Air Industries Group Announces Financial Results for First Quarter 2024 and Updates Its Fiscal 2024 Business Outlook
Air Industries Group (NYSE American: AIRI) reported its financial results for Q1 2024, announcing net sales of $14.06 million, a 12% increase from Q1 2023. However, the company posted a net loss of $706,000, higher than the $618,000 loss in the previous year. Gross profit slightly improved to $1.91 million, with a decreased gross margin of 13.6% compared to 15% in Q1 2023. Operating expenses rose to $2.17 million, resulting in an increased operating loss.
The company’s backlog increased to $99.3 million, and it began initial production on new programs with expected improved margins over time. Cash flow used in operations was $232,000, and total indebtedness stood at $23.94 million. The company aims for net sales of at least $50 million and improved adjusted EBITDA for fiscal 2024. A conference call to discuss these results is scheduled for May 16, 2024, at 4:15 PM ET.
- Net sales increased by 12% to $14.06 million in Q1 2024.
- Backlog rose to $99.3 million, indicating strong future demand.
- Initial production on new programs began, with expected margin improvements over time.
- Projected net sales for fiscal 2024 are at least $50 million.
- Adjusted EBITDA for fiscal 2024 is expected to be better than in 2023.
- Net loss increased to $706,000 in Q1 2024 from $618,000 in Q1 2023.
- Gross margin decreased to 13.6% from 15% in the previous year.
- Operating loss widened to $259,000 compared to $158,000 last year.
- Cash flow used in operations was $232,000 in Q1 2024.
- Total indebtedness is high at $23.94 million with only $225,000 in cash on hand.
Insights
The first quarter financial results of Air Industries Group (AIRI) exhibit a mixed performance. On the positive side, net sales increased from
The company’s costs rose alongside revenue, leading to a net loss of
A key indicator to watch is the book-to-bill ratio at
From a market perspective, Air Industries Group seems to be navigating through a period of fluctuating demand and operational adjustments. Their backlog increase to
The aerospace and defense sector is typically characterized by long lead times and sizeable contracts. The volatility in this market can be attributed to factors such as government defense budgets and geopolitical dynamics. AIRI’s ability to stay competitive and improve its gross margins will be important for sustained investor confidence.
The reliance on a single lender for adjustments to the Credit Facility could be a double-edged sword. While it offers tailored financial solutions, it also adds a layer of financial risk should negotiations falter. The cash flow used in operational activities is another critical area. Although expected to break even, the current usage indicates potential liquidity issues ahead.
Retail investors should weigh these operational challenges against the backdrop of a promising backlog and strategic market positioning in the aerospace industry. Continuous monitoring of operational efficiency and contract wins will be essential to gauge the company’s trajectory correctly.
The initial production on new programs with low gross margins is a strategic risk but also an opportunity for Air Industries Group. Early inefficiencies in new product lines are common, but the company's ability to refine operations and ramp up production will be pivotal. Improving these margins is critical for enhancing overall profitability and derives directly from process optimization and cost management strategies.
The mention of not meeting the Fixed Charge Coverage Ratio with their lender signals that financial flexibility is somewhat constrained. This could impact operational decisions, prioritizing cost-cutting measures and streamlining efforts across various departments.
Furthermore, the company’s focus on closing large opportunities appears promising. However, execution and delivery will determine if these can offset the operational losses and translate into long-term gains. It's worth noting that high-quality precision manufacturing in aerospace and defense requires stringent quality controls and efficient production workflows. Any missteps here can lead to higher costs and delayed deliveries, affecting the bottom line.
In summary, while the company’s current operational challenges are notable, there is potential for improvement if strategic initiatives are managed efficiently. Retail investors should watch out for any updates on operational refinements and subsequent effects on the margins.
“Fiscal 2024 is off to a good start. The strong order and opportunity flow we experienced during the fourth quarter of last year continues and remains strong. We achieved bookings of
First Quarter 2024 Financial Results
| First Quarter (Unaudited) | ||||||||
|
2024 |
|
|
2023 |
|
|||
| Net Sales | $ |
14,061,000 |
|
$ |
12,549,000 |
|
||
| Cost of Sales |
|
12,155,000 |
|
|
10,669,000 |
|
||
| Gross Profit |
|
1,906,000 |
|
|
1,880,000 |
|
||
| Gross Margin |
|
13.6 |
% |
|
15.0 |
% |
||
| Operating Expense |
|
2,165,000 |
|
|
2,038,000 |
|
||
| Operating Loss |
|
(259,000 |
) |
|
(158,000 |
) |
||
| Interest Expense |
|
(462,000 |
) |
|
(476,000 |
) |
||
| Other Income (net) |
|
15,000 |
|
|
16,000 |
|
||
| Loss before Income Taxes |
|
(706,000 |
) |
|
(618,000 |
) |
||
| Income Taxes |
|
- |
|
|
- |
|
||
| Net Loss | $ |
(706,000 |
) |
$ |
(618,000 |
) |
||
| Loss per Share | $ |
(0.21 |
) |
$ |
(0.19 |
) |
||
| Reconciliation of EBITDA To GAAP | ||||||||
| Net Loss | $ |
(706,000 |
) |
$ |
(618,000 |
) |
||
| Interest Expense |
|
462,000 |
|
|
476,000 |
|
||
| Depreciation |
|
527,000 |
|
|
604,000 |
|
||
| Amortization |
|
17,000 |
|
|
17,000 |
|
||
| Stock Compensation |
|
62,000 |
|
|
99,000 |
|
||
| Adjusted EBITDA | $ |
362,000 |
|
$ |
578,000 |
|
||
Updated 2024 Business Outlook and Items of Note
-
Although it remains difficult to predict the timing of orders, raw materials and delivery times for finished products, the Company is still targeting that net sales for fiscal 2024 to be at least
$50.0 million - The book-to-bill ratio, which is bookings divided by net sales, was .92X for the first quarter of 2024.
-
Backlog, which represents the value of all undelivered funded orders received, stood at
$99.3 million - During Q1 2024, the Company began initial production on certain new programs. Gross margins for these programs were low but expected to improve as we refine our operations and accelerate productions.
-
Cash flow used in operating activities for the first quarter of 2024 was
$ 232,000 -
As of March 31, 2024, total indebtedness stands at
$23,936,000 $225,000 - Additional information about the Company’s first quarter 2024 results can be found on the Investors website section on the Company’s website at www.airindustriesgroup.com and its Form 10Q filing as filed with the SEC.
Conference Call Information
The Company will host a conference call to discuss Q1 and its updated 2024 business outlook. The call is scheduled for May 16, 2024, at 4:15PM Eastern Time.
The conference call number is 877-524-8416 and will be made available for replay at www.airindustriesgroup.com.
ABOUT AIR INDUSTRIES GROUP
Air Industries Group is a leading manufacturer of precision components and assemblies for large aerospace and defense prime contractors. Its products include landing gears, flight controls, engine mounts and components for aircraft jet engines, ground turbines and other complex machines. Whether it is a small individual component or complete assembly, its high quality and extremely reliable products are used in mission critical operations that are essential for the safety of military personnel and civilians.
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.
NON-GAAP FINANCIAL MEASURES
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 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240515998933/en/
Air Industries Group
Chief Financial Officer
631-328-7039
Anyone wishing to contact us or send a message can also do so by visiting: www.airindustriesgroup.com/contact-us/
Source: Air Industries Group
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