Commitments and Contingencies

12 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters; however, it does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation.

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), was a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco. Avco also sued Arconic, Inc. (“Arconic”), which was the raw material supplier. The lawsuit has been resolved in a manner satisfactory to all parties pursuant to a confidential settlement agreement for an immaterial amount, and the case was dismissed on October 14, 2021.

The Company was a defendant in a purported class action lawsuit filed in the Superior Court of California, County of Orange, which was filed in August 2017, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations; failure to maintain required wage records and furnish accurate wage statements; and unfair competition. A settlement has been reached and the Company received preliminary court approval on July 13, 2020, following a brief delay caused by COVID-19 closures and restrictions. Class action notices were sent at the end of September and there were no objections to the settlement. On February 4, 2021, the court issued a tentative ruling to grant final approval. The final approval was granted and the previously recorded liability of $315 was paid on March 29, 2021.

During fiscal 2020, the Company received notice from the International Association of Machinists and Aerospace Workers Union that they were disclaiming all interest in representing certain hourly employees at the Company’s Cleveland facility. Subsequently, the International Brotherhood of Boilermakers Union filed a petition to represent this same group of hourly employees. A mail ballot election took place in June 2020 and the National Labor Relations Board certified the International

Brotherhood of Boilermakers as the elected representative of the Company’s hourly production employees. The Company’s obligations will be more fully understood following the ratification of a collective bargaining agreement.

In fiscal 2021, the insurance claim related to the fire on December 26, 2018 at the Orange location was finalized with the Company's insurance carrier. The Company completed the restoration of the final two of the six presses damaged in the fire at the end of the third quarter of fiscal 2021. The restoration of the building structure was completed as of September 30, 2021.

Having finalized the claim with its insurance carrier, cash proceeds of $4,548 were received in fiscal 2021. As noted in the table below, $3,001 was recognized within the consolidated statements of operations. The Company has business interruption insurance coverage, of which $546 of the amount received was reflected within the cost of goods line within the consolidated statement of operations.


Balance sheet (Other receivables):

September 30, 2019		$	3,500
	Cash received	(10,927)
	Capital expenditures (equipment)	5,874

	Other expenses	1,881
	Business interruption	1,219
September 30, 2020		$	1,547


Balance sheet (Other receivables):

September 30, 2020		$	1,547
	Cash received	(4,548)
	Capital expenditures (equipment)	2,397
	Other expenses	58
	Business interruption	546
September 30, 2021		$	—

The following table reflects how the proceeds received impacted the consolidated statements of operations as of September 30,


	Year Ended September 30, 2021
	Balance without insurance proceeds		Insurance recoveries		Balance with insurance proceeds

Cost of goods sold	$	88,990	$	(604)	$	88,386
Gain on insurance recoveries	$	—	$	(2,397)	$	(2,397)
(Loss) before income tax benefit	$	(4,966)	$	(3,001)	$	(1,965)


	Year Ended September 30, 2020
	Balance without insurance proceeds		Insurance recoveries		Balance with insurance proceeds

Cost of goods sold	$	96,711	$	(3,100)	$	93,611
Gain on insurance recoveries	$	—	$	(5,874)	$	(5,874)
Income before income tax benefit	$	6	$	(8,974)	$	8,980

The following table demonstrates the total settlement amount since December 26, 2018:


	Total Claim
Property & damage **	$	20,364
Extra expense & mitigation expense	4,404
Business interruption	2,932
	$	27,700

**$3,640 of total was directed to the landlord of the property for the restoration of the building in response to the fire damage that occurred in 2018 as prescribed by the lease arrangement.