Air Industries (AIRI) 14 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the Air Industries Group Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This call 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 business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date the statement is made.

These forward-looking statements are based largely on our company's expectations and there are a number of risks and uncertainties, some of which are beyond our control and cannot be predicted or quantified. Future developments and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.

risks forward-looking there be information these assurance be accurate. of the that will light and can uncertainties, no In prove to securities designation with This to to a a constitute not the respect consent, nor company's of any shareholders. proxy, agent call of a or an authorization meeting solicitation does purchase offer

President like you. Thank I'd time, call this CEO. turn the over and to At to Mr. Lou Melluzzo,

begin. may You

for third joining our Thank of us This our you you, Matt, saw reported the and backlog. morning, growth, margins We results XXXX. all for revenue improved quarter thank fiscal we line and today. top gross expanded

turn As fiscal over want I spend in XXXX the many to later a I'll let to on bookings. few I'll we I Scott share discuss details. also it positive outlook. financial of him, reaffirmed our the moments call, before But

be order to Without question, continues strong. our flow

increase since I step for X% undelivered When a XXXX, back and Our marking million, backlog you these customer XX% a January $XXX of orders my June take team XX, proud surpassed of since fully X, increase achievements. funded a am XXXX. is look above of a encouraging and remains full. that book-to-bill trailing This XX industry period, ratio the months our over ended our of X.X:X, XXXX. XX, and for new quotes X.X:X standard September was longer also pipeline the is well

closing highlights, the Let some Scott will Scott? I and financial our over discuss me outlook some call provide remarks. turn for business and to

Lou. Thanks, Yes. share about quarter Lou's I third enthusiasm the results.

we improvements. X.X% to we more XXXX, what achieved $XX.X last saw the report quarter XX, third in than were QX pleased them gross for also I'm of some was ended That discuss detail. margin that Consolidated in me sales net year. Let million. September higher

XX.X%, to gross profit was In fact, by percentage increase compared X over to percentage gross dollars in $XXX,XXX XXXX. of but compared points only of than our profit sales XX% a an more or did as XXXX, increase not our

laurels. our resting not are on we Importantly,

and margin our to historical average, we and gross efficiencies. we are to additional XX.X% Our of achieve remains ramps below continue achieve shooting production as improvement

operating to We continue expenses. focus on controlling

third We For $XXX,XXX reduction a improvement were quarter income months $XXX,XXX quarter. than or in third achieved million, EBITDA of reflects over a the the Adjusted which $XX,XXX, of was the operating QX we quarter, X for last X.X% the substantial that of improved incurred has loss of they year and significantly. less XXXX. $X.X in

For that in the EBITDA detailed the X $X,XXX,XXX. was months, it release A X of it improved our this for reconciliation press issued morning. and included is GAAP by by improved $XXX,XXX months, to

bottom improvement $X.XX And a had a line, the net share. loss finally, is on the net of $X,XXX,XXX we from a This share. or dramatic XXXX of when or quarter had of third a $X.XX we loss a $XXX,XXX

was of as in up is compliance X.X% sheet side, loan $X,XXX,XXX XXXX, remain total On for with to the the year. debt The company December balance or from balance $XX,XXX,XXX, covenants, in XX, of we the September expect and XX, compliance its XXXX.

update an I and Lou Lou? some our business the on that, to with back additional turn will call for And XXXX remarks outlook.

for this expect pleased future. year. prior in the positive Scott. trend results to continue compared that foreseeable am I the improvements the and Thanks, continued quarter reflect I our to year-to-date third

outreach. Our expansion, aftermarket success is our and a focus strategy driven a portfolio by on strategy, industry including executing sharp an

on and regular hard a We working and to meet are business. expand our with potential both customers basis continue existing to

outlook, With respect are to our XXXX we our reaffirming business guidance.

we will we with think $XX for about net least Also, the achievement XXXX. of consistent that targeting in essentially adjusted levels. surpass for revenues XXXX XXXX are million fiscal believe sales expected XXXX to we with XXXX, EBITDA at Specifically, significantly be as

gross see improvements will margins and operating we income. in However,

heavily weighted military. is we term, longer Industries' are enthusiastic. to Looking the the at very business Air

is the years X in or than lack the the federal that believe We of has we believe actually reduction that Defense inflation. been ago, maintenance flat, only and resulted funding past the force Department of now the fewer has delayed and considering DoD X employees military Over deteriorating the years, budget a agency has readiness.

to the administration with I'll report conference we ongoing thinking preview In and and conflicts an spending of things up, defense are term Now abroad, are on give pending shape more in as focused. our long will get early year-end what I to and expect our markets but XXXX we new seeing. what call, that more wanted you have we

for in first posted New at is we on several want Rodeo last City. York the mention website. do that the to years, The MicroCap time the conference attended our in I presentation used month, Conference Finally, Investor we

have encourage to it, you look. you not viewed take If I a

Scott be forward we'd shareholders you in you to a talk look increasing to shareholder investor a whether Air coming Industries you. or I the or call, to a And me happy give longtime our outreach are and our story, encourage months. to to I newcomer

Now operator of read unable that before up can was an to open the you questions and When the turn provide call Scott I will have the over operator the unfortunately Q&A, questions today's received we attend we to from analyst is portion please done, some some Q&A. the Scott, answers. for call.

Scott? So

you. Thank Okay, Lou.

in As advance like address. to that we receive questions did we Lou mentioned, some would

can margin? dynamics anticipate margin you profit behind you see few dynamics excuse overall the years? -- the next the describe improvement fluctuations, between given the question, And The do trend to me, in gross first fluctuation quarterly over the the gross

to given in gross margin answer The tied in quarter. that the is that to any in question mix products shipped fluctuation quarterly the our is

to the have given you fluctuation impacts the of margin. a manufacture customers' discrete period, thereby lead schedule, of any aware, the ship then causing that times, produce long our products gross the which are we and in timing many we we in As product

quarter-to-quarter there just continue we I what on the today, years. margins believe be that improve said, Based will fluctuations over know we But overall year-to-year. several next to as will and

you are supporting base the trends what customer XX over we The and macro XX the next to received months? your second question was,

now to maintenance. that lack agency has answer resulted of funding the being to that fewer mentioned only that With did of earlier, has the next several fleet said, the federal the conflicts years years back is into given employees than will aircraft and abroad. bring the significant The expect state we readiness, over X is, they ago, be as there Department Defense the delayed spending in especially a of

not trends The providing should while year-over-year we guidance, that given to the you we improvement in third are question XXXX operating results? backlog, anticipate received,

improved that roughly be XXXX The will answer with expect gross XXXX believe margin. that equal and revenues is to we see

operating in check, in will we do that. this our able to keep to time. We highly especially just be inflationary continued costs have We continue anticipate to

XXXX. So we consistent expect or improved slightly remain our operating for results to

back you. turn to I Lou, it

Thank you, Scott.

open Now call. portion that the you that Matt, received can the of let's advance, the in over questions lines, have addressed Q&A we turn please? the the we Matt for to up call

question First Instructions] is Perez Company. [Operator from Jaime from R.F. & Lafferty

change troops? aircraft Now do refurbish to that far hitting it we as equipment most? or the in a segment the and see just maybe new as or new equipment, be new Is our increasing administration, your where builds or aftermarket backlog you placed to old have fleet in parts

in believe thank is uptick for we going Well, you experience question. the parts. what aftermarket an We're to

the to been fix the and had planes. the threats bastardizing what's the the on they the Just across support of the happened, office, the that we right although the Ukraine, and all U.S. intimately and now And to some When with been the fleets defense administration on, Israel other field. think that runway not over had Trump years are the both and started Republicans spending the like prior involved, on going the aircraft ago, sharply. took Republican aging, X conflicts aircrafts we're helicopter with that going ones, upticked in now in when pretty world we both

aftermarket we an parts. So uptick foresee in

NATO also would U.S. that military? the U.S. be Now or just military and

U.S. sell although other typically we have too not an Well, striked we agreement long service to military, the countries. NATO ago countries, to

it. this is agreement that fall, new we announced So just

there what So field the we'll comes out well. see of in as

taken as but the I the Now new the looking you could as could Trump start on when be? what timing be hasn't into bids or office, what think far you aftermarket? do know timing

on is XX lead same forgings times weeks. weeks. and time EXD, go XX, predominantly we're those seeing to materials from up the get we're thing. seeing in able And BlackHawk were forgings We parts now to XX increasing. What lead XX

as So we're right we The materials, seeing being increased. changed. possible. dramatically now our is put we quickly time time lines. get on tough lead it, have we the materials what's hasn't But material business That as production, door the on them driving and out hands the once

Right.

inflation? you mean, Is is is on there any guys cost of... sort material, the how Now inflation what's -- -- it cost the -- I it

across increase materials price no. board. been across No, dramatic There's all the

all Our band. long-term agreements stipulate a

our with win it win X% it in we X, the long-term purchase part X, and And agreement the way being quote years the or X% not that when at dollars. we X for pricing OEMs guarantee We're is anything order We becomes problem typically, business. the whoever the a issues So can't problem. is. above and business, first the X out

Right.

you different types know guys type you Now in at I your market like... that and the mean, possibility we you looking do Are of with of I mean, markets, at? gears. what of landing I new about mean, I are new talked markets, eVTOL and looking drones. of

across so operations. we're markets for our new we're military, XX% predominantly in So us, --

So commercial they time, on a again, lot the for leniency But one aviation, to Boeing that's -- us, woes right work. demand they're see commercial more products that are market in now. this long new materials but for they're the have with despite There's hot commercial, start we that's put where OEMs heavy others. a pretty having lead

unstable in starting now the it to they're in pull back. China They're was areas and lot work A back. other of that pulling it across

an with We're helicopter XX with we're with seeing involved we're some new future. electric it have for for of and activity, be quoting quoting also and -- the going range couple in uptick we're XX-mile in been over going vertical into vertical a -- for on be years, be and those The to fruition the way supply We're V-XXX, companies several now, replacement lift. Bell BlackHawk as some of see we're is the next don't -- it XX, so the coming of that companies in to at the well. We some takeoff seeing years. And planes. will commercial. both to short but in within going also be coming in takeoff vertical point, chain. vehicle We're That's

was I one a was day. watching jets to become When Yes. kid that and realize going the I didn't was a I reality

your the the markets, and eVTOL So drones... new

We're us. several new looking are at There We're lift. new for at drones. at eVTOL, opportunities commercial. vertical looking looking We're missiles.

engineer, and AI Yes. And drone warfare, I'm drones. on years think the mean, No, especially aeronautical I with are is the last these you but an the with involved everything drones. get for do -- you couple not of of you guys predator since sense I eVTOL the going fighters, guys -- it to some makes and of gears some for landing guys just

aerostructures. a do than stops gear, just do landing more company, carriers. We landing lot It's planes we work. do but on We arresting gear a of gear. We're the structural which

lot deal. for So there's one-shot there's a It's beauty about Missiles, missile. And of markets. lot of gear. deal, they example, parts it's is a one-shot landing missiles a a in but a structural don't the have

right. Yes. All right. Yes. All

industry. I I defense lot mean, of new like it a So questions good administration, the the seems those have. bringing things, to especially it's are the just

a question is next investor. from Katz ], The Lawrence [ private

August seems I company says lot. million it $XXX a difference the clarify that. And million I a out a backlog. here backlog. want On and a the order The wondered between Today, -- press if release, would a million $XXX and has press XX, huge resultant million company like to press million releases. between in announcing it $XXX $XXX the you release discrepancy the $XXX X is put to be

I'd to. be happy

XX the what we $XXX $XXX If in-house you X that's funded what different have the between orders it's and about look utilizes we million million company stretches firm But backlog when at releases, So okay? is that a that years, press measures. months talk predominantly, our potentially is is. of backlog, couple

we over awards we Our are can awards to But $XXX X-year $XXX have million. anything, backlog. contract. Those contracts. say X they order, numbers total or But in XX in about so and let's the X-year million, years not months the given to is say, when company, up not the

I if Let me clarify that further, little a may.

contract award liability, As $XXX order the entire order, cancel call is as number customer whereas Lou funded, that million termination a LTA the if million, is total would -- as or the much funded, against parts. time there for entire would required we one contract, months, those of fully period of $XXX mentioned, said, the meaning next provide an that were $XXX longer a over million And time has XX they've what the Lou the lead order been to life a be within is announced, for manufacture additional million, placed as go released funded out the orders XX $XXX goes to in to that or said. they as the on, the releases only time the Lou just that

I Okay. said, was it you understand clear. and what

Let it me or talked a release just rescinded about is that even press try the $XXX That on order million been The anything. was XX, backlog, hasn't August $XXX long It's to resulting still make clear. more term. in that million in on.

correct. completely You're correct. He's

hear. to wanted Good. That's what I

what appreciate call, I and that explain No, the meant. further that we could appreciate I

private from is Mitchell question investor. a ], Next Katz [

has in you workflows, place question increase operation. line? optimize the with to eliminate utilization, in your programs do reduced improve have internal operator or manufacturing My production to equipment productivity, bottlenecks do What

question. great a That's

operations, board. Connecticut is an and customers' operation We Technologies customers' would from to utilizing that's his have is looking a services at executives outside our that at operation there's Center workflow is -- these sole help parts. Advanced at addressing for we're requirements, CCAT, which scheduling, help the in across everything an needs, for like ConSTEP, equipment looking also an that Connecticut called We And facilities. to team produce make retired which our of best continuous job improvement sure the the call charts part operation of that coordinator example, called

month. correct? how Is on month, Plus So we XX how whatever speeds do new a the lot put in this did at And and improve, let's if Are both and a streamline internally lot consultants tend it a technologies? of there's outside we everything. product the walks we both there's to use X to do hours to we to, a We feeds do. -- last if there's gumble machine? we strive hours, the closer we material -- we need get togethers systems, of and to say, when there look can operations in do we mill cutter

there If I'd like turn any questions, comments. no closing are to management back to floor for the further

be our updating for We look next Thank with interest on you, Matt. call Thank today time on Industries and progress you in the the all call. the Air for to on Group. can that, your Matt, to conclude you taking forward you the call.

today's Thank teleconference. you. This concludes

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