Air Industries Group Announces Results for the First Quarter of 2020
May 18 2020 - 8:00AM
Business Wire
Air Industries Group (NYSE AMEX:
AIRI):
Air Industries Group (“Air Industries” or the “Company”), an
integrated manufacturer of precision equipment assemblies and
components for leading aerospace and defense prime contractors
today announced its results for the first calendar quarter of
2020.
Highlights
- Consolidated net sales for the three months ended March 2020
were $13.4 million a decline of $500,000 or (3%) compared to $13.9
million in 2019.
- Consolidated gross profit for the three months ended March 2020
was $2.2 million a decline of $100,000 or (4%) from 2019. Gross
profit as a percentage of sales remained unchanged.
- Operating expenses for the three months ended March 2020 were
$2.3 million an increase of approximately $200,000 or 10% compared
to $2.1 million for 2019. The majority of the increase in operating
costs results from additions to the reserve for doubtful accounts
receivable.
- Air Industries had an operating loss for the three months ended
March 2020 of $(81,000) compared to an operating loss of $63,000 in
2019.
- Interest and financing costs for the three months ended March
31, 2020 were $252,000 in fiscal 2020 a dramatic decline of $
581,000 or 70% compared to $833,000 in 2019. The decline in
interest expense reflects the significantly lower interest rates of
the Company’s new credit facility with Sterling National Bank.
- Net Income for the three months ended March 31, 2020 was $ 1.1
million compared to a net loss in 2019. The increase in net income
results solely from an income tax refund of $ 1.4 million arising
from tax law changes in recent legislation. Absent this tax refund
the net loss for three months ended March 2020 was approximately
$356,000 an improvement of $ 639,000 or 64% compared with a net
loss from continuing operations of $995,000 for 2019.
- Adjusted EBITDA for the three months ended March 2020 was
$894,000 million as shown in the table below. Adjusted EBITDA is a
non-GAAP financial measure which is reconciled to the most directly
comparable GAAP financial measure and is more fully defined in the
below table.
2020
Net Income
$
1,058
Add-backs to EBITDA Interest
379
Taxes
(1,414
)
Depreciation & Amortization
687
EBITDA
710
Add-backs to Adjusted EBITDA Bank Charges
44
Stock Compensation
140
Adjusted EBITDA
$
894
CEO Commentary
Lou Melluzzo, CEO of Air Industries said, “It would be an
understatement to say that economic conditions have changed
dramatically since the beginning of the year. In spite of
operational challenges, I am pleased that for the first quarter of
2020 Air Industries was able to maintain sales and profitability
roughly equal to the prior year. As the quarter progressed, an
increasing numbers of factory workers were unable to come to work
and this impacted production. The COVID-19 pandemic became more
severe in April, especially in New York. For several weeks in April
one third of our factory staff was not at work. This had a negative
impact on our production and shipments. Our business was also
impacted by the closing for an extended period of several
processing shops we utilize to finish our products. We made the
decision that employees with the ability to work remotely should do
so.
Recently we have seen absenteeism decline and the majority of
our office employees have returned to work. Operations have
improved, but have not recovered fully. We expect to see
productivity continue to improve in the coming weeks.
The Coronavirus has severely impacted the commercial aerospace
industry. Defense aerospace has not, as yet, seen any material
deleterious effect. As you know, Air Industries products are
primarily defense related. We have seen reductions in orders from
our commercial customers but defense remains strong. We are
currently accelerating production of military product to offset
reductions in commercial orders. Our large OEM customers have been
very supportive in helping us to reprioritize production schedules
so that we can minimize the impact.
In our prior press release we said that things were too
uncertain to issue guidance. They remain so now. We will do so when
things become clearer, which we hope is soon.
Finally we are very thankful to our hard working Air 'family',
who have shown exceptional dedication and commitment in the face of
this pandemic.”
Additional information about the Company can be found in its
filings with the SEC.
Investor Conference Call
Management will host a conference call on Monday May 18, 2020 at
4:15pm Eastern.
Conference Toll-Free Number 800-368-1029
Passcode – 257 481
ABOUT AIR INDUSTRIES GROUP Air Industries Group (AIRI) is
an integrated manufacturer of precision equipment assemblies and
components for leading aerospace and defense prime contractors.
Forward Looking Statements Certain matters discussed in
this press release are 'forward-looking statements' intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. In particular,
the Company's statements regarding trends in the marketplace,
future revenues, earnings and Adjusted EBITDA, the ability to
realize firm backlog and projected backlog, cost cutting measures,
potential future results and acquisitions, are examples of such
forward-looking statements. The forward-looking statements are
subject to numerous risks and uncertainties, including, but not
limited to, the timing of projects due to variability in size,
scope and duration, the inherent discrepancy in actual results from
estimates, projections and forecasts made by management, regulatory
delays, changes in government funding and budgets, and other
factors, including general economic conditions, not within the
Company's control. The factors discussed herein and expressed from
time to time in the Company's filings with the Securities and
Exchange Commission could cause actual results and developments to
be materially different from those expressed in or implied by such
statements. The forward-looking statements are made only as of the
date of this press release and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
Adjusted EBITDA The Company uses Adjusted EBITDA, a
Non-GAAP financial measure as defined by the SEC, as a supplemental
profitability measure because management finds it useful to
understand and evaluate results, excluding the impact of non-cash
depreciation and amortization charges, stock based compensation
expenses, and nonrecurring expenses and outlays, prior to
consideration of the impact of other potential sources and uses of
cash, such as working capital items. This calculation may differ in
method of calculation from similarly titled measures used by other
companies and may be different than the EBITDA calculation used by
our lenders for purposes of determining compliance with our
financial covenants. This Non-GAAP measure may have limitations
when understanding performance as it excludes the financial impact
of transactions such as interest expense necessary to conduct the
Company’s business and therefore are not intended to be an
alternative to financial measure prepared in accordance with GAAP.
The Company has not quantitatively reconciled its forward looking
Adjusted EBITDA target to the most directly comparable GAAP measure
because such items such as amortization of stock-based compensation
and interest expense, which are specific items that impact these
measures, have not yet occurred, are out of the Company’s control,
or cannot be predicted. For example, quantification of stock-based
compensation is not possible as it requires inputs such as future
grants and stock prices which are not currently ascertainable.
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version on businesswire.com: https://www.businesswire.com/news/home/20200518005062/en/
Air Industries Group Investor Relations Michael Recca - CFO
631.968.5000 ir@airindustriesgroup.com
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