Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
A discussion of changes in (i) our results of operations, (ii) our segment results of operations and (iii) our cash flows from operating, investing and financing activities for the year ended December 31, 2024 compared with the year ended December 31, 2023 has been omitted from this Annual Report but may be found under the headings (i) “Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations,” (ii) “Management's
Discussion and Analysis of Financial Condition and Results of Operations - Segment Results of Operations” and (iii) “Management's Discussion and Analysis of Financial Condition and Results of Operations - Cash Flows,” respectively, included in the Company's Registration Statement on Form S-4/A (Fi le No. 333-286373) filed with the SEC on May 12, 2025.
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 audited consolidated financial statements as of and for the years ended December 31, 2025, 2024 and 2023, and the related notes thereto, which are included elsewhere in this Annual Report. Unless the context requires otherwise, references to “Aebi Schmidt” in this section of the Annual 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 sections entitled “Forward-Looking Statements” and “Risk Factors”.
Overview
Aebi Schmidt is a leading global manufacturer of specialty vehicles. We are headquartered in Switzerland and employ approximately 5,700 people. We operate in 17 countries through our own sales and service organizations, with more than 70 locations worldwide, including over a dozen production facilities and a dense network of upfitting and service centers. Through established partnerships with dealers, we are represented in more than 90 additional countries globally. Our core offerings include solutions and equipment for snow removal and de-icing, street and runway sweepers, truck and RV chassis, as well as truck bodies and vehicle upfitting for a wide range of commercial fleets and vocations. Furthermore, we produce specialty vehicles and equipment for municipal and airport maintenance services as well as for the cultivation of steep and challenging terrain.
On July 1, 2025, Aebi Schmidt acquired 100% of the outstanding equity interests of Shyft, a niche market leader in specialty vehicle manufacturing and assembly for the commercial and recreational vehicle industries, through the Merger. The Merger involved 100% of the voting equity interests of Shyft, with the primary reasons for the combination being to enhance our product offerings in specialty vehicle solutions, develop our market share in North America, and the leverage Shyft's innovative design and manufacturing capabilities.
Aebi Schmidt has a track record in continuous profitable growth. For the year ended December 31, 2025, its sales increased by $440.7 million, or 41%, to $1,526.6 million in comparison to the year ended December 31, 2024, due in part to the Merger with Shyft in July 2025. For the year ended December 31, 2024, its Sales increased by $70.4 million, or 7%, to $1,086.0 million in comparison to the year ended December 31, 2023. Operating income increased by $4.6 million, or 7%, to $73.1 million in the year ended December 31, 2025 in comparison to the year ended December 31, 2024, and increased by $9.5 million, or 16%, to $68.5 million in the year ended December 31, 2024 in comparison to the year ended December 31, 2023. Based on its strategy and strong customer orientation, Aebi Schmidt is prepared to continue the growth path in the foreseeable future.
North America
Aebi Schmidt North America segment offers a wide range of vehicles, equipment and services primarily across four of our five lines of business: Airport & Chassis, Commercial Trucks, Goods Transport, and Municipal. 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 . T he Merger with Shyft in July 2025 allowed Aebi Schmidt to penetrate additional markets and product lines, as well as combine Aebi Schmidt’s commercial business with Shyft’s fleet and commercial business, optimizing Aebi Schmidt’s purchasing and production capacity.
• Airport & Chassis . MB and Schmidt are both leading in equipment for airport runway maintenance, offering snow removal and de-icing solutions, multi-tasking machines, and runway sweepers. Spartan RV Chassis also fit into this line of business.
• Commercial Trucks . With an outstanding variety of different value propositions, Monroe, Magnum, Strobes-R-Us and Meyer either build or upfit work trucks for commercial and municipal fleets and individual business owners.
• Goods Transport . Utilimaster designs and builds fleet solutions and offers a support and service network throughout the life span of vans and trucks. Our EV solutions are marketed under the Blue Arc brand. Towmaster equipment trailers are also included in this line.
• Municipal . Both Monroe and Swenson provide snow & ice control equipment and liquid anti-icing systems. Our Municipal line also include electric Sweepers from Schmidt, Pavement Marking Solutions from MB and ELP’s full range of snow removal equipment, dump bodies, interchangeable body system, and more.
Europe and the ROW
In Europe and ROW, Aebi Schmidt offers a wide range of vehicles, equipment and services primarily across three of our five lines of business: Airport & Chassis, Municipal and Agriculture. Aebi Schmidt has long-lasting relationships with airports and municipalities across Europe and with international customers. Aebi Schmidt offers a wide range of products tailored to European and international markets, including snowplows, street sweepers, multifunctional vehicles, and specialized equipment for airport operations. Aebi Schmidt has established a strong reputation for quality and reliability, with innovative solutions that enhance efficiency and sustainability through its technological features.
• Airport & Chassis . Primarily Airport Maintenance Teams rely on Schmidt Technology for decades. Its jet, compact and high-speed sweepers, sprayers and blowers provide for airport operations in both winter and summer. Meanwhile they are almost all equipped with state-of-the-art control systems, some of which allow automated or autonomous operations. Schmidt also offers hydraulic equipment and control systems for this line of business .
• Municipal . Schmidt combines a powerful range of expertise across the many municipal requirements in both summer and winter. Schmidt launched its first sweeper in the 1960's and has since incorporated technologies like pre-wetted salt spreading from Nido, narrow-track multipurpose transporters from Ladog, Scandinavian plowing technologies and more from Arctic or Tellefsdal. A constantly growing number of vehicles and solutions do meanwhile also come with full electric drive, supporting municipalities to meet their emission targets.
• Agriculture . Aebi provides solutions to cultivate steep and challenging terrain efficiently and safely. Aebi Slope Tractors, Transporter or Motor Mowers are used by mountain farming businesses, municipalities and contractors.
Trends and Key Factors Affecting Performance
As a manufacturer of vehicles, equipment, and attachments for vehicles, Aebi Schmidt operates within the economic and regulatory environment surrounding the commercial trucks and trailers, snow and ice clearing, street sweeping, airport snow and ice clearing, and agriculture industries. Aebi Schmidt’s performance and results of operations are driven by key external trends and factors, including:
Growing Trucking Industry
Aebi Schmidt’s commercial trucks and trailers business is heavily dependent on the trucking industry. The growth of the business segment is partly driven by the overall growth of the economy. Aebi Schmidt’s ability to capitalize on the increased demand from the trucking industry will significantly impact its sales, sales growth, and financial performance.
Changes in Airport Traffic and Operating Airports
Aebi Schmidt’s airport snow and ice clearing business is dependent on overall airport traffic and the number of operating airports. As Aebi Schmidt provides critical infrastructure for airports to comply with strict safety and operational standards set by aviation authorities, Aebi Schmidt anticipates the need for its equipment to continue as failure by airports to meet these standards due to inadequate snow and ice clearing can result in penalties and operational restrictions. During slower periods of national and global travel, Aebi Schmidt’s business may experience decline due to fewer flights, and airport closures can cause lower demand for its products. However, as demand for air travel increases and airports are built or expanded, Aebi Schmidt expects to have an advantage over its competitors as Aebi Schmidt has existing relationships with airports and a proven track record for providing equipment that is compliant with aviation standards. Aebi Schmidt’s ability to maintain these relationships and provide equipment that meets the needs of airports in various jurisdictions may have a material impact on its future sales and sales growth. Additionally, Aebi Schmidt’s business relies on weather conditions and thrives during periods of heavy snow and icing.
Municipal Growth and Urbanization
Aebi Schmidt’s municipal snow and ice clearing business and municipal street sweeping business is expected to be impacted by increasing urbanization. As municipalities continue to develop and expand, Aebi Schmidt anticipates growth for its business due to increases in roads that require maintenance. As cities expand and populations increase, there is a
heightened need for effective infrastructure maintenance, including road cleaning, snow removal, and other municipal services. Aebi Schmidt expects that increased urbanization will lead to its ongoing collaboration with municipalities to address their unique needs. Aebi Schmidt’s ability to meet the needs of various municipalities depending on their location and infrastructure may have a material impact on its future sales and sales growth.
Climate Change and Weather Events
Demand for Aebi Schmidt’s snow and ice clearing products are in part affected by climate change and weather events. As temperatures rise, shorter winters and less snow fall could cause a decrease in demand for Aebi Schmidt’s equipment. Aebi Schmidt’s ability to monitor and adapt to different product needs based on the changing climate may have a material impact on its future sales and financial performance. At the same time, sustainability and efficiency play a crucial role in Aebi Schmidt’s operations. Aebi Schmidt’s machines are designed to optimize performance by applying the precise amount of additives needed, ensuring both environmental responsibility and cost-effectiveness.
Price of Raw Materials and Components
Aebi Schmidt sources its raw materials and manufactured components from suppliers both domestically and internationally. Aebi Schmidt’s business approach is based on local presence which is also reflected on its sourcing strategy: Aebi Schmidt sources primarily from North American suppliers for its North American business and from European suppliers for its European business. However, Aebi Schmidt’s supply chain may have tier 2 or tier 3 suppliers that are located in other geographic regions, such as China. The prices of key raw materials, including steel or aluminum may experience volatility due to economic conditions outside of Aebi Schmidt’s control, such as tariffs and which may impact its overall profitability. Aebi Schmidt’s ability to control its exposure to fluctuations in raw materials prices through long-term supply contracts and other instruments, as well as through its contract negotiations with suppliers, may have a material impact on its costs and financial performance.
Increasing Costs of Production
The performance of Aebi Schmidt’s manufacturing operations is driven by various factors influencing production. Unplanned downtime due to labor supply, safety incidents, or supply chain issues could significantly decrease production and impact the number of products Aebi Schmidt is able to produce and sell. Increasing labor costs and increasing energy costs could lead to an increased cost of production, which could negatively impact Aebi Schmidt’s results of operations if increased costs cannot be passed on to the markets. Supply chain challenges, including transportation delays and shortages of certain materials, may lead to increased costs for sourcing raw materials. Aebi Schmidt continues to monitor a variety of external factors, such as supply chain disruptions and labor pressures, and its ability to adapt to these factors may have a material impact on its costs and financial performance.
Changes in Global Market Conditions
Global market conditions, including inflation, recession, interest rates, tariffs, trade laws, ongoing conflicts in the Middle East and Ukraine, and governmental regulations, may create challenges for Aebi Schmidt’s business. The overall economic climate has a direct impact on Aebi Schmidt’s sales and revenue, including future top-line growth. Fluctuations in interest rates can influence Aebi Schmidt’s borrowing costs and consumer financing options. An increase in interest rates would lead to higher costs of capital, which may impact Aebi Schmidt’s investment strategies and expansion plans.
Tariffs and trade laws can affect Aebi Schmidt’s cost structure and market access. The imposition of tariffs on imported goods may increase Aebi Schmidt’s costs for raw material and components, which may materially impact its profitability. While sourcing primarily from local suppliers, such as U.S. suppliers for U.S. manufacturing, may provide some protection from tariffs and trade barriers, such tariffs and trade barriers may also increase the cost of locally sourced materials as the overall supply in the local market may be limited. Further, some local suppliers may not be able to supply their materials and components as they may rely on international sub-suppliers. To mitigate short-term price volatility, Aebi Schmidt seeks to lock in key raw materials for up to the next month to two years through selective and dedicated supplier contracts. Aebi Schmidt primarily sells products manufactured in the United States to customers in its North American segment and products manufactured in Europe to customers in Europe and other parts of the world. Tariffs and trade barriers may affect Aebi Schmidt’s business, directly or indirectly, through the general level of economic activity, the impact on local prices, and the availability of materials and components, among other factors.
Changes in Regulatory Environment
Aebi Schmidt operates in economies regulated by federal, state, and international environmental laws which may affect its operations, use and/or disposal of materials, and emissions. Changes in regulations require Aebi Schmidt to adapt its operations to comply with additional regulations, which may increase its costs and investments in new technologies. Aebi Schmidt must ensure that its products comply with emissions regulations set by governments and international bodies. Aebi Schmidt also incorporates safety features into its equipment to comply with industry and regulatory safety standards,
and the introduction of new standards may involve additional design and engineering efforts on Aebi Schmidt’s part, which could increase its research and development costs. Additional initiatives and legislation could also lead to increased legal, administrative, or environmental costs. As Aebi Schmidt expands its geographic footprint, Aebi Schmidt may be subject to additional regulations that are more stringent than the ones it is currently subject to.
Due to its established economies of scale, Aebi Schmidt expects to have a competitive advantage in its ability to adequately comply with any additional regulatory requirements, while new entrants into the industry or smaller competitors may struggle to comply with such environmental, safety, and other requirements. Aebi Schmidt’s ability to maintain this competitive advantage may have a significant impact on its ability to expand its geographic footprint and market share in existing markets. Furthermore, as a global supplier, Aebi Schmidt must navigate varying regulatory requirements across different countries. For example, the same product may need to be homologated multiple times to comply with different national regulations. Aebi Schmidt is seeing signs of deregulation or halted additional regulation in the U.S., while the EU continues to implement and enforce stricter regulations, adding further complexity to its regulatory compliance efforts.
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 (e.g., 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 years ended December 31, 2025, December 31, 2024 and December 31, 2023.
Year Ended December 31,
(in thousands, except percentages)
Sales
Net income
Net income margin
Adjusted EBITDA (1)
Adjusted EBITDA margin (1)
Net cash provided by (used in) operating activities
(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 measures.
Components of Results of Operations
Sales
Sales are comprised primarily of revenue from the sale of equipment for commercial vehicles and trailers, snow and ice clearing, airport runway clearing, street cleaning and marking, environmental maintenance, and agriculture, net of sales discounts, rebates, and commissions. Sales also include revenues generated from selling spare parts as well as repair and maintenance services for these machines. In general, these after-sales activities add 15% to 20% of the total annual sales of Aebi Schmidt’s Group. In accordance with Aebi Schmidt’s business segments, after sales activities in Europe and the ROW are directly linked to products sold in Europe and the ROW. Likewise, North America after sales services are only rendered in North America.
Cost of products sold
Cost of products sold consists of materials and supplies, personnel costs, outsourced services, depreciation and outgoing freight costs.
Research and development expense
Research and development expense primarily consists of compensation costs, external engineering service costs, and material costs for product development and prototyping, among other items.
Selling, general and administrative expense
Selling, general and administrative expense consists of sales, after sales, marketing, product management, and strategic purchasing expenses, as well as administrative expenses such as costs related to human resources, finance and information technology (including enterprise resource planning system). Amortization of intangible assets such as concessions, rights, licenses, and information technology software is also included in selling, general and administrative expense.
Amortization of purchased intangibles
Amortization of purchased intangibles consists of amortization of acquired brands, technology assets, customer relationships and other acquired finite-lived intangible assets.
Other operating (income) expense
Other operating income and expense consists primarily of foreign exchange income and expense. Aebi Schmidt’s functional currency is generally the applicable local currency. Aebi Schmidt’s reporting currency is the U.S. dollar, and a majority of its sales are received in U.S. dollars.
Interest expense
Interest expense primarily consists of interest paid and accrued on Aebi Schmidt’s short- and long-term debt.
Other income (expense)
Other income and expense was driven by transaction costs, restructuring expenses, as well as integration costs, proceeds from the sale of property, plant and equipment, other exceptional income and expense, and foreign exchange income and losses on financial positions. These positions were partially offset by income attributable to pension assets. Exceptional income and expense refer to unusual or non-recurring amounts that are outside Aebi Schmidt's normal operations.
Income tax expense (benefit)
Aebi Schmidt is subject to tax in multiple jurisdictions, including those in the United States, Switzerland, Canada and countries in the European Union, e.g. Germany, Netherlands or Poland. The tax jurisdictions in which Aebi Schmidt operates have different statutory tax rates. Accordingly, Aebi Schmidt’s effective tax rate will vary depending on the relative proportion of income in each jurisdiction, changes in the valuation allowance on its deferred tax assets, and changes in tax laws.
Results of Operations
Results for Aebi Schmidt for the year ended December 31, 2025, compared to results for the year ended December 31, 2024.
For the Year Ended December 31,
$ Change
% Change
Sales
Cost of products sold
Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Amortization of purchased intangibles
Other operating (income) expense
For the Year Ended December 31,
$ Change
% Change
Total operating expenses
Operating income
Other income (expense):
Interest expense
Other income (expense)
Total other income (expense)
Income from continuing operations before income taxes
Income tax expense (benefit)
Income from continuing operations
Net income
Less: Net income attributable to non-controlling interest
Net income attributable to Aebi Schmidt Holding AG
Sales
Sales increased by $440.7 million, or 41%, to $1,526.6 million for the year ended December 31, 2025, from $1,086.0 million for the year ended December 31, 2024. The increase in sales was primarily driven by sales attributed to Shyft of $378.0 million, an increase in new business sales of $49.6 million, and an increase in after sales of $13.1 million.
Cost of products sold
Cost of products sold increased by $364.9 million, or 43%, to $1,222.6 million for the year ended December 31, 2025, from $857.7 million for the year ended December 31, 2024. The increase in cost of products sold was driven by $310.5 million in costs attributable to Shyft, an increase of $45.7 million in costs related to new business sales, and an increase of $9.0 million in costs related to after sales. This was partially offset by a decrease of $3.5 million due to lower overhead costs incurred compared to the prior year.
Research and development expense
Research and development expense increased by $6.9 million, or 35%, to $26.5 million for the year ended December 31, 2025, from $19.6 million for the year ended December 31, 2024 primarily driven by an increase of $5.2 million in activity attributable to Shyft and development of new product solutions by Aebi Schmidt.
Selling, general and administrative expense
Selling, general and administrative expense increased by $56.0 million, or 45%, to $180.6 million for the year ended December 31, 2025, from $124.7 million for the year ended December 31, 2024. The increase in selling, general and administrative expense was primarily driven by an increase of $55.8 million in costs attributable to Shyft, along with an increase in finance department costs of $4.6 million and an increase in IT costs of $2.2 million, partially offset by a decrease in general administrative costs of $7.4 million driven by the change in repurchase liability for our employee share plan and a decrease in management costs of $0.4 million.
Amortization of purchased intangibles
Amortization of purchased intangibles increased by $9.2 million, or 66%, to $23.3 million for the year ended December 31, 2025, from $14.1 million for the year ended December 31, 2024. The increase is primarily attributable to amortization of $9.0 million related to the intangible assets acquired as part of the Merger with Shyft.
Other operating (income) expense
Other operating expense decreased by $0.9 million, or 63%, to $0.5 million for the year ended December 31, 2025, from other operating expense of $1.4 million for the year ended December 31, 2024. The decrease in other operating expense was primarily driven by a decrease of net foreign exchange losses of $0.4 million and decrease of other expenses by $0.5 million.
Interest expense
Interest expense increased by $7.7 million, or 23%, to $41.8 million for the year ended December 31, 2025, from $34.1 million for the year ended December 31, 2024. The increase in interest expense was primarily driven by an increase in interest expense attributable to Shyft of $1.3 million, the incurrence of $4.8 million in costs related to the debt refinancing we undertook in connection with the Merger, and an increase in cash interest paid attributable to Aebi Schmidt of $1.7 million.
Other income (expense)
Other expense changed by $27.4 million to $20.1 million for the year ended December 31, 2025, from other income of $7.3 million for the year ended December 31, 2024. The change in other expense was mainly driven by an increase in transactions-related expense of $12.1 million, an increase in net foreign exchange losses on financial positions of $4.6 million, integration costs of $3.9 million, and a change attributable to the bargain purchase gain on acquisition by $6.8 million recorded in 2024, partially offset by other income attributable to Shyft of $2.2 million.
Income tax expense (benefit)
Income tax expense decreased by $9.4 million, or 86%, to $1.5 million for the year ended December 31, 2025, from $10.9 million for the year ended December 31, 2024. The change in income tax expense (benefit) was primarily driven by a $2.9 million benefit attributable to Shyft and a decrease in income tax expense of $6.6 million mainly driven by a change in the uncertain tax position of $5.4 million, as well as by lower taxable income for the year ended December 31, 2025.
Segment Results of Operations
Aebi Schmidt operates its business as two reportable segments: (i) North America and (ii) Europe and ROW. Both segments operate separately with limited cross-selling activities.
The information below includes sales and Adjusted EBITDA by segment, consistent with information presented for financial reporting purposes in “ Note 17 - Segments ” of the Notes to Consolidated Financial Statements included in Item 8 appearing in this Annual Report. Costs that are not allocated to either segment and intrasegment revenues and expenses are immaterial and are included within the figures shown below.
For the Year Ended December 31, 2025
(in thousands)
North
America
Europe and ROW
Total
Segment sales
Segment Adjusted EBITDA
For the Year Ended December 31, 2024
North
America
Europe and ROW
Total
Segment sales
Segment Adjusted EBITDA
North America
Sales for the North America segment increased by $381.7 million, or 64%, to $975.1 million for the year ended December 31, 2025, from $593.4 million for the year ended December 31, 2024. The increase in sales was primarily driven by sales attributable to Shyft of $378.0 million, as well as higher sales of new products of $0.9 million and an increase in after sales of $2.8 million.
Adjusted EBITDA for the North America segment increased by $30.7 million, or 45%, to $99.4 million in the year ending December 31, 2025, from $68.7 million in the year ending December 31, 2024. The increase in Adjusted EBITDA was primarily driven by the addition of $36.9 million in activity attributable to Shyft, along with an increase in other segment income of $0.7 million, and a decrease in research and development expenses of $0.4 million, partially offset by an increase in selling, general, and administrative expenses of $6.6 million and a decrease of gross margin of $0.7 million.
Europe and ROW
Sales for the Europe and ROW segment increased by $59.0 million, or 12%, to $551.5 million for the year ended December 31, 2025, from $492.5 million for the year ended December 31, 2024. The increase in sales was driven by an increase in sales of new products of $48.7 million and an increase in after sales of $10.3 million.
Adjusted EBITDA for the Europe and ROW segment increased by $3.2 million, or 10%, to $33.4 million for the year ended December 31, 2025, from $30.3 million for the year ended December 31, 2024. The increase in Adjusted EBITDA was driven by an increase in gross margin of $8.8 million and a decrease in selling, general and administrative expenses of $6.3 million, partially offset by an increase in expenses related to other segment items of $9.8 million and an increase in research and development expense of $2.2 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 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, integration costs, bargain purchase gains on acquisitions, settlement of acquisition, 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, non-cash stock based compensation expenses, and other non-recurring items. Aebi Schmidt defines as 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.
For the year ended December 31,
(in thousands, except percentages)
Net income
Adjusted for:
Income tax expense (benefit)
Interest expense
Foreign exchange (gain) / losses on external debt
Depreciation and amortization
Restructuring and other related expenses
Transaction related expenses
Bargain purchase gain on acquisition
Integration costs
Settlement of acquisition
Change in repurchase liability for employee share plan
Pension related income, net
Legacy legal matters
Sales executive transition
Change in provision for contingencies
Non-cash stock-based compensation expenses
Other non-operating one-off items
Adjusted EBITDA
Sales
Net Income Margin
Adjusted EBITDA Margin
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, its revolving credit facility and other debt issuances, and existing cash balances of $98.5 million as of December 31, 2025. Aebi Schmidt actively manages its working capital and associated cash requirements and continually seeks more effective uses of cash.
As of December 31, 2025, Aebi Schmidt had $416.5 million of net working capital (i.e., current assets minus current liabilities), as compared to $251.0 million of net working capital as of December 31, 2024 and $252.6 million of net working capital as of December 31, 2023.
Aebi Schmidt believes that its available liquidity will be sufficient to meet its current obligations for at least 12 months from the date of this filing and for the foreseeable future thereafter, 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 for the year ended December 31, 2025 compared to the year ended December 31, 2024 are summarized in the following table.
For the Year Ended December 31,
(in thousands)
Change
Change
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Translation adjustment on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
n.m. – not meaningful
Net cash provided by operating activities
Net cash provided by operating activities decreased by $59.8 million, or 87%, to $9.0 million for the year ended December 31, 2025, from $68.8 million for the year ended December 31, 2024. The decrease in net cash provided by operating activities was primarily driven by a decrease in net income of $21.0 million, a decrease in collection of accounts receivable and contract assets of $61.4 million, a decrease of $19.2 million in other current liabilities and accrued expenses, an increase of $18.9 million in inventory levels, an increase in net other assets and liabilities of $15.0 million, and an increase in income taxes receivable of $11.7 million. This activity was partially offset by an increase in accounts payable and contract liabilities of $39.0 million due to increased costs of production and purchases of raw materials, and an increase in accrued compensation and related taxes of $14.0 million.
Net cash provided by (used in) investing activities
Net cash provided by investing activities increased by $14.9 million, or 164%, to $5.8 million for the year ended December 31, 2025, from cash used in investing activities of $9.1 million for the year ended December 31, 2024. The increase was primarily driven by an increase of $19.4 million of net cash acquired as part of the Merger with Shyft compared to the $4.4 million of net cash acquired in 2024 as part of the acquisition of Ladog.
Net cash provided by (used in) financing activities
Net cash provided by financing activities increased by $51.8 million, or 146%, to $16.3 million for the year ended December 31, 2025, from cash used in financing activities of $35.4 million for the year ended December 31, 2024. The increase was driven by the debt refinancing we undertook in connection with the Merger, which resulted in proceeds, net of payments, of $62.7 million. This increase was partially offset by an increase in dividend payments of $10.2 million and an increase in payments from the exercising and vesting of stock incentive awards of $2.0 million.
Capital Expenditures
For the year ending December 31, 2026, Aebi Schmidt anticipates approximatel y $24 million o f capital expenditures to maintain the capacity of its manufacturing facilities and invest in emerging technologies. This level is comparable with previous years. In its budgeting process, Aebi Schmidt includes major capital expenditures projects for management to review. Aebi Schmidt closely monitors its capital expenditures in order to control its cash flow needs. Aebi Schmidt expects these expenditures to result in more productive and diversified operations. Evolving economic conditions, the potential for increased maintenance costs, and incorrect cash flow estimates from the capital expenditures could result in less-productive investments than Aebi Schmidt anticipates. Aebi Schmidt’s cash flow and operating results could be negatively impacted by the actual returns on its capital expenditures.
Debt
In thousands
December 31,
December 31,
December 31,
Revolving credit facility, due 2030
Term loan, Facility A, due 2030
Revolving credit facility, due 2026
Term loan:
Facility A, due 2026
Facility B, due 2026
Facility C, due 2026
Shareholder loan
Other debt
Total debt
Less current portion of long-term debt
Total long-term debt
Refinancing Transaction
On March 10, 2025, the Company entered into the New Credit Facilities Agreement comprising:
• Term Loan, Facility A, due 2030
• Revolving Credit Facility, due 2030
The New Credit Facilities Agreement became effective with the closing of the Merger. As of July 1, 2025, the proceeds obtained ($572.1 million) were utilized to fully repay the outstanding amounts of:
• Term Loan, Facility A, B and C, due 2026 ($187.0 million)
• Revolving Credit Facility, due 2026 ($185.6 million)
• Bilateral Credit Lines ($21.1 million)
• Revolving Credit Facility of Shyft ($120.0 million)
Term Loan, Facility A, due 2030
The Term Loan, Facility A is a multicurrency senior secured amortizing term loan facility with a total commitment amount of $350.0 million. The interest rate is variable defined based on the applicable reference rate (SOFR, SARON, EURIBOR), plus a margin. The margin increases with the Company’s leverage ratio. The average interest rate for the six months ended December 31, 2025 was 6.633%.
The Company is subject to certain customary covenants that prohibit the Company from incurring additional indebtedness, limit certain acquisitions, investments, advances or loans and restrict substantial asset sales (all subject to certain exceptions and baskets). In addition, the New Credit Facilities Agreement also requires the Company to maintain certain financial ratios. For the period ended December 31, 2025, the Company was required to maintain a leverage ratio that did not exceed 3.25x. The Company was in compliance with all covenants as of December 31, 2025.
Revolving Credit Facility, due 2030
The revolving credit facility is a multicurrency senior secured revolving loan facility with a total commitment amount of up to $250.0 million The interest rate is variable and based on the applicable a reference rate (SOFR, SARON, EURIBOR), plus a margin. The margin increases with the Company’s leverage ratio. The average interest rate for the six months ended December 31, 2025 was 6.496%.
The Company is subject to certain customary covenants that prohibit the Company from incurring additional indebtedness, limit certain acquisitions, investments, advances or loans and restrict substantial asset sales (all subject to certain exceptions and baskets). In addition, the New Credit Facilities Agreement also requires the Company to maintain certain financial ratios. For the period ended December 31, 2025, the Company was required to maintain a leverage ratio that did not exceed 3.25x. The Company was in compliance with all covenants as of December 31, 2025.
Shareholder Loans
As of December 31, 2025 and December 31, 2024, there were subordinated shareholder loans with outstanding amounts of $17.1 million and $17.6 million from PCS Holding AG, as well as subordinated shareholder loans with amounts outstanding of $12.6 million and $11.7 million from Gebuka AG, respectively. 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. These shareholder loans were renewed and amended in connection with the New Credit Facilities Agreement.
Other Debts
In connection with the expansion of the plant in Chilton, Wisconsin and certain US mortgage loans, the outstanding amount is about $10.0 million as of December 31, 2025.
Contingent Liabilities
Changes in Aebi Schmidt’s warranty liability during the years ended December 31, 2025, 2024 and 2023 were as follows:
(in thousands)
Balance of warranty liability, beginning of year
Accruals for current period sales
Cash settlements
Changes in liability for pre-existing warranties
Acquisitions
Translation adjustment
Balance of warranty liability, end of year
Aebi Schmidt’s long-term warranty provisions amounting to $2.6 million, $1.6 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively, is included within other non-current liabilities on its balance sheet.
Contractual and Other Obligations
Aebi Schmidt is party to contractual and other 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. Aebi Schmidt believes that its principal sources of liquidity will be sufficient to satisfy such contractual and other obligations.
Refer to “ Note 8 - Commitments and Contingent Liabilities ” of the Notes to Consolidated Financial Statements in Item 8 appearing in this Annual Report for details on its contractual obligations.
Off-Balance Sheet Arrangements
In 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 in the event that Aebi Schmidt does not fulfil its contractual obligations. The Company would then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. At December 31, 2025, 2024 and 2023, the total outstanding performance bonds aggregated to $20.2 million, $13.2 million and $18.7 million, respectively. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in 2025, 2024 and 2023.
Critical Accounting Policies and Estimates
The following discussion of critical accounting policies and estimates is intended to supplement “ Note 1 - Nature of Operations and Basis of Presentation ” of the Notes to Consolidated Financial Statements in Item 8 appearing in this Annual Report. These policies were selected because they are broadly applicable within Aebi Schmidt’s operating units and they involve additional management judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related statement of income, asset and/or liability amounts.
Revenue recognition
Essentially all Aebi Schmidt’s revenue is generated through contracts with its customers. Aebi Schmidt may recognize revenue over time or at a point in time when or as obligations under the terms of a contract with its customer are satisfied, depending on the terms and features of the contract and the products supplied. Aebi Schmidt’s contracts generally do not have any significant variable consideration. The collectability of consideration on the contract is reasonably assured before revenue is recognized. On certain vehicles, payment may be received in advance of Aebi Schmidt satisfying its performance obligations. Such payments are recorded in Contract liabilities on the Consolidated Balance Sheets. The corresponding performance obligations are generally satisfied within one year of the contract inception. Aebi Schmidt has elected to utilize the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred because the amortization period for the prepaid costs that would have otherwise been deferred and amortized is one year or less. Aebi Schmidt uses an observable price to allocate the stand-alone selling price to separate performance obligations within a contract or a cost-plus margin approach when an observable price is not available. The estimated costs to fulfil Aebi Schmidt’s base warranties are recognized as expense when the products are sold.
The assumptions used to recognize revenue over time are based on measure of progress. Measure of progress is derived from work in progress reports indicating the costs and/or labor hours applied to each project. Aebi Schmidt’s determination of the measure of progress is dependent on the accuracy of expected costs and labor hours for each project. To the extent Aebi Schmidt’s actual costs or labor hours differ from the expected amount, the revenue expected to be recognized over time may differ from the actual revenue recognized. Historically, the difference between expected and actual amounts have been immaterial, and Aebi Schmidt does not expect any material differences in the future.
Business combinations
When acquiring other businesses, Aebi Schmidt recognizes identifiable assets acquired and liabilities assumed at their acquisition date estimated fair values, and separately from any goodwill that may be required to be recognized. Goodwill, when recognizable, is measured as the excess amount of any consideration transferred, which is measured at fair value, over the acquisition date fair values of the identifiable assets acquired and liabilities assumed. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.
Accounting for such acquisitions requires Aebi Schmidt to make significant assumptions and estimates and are adjusted during the measurement period for a period of up to one year after the acquisition date. Costs incurred to effect an acquisition, such as legal, accounting, valuation or other third-party costs, as well as internal general and administrative costs incurred are charged to expense in the periods incurred. There may be a material difference between the accounting estimates related to the fair value of the assets acquired and liabilities assumed at acquisition date and the final purchase price allocation.
Goodwill and Intangible Assets
In accordance with authoritative guidance on goodwill, it is tested for impairment at least annually, and written down when and to the extent impaired. Aebi Schmidt performs its annual impairment test for goodwill assets as of December 31 of each year, or more frequently if an event occurs or conditions change that would more likely than not reduce the fair value of the asset below its carrying value.
Aebi Schmidt estimates the fair value of acquired intangible assets using various valuation techniques. The primary valuation techniques used include forms of the income approach, specifically the relief-from-royalty and multi-period excess earnings valuation methods. Under these valuation approaches, Aebi Schmidt makes estimates and assumptions from a market participant perspective. Significant assumptions used in estimating future cash flows included projected revenue growth rates and discount rate for customer relationships and projected revenue growth rates, royalty rate and discount rate for brand. Under the multi-period excess earnings method, value is estimated as the present value of the benefits anticipated from ownership of the asset, in excess of the returns required on the investment in contributory assets that are necessary to realize those benefits. The intangible asset’s estimated earnings are determined as the residual earnings after quantifying estimated earnings from contributory assets. Under the relief-from-royalty method, Aebi Schmidt calculates the cost savings associated with owning rather than licensing the assets. Assumed royalty rates are applied to projected revenue for the remaining useful lives of the assets to estimate the royalty savings.
Aebi Schmidt first assesses qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for products and current and forecasted financial performance to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is more likely than not that the fair value of the reporting unit is greater than its carrying
amount, it is not required to calculate the fair value of a reporting unit. Aebi Schmidt has the option to bypass this qualitative assessment and proceed to a quantitative goodwill impairment assessment. If Aebi Schmidt elects to bypass the qualitative assessment, or if after completing the assessment it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying value, Aebi Schmidt performs an impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill.
The fair value of the reporting unit is determined by estimating the future cash flows of the reporting unit to which the goodwill relates, and then discounting the future cash flows at a market-participant-derived weighted-average cost of capital (“WACC”). In determining the estimated future cash flows, Aebi Schmidt considers current and projected future levels of income based on the plans for that business; business trends, prospects and market and economic conditions; and market-participant considerations. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered to not be impaired. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill.
Significant judgments inherent in these analyses include assumptions about appropriate sales growth rates, WACC and the EBITDA margin. The judgments and assumptions used in the estimate of fair value are generally consistent with the projections and assumptions that are used in current operating plans. Such assumptions are subject to change as a result of changing economic and competitive conditions. The determination of fair value is highly sensitive to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of the reporting units and trade name.
During the fourth quarter of 2025, the Company changed its reporting units. Under accounting standards, the Company is required to perform an impairment assessment of its prior reporting units immediately prior to the change and immediately after the change on its new reporting units. To the extent that a prior reporting unit was separated into more than one reporting unit, the allocation of goodwill between the components of the old reporting units was determined based on their relative fair value.
As of December 31, 2025, the most recent annual goodwill impairment assessment date, the Company performed a quantitative assessment of the fair value of its prior and new reporting units and concluded there was no impairment.
See “ Note 4 – Goodwill and Intangible Assets ” of the Notes to Consolidated Financial Statements in Item 8 appearing in this Annual Report for further details on our goodwill and indefinite-lived intangible assets.
Income taxes
Assumptions and estimates are required to determine the amount of current and deferred income tax assets and liabilities. Some of these estimates are based on the interpretation of existing tax legislation and regulations. Deferred income tax assets and liabilities are calculated based on the anticipated effective tax rate of the individual entity. Aebi Schmidt makes a variety of assumptions regarding the estimation of future taxable profit, tax regulations, and changes in the jurisdictions it operates in.
Valuation of deferred tax assets
The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted is based on an evaluation of possible sources of taxable income and also considers all available positive and negative evidence factors. Aebi Schmidt’s accounting for the valuation of deferred tax assets represents Aebi Schmidt’s best estimate of future events. Changes in current estimates of Aebi Schmidt, due to unanticipated market conditions, governmental legislative action or events, could have a material effect on Aebi Schmidt’s ability to utilize deferred tax assets.
At December 31, 2025 and December 31, 2024, valuation allowances against deferred tax assets were $11.5 million and $8.9 million, respectively, and primarily relate to entities that are in cumulative loss positions. Refer to “Note 7 - Income Taxes” of the Notes to Consolidated Financial Statements in Item 8 appearing in this Annual Report for additional information on the composition of these valuation allowances.
If, in the future, Aebi Schmidt generates taxable income in jurisdictions where it has recorded full valuation allowances, on a sustained basis, the conclusion of Aebi Schmidt regarding the need for full valuation allowances in these tax jurisdictions could change, resulting in the reversal of some or all of the valuation allowances. If the Aebi Schmidt operations generate taxable income prior to reaching profitability on a sustained basis, Aebi Schmidt would reverse a portion of the valuation allowance related to the corresponding realized tax benefit for that period, without changing the conclusions on the need for a full valuation allowance against the remaining net deferred tax assets.
Uncertain tax positions
Significant judgment is also required in evaluating uncertain tax positions of Aebi Schmidt. Although Aebi Schmidt believes that the tax return positions are sustainable, Aebi Schmidt recognizes tax benefits from uncertain tax positions in the financial statements only when it is more likely than not that the positions will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Aebi Schmidt believes that it has provided adequate reserves for all uncertain tax positions.
Recently Issued and Adopted Accounting Standards
For more information regarding recent accounting pronouncements, refer to “ Note 1 - Note 1 Nature of Operations and Basis of Presentation ” of the Notes to Consolidated Financial Statements in Item 8 appearing in this Annual Report.
