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 three and nine months ended
September 30, 2020.
Sales for the third quarter were approximately $ 13.7 million,
increasing $ 5.2 million or 61% compared to the second quarter
during the height of the pandemic. Gross margin for the third
quarter was 12.1% increasing 490 basis points or nearly 68%
compared to 7.2% percent for the second quarter.
CEO Commentary
Lou Melluzzo, CEO of Air Industries said, “In our August press
release I said we were optimistic about the third quarter. That
optimism was well founded. I am extremely pleased to tell you that
Air Industries has achieved the hoped for 'V –Shaped' recovery in
sales. For the third quarter sales have returned to their
pre-pandemic average, in excess of $ 13 million per quarter. That
said we continue to experience challenges and increased costs.
These challenges and costs were more pronounced during July and
August. In September business conditions returned to very near
pre-pandemic levels. While our gross margin on sales improved
significantly from the second quarter it has yet to return to
pre-pandemic levels. As conditions continue to return to normal we
expect our gross margin will also return to normal.
“We previously announced a major capital investment in machinery
purchasing four pieces of equipment totaling some $ 2.5 million.
The first, and largest of these machines, the Mitsui Seiki has been
installed and is operational, producing product. The next two are
being installed now, and should be making product within a few
short weeks. The final piece of equipment is slated to arrive at
our Long Island facility in November. To make room for this
equipment we have moved four machines to our facility in
Connecticut where they are being installed now. One unit is
operational and the other three will be shortly.
“Our business is highly concentrated on military hardware with
Defense Aerospace representing 85 – 90% of sales. Air Industries
backlog has remained stable. Our 18-month backlog, consisting
entirely of firm purchase orders, was $ 95.2 million at September
30 2020. Air Industries is in the enviable position of having
outstanding orders for the next 18-months that exceed our sales for
the last 18-months. Our significant investment in new machinery,
combined with our increased focus on outsourcing work is to
increase through-put and satisfy customer demand.”
Financial Highlights
For the three months ended September 30, 2020 compared to
September 30, 2019
- Consolidated net sales for the three months ended September
2020 were $13.7 million declining $300, 000 or 2% compared to
nearly $14.0 million for the three months ended 2019.
- Consolidated gross profit for the three months ended September
2020 was $1.7 million declining $1.3 million or 43% compared to
$3.0 million for the three months ended 2019. Gross profit as a
percentage of sales declined to 12.1% in 2020.
- Operating expenses for the three months ended September 2020
were $1.9 million increasing $ 100,000 or 6% compared to $ 1.8
million for the three months ended September 2019.
- Air Industries had an operating loss of $240,000 for the three
months ended September 2020 compared to an operating profit of $1.2
million for the three months ended September 2019.
- Interest and financing costs for the three months ended
September 2020 were $359,000 a dramatic decline of $476,000 or 57%
compared to $835,000 for the three months ended 2019. The decline
in interest expense reflects the significantly lower interest rates
of the Company’s new credit facility with Sterling National
Bank.
- Results for the Three Months ended September are summarized in
the table below:
Three Months Ended September
2020
2019
Net Sales
$
13,662
$
13,997
Cost of Sales
12,006
11,034
Gross Profit
1,656
2,963
Gross Margin as a % of Sales
12.1
%
21.2
%
Operating Expenses
1,896
1,808
Income (Loss) from Operations
(240
)
1,155
Interest and Financing Costs
(359
)
(835
)
Other Income, Net
122
100
Loss before Income Taxes
(477
)
420
(Benefit from) Provision for Taxes
-
22
Net Income (Loss)
$
(477
)
$
398
For the Nine months ended September 30, 2020 compared to
September 30, 2019
- Consolidated net sales for the nine months ended September 2020
were $35.6 million declining $5.6 million or 14% compared to $41.2
million for the nine months ended 2019.
- Consolidated gross profit for the nine months ended September
2020 was $4.5 million declining $2.9 million or 39% compared to
$7.4 million for the nine months ended 2019. Gross profit as a
percentage of sales declined to 12.5% in 2020.
- Operating expenses for the nine months ended September 2020
were $6.1 million increasing approximately $300,000 or 5% from $5.8
million for the nine months ended 2019.
- Air Industries had an operating loss of $1.6 million for the
nine months ended September 2020 compared to operating income of
$1.3 million for the nine months ended September 2019.
- Interest and financing costs for the nine months ended
September 30, 2020 were $1.2 million declining $1.6 million or 57%
compared to $2.8 million for the nine months ended 2019. The
decline in interest expense reflects the significantly lower
interest rates of the Company’s new credit facility with Sterling
National Bank.
- Results for the Nine Months ended September are summarized in
the table below:
Nine Months Ended
September
2020
2019
Net Sales
$
35,603
$
41,243
Cost of Sales
31,152
33,815
Gross Profit
4,451
7,428
Gross Margin as a % of Sales
12.5
%
18.0
%
Operating Expenses
6,064
5,842
Loss on Lease Abandonment
-
(275
)
Income (Loss) from Operations
(1,613
)
1,311
Interest and Financing Costs
(1,167
)
(2,790
)
Other Income, Net
363
169
Loss before Income Taxes
(2,417
)
(1,310
)
(Benefit from) Provision for
Taxes
(1,414
)
22
Net Income (Loss)
$
(1,003
)
$
(1,332
)
Adjusted EBITDA
- Adjusted EBITDA turned positive at $ 560,000 for the three
months ended September after a loss for the second quarter ending
June 30, 2020. For the nine months ended September 2020 Adjusted
EBITDA was $1.1 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.
Adjusted EBITDA
Three Months
September 2020
Nine Months
September 2020
Net Loss
$
(477,000
)
$
(1,003,000
)
Add-backs to EBITDA Interest
359,000
1,167,000
Taxes
-
(1,414,000
)
Depreciation & Amortization
576,000
1,920,000
EBITDA
458,000
670,000
Add-backs to Adjusted EBITDA Bank Charges
50,000
122,000
Stock Compensation
52,000
266,000
Adjusted EBITDA
$
560,000
$
1,058,000
Additional information about the Company can be found in its
filings with the SEC.
Investor Conference Call
Management will host a conference call on
Friday, October 30, 2020 at 8:30AM Eastern
Conference Toll-Free Number –
800.309.1256
Passcode – 873-348
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/20201029006229/en/
Air Industries Group Michael Recca Investor Relations
631.968.5000 ir@airindustriesgroup.com
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