of which may have a negative impact on our results of operations and financial position.
Unforeseen or recurring operational problems at any of our facilities, or a catastrophic loss of one of our key manufacturing facilities,
may cause significant lost production and adversely affect our results of operations.
Our manufacturing process could be affected by operational problems that could impair our production capability. Many of our manufacturing facilities contain sophisticated
machines that are used in our manufacturing process. Disruptions or shutdowns at any of our facilities could be caused by:
| • |
maintenance outages to conduct maintenance activities that cannot be performed safely during operations;
|
| • |
prolonged power failures or reductions;
|
| • |
breakdown, failure or substandard performance of any of our machines or other equipment;
|
| • |
noncompliance with, and liabilities related to, environmental requirements or permits;
|
| • |
disruptions in the transportation infrastructure, including railroad tracks, bridges, tunnels or roads;
|
| • |
fires, floods, earthquakes, tornadoes, hurricanes, microbursts or other catastrophic disasters, national emergencies, pandemics, political unrest, war or terrorist activities; or
|
| • |
other operational problems.
|
If some of our facilities are shut down, they may experience prolonged startup periods, regardless of the reason for the shutdown. Those startup periods could range from several
days to several weeks or longer, depending on the reason for the shutdown and other factors. Any prolonged disruption in operations at any of our facilities could cause a significant loss of production and adversely affect our results of
operations and negatively impact our customers and dealers. Further, a catastrophic event could result in the loss of the use of all or a portion of one of our manufacturing facilities. Although we carry property and business interruption
insurance, our coverage may not be adequate to compensate us for all losses that may occur. Any of these events individually or in the aggregate could have a material adverse effect on our business, financial condition and operating results.
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Disruptions within our dealer network could adversely affect our business.
We rely, for certain of our products, on a network of independent dealers to market, stock, deliver, provide training for, and service our products to and for customers. Our
business is influenced by our ability to initiate and manage new and existing relationships with dealers.
From time to time, we or an individual dealer may choose to terminate the relationship, or the dealership could face financial difficulty leading to bankruptcy or other failure,
or difficulty in transitioning to new ownership, in each case leading to a temporary loss of distribution channels. In addition, our competitors could engage in a strategy to attempt to acquire or convert our dealers to carry their products. We
do not believe our business is dependent on any single dealer, the loss of which would have a sustained material adverse effect on our business.
However, the disruption of dealer coverage within a specific local market could have an adverse impact on our business within the affected market. The loss or termination of a
significant number of dealers could cause difficulties in marketing and distributing our products and have an adverse effect on our business, operating results or financial condition. If a dealer in a strategic market experiences financial
difficulty, we may choose to provide financial support such as extending credit to a dealership, reducing the risk of disruption, but increasing our financial exposure.
Additionally, there is a competitive risk related to the distribution chain, as dealers operate independently and set their own pricing and conditions in the market. While we may
seek to mitigate that risk through direct sales, we have no control over dealer pricing strategies. This risk could impact the competitiveness of our products in specific dealer markets.
We may be unsuccessful in implementing our growth strategy.
Our growth strategy includes expanding existing market share through product innovation, continued expansion into industrial and global markets and merger or acquisition related
activities. We believe that our future success depends in part on our research and development and engineering efforts, our ability to manufacture or source the products and customer acceptance of our products. As it relates to new markets, our
success also depends on our ability to create and implement local supply chain, sales, distribution and services strategies to reach these markets.
The potential inability to successfully implement and manage our growth strategy could adversely affect our business and our results of operations. The successful implementation
of our growth strategy will depend, in part, on our ability to integrate operations with acquired companies.
We also make investments in new business development initiatives which could have a relatively high failure rate. We limit our investments in these initiatives and establish
governance procedures to contain the associated risks, but losses could result and may be material. Our growth strategy also may involve acquisitions, joint venture alliances and additional arrangements of distribution. We may not be able to
enter into acquisitions or joint venture arrangements on acceptable terms, and we may not successfully integrate these activities into our operations. We also may not be successful in implementing new distribution channels, and changes could
create discord in our existing channels of distribution.
When we introduce new products, we may incur expenses that we did not anticipate, such as recall expenses, resulting in reduced earnings.
The introduction of new products is critical to our future success. We will have additional costs when we introduce new products, such as initial labor or purchasing
inefficiencies and costs to identify and comply with product regulations applicable to the new products. But we may also incur unexpected expenses. For example, we may experience unexpected engineering or design issues that will force a recall of
a new product, increase our warranty costs for the new product, or increase production costs of the product above levels needed to ensure profitability. In addition, we may make business decisions that include offering incentives to stimulate the
sales of products not adequately accepted by the market, or to stimulate sales of older or less marketable products. The costs resulting from these types of problems could be substantial and have a significant adverse effect on our earnings.
We may discover defects in our vehicles, potentially resulting in delaying new model launches, recall campaigns, increased warranty costs,
liability or other costs.
Meeting or exceeding many government-mandated safety standards is costly and often technologically challenging. Government safety standards require manufacturers to remedy defects
related to motor vehicle safety through safety recall campaigns, and a manufacturer is obligated to recall vehicles if we determine that they do not comply with relevant safety standards. Should we or government safety regulators determine that a
safety or other defect or noncompliance exists with respect to certain of our vehicles, there could be a delay in the launch of a new model, recalls of existing models or a significant increase in warranty claims, the costs of which could be
substantial. Any actual or perceived defect or other quality issue in our products could be costly to address and could also lead to potential liability or reputational damage. Additionally, the vehicles we manufacture for sale are subject to
strict contractually established specifications using complex manufacturing processes. If we fail to meet the contractual requirements for a vehicle or a part, we could be subject to warranty costs to repair or replace the part itself and
additional costs related to the investigation and inspection of non-complying parts. These potential warranty and repair and replacement costs are generally not covered by our insurance. We establish warranty reserves that represent our estimate
of expected costs for fulfilling our warranty obligations. We base our estimate for warranty reserves on our historical experience and other related assumptions. If actual results materially differ from these estimates, our results of operations
could be materially affected.
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In addition, we may not be able to enforce warranties and extended warranties received or purchased from our suppliers if they refuse to honor such warranties or go out of
business. Also, a customer may choose to pursue remedies directly under our contract with us over enforcing such supplier warranties. In such a case, we may not be able to recover our losses from the supplier.
Increases in the cost of labor, deterioration in employee relations, union organizing activity and work stoppages at our facilities could
have a negative effect on our business.
While we believe our employee relations are generally positive, it cannot be assured that our relations with our workforce will remain positive. A deterioration in these relations
could have an adverse effect on our business. In addition, we conduct a large portion of our business in highly competitive labor markets. If we are unable to recruit and retain a sufficient workforce, or if the costs of doing so increase, our
business could be materially adversely affected.
Union organizers may work to organize employees at some of our facilities. If union representation is implemented at such sites and we are unable to agree with the union on
reasonable employment terms, including wages, benefits, and work rules, we could experience a significant disruption of our operations and incur higher ongoing labor costs. Further, if a location does experience organizing activity, our
management and other personnel need to divert attention from operational and other business matters to devote substantial time to address such activity.
Our ability to execute our strategy is dependent upon our ability to attract, retain, and develop qualified personnel, including our ability
to execute proper succession plans for senior management and key employees.
Our continued success depends, in part, on our ability to identify, attract, motivate, train and retain qualified personnel in key functions and geographic areas, including the
members of our senior management team. In particular, we are dependent on our ability to identify, attract, motivate, train and retain qualified engineers and skilled labor with the requisite education, background and industry experience to
assist in the development, enhancement, introduction and manufacture of our products and technology solutions.
Failure to attract, train and retain qualified personnel, whether as a result of an insufficient number of qualified local residents or the allocation of inadequate resources to
train, integrate and retain, could impair our ability to execute our business strategy and could have an adverse effect on our business prospects. Our success also depends to a large extent upon our ability to attract and retain key executives
and other key employees, as well as the existence of a succession plan for these employees. These employees have extensive experience in our markets and are familiar with our business, systems and processes. The loss of the services of one or
more of these key employees could have an adverse effect, at least in the short to medium term, on significant aspects of our business, including the ability to manage our business effectively and the successful execution of our strategies, if
transitions according to our succession plans are not successful. If certain of these employees decide to leave, we could incur disruptions to the completion of certain initiatives and could incur significant costs in hiring, training, developing
and retaining their replacements if our succession plans are not adequate.
Risks associated with international sales and contracts could have a negative effect on our business.
We face numerous risks associated with conducting international operations, any of which could negatively affect our financial performance, including changes in foreign country
regulatory requirements, the strength of the U.S. dollar and the Euro compared to other currencies, import/export restrictions, the imposition of tariffs and other trade barriers, disruptions in the shipping of exported products and other
logistical challenges. In addition, when we introduce an existing product into a new market, we generally will incur additional costs to adapt that product to local markets, and to identify and comply with product regulations applicable to
products in that jurisdiction.
Our EVs rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design
defects, or if we are unsuccessful in addressing or mitigating technical limitations in our systems, our EV business could be adversely affected.
Our EVs rely on software and hardware that is highly technical and complex and will require modification and updates over the life of our vehicles. Our software and hardware may
contain errors, bugs, vulnerabilities or design defects, and our systems are subject to certain technical limitations that may compromise our ability to meet our objectives. Some errors, bugs, vulnerabilities, or design defects inherently may be
difficult to detect and may only be discovered after the product has been released. Although we will attempt to remedy any issues we observe in our vehicles effectively and rapidly, such efforts may not be timely, may hamper production or may not
be to the satisfaction of our customers.
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If we are unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software and hardware, or fail to deploy updates to our software properly, we
would suffer damage to our reputation, loss of customers, loss of revenue or liability for damages, any of which could adversely affect our business, prospects, financial condition, results of operations, and cash flows.
There are complex software and technology systems that we must develop in coordination with vendors and suppliers to reach mass production
for our EVs, and there can be no assurance that we will successfully develop or integrate them.
Our EVs and EV operations use a substantial amount of complex third-party and in-house software and hardware. The development and integration of such advanced technologies are
inherently complex, and we will need to coordinate with our vendors and suppliers to reach mass production for our EVs. Defects and errors may be revealed over time and our control over the performance of third-party services and systems may be
limited. As a result, our potential inability to develop and integrate the necessary software and technology systems may adversely affect our EV business.
We rely on third-party suppliers to develop a number of emerging technologies for use in our EVs, including battery technology and the use of different battery cell chemistries.
Certain of these technologies and chemistries are not currently commercially viable, and they may never be commercially viable. There can be no assurances that our suppliers will be able to meet the technological requirements, production timing,
and volume requirements to support our business plan. Competitors and their suppliers may develop cheaper or more efficient battery technology. Furthermore, if we experience delays from our third-party suppliers (including due to their financial
viability or technology), we could experience delays in delivering on our timelines. In addition, the technology may not comply with the cost, performance useful life, and warranty characteristics we anticipate in our business plan. As a result,
our business plan could be significantly impacted and we may incur significant liabilities under warranty claims which could materially and adversely affect our business, prospects, financial condition, results of operations, and cash flows.
General economic, market, and/or political conditions, whether on a global, national, or more regional scale, could have a negative effect
on our business.
Wars, acts of terrorism, armed conflicts, natural disasters (including those caused by climate change), budget shortfalls, cybersecurity incidents, civil unrest, governmental
actions, and epidemics have in the past and could in the future create significant uncertainties that may have material and adverse effects on consumer demand, shipping and transportation, the availability of manufacturing components, commodity
prices and our ability to engage in overseas markets as tariffs are implemented. An economic recession, whether resulting from one of these events or others, would have a material adverse impact on our financial condition and results of
operations.
If there is a rise in the frequency and size of product liability, warranty and other claims against us, including wrongful death claims,
our business, results of operations and financial condition may be harmed.
We are frequently subject, in the ordinary course of business, to litigation involving product liability and other claims, including wrongful death claims, related to personal
injury and warranties. We insure our product liability claims in the commercial insurance market. We cannot be certain that our insurance coverage will be sufficient to cover all future claims against us. Any increase in the frequency and size of
these claims, as compared to our experience in prior years, may cause our insurance premiums to rise significantly. It may also increase the amount we pay in punitive damages, which our insurance may not cover. In addition, a major product recall
or increased levels of warranty claims could have a material adverse effect on our results of operations.
Changes to laws and regulations governing our business could have a material impact on our operations.
Our manufactured products and the industries in which we operate are subject to extensive federal, state and local regulations in multiple jurisdictions. Changes to any of these
regulations or the implementation of new regulations could significantly increase the costs of manufacturing, purchasing, operating or selling our products, managing our data and systems, and could have a material adverse effect on our results of
operations. Our failure to comply with present or future regulations could result in fines, potential civil and criminal liability, suspension of sales or production, or cessation of operations.
Failure to comply with, and liabilities arising under, environmental and motor vehicle laws and regulations could have a material impact on
our operations.
Our operations are subject to a variety of federal, state, local and international environmental regulations in the jurisdictions in which we operate relating to, among other
matters, noise pollution and the use, generation, storage, treatment, emission and disposal of hazardous materials and wastes, some of which impose joint and several liability, regardless of fault. Our failure to comply with present or future
regulations could result in fines, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process, costly cleanup or capital expenditures. Climate change regulations at the federal, state
or local level in the jurisdictions in which we operate could require us to change our manufacturing processes or product portfolio or undertake other activities that may require us to incur additional expenses, which may be material.
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Our vehicles are subject to motor vehicle safety standards, and the failure to satisfy such mandated safety standards could have a material adverse effect on our business,
financial condition, results of operations, and cash flows.
All vehicles sold must comply with applicable international, federal, state and local motor vehicle safety standards. In the United States, vehicles that meet or exceed all
federally mandated safety standards are self-certified by the manufacturer under the federal regulations. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification.
Jurisdictions outside the United States require us to meet “Type Approval” requirements by proving to regulators that our vehicles meet those relevant safety standards in effect in those countries. Our failure to maintain compliance of our
current vehicles or obtain certification of compliance for any future vehicle, including future EV models, with motor vehicle safety standards in the United States, Europe, Canada or other jurisdictions could have a material adverse effect on our
business, prospects, financial condition, results of operations, and cash flows.
Our operating results may fluctuate significantly on a quarter-to-quarter basis.
Our quarterly operating results depend on a variety of factors including the timing and volume of orders, the completion of product inspections and acceptance by our customers,
and various restructuring initiatives that may be undertaken from time to time. Accordingly, our financial results may be subject to significant and/or unanticipated quarter-to-quarter fluctuations.
Our businesses are cyclical, and this can lead to fluctuations in our operating results.
The industries in which we operate are highly cyclical and there can be substantial fluctuations in our manufacturing, shipments and operating results, and the results for any
prior period may not be indicative of results for any future period. Companies within these industries are subject to volatility in operating results due to external factors such as economic, demographic and political changes. Factors affecting
the manufacture of chassis, specialty vehicles and other products include but are not limited to:
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Commodity prices;
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Fuel availability and prices;
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Unemployment trends;
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International tensions and hostilities;
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General economic conditions;
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Various tax incentives;
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Strength of the U.S. dollar and Euro compared to other currencies;
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Overall consumer confidence and the level of discretionary consumer spending;
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Dealers’ and manufacturers’ inventory levels; and
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Interest rates and the availability of financing.
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Economic, legal and other factors could impact our customers’ ability to pay accounts receivable balances due from them.
In the ordinary course of business, customers are granted terms related to the sale of goods and services delivered to them. These terms typically include a period between when
the goods and services are tendered for delivery to the customer and when the customer must pay for these goods and services. The amounts due under these payment terms are listed as accounts receivable on our balance sheet. Prior to our
collecting these accounts receivable, our customers could encounter drops in sales, unexpected increases in expenses, or other factors which could impact their ability to continue as a going concern, and which could affect the collectability of
these amounts. Writing off uncollectible accounts receivable could have a material adverse effect on our earnings and cash flow as we have major customers with material accounts receivable balances at any given time.
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Our business operations could be disrupted if our information technology systems fail to perform adequately or experience a cybersecurity
incident.
We rely on our information technology systems to effectively manage our business data, communications, supply chain, product engineering, manufacturing, accounting and other
business processes. If these systems are damaged, cease to function properly or are subject to a cybersecurity breach such as ransomware, phishing, infection with viruses or intentional attacks aimed at theft or destruction of sensitive data, we
may suffer an interruption in our ability to manage and operate the business, and our results of operations and financial condition may be adversely affected.
Like most corporations, our information systems are a target of attacks. In addition, third-party providers of data hosting or cloud services, as well as our suppliers, may
experience cybersecurity incidents that may involve data we share with them. There can be no assurance that cybersecurity incidents, whether with respect to us or such third-party providers, will not have a material adverse effect on us in the
future. To mitigate risks to our information systems, we continue to make investments in personnel, technologies and training of personnel.
Fuel shortages, or higher prices for fuel, could have a negative effect on sales.
Gasoline or diesel fuel is required for the operation of the specialty vehicles we manufacture. There can be no assurance that the supply of these petroleum products will continue
uninterrupted, that rationing will not be imposed or that the price of, or tax on, these petroleum products will not significantly increase in the future. Increases in gasoline and diesel prices and speculation about potential fuel shortages may
have had an unfavorable effect on consumer demand for certain we products. This, in turn, may have a material adverse effect on our sales volume. Increases in the price of oil also can result in significant increases in the price of many of the
components in our products, which may have an adverse impact on margins or sales volumes.
We could incur asset impairment charges for goodwill, intangible assets or other long-lived assets.
We have a significant amount of goodwill, intangible assets and other long-lived assets. At least annually, we review goodwill and non-amortizing intangible assets for impairment.
We will also review for impairment identifiable intangible assets, goodwill and other long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. If the
operating performance at one or more of our reporting units fails to meet future forecasts, or if future cash flow estimates decline, we could be required, under current U.S. accounting rules, to record impairment charges for our goodwill,
intangible assets or other long-lived assets. Any write-off of a material portion of such assets could negatively affect our results of operations or financial position.
We may be unable to adequately protect our intellectual property.
While we believe that our patents, trademarks, know-how and other intellectual property have significant value, it is uncertain that this intellectual property or any intellectual
property acquired or developed by us in the future will provide a meaningful competitive advantage. Our patents or pending patent applications may be challenged, invalidated or circumvented by competitors or rights granted thereunder may not
provide meaningful proprietary protection. Moreover, competitors may infringe on our patents or successfully avoid them through design innovation. Policing unauthorized use of our intellectual property is difficult and expensive, and we may not
be able to, or have the resources to, prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the U.S. The cost of protecting our intellectual property may be
significant and have a material adverse effect on our financial condition and future results of operations. In addition, because we operate in many countries throughout the world, our intellectual property may be subject to additional risks of
infringement, sometimes in jurisdictions with weaker protections of intellectual property rights, and we must take steps to protect our intellectual property rights under the laws of multiple jurisdictions. This risk increases when the
intellectual property rights relate to new technologies.
Emerging issues related to the development and use of artificial intelligence (“AI”) could give rise to legal or regulatory action,
damage our reputation or otherwise materially harm our business.
Our development and use of AI technology in our products and operations remains in the early phases. While we aim to develop and use AI responsibly and attempt to mitigate ethical
and legal issues presented by our use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. AI technologies are complex and rapidly evolving and the technologies that we develop or use may ultimately be flawed.
Moreover, AI technology is subject to rapidly evolving domestic and international laws and regulations, which could impose significant costs and obligations on the company. For example, the European Union’s Artificial Intelligence Act, which
establishes broad obligations for the development and use of AI-based technologies made available in the European Union based on their potential risks and level of impact, came into force on August 1, 2024. Emerging regulations may pertain to
data privacy, data protection, and the ethical use of AI, as well as clarifying intellectual property considerations. Our use of AI could give rise to legal or regulatory action, increased scrutiny or liability, damage our reputation or otherwise
materially harm our business.
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We are subject to litigation in the ordinary course of business, and uninsured judgments, settlements or other costs, or a rise in insurance
premiums may adversely impact our results of operations.
In the ordinary course of business, we are subject to various claims and litigation. Any such claims, whether with or without merit, could be time-consuming and expensive to
defend, could divert management’s attention and resources, could result in reputational damage to us, could result in significant damages or other costs, and could otherwise have a material adverse effect on our business, financial condition and
results of operations.
Some of our businesses have in the past and may in the future face claims and litigation regarding accidents involving their products, including accidents involving injuries and
deaths, and the increasing amount of our vehicles on the road may increase our exposure to such matters. In accordance with customary practice, we maintain insurance against some, but not all, of these potential claims. We may elect not to obtain
insurance if we believe that the cost of available insurance is excessive relative to the risks presented. The levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities. Further, we may not be able to
maintain insurance at commercially acceptable premium levels or at all.
If any significant accident, judgment, claim or other event is not fully insured or indemnified against, then in either case that could have a material adverse impact on our
business, financial condition and results of operations. We cannot assure that the outcome of all current or future litigation will not have a material adverse impact on our business or results of operations.
Fluctuations in foreign currency exchange rates have adversely affected and could continue to adversely affect our operating results.
Because the functional currency of most of our foreign operations is the applicable local currency, but our financial reporting currency is the U.S. dollar, we are required to
translate the assets, liabilities, expenses, and revenues of our non-U.S. operations into U.S. dollars at the applicable exchange rate in preparing our financial statements. Accordingly, we face foreign currency exchange rate risk arising from
transactions in the normal course of business, such as sales and loans to wholly owned subsidiaries, sales to third-party customers, purchases from suppliers, and bank lines of credit with creditors denominated in foreign currencies.
Foreign currency exchange rates have affected our net sales, net earnings, and operating results in the past and could affect them in the future, in some cases materially.
Currency exchange rate fluctuations may also affect the comparative prices between products we sell and products our non-U.S. competitors sell in the same market, which may decrease demand for our products. Substantial exchange rate fluctuations
caused by the strengthening of the U.S. dollar or otherwise, may have an adverse effect on our operating results, financial condition, and cash flows, as well as the comparability of our financial statements between reporting periods. While we
actively manage our foreign currency market risk in the normal course of business by entering into various derivative instruments to hedge against such risk, these derivative instruments involve risks and may not effectively limit our underlying
exposure to foreign currency exchange rate fluctuations or minimize our net earnings and cash volatility associated with foreign currency exchange rate changes. Further, the failure of one or more counterparties to our foreign currency exchange
rate contracts to fulfill their obligations to us could adversely affect our operating results.
Weather conditions, including conditions exacerbated by global climate change, present chronic and acute physical risks, and have previously
impacted, and may continue to impact, demand for some of our products and/or cause disruptions in our operations.
Weather conditions in particular geographic regions have adversely affected, and in the future will likely adversely affect the sales, demand, and field inventory levels and
seasonality trends of some of our products. Weather conditions also have disrupted our own manufacturing and distribution facilities and our supply chain, which has impacted our ability to manufacture products to fulfill customer demand, and such
disruptions may occur in the future. For example, drought or unusually wet conditions have had, and may continue to have, an adverse effect on sales of certain mowing equipment products. Lower snowfall accumulations in key markets have had, and
may continue to have, an adverse effect on sales of our snow and ice removal business. Similarly, adverse weather conditions in one season may negatively impact customer purchasing patterns and net sales for some of our products in another
season. For example, lower snowfall accumulations may result in lower winter season revenues for landscape contractor professionals, causing such customers to forego or postpone spring purchases of our mowing equipment products.
Our business is subject to risks arising from our indebtedness, contingent obligations, liquidity and financial position.
Our business has meaningful working capital requirements and a decline in operating results or access to financing may have an adverse impact on our liquidity position. The New
Credit Facilities Agreement, which we have used or will use to refinancing existing interest-bearing financial indebtedness of Aebi Schmidt and Shyft (and their subsidiaries), to pay costs and expenses incurred in connection with the Refinancing
and the Transactions, and for general corporate and working capital purposes, went into effect on July 1, 2025. Our ability to make required payments of principal and interest on our debt will depend on our future performance, which, to a certain
extent, is subject to general economic, financial, competitive, political and other factors, some of which are beyond our control. Accordingly, conditions could arise that could limit our ability to generate sufficient cash flows or to access
borrowings to enable us to fund our liquidity needs, which could further limit our financial flexibility or impair our ability to obtain alternative financing sufficient to repay our debt at maturity.
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We believe that our cash on hand, together with funds generated by our operations and borrowings under the New Credit Facilities Agreement, will provide us with sufficient
liquidity and capital resources to meet our working capital, capital expenditures and other operating needs for the foreseeable future. This belief is based on significant assumptions including, among other things, assumptions relating to future
sales volumes, the successful implementation of our business strategies, the continuing availability of trade credit from certain key suppliers and that there will be no material adverse developments in our competitive market position, business,
liquidity or capital requirements. Any failure to achieve earnings expectations may have an adverse impact on our available liquidity. As a result, we cannot provide assurance that we will continue to have sufficient liquidity to meet our
operating needs. In the event that we do not have sufficient liquidity, we may be required to seek additional capital, reduce or cut back our operating activities, capital expenditures or otherwise alter our business strategy. If we obtain
additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional debt, the agreements governing that debt may contain significant financial and other covenants that may materially restrict
our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.
We have meaningful contingent obligations, which could negatively impact our results of operations.
We have meaningful contingent liabilities with respect to certain items that, if realized, could have a material adverse effect on our business, financial condition and operating
results. In particular, we obtain certain vehicle chassis from automobile manufacturers under converter pool agreements. Chassis typically are converted and delivered to customers within 90 to 120 days of receipt. If the chassis are not converted
within this timeframe of delivery, in certain cases we are obliged to purchase the chassis and record it as inventory or is obligated to begin paying an interest charge on this inventory until purchased. We also obtain vehicle chassis directly
from our customers in connection with specific vehicle orders. These vehicle chassis are stored at our various production facilities until the related value-added work is completed and the finished unit is shipped back to the customer. The
customer does not transfer the vehicle chassis certificate of origin to us. If damage or theft were to occur to these chassis, we would be responsible for related costs incurred to repair or replace the customer-provided chassis. Further, in
connection with dealers’ wholesale floor-plan vehicle financing programs, we enter into repurchase agreements with certain lending institutions, customary in the industries in which we operate, which may require us to repurchase previously sold
vehicles. Although our exposure under these agreements is limited by the expected resale value of the inventory we may repurchase, we may receive less than anticipated on such resales and could collect payment on such resales later than
originally expected. Additionally, we are party to multiple agreements whereby we guarantee indebtedness of others, including losses under pool agreements. Also, we are contingently liable under bid, performance and specialty bonds issued by our
surety companies and has open standby letters of credit issued by our banks in favor of third parties. While we do not expect to experience material losses under these agreements, we cannot provide any assurance that these contingent liabilities
will not be realized.
Expectations relating to environmental, social and governance (“ESG”) considerations expose us to potential liabilities, increased costs,
reputational harm and other adverse effects on our business.
Various regulatory authorities have imposed, and may continue to impose, mandatory substantive or disclosure requirements with respect to ESG and sustainability matters. These
requirements are not uniform across jurisdictions and may conflict with legal requirements, particularly in certain U.S. states that seek to discourage or penalize consideration of ESG factors in business operations, which may result in increased
complexity, and cost for compliance, as well as could lead to increased litigation risks related to disclosures made pursuant to these regulations and legal requirements, any of which could adversely affect our financial performance.
Additionally, we make statements about our ESG goals and initiatives through information provided on our website, press statements and other communications, and in the future expect to report on ESG matters in line with mandatorily applicable
reporting rules under Swiss law. Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or international ESG laws and regulations, or meet evolving and
varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.
Risks Relating to Tax Matters
Our management views the following Risk Factors as the primary tax-related risks with respect to Aebi Schmidt and Aebi Schmidt’s Common Stock (our “Common Stock”). However,
you should read the discussion under the sections of the Proxy Statement/Prospectus entitled “Material U.S. Federal Income Tax Considerations for U.S. Holders” and “Material
Swiss Tax Consequences of the Ownership of Combined Company Shares” for a more complete discussion of U.S. federal and Swiss income tax considerations relating to the Transactions and/or the ownership and disposition of our Common Stock.
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The IRS may assert that Aebi Schmidt is a “domestic corporation” or a “surrogate foreign corporation” for U.S. federal income tax purposes.
Under current U.S. federal income tax law, a corporation is generally considered for U.S. federal income tax purposes to be a tax resident in the jurisdiction of our organization
or incorporation. Accordingly, under generally applicable U.S. federal income tax rules, Aebi Schmidt, which is incorporated under the laws of Switzerland and is a Swiss tax resident, would be classified as a non-U.S. corporation (and, therefore,
not a U.S. tax resident) for U.S. federal income tax purposes. Section 7874 of the Code, however, contains rules that may cause a non-U.S. corporation to, in certain circumstances, be treated as a domestic corporation for U.S. federal income tax
purposes. If we were treated as a domestic corporation for U.S. federal income tax purposes, we could be subject to substantial U.S. tax liability, in addition to tax liability in our country of residence, and the gross amount of any dividend
payments to our non-U.S. holders could be subject to U.S. withholding tax. In addition, even if a non-U.S. corporation is not treated as a domestic corporation for U.S. federal income tax purposes, the non-U.S. corporation may be treated as a
“surrogate foreign corporation” under Section 7874 of the Code, in which case the non-U.S. corporation would be subject to certain adverse U.S. federal income tax rules, including the ineligibility of dividends paid by the non-U.S. corporation
for the reduced rates of tax that apply to qualified dividends.
We believe that the Merger should not result in Aebi Schmidt being treated as a “surrogate foreign corporation” within the meaning of Section 7874(a)(2)(B) of the Code or a
“domestic corporation” pursuant to Section 7874(b) of the Code. However, the application of the rules under Section 7874 of the Code is complex and subject to uncertainty, and there is limited guidance regarding their application. Moreover, the
application of Section 7874 of the Code to the facts and circumstances of the Transactions is uncertain.
Please see the section of the Proxy Statement/Prospectus entitled “Material U.S. Federal Income Tax Considerations for U.S. Holders—Application
of Section 7874 of the Code” for a more detailed discussion with respect to Section 7874 of the Code.
If Aebi Schmidt is a passive foreign investment company, U.S. holders of shares of our Common Stock could be subject to adverse U.S. federal
income tax consequences.
Aebi Schmidt, as a non-U.S. corporation, will be classified as a passive foreign investment company (“PFIC”) for any taxable year if either (1) at least 75% of our gross
income for such year consists of certain types of “passive” income, or (2) at least 50% of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income
or are held for the production of passive income. Under certain “look-through” rules, a non-U.S. corporation is treated for purposes of determining whether Aebi Schmidt is a PFIC as owning a proportionate share of the assets, and receiving a
proportionate share of the gross income, of subsidiaries in which we directly or indirectly owns a 25% or greater interest. Based on the current composition of our income, assets and operations, and, the expected composition of our income, assets
and operations after the Merger, we believe (i) that Aebi Schmidt was not a PFIC for our taxable year prior to the Closing, and (ii) that Aebi Schmidt will not be a PFIC for our taxable year that includes the Closing or the foreseeable future.
Because determining PFIC status is a fact-intensive exercise made on an annual basis and depends on the composition of a non-U.S. corporation’s assets and income during each year, no assurance can be given that we are not, and we will not be,
classified as a PFIC. If we were a PFIC for any taxable year, or portion thereof, that is included in the holding period of a U.S. holder of our Common Stock, such U.S. holder could be subject to certain adverse U.S. federal income tax
consequences and could be subject to additional reporting requirements. There can be no assurance that we will not be a PFIC for U.S. federal income tax purposes for the taxable year that includes the Closing or for future taxable years.
Please see the section of the Proxy Statement/Prospectus entitled “Material U.S. Federal Income Tax Considerations for U.S. Holders—U.S. Federal
Income Tax Consequences for U.S. Holders of Aebi Schmidt Common Stock—Passive Foreign Investment Company Considerations” for a more detailed discussion with respect to our potential PFIC status and certain tax implications thereof. U.S.
holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of our Common Stock.
If a U.S. investor is treated for U.S. federal income tax purposes as owning directly or indirectly at least 10% of our Common Stock, such
U.S. investor may be subject to adverse U.S. federal income tax consequences.
For U.S. federal income tax purposes, if a U.S. investor is treated for U.S. federal income tax purposes as owning (directly, indirectly or constructively) at least 10% of the
value or voting power of our Common Stock, such U.S. investor may be treated as a “United States shareholder” with respect to Aebi Schmidt, or any of our non-U.S. subsidiaries, which could result in adverse U.S. federal income tax consequences to
such U.S. investor if Aebi Schmidt or such subsidiary is a “controlled foreign corporation.” A non-U.S. corporation is considered a controlled foreign corporation if more than 50% of (1) the total combined voting power of all classes of stock of
such corporation entitled to vote, or (2) the total value of the stock of such corporation is owned or is considered as owned by applying certain constructive ownership rules, by U.S. shareholders on any day during the taxable year of such
non-U.S. corporation. As we will have U.S. subsidiaries following the Transactions, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations under certain attribution rules regardless of whether we are treated as a
controlled foreign corporation.
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Under these rules, certain U.S. shareholders (that directly or indirectly own at least 10% of the value or voting power of our Common Stock) may be required to report annually and
include in their U.S. federal taxable income their pro rata share of our non-U.S. subsidiaries’ “Subpart F income” and, in computing their “global intangible low-taxed income,” “tested income” and a pro rata share of the amount of certain U.S.
property held by the subsidiaries regardless of whether such subsidiaries make any distributions. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such U.S. shareholder to significant monetary
penalties and may extend the statute of limitations with respect to such U.S. shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due. We do not intend to assist U.S. investors in determining
whether we or any of our non-U.S. subsidiaries are treated as a controlled foreign corporation for U.S. federal income tax purposes or whether any U.S. investor is treated as a U.S. shareholder with respect to any of such controlled foreign
corporations or furnish to any investor information that may be necessary to comply with reporting and tax paying obligations if we, or any of our non-U.S. subsidiaries, is treated as a controlled foreign corporation for U.S. federal income tax
purposes. U.S. investors who directly or indirectly own 10% or more of the combined voting power or value of our Common Stock are strongly encouraged to consult their own tax advisors regarding the U.S. tax consequences of owning or disposing of
our Common Stock.
Future changes to tax laws could adversely affect our effective tax rate, potential tax liability, operations or financial performance.
Any change in tax law, interpretation or practice, or in the terms of tax treaties, in a jurisdiction where we and our subsidiaries are subject to tax could increase the amount of
tax payable by us and our subsidiaries, either in respect of the Transactions or in respect of the operations of Aebi Schmidt and its subsidiaries. These changes could negatively affect our operations or financial performance.
Aebi Schmidt has operations in various countries that have differing tax laws and is subject to audit by domestic and foreign authorities. The effective tax rate of Aebi Schmidt
and our subsidiaries may change from year to year based on changes in the mix of activities and income earned among the different jurisdictions in which Aebi Schmidt and our subsidiaries (including Shyft after the Merger), will operate; changes
in tax laws in these jurisdictions; changes in the tax treaties between various countries in which they will operate; changes in eligibility for benefits under those tax treaties; and changes in the estimated values of deferred tax assets and
liabilities. Tax laws, regulations and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political and other conditions, and significant judgment is required in
evaluating and estimating the provision and accruals for these taxes. Such changes could result in a substantial increase in the effective tax rate on all or a portion of the income of us and our subsidiaries.
Dividends on shares of our capital stock may subject U.S. shareholders to Swiss withholding tax.
Dividends paid on shares of our capital stock generally will be subject to Swiss withholding tax at a rate of 35% on any amount that cannot be allocated to share capital as
reported on the annual standalone financial statements prepared pursuant to Swiss law (i.e., would constitute a reduction of share capital) or capital contribution reserves as reported on our annual standalone financial statements prepared
pursuant to Swiss law and recognized as such by the Swiss Federal Tax Administration. We created create through the Merger additional capital contribution reserves in the amount of the fair market value of Shyft. There can be no assurance our
shareholders will approve dividends out of capital contribution reserves. It is also possible that Swiss withholding tax rules will be changed in the future or that a change in Swiss law will adversely affect us or our shareholders, in particular
as a result of distributions out of capital contribution reserves becoming subject to additional corporate law or other restrictions. If we are unable to allocate any portion of a dividend to share capital or capital contribution reserves, we
will not be able to make distributions without subjecting our shareholders to Swiss withholding tax. For additional information, including regarding potential recovery routes, please see the section of the Proxy Statement/Prospectus entitled “Material Swiss Tax Consequences of the Ownership of Combined Company Shares—Swiss Withholding Tax.”
Repurchases of shares of our capital stock could be subject to Swiss tax, and it may not be possible to manage such share repurchases
efficiently at a sufficiently large scale.
The repurchase of shares of our capital stock for cancellation will be treated as a partial liquidation, and the proceeds from any repurchase of shares of our capital stock will
generally be subject to Swiss withholding tax at a rate of 35% on any amount that cannot be allocated to share capital (as reported on our annual standalone financial statements prepared pursuant to Swiss law) or capital contribution reserves (as
reported on our annual standalone financial statements prepared pursuant to Swiss law and recognized as such by the Swiss Federal Tax Administration). We created through the Merger additional capital contribution reserves in the amount of the
fair market value of Shyft. While the repurchase of shares of our capital stock for purposes other than for cancellation (such as to retain the repurchased shares as treasury shares for use in connection with acquisitions, equity incentive plans,
convertible debt or other instruments) would generally not be subject to Swiss withholding tax, the repurchase of shares for purposes other than cancellation would also be treated as a partial liquidation if we repurchase shares of our capital
stock in excess of certain thresholds or if we fail to sell or reissue such shares within the applicable time period after the repurchase.
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In most instances, Swiss companies with shares listed on a Swiss trading venue will repurchase shares for cancellation through a second trading line on such Swiss trading venue.
On the second trading line, the Swiss withholding tax of 35% is deducted from the portion of the purchase price that is subject to Swiss withholding tax as required by Swiss tax laws, and certain shareholders may subsequently apply for a full or
partial refund of this Swiss withholding tax. Should Aebi Schmidt not deduct the Swiss withholding tax upon repurchase (for example, in the case of a repurchase on an ordinary trading line), we would have to pay the grossed-up Swiss withholding
tax (53.8%) upon cancellation of the repurchased shares, in case of the repurchase of shares in excess of certain thresholds or failure to sell or reissue such shares within the applicable time period after the repurchase.
We do not expect to be able to use the customary second trading line process available on Swiss trading venues to repurchase shares of our capital stock because we are not
expected to list our shares on any Swiss trading venues. Moreover, opening a second trading line that would allow us to deduct the Swiss withholding tax of 35% from the purchase price is not possible on the Nasdaq. While it is possible that
companies whose shares are not listed on the SIX are allowed in the future to have second trading lines on the SIX, there is expected to be significant practical hurdles for us to efficiently manage repurchases on such second trading lines in a
sufficiently large scale given the materially different trading hours of the SIX and Nasdaq, among other things. While in certain cases we may be able to conduct repurchases through arrangements with certain financial institutions (referred to as
“virtual second trading lines”), such arrangements may be less efficient than a customary second trading line and, in any case, will be subject to confirmation in a tax ruling with the competent Swiss tax authorities. We may not be able to
receive such a Swiss tax ruling and there is no certainty that in the future a second trading line for Swiss companies with shares listed on a foreign stock exchange will be available, or that such second trading line would allow us to
efficiently manage repurchases in a sufficiently large scale, thus limiting our ability to conduct share repurchases.
Risks Relating to recent acquisition of Shyft
Our management views the following Risk Factors as the primary risks for Aebi Schmidt relating to its recent acquisition of Shyft; however, you should read the discussion under
the sections of the Proxy Statement/Prospectus entitled “Risk Factors—Risks Relating to the Merger,” which have been incorporated herein by reference.
Our future results may be adversely impacted if we do not effectively manage our expanded operations.
As a result of the Merger, the size of Aebi Schmidt’s business is significantly larger than the size of either Shyft’s or Aebi Schmidt’s respective businesses immediately prior to
the Merger. Our ability to successfully manage this expanded business will depend, in part, upon management’s ability to implement an effective integration of the two companies and our ability to manage the increased costs and complexities
associated with a combined business that is significantly larger in size and scope. There can be no assurances that our management will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits
currently anticipated from the Merger.
Each of Shyft and Aebi Schmidt incurred substantial expenses related to the completion of the Merger, and we expect to incur substantial
expenses related to the integration of the Shyft’s businesses into Aebi Schmidt.
Each of Shyft and Aebi Schmidt incurred substantial expenses in connection with the Merger, and we expect to incur substantial expenses to integrate a large number of processes,
policies, procedures, operations, technologies and systems of Shyft and Aebi Schmidt. The substantial majority of these costs will be non-recurring expenses related to the Transactions, the ancillary agreements and the facilities and systems
consolidation costs. We may incur additional costs or suffer loss of business under third-party contracts that are terminated, may suffer losses of, or decreases in orders by, customers, and may incur costs to retain certain key management
personnel and employees. We also have incurred and will continue to incur transaction fees and costs related to formulating and executing the integration plans for the combined business, and the execution of these plans may lead to additional
unanticipated costs and time delays. These incremental transaction-related costs may exceed the savings we expect to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the
businesses, particularly in the near term and in the event of any material unanticipated costs. Factors beyond the parties’ control could affect the total amount or timing of these expenses, many of which, by their nature, are difficult to
estimate accurately.
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We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in
the future or fail to maintain an effective system of internal control over financial reporting. If our remediation of the material weaknesses is not effective, or we fail to develop and maintain effective internal control over financial
reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which could harm our business and negatively impact the value of our Common Stock.
In connection with the preparation of our consolidated financial statements as of December 31, 2024 and 2023 and for the years then ended for purposes of the Proxy
Statement/Prospectus , we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Management identified the following material weaknesses in our internal control
over financial reporting:
| i. |
Lack of designing and maintaining an effective control environment commensurate with our financial reporting requirements due to a lack of sufficient number of professionals with an appropriate level of internal
controls and technical U.S. GAAP knowledge, experience and training to appropriately analyze, record and disclose accounting matters, including complex, non-routine transactions accurately and timely;
|
| ii. |
Lack of maintaining formal accounting policies and procedures, and designing and maintaining controls related to significant accounts and disclosures to achieve complete, accurate and timely financial
accounting, reporting and disclosures;
|
| iii. |
Lack of consistently establishing appropriate authorities and responsibilities related to the segregation of duties in our finance and accounting functions;
|
| iv. |
A failure to design and maintain effective information technology (“IT”) general controls over user access, change management and segregation of duties for SAP information systems in Europe that are relevant to
the preparation of our financial statements; and
|
| v. |
A failure to design and maintain effective IT general controls over user access, change management and segregation of duties for the remaining information systems (other than SAP information systems) that are
relevant to the preparation of our financial statements.
|
The above IT general control deficiencies did not result in a material misstatement to the financial statements; however, these IT general control deficiencies could impact maintaining effective
segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the
effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.
We are developing a plan to remediate the material weaknesses identified, including: (a) providing relevant U.S. GAAP technical accounting, internal controls over financial
reporting and SEC financial reporting requirements training for personnel, including hiring additional personnel to strengthen the accounting and finance functions; and (b) designing and implementing a financial reporting control framework,
including management review controls, together with IT general and application controls for all systems which materially impact financial reporting.
Following the identification of the identified material weaknesses, we have initiated certain remediation procedures. For example, we are in the process of (i) engaging an
external consultant with extensive expertise in internal controls, accounting and SEC matters to assist we management in enhancing our overall internal control framework and (ii) reviewing the gap-analysis performed by we to determine the order
in which the changes should be implemented by we and the timing of such changes. While we are working to remediate the identified material weaknesses as timely and efficiently as possible, at this time we cannot provide an estimate of the time we
will take to complete this remediation plan. We cannot assure you that these remediation measures will significantly improve or remediate the material weaknesses above. As of the date of this Quarterly Report, the material weaknesses have not
been remediated.
During the fiscal year ended December 31, 2024, we have not incurred material costs as part of our remediation efforts; however, we cannot provide an estimate of costs expected to
be incurred in connection with the implementation of this remediation plan. We expect the remediation to be time-consuming and place significant demands on our financial and operational resources. The implementation of our remediation measures
will require validation and testing of the design and operating effectiveness of our internal controls over a sustained period.
We cannot assure that we will be successful in remediating the material weaknesses identified above. The failure to correct the material weaknesses or the failure to discover and
address any other material weaknesses or deficiencies could result in inaccuracies in the financial statements and impair the ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.
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Aebi Schmidt was a Swiss private company prior to the Merger and was not required to comply with Section 404 of the
Sarbanes-Oxley Act. Therefore, neither management nor an independent registered public accounting firm has performed an evaluation of the effectiveness of our internal control over financial reporting in accordance with the provisions of the
Sarbanes-Oxley Act. Following the Closing and our U.S. listing, as a public company, our management will be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404(a) of the
Sarbanes-Oxley Act and is expected to become subject to auditor attestation requirements pursuant to Section 404(b) of the Sarbanes-Oxley Act, beginning with the filing of Combined Company’s Annual Report on Form 10-K for the year ending
December 31, 2026.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time
to compliance with our public company responsibilities and corporate governance practices.
As a public company, we will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank
Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective
disclosure and financial controls and corporate governance practices. We expect that the we will need to hire and train additional accounting, finance, and other personnel in connection with our efforts to comply with the requirements of being a
public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. Our management and other personnel have and will also need to continue to devote a
substantial amount of time to compliance with the additional reporting requirements of the Exchange Act. These requirements have and will continue to increase our legal and financial compliance costs and will make some activities more
time-consuming and costly. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
We are an emerging growth company and our compliance with the reduced reporting and disclosure requirements applicable to emerging growth
companies could make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Acts of 2012 (the “JOBS Act”), and may remain an emerging growth company for up to five years. For as
long as we are an emerging growth company, we will not be required to comply with certain requirements that are applicable to other public companies that are not emerging growth companies, including the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, and may also take advantage of the reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements and the exemptions from the requirements of
holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved. As a result, the information we provide shareholders will be different than the information
that is available with respect to other public companies. In the Proxy Statement/Prospectus, we did not include all of the executive compensation related information that would be required if we were not an emerging growth company, and we have
provided only two years of audited financial statements and two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If some investors find our Common Stock less attractive as a result, there
may be a less active trading market for our Common Stock, and our stock price may be more volatile.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such
time as those standards apply to private companies. We have not elected to use this extended transition period. We expect to lose “emerging growth company” status as of December 31, 2025.
The New Credit Facilities Agreement contains, and agreements governing future indebtedness may contain, restrictive covenants that may
impair our ability to access sufficient capital and operate our business.
The New Credit Facilities Agreement contains various provisions that limit our ability (subject to a number of exceptions) to, among other things:
| • |
incur additional indebtedness;
|
| • |
incur certain liens;
|
| • |
consolidate or merge with other parties;
|
| • |
alter the business conducted by us and our subsidiaries taken as a whole;
|
| • |
make investments, loans, advances, guarantees and acquisitions;
|
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| • |
sell, lease or transfer assets, including capital stock of our subsidiaries;
|
| • |
enter into certain sale and leaseback transactions;
|
| • |
repay any subordinated indebtedness we may issue in the future;
|
| • |
amend the terms of certain unsecured or subordinated debt;
|
| • |
engage in transactions with affiliates; and
|
| • |
enter into agreements restricting our subsidiaries’ ability to pay dividends.
|
In addition, the restrictive covenants in the New Credit Facilities Agreement require us to maintain specified financial ratios and other business or financial conditions. Our
ability to comply with these financial ratios or other covenants may be affected by events beyond our control, and our failure to comply with these ratios or other covenants could result in an event of default. These covenants may affect our
ability to operate and finance our business as we deem appropriate. Our inability to meet obligations as they become due or to comply with various financial covenants contained in the instruments governing our current or future indebtedness could
constitute an event of default under the instruments governing our indebtedness. If there were an event of default under the New Credit Facilities Agreement, or any future instruments governing our indebtedness, the holders of the affected
indebtedness could declare all of the affected indebtedness immediately due and payable, which, in turn, could cause the acceleration of the maturity of all of our other indebtedness. We may not have sufficient funds available, or we may not have
access to sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additional financing, the terms of the financing may not be favorable to us. In addition, we have pledged the equity securities of certain of
our material subsidiaries as security for our obligations under the New Credit Facilities Agreement. If amounts outstanding under the New Credit Facilities Agreement were accelerated, our lenders could foreclose on those pledges, and we could
lose a substantial part of our assets. Any event of default under the instruments governing our indebtedness could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to our Common Stock
Our Common Stock has a limited a history of trading and the market price and trading volume of our Common Stock may be volatile.
Because Aebi Schmidt was a private company prior to the Merger, our Common Stock has a limited trading history, and the market price and trading volume of our Common Stock may be
volatile.
We are parties to the Relationship Agreements, which provide the Specified Stockholders with certain rights over company matters.
Concurrently with the closing of the Merger (the “Closing”), we entered into the Relationship Agreements with the Specified
Stockholders. The Relationship Agreements establish certain rights, restrictions and obligations of the Specified Stockholders, and set forth other arrangements relating to Aebi Schmidt, including the right of PCS Holding AG (“PCS” and,
together with Mr. Peter Spuhler, the “PCS Parties”) to designate up to four individuals for nomination to the our Board, subject to the PCS Parties maintaining certain beneficial ownership of shares of our Common Stock. Pursuant to the
Relationship Agreements, after the second anniversary of the Closing, the Specified Stockholders may increase their stake in Aebi Schmidt, which would lead to more influence of the Specified Stockholders in our general meeting of shareholders.
Also, the PCS Relationship Agreement can be terminated by PCS after the fourth anniversary of the Closing, and if the PCS Relationship Agreement were to be terminated, the PCS Parties could nominate more members to our Board than what is
envisaged by the PCS Relationship Agreement. The interests of the parties to the Relationship Agreements may differ from those of other holders of our Common Stock. For more information, please see the section of the Proxy Statement/Prospectus
entitled “Other Related Agreements—Relationship Agreements.”
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Aebi Schmidt is a Swiss corporation, and shareholders may not have the same rights
and protections generally afforded to shareholders of U.S. corporations.
Swiss law and the Amended Articles may not grant our shareholders certain of the rights and protections generally afforded to shareholders of U.S. corporations. In particular,
Swiss corporate law limits the ability of a shareholder to challenge resolutions or actions of the board of directors in court. Under Swiss law, shareholders generally cannot bring a suit to reverse a decision by the board of directors, but may
seek damages for breaches of duty by the board of directors. Furthermore, remedies against transactions involving conflicts of interest or other procedural flaws may be limited if a claimant cannot prove that the benefits inuring to us are
manifestly disproportionate to the consideration rendered in return.
The PCS Parties control a significant number of shares of our Common Stock, providing them with substantial influence over our business.
The PCS Parties beneficially own approximately 35% of the issued and outstanding shares of our Common Stock and four directors nominated by the PCS Parties serve on our Board,
pursuant to the PCS Relationship Agreement. As a result, the PCS Parties may have substantial influence over matters requiring approval by our shareholders, including the election and removal of directors, amendments to the Amended Articles, any
proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. The PCS Parties may have interests that are different from those of other stockholders.
The PCS Parties’ ownership of the shares of our Common Stock may adversely affect the trading price for our Common Stock to the extent investors perceive disadvantages in owning
shares of a company with a significant stockholder or if the PCS Parties take any action with our shares that could result in an adverse impact on the price of our Common Stock, including a sale of any portion of their shares of our Common Stock.
Our shares are not listed in Switzerland, our home jurisdiction. As a result, shareholders may not benefit from certain provisions of Swiss
law that are designed to protect shareholders in a public takeover offer or a change-of-control transaction.
Because our shares are listed exclusively on Nasdaq and not in Switzerland, our shareholders will not benefit from the protection afforded by certain provisions of Swiss law that
are designed to protect shareholders in the event of a public takeover offer or a change-of-control transaction. For example, the Swiss takeover regime imposes a duty on any person or group of persons who acquires more than one-third of a
company’s voting rights to make a mandatory offer for all of the company’s outstanding listed equity securities. In addition, the Swiss takeover regime imposes certain restrictions and obligations on bidders in a voluntary public takeover offer
that are designed to protect shareholders. However, these protections are applicable only to issuers that list their equity securities in Switzerland, and because our shares are listed exclusively on Nasdaq, such Swiss law protections are not
applicable to Aebi Schmidt. While the Amended Articles provide for clauses aiming to provide similar takeover protections, there is no guarantee that such clauses will result in the same or similar level of protection of minority shareholders as
would be the case if Swiss law would apply directly. Furthermore, since Swiss law will restrict our ability to implement rights plans or U.S.-style “poison pills,” our ability to resist an unsolicited takeover attempt or to protect minority
shareholders in the event of a change-of-control transaction may be limited. Therefore, our shareholders may not be protected to the same degree in a public takeover offer or a change-of-control transaction as are shareholders in a Swiss company
listed in Switzerland.
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The Amended Articles designate the courts at the location of our registered seat as the exclusive forum for certain types of actions and
proceedings that may be initiated by the our shareholders.
The Amended Articles provide that (except with respect to any disputes arising under the Securities Act, the Exchange Act and any rules and regulations promulgated thereunder) the
exclusive jurisdiction for any disputes arising from company matters (including but not limited to disputes between individual shareholders and Aebi Schmidt or our corporate bodies, as well as between us and our corporate bodies, or between the
corporate bodies themselves) is at our registered seat in Frauenfeld, Switzerland. Any person or entity purchasing or otherwise acquiring our shares will be deemed to have notice of and consented to the provisions of the Amended Articles,
including the exclusive forum provision. As a result, our shareholders may be required to bring certain legal actions or proceedings exclusively in Swiss courts, which may be less convenient and more costly than courts in other jurisdictions,
including the United States. Furthermore, the jurisdiction clause in the Amended Articles may limit the ability of our shareholders to initiate legal proceedings against Aebi Schmidt or our directors, officers, or other representatives in
jurisdictions of their choosing. It may also discourage lawsuits or derivative actions, even if such claims would otherwise be permissible under applicable laws. Moreover, Swiss courts may apply legal principles or procedural rules that differ
from those in U.S. courts, potentially leading to outcomes less favorable to shareholders compared to an action or proceeding brought in a U.S. court.
We cannot guarantee the timing, amount or payment of dividends on shares of our capital stock.
While we expect to pay dividends, the timing, declaration, amount and payment of any future dividends on shares of our capital stock will fall within the discretion of our Board.
There can be no assurance that we will pay or declare dividends in the future. Under Swiss law, we may only pay dividends if (i) we has sufficient net income from the immediately preceding fiscal year, (ii) we has brought forward net income from
prior fiscal years or (iii) we has otherwise freely distributable reserves, each as evidenced by our audited annual standalone financial statements prepared pursuant to Swiss law, after allocations of net income to statutory retained earnings as
required by Swiss law and by the Amended Articles. See section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended Articles—Dividends and Distributions.”
Additionally, any decision by our Board to recommend the payment of a dividend will depend on many factors, such as our financial condition, earnings, corporate strategy, credit rating, capital requirements, debt service obligations, debt
covenants, industry practice, legal requirements, regulatory constraints and other factors that our Board deems relevant. Additionally, the declaration, timing and amount of any dividends to be paid by us will be subject to approval by our
shareholders at the relevant general meeting of shareholders. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and access to the capital markets. Further, under Swiss law, although shareholders must
approve dividend distributions in advance, the determination of the record and payment dates may be delegated to the company’s board of directors. Shyft currently anticipates that our Board will adopt a practice of recommending an annual dividend
paid in equal quarterly installments. If our Board were to do so, Shyft expects that the policy would be effected by seeking approval of our shareholders at the annual general meeting for an annual dividend distribution to be paid in four
quarterly installments on dates determined by our Board. However, any specific decisions in the future regarding dividends and dividend policy will be determined from time to time by our Board with the approval of the shareholders. Shyft cannot
guarantee that we will pay a dividend in the future.
Swiss law imposes certain restrictions on our ability to repurchase our shares.
Swiss law limits our ability to hold or repurchase our shares of capital stock. We and our subsidiaries may only repurchase shares of our capital stock to the extent that (i) we
have freely distributable reserves in the amount of the purchase price (as reported on the annual standalone financial statements prepared pursuant to Swiss law) and (ii) the aggregate nominal amount (par value) of all shares of our capital stock
held by us and our subsidiaries does not exceed 10% of our share capital (excluding any treasury shares dedicated for cancellation pursuant to a shareholder-ratified repurchase program) registered in the Commercial Register. For more information,
please see the section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended Articles—Repurchase of Combined Company Shares.” As a result, should
we choose to repurchase shares of our capital stock in the future, our shareholders would be required to periodically approve a reduction in the share capital through the cancellation of designated blocks of repurchased shares held in treasury
and may from time to time, as necessary, in a separate vote, have to approve share repurchase programs. If our shareholders do not approve the cancellation of repurchased shares or, if necessary, approve a proposed share repurchase program, we
may be unable to return capital to shareholders through share repurchases.
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Certain provisions of the Amended Articles and Swiss law may limit our flexibility to raise capital, issue dividends and otherwise manage
ongoing capital needs.
The rights of our shareholders will be governed by Swiss law and the Amended Articles. Swiss law requires approval by shareholders for certain corporate actions over which a board
of directors would have authority in some other jurisdictions. For example, Swiss law provides that the payment of dividends and other distributions and the cancellation of treasury shares must be approved by shareholders. Swiss law also requires
that shareholders resolve to, or authorize the board of directors to, increase the share capital. While shareholders may authorize a board of directors to increase or reduce the company’s share capital by introducing a capital band into the
company’s articles of association, Swiss law limits this capital band to between 50% and 150% of the issued share capital as recorded in the Commercial Register at the time of the introduction of the capital band. The capital band, furthermore,
has a limited duration of up to five years unless renewed by shareholders (by holders of at least two-thirds of the votes represented at a general meeting of shareholders) from time to time. According to the Amended Articles, our Board will be
authorized to increase our share capital to a maximum of $116,299,384 and/or reduce it to a minimum of $62,080,000 without a shareholder vote. However, this capital band authorization will expire on February 12, 2030, at which point a new capital
band must be approved by shareholders before our Board may increase and/or reduce our share capital under a capital band. For more information, please see the section of the Proxy Statement/Prospectus entitled “Description
of the Capital Stock of the Combined Company and Amended Articles—Ordinary Capital Increase, Conditional Share Capital and Capital Band.”
Additionally, Swiss law grants preemptive rights to existing shareholders to subscribe for new issuances of shares and advance subscription rights for convertible bonds or similar
instruments with conversion or option rights. For more information, please see the section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended
Articles—General—Preemptive Rights.”
Swiss law also does not provide as much flexibility in the various terms that can attach to different classes of shares as the laws of some other jurisdictions. These Swiss law
requirements relating to our capital management may limit our flexibility, and situations may arise where greater flexibility would provide substantial benefits to our shareholders.
Certain provisions in the Amended Articles may limit or preclude shareholders’ ability to exercise control over us.
The Amended Articles will contain provisions that are intended to limit the ability of shareholders to exercise control over Aebi Schmidt. For example, the Amended Articles
provide that no person may, directly or indirectly, formally, constructively or beneficially own or otherwise control voting rights with respect to 49% or more of our share capital (as registered in the Commercial Register). For more information,
please see the section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended Articles—Voting Rights and Voting Restrictions—Voting Restrictions.”
Shareholders may not be able to exercise preemptive rights in future issuances of equity or other securities that are convertible into
equity.
Under Swiss law, shareholders may receive certain preemptive rights to subscribe on a pro rata basis to issuances of equity or other securities that are convertible into equity.
For more information, please see the section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended Articles—General—Preemptive Rights.” Due to
laws and regulations in their respective jurisdictions, however, non-Swiss shareholders may not be able to exercise such rights unless we take action to register or otherwise qualify the rights offering under the laws of such shareholders’
jurisdiction. Shyft cannot give any assurance that we will register or otherwise qualify the offering of subscription rights or shares under the law of any jurisdiction where the offering of such rights is restricted. If shareholders in such
jurisdictions were unable to exercise their subscription rights, their ownership interest in us would be diluted.
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Index
Holders of shares of our capital stock may not be able to exercise certain shareholder rights if they are not registered as shareholders of
record on our Share Register.
Our capital stock is issued as uncertificated securities, which are held either in the name of Cede & Co. through the
Depository Trust Company, the U.S. central securities depositary (“DTC”), or directly registered on our share register (our “Share Register”). For more information, please see the section of the Proxy Statement/Prospectus entitled “Description of the Capital Stock of the Combined Company and Amended Articles—General—Forms of Holding Combined Company Shares.” Given that shares of our
capital stock will primarily be held through DTC, SIX SIS AG, the national central securities depository of the Swiss financial market and an international central securities depository (“SIX SIS”), will not serve as the primary central
securities depositary for shares of our capital stock, and any shares of our capital stock held through SIX SIS, including those received in the Merger, will be derivatives of shares held through DTC. Therefore, and contrary to common practice
for other Swiss companies with shares listed on the SIX Swiss, holders of our shares will not be eligible for automated registration on our Share Register under the system of SIX SIS (AREG-Data).
In relation to us, only those shareholders directly registered in our Share Register will be recognized as shareholders. Voting rights may only be exercised by holders of shares
of our capital stock registered with voting rights in our Share Register. While holders of shares who are not registered as shareholders of record on our Share Register will be able to receive dividends and in certain cases, if duly authorized by
a proxy issued by the relevant holder of record and depending on their bank or broker, vote their shares at general meetings of shareholders, certain other shareholder rights (such as the right to request that a general meeting of shareholders be
called, the right to put items on the agenda of a general meeting of shareholders, the right to sue our corporate bodies, or the right to inspect our books and records) will not be available to such holders of shares who are not registered as
shareholders of record on our Share Register.
U.S. shareholders may not be able to obtain judgments or enforce civil liabilities against us or our executive officers or members of our
Board.
We are organized under the laws of Switzerland, and our jurisdiction of incorporation is Switzerland. In addition, certain of our directors and officers reside outside the United
States and certain of our assets and the assets of such persons are located in jurisdictions outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon such
persons, obtain documents or other discovery in connection with any legal proceedings against such persons in the United States or enforce against them judgments obtained in U.S. courts.
Switzerland and the United States do not have a treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters. The recognition and
enforcement in Switzerland of a judgment of the courts of the United States are governed by the principles set forth in the Swiss Federal Act on Private International Law. This statute provides in principle that a judgment rendered by a non-Swiss
court may be enforced in Switzerland only if:
| • |
the non-Swiss court had jurisdiction pursuant to the Swiss Federal Act on Private International Law;
|
| • |
the judgment of such non-Swiss court has become final and non-appealable;
|
| • |
the judgment does not contravene Swiss public policy;
|
| • |
the court procedures and the service of documents leading to the judgment were in accordance with the due process of law; and
|
| • |
no proceeding involving the same position and the same subject matter was first brought in Switzerland, or adjudicated in Switzerland, or was earlier adjudicated in a third state and this decision is
recognizable in Switzerland.
|
In particular, there is doubt as to the enforceability in Switzerland of original actions, or in actions for enforcement of judgments of U.S. courts, of civil liabilities to the
extent predicated upon the civil liability provisions of the federal and state securities laws of the United States. Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities
laws, may not be allowed in Swiss courts as contrary to public policy. Also, provisions of Swiss law may be applicable regardless of any other law that would otherwise apply.
Page 57 of 60
Index
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
[The Company did not make any unregistered sales of equity securities during the second quarter of 2025.]
| Item 5. |
Other Information.
|
Pre-Closing Dividend
On June 23, 2025, the Company’s Board of Directors resolved to propose to the general meeting of the shareholders the distribution of a dividend of CHF 2,475,733.34 (representing CHF 0.46 per share
as of such date), to be made to shareholders of record as of June 23, 2025, with a payment date of June 30, 2025, subject to approval by the Company’s stockholders as required under Swiss law. The general meeting of the shareholders approved the
dividend at a shareholder meeting being held on June 28, 2025, and such dividend was paid on June 30, 2025.
Rule 10b5-1
During the quarter ended June 30, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
Page 58 of 60
Index
| Item 6. |
Exhibits.
|
| (a) |
Exhibits. The following exhibits are filed as a part of this Quarterly Report on Form 10-Q:
|
|
Exhibit No.
|
Document
|
|
10.1
|
Lockup Letter, dated April 5, 2025, by and between Aebi Schmidt and John Dunn, incorporated by reference from Amendment No. 1 to Aebi
Schmidt’s Registration Statement on Form S-4 filed on May 5, 2025
|
|
10.2
|
Form of Bonus Retention Agreement between Aebi Schmidt and certain officers of Aebi Schmidt and its subsidiaries, including Barend Fruithof,
Thomas Schenkirsch and Steffen Schewerda, incorporated by reference from Aebi Schmidt’s Quarterly Report on Form 10-Q filed June 27, 2025 +
|
|
10.3
|
Second Amended and Restated Shareholder Loan Agreement (2015) by and between the Company and PCS Holding AG, dated as of June 26, 2025,
incorporated by reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
| 10.4 |
Second Amended and Restated Shareholder Loan Agreement (2018) by and between the Company and PCS Holding AG, dated as of June 26, 2025,
incorporated by reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
| 10.5 |
Second Amended and Restated Shareholder Loan Agreement (2015) by and between the Company and Gebuka AG (2015), dated as of June 26, 2025,
incorporated by reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
| 10.6 |
Second Amended and Restated Shareholder Loan Agreement (2018) by and between the Company and Gebuka AG, dated as of June 26, 2025,
incorporated by reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
| 10.7 |
Subordination Agreement, by and between the Company and UBS Switzerland AG and PCS Holding AG, dated as of June 26, 2025, incorporated by
reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
| 10.8 |
Subordination Agreement, by and between the Company and UBS Switzerland AG and Gebuka AG, dated as of June 26, 2025 (personal information
redacted), incorporated by reference from, Aebi Schmidt’s Current Report on Form 8-K filed July 1, 2025
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
| + |
Management contract or compensatory plan or agreement.
|
Page 59 of 60
Index
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Date: August 14, 2025
|
Aebi Schmidt Holding AG
|
|
|
By:
|
/s/ Barend Fruithof
|
|
|
Name:
|
Barend Fruithof
|
|
|
Title:
|
Group CEO
|
|
|
By:
|
/s/ Marco Portmann
|
|
|
Name:
|
Marco Portmann
|
|
|
Title:
|
Group CFO
|
|
Page 60 of 60
Source:
FAQ
What were Aebi Schmidt's (AEBI) sales for the quarter ended June 30, 2025?
Aebi Schmidt reported $277.7 million in sales for the three months ended June 30, 2025, a 4.2% increase versus the prior-year quarter.
Did Aebi Schmidt (AEBI) report net income or a loss for Q2 2025 and the six months?
The company reported a net loss of $2.3 million for the quarter and a net loss of $0.3 million for the six months ended June 30, 2025.
What is Aebi Schmidt's (AEBI) Adjusted EBITDA and margin for the six months ended June 30, 2025?
Adjusted EBITDA for the six months was $42.6 million with an Adjusted EBITDA margin of 8.1%.
What were the key terms of the Shyft acquisition disclosed by Aebi Schmidt (AEBI)?
Aebi Schmidt closed the Shyft merger on July 1, 2025, with preliminary total consideration of approximately $442.5 million and issued 36,350,634 shares of Aebi Schmidt common stock to Shyft shareholders.
How much debt did Aebi Schmidt (AEBI) have as of June 30, 2025 and what financing was put in place at closing?
As of June 30, 2025 total debt was $467.96 million (long-term debt $440.98 million). At the Shyft closing, the company obtained a new $600 million credit facilities agreement.
Does the company disclose any litigation related to the Merger?
The filing states that shareholder complaints were filed relating to the proxy and that the Combined Company reached an agreement to resolve that litigation on July 25, 2025; a liability had been accrued as of June 30, 2025 and the settlement was not expected to be material to consolidated financial statements.
Aebi Schmidt Hldg Ag
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Aug 14, 2025
[8-K] Aebi Schmidt Holding AG Reports Material Event
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Farm & Heavy Construction Machinery
Construction Machinery & Equip
Switzerland
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