Air Industries (AIRI) 7 Dec 232023 Q3 Earnings call transcript

Hello, and welcome to the Air Industries Group Third Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. This call and the accompanying webcast may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's expectations regarding realization of its business strategy and growth strategy.

Expressions, which include forward-looking statements speak only as of the date of this call. control based a our uncertainties, number which beyond are are expectations some statements predicted are to be subject of our forward-looking largely company's on and of or These quantified. cannot and risks and materially actual contemplated forth underlying forward-looking differ or those statements. set Future developments could from and the results and by In assurance accurate. information forward-looking to be that these will and there uncertainties, risks of the light can no be prove of company's any call proxy, does to an constitute or nor designation consent, a This solicitation agent offer to authorization securities a a purchase meeting shareholders. not with respect of the

At this Please to go to the CEO. Lou sir. call time, over I'd like ahead, and Melluzzo, President turn

thank for afternoon, you, today. Good Thank joining you John. and us

to a third as growth emphasize on As of in period we our I for stated this quarter further the want today's Air was plan. new I news opportunities exciting on Industries executed call, release,

even raw in to XXXX and by we higher third quarter that have both begun business quarter ease, say a our XXXX and these of sales shortages fourth to levels impacted Thankfully, rebound to for EBITDA. product. materials expect of was though material I critical the and of into shortages certain

was third $XX.X quarter sales and Our the for or million. $X.X Gross XX% incurred net were loss million. profit a million we sales, of of $X.X

strong better the profitability. continue that in sales, through higher Sterling contribute Connecticut. time and cost Sterling in Sterling's broke increasing strategy million had the Engineering improving its We quarter, to mix increasing favorable for our noteworthy achieving of absorption and years. to experienced sales growth traction level volume and many a product first $X for

especially equipment, on its calls, modernize unique is to new capabilities discussed and differentiate critical Sterling invest sales, for our providing the I in marketplace. strategy long-term past plan its agreements, and it expand in the through As

U.S. used manufacture Navy's partnership now portfolio provider the end, Industries Air arresting E-XD customer, and the is with this product we expanding support aircraft to the a welding, to flash process gear mission-critical welding that our equipment processes. for program. major in sole Towards special secured of of

functional helicopter We shop acquired to expanding and bolster a and CMM a producing also to mill new a final measuring support new have format capabilities large added business our bridge our inspection. machine now have fully in paint accorded

basis, this installation the has Also is and of the activity a have underway. of December notable at to bookings. new increased the tenure business and On and development Sterling a Industries enthusiasm million quoting a our have XXXX. XX, our current increase over year, trailing a new future. solar increased roof has panels we is Company-wide, resulted business compared in in for month activity business doubled Air X-month bookings installed $X exciting of only

in and Ukraine been Pacific is contributor, the Middle East believe in have raging has wars primary continued focus but rising Perhaps we The this on Recently, focus increased the our Asia a purchase million the critical tension to company the to $X.X of to U.S. lead carriers product contract the long U.S. support production time program. Navy's future aircraft received to Navy's this order strategic The a E-XD a is activity cause. and and increased military have which of fund operations. the been I aircraft, awarded capabilities. acquisition support

year-to-date. an stands or increase X.X% backlog of current grow now $X.X and million XX-month $XX.X at to Our than more consolidated continuing is million,

our XX% with I, people At business to and shipments together with reduced we fruition. projects, several meetings large are meeting, bidding believe Subsequent exciting whopping site we our and Show European-based which we large with company major this with in met frame. Air have a same several gear. Additionally, in in landing multinational are a by development close time Paris overdue a the aerospace the July, manufacturer concentration visits to on had this

Accomplishing production this is initial remarkable. short after just in a months our few

to business our the submarine nuclear results. produce in expand initiative to Lastly, continues

nuclear ourselves vetting We with prime the proven manufacturers. next and sub-tier have submarine suppliers, step have taken with process the in

portion am taken aerospace a Scott Officer introduce I Industries related pleased of to our to CFO. Scott plans, Chief has special of responsibilities, newly here our named veteran growth sector. the new focusing report with is XX-year that our especially Mike projects years. With in been the and us complete, is many for on Air Accounting Glassman, has Recca on

dedication Mike in that hand, of I can and Industries. still they good a CFO our on be count new both whole CEO's enough Air the in personally announcement, and their I of the is As said are roles. for people right Scott the I both pleased for for I can't thankful am

me to will for call let which Scott Q&A concluding turn the his Now with up a and over Scott? follow report, remarks. some

your Thanks, honored Industries. introduction. role appreciate on Lou, and new kind I'm I good Air at afternoon. to this take

the of quarter. third on results Let me detail provide the some additional

XXXX. were net said, sales lower than and was of second the quarter than As quarter Lou million, third third $XX.X our of lower the which XXXX quarter X.X% X.X%

down Year-to-date period ago. compared from million, were million year sales X.X% $XX.X a of $XX same to the

a periods, CMS X particularly for were that subsidiary. shortage product of had negative effect partially offset all Sterling our sales measurable by mentioned there Lou sales. sales that at lower X raw on has at For improving a been material,

some more you details. Let give me

the orders During worth X raw material, not first by over had could million X perhaps or produce to of $X.XX ship. due which we $X reduced XXXX, during nearly months we parts, lack has for EBITDA million XXX of that months. This were the the

and quarter than ease. to quarter shortages $X.X the XXXX of of than lower of which the was lower these indicated, third XX.X% the Lou for As third is million started second quarter XXXX XX.X% Gross XXXX. profit have

to million, the decrease comparable mainly Gross XXXX to by The profit more due at exacerbated profit third lower gross of in gross higher of overhead. increased period for product Sterling absorption decline profit under from months CMS. sales, increased first quarter improved mix absorption the and X totaled due $X.X year-over-year in XX.X% In at significantly of sales and overhead year-to-date XXXX. of sixfold a was manufacturing contrast, than

quarter XX% XX.X% second margin sales of XXXX. for XXXX. for whereas, XXXX, as of the gross of was of quarter profit to Our XX.X% same of margin ended of for the Gross of compared XX.X% profit margin quarter reported for sales the was third third XX, a September gross XXXX, X of the and sales XXXX the for months period XX.X% reported

Operating quarter $X million, XXXX. quarter and for to quarter lower of a I'd third and XXXX and XXXX to the of the the of adjusted on X.X% remind X at more than X.X% anticipated calculating year-end particular the losses for contract gross for were slow-moving you of a decline XX.X% like margin in inventory to of from was conservative reserving method due second adoption third XXXX expenses the XXXX. of that

believe to XXXX. Year-to-date in achievements. X%. quarter is control of this in in third operating being the of versus operating incurred operating $XX,XXX the of operating expenses of We significant able and XXXX quarter third the less have in $XXX,XXX costs inflationary XXXX an compared income only We the quarter of year-over-year that of than $XXX,XXX quarter of income increased by environment the period. operating the Year-to-date, year-to-date, the XXXX, to loss operating quarter doubled has XXXX. the for quarter from XXXX, with and primarily income with reported the of second increase operating rate, of since $XXX,XXX XXXX XX.X% increased third loss third June the increase the costs Interest X.X% for XX.X% which due was and in financing $XXX,XXX from of prime second

of loss $X.X a was third the Net in for million quarter for XXXX, with net loss ended net in $XXX,XXX quarter of quarter loss second with was net third months $X.X a compared loss loss of of period. the a of compared XXXX million the $XXX,XXX X the XX, XXXX in the Net $XXX,XXX September XXXX. and

been Our in very more adequate payable for and balance current, we sheet accounts are reducing robust, remains and have immediate Accounts inventory. needs. our than successful receivable

that Lou, and my back you. I'll concludes turn to it report,

we this of Thank the as year was our you, wins period for our its drive Industries John, momentum of of that, quarter plan The new here. new in company's turn would level the continue Air over mind. for are from higher to to you people. . With development continued tangible expect I summary, is investment, opportunities and like its sales have that of and producing this and to great don't questions-and-answers execution if In growth business bookings the Because investment exciting business in results. result Scott. a segment, third

Howard [Operator with Instructions] from First the line question Brothers. comes Taglich of Halpern

income, to sustained margins a In plan operating be of to appears you period improving cost to operating gross contingent terms cost that's good it have structure. a on more going get because of you the

just of type guess, mix? help in it being how in a So we that produce the to utilization to forward? should we increased going sales of terms I look and terms should at generating, able at sales How look different of

all about development. Well, Howard, this business it's year, been

was of roughly this onset last if as orders in year COVID, this or materials necessarily year, weren't placed and of but the you're that some timely some they because this are year suffered kind out And should. With to we lucky. as in spending environment field military a reduced, this not year

bit saw alloy mix. inconel and to single OEMs more the qualify the mills people that product the a us XXX mills, now into and caused seeing year, we're need of and So they grief little that the now special this the bring angst more

could tremendous, ran had So standpoint. year tremendous this year have [Howard] from difference us a a profitability was both that single a in and sales product for

our platforms nuclear boat We're facilities. are X very successful subtiers, are robust in only to vetting our opportunities. with increase directly help through be believe of line future. we've have getting able sales do additional and business the in we're sustain the going had process some We development So There that to the in submarines. but work do and electric bottom I not in will business that been for with and folks now them. We're traction in bringing

just thank sustainable. we're effect. mix currently that, the ease running the are than that but end got we're we're not up just material are seeing And an overcome -- 'XX. seeing the and seeing problem, the for we is of more industry-wide shortages that We have So things it's just tail not God, to

Okay.

or you those that And a approximately. the some press least those out Do so do have said there? out able year have bookings to are into better minimums bookings. given you're now a you that you're ramping month -- the gross on $X or Like up attain visibility release million margins you going X, at you in

course, pricing, are into of repeat repeat parts. looking these are for are of bookings before, business we homework getting We, made on the that We're we've doing that. our many that but

be those we products better obviously. before, So made than margin haven't on the parts we believe will that

margin high Lou the for a shortage products. based we as or one air material said, margin believe higher specific this on Additionally, which product of easing is

We that. will our be on based to increase margins able

course, manufacturing the to now with with be shop. shop, will going our going and absorb increase the hours Of work overhead throughput the more through additional able as through well, we'll our or

hours hours -- year, in priced about shop absorption Howard, under that's to number. a are the It's right. the through availability. a we And catching incurred material big up. delta This XX,XXX due platforms less running the that's

up, once that see game. different a easing we So in cover you you're which the absorption,

more the And being even aggregate... produce operating to generate to in have the really generate, get door, with not you're it to higher out increase going sales, able expenses

are primed. now to at CapEx That's right few need that we is up. in to correct. is is of a do. is on the brought right execution level the to the that The We not problem. on bit what confident XXX% peak years -- The Group people Industries We're not the money I quite able last problem. -- support we spent now. be in am equipment set Execution Air

guesstimate that might million, the peak a that of a $XX the not have we Okay. million. we we And able quarter to roughly based reach sequential -- the but that area? just do said $XX.X we in from on Am you right sales better over on should had second in increase what in press release, just than line, be the in should I

. ballpark. the in you're think I

Okay.

of know will keep things I our year as in cross go put Well, a hard fingers, hopefully, and forward. we work better each you lot Okay. this quarter getting only

Exactly.

Exactly.

like I'd Lou Instructions] floor [Operator questions. over back closing for turn any to time, At further comments. the this there no are Melluzzo to

John. you, Thank

for time thank that, your you for Industries and the taking to with again, be Air in call Group. interest So the all once on

you Thank updating our best we -- the may of and on and for next to Our you Happy wishes conclude progress our call forward holidays, you. Year call, John, . New look the to the please. on everyone.

teleconference. today's concludes Thank This you.

your for time. participation. You at your may Thank disconnect this lines you