Air Industries Group, Inc., (www.airindmc.com) a holding company established to consolidate manufacturers, engineering integrators and specialized service providers to the aerospace/defense industry, announced net sales for second quarter were $10,989,536, an increase of 47 percent as compared to $7,488,130 in the first quarter 2007 and 19 percent as compared to $9,220,165 in the second quarter 2006.
Financial results and business development highlight for the year to date include: Net sales up 19 percent from 2Q06 and 47 percent from 1Q07, gross profit margin up 22 percent in 2Q07 from 17 percent in 1Q07 and 19 percent in 2Q06, and raised more than $8 million in oversubscribed offering.
The increase in net sales from the prior periods was primarily attributable to an improvement in order releases for parts and related defense components to one of the company’s prime aerospace customers as well as the contribution of Sigma Metals from the date of acquisition in April 2007.
Gross profit in the second quarter 2007 was $2,372,838, an increase of 35 percent as compared to gross profit of $1,752,839 for the same period of 2007, and an increase of 90 percent from $1,248,646 in the first quarter 2007. As a percentage of sales, gross margin in the second quarter 2007 was 22 percent, as compared to 19 percent for the same period of 2006 and 17 percent in the first quarter of 2007. The increase in the gross profit as well as gross profit as a percentage of sales for the second quarter of 2007 primarily reflects the higher level of revenue and related improvement in manufacturing efficiencies and, to a lesser extent, higher margin contributions from Sigma Metals revenues.
The company incurred a net loss before provision for income taxes of $237,305 for the three months ended June 30, 2007, as compared to a pre tax profit of $224,423 for the three months ended June 30, 2006, and a pre tax net loss of $6,723 in the three months ended March 31, 2007. The net loss for the second quarter of 2007 was $315,443 as compared to a net loss of $40,432 in the same period of 2006, and a net loss of $71,487 in the first quarter of 2007. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the second quarter 2007 was $306,908, as compared to $864,998 in the same period of 2006 and $290,458 for the first three months of 2007.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the second quarter 2007 was $306,908, as compared to $864,998 in the same period of 2006 and $290,458 for the first three months of 2007. Air Industries Group considers EBITDA to be an important financial indicator of the company’s operational strength and performance, and uses this indicator when making decisions regarding investments in the various components of its business and acquisition valuations. Because EBITDA is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”), and is thus susceptible to varying calculations, EBITDA, as presented, may not be directly comparable to other similarly titled measures reported by other companies.
In April 2007, Air Industries raised $8,023,000 in gross proceeds from institutional and accredited investors through a private placement of 802,300 shares of its Series B Convertible Preferred stock. A portion of the proceeds has been allocated toward the cash component for the acquisition of Sigma Metals. The common stock underlying the Series B Convertible Preferred stock has been registered with the Securities and Exchange Commission and applied toward an average weighted shares outstanding basis to the company’s earnings per share calculations for the second quarter of 2007.
“The improvements in revenue and gross margin, as well as progress with our consolidation strategy, as exhibited in the second quarter of 2007 are a harbinger of the growth to come in the second half of the year,” said Peter Rettaliata, Air Industries group president and chief executive officer. “Importantly, resulting from our growth initiatives, we look forward to a return to profitability in the second half of the year. Our growth platforms and the apparently unabating activity in the commercial and military aerospace markets contributed toward our successful completion of an offering of securities that raised over $8 million. The offering was oversubscribed primarily as a result of stronger than anticipated demand from institutional investors.”
“Integral to our growth strategy is our commitment to expand our products lines and diversify our revenue streams. This strategy is clearly being executed as evidenced by the closing of our acquisition of Sigma Metals in April. With high margin revenues, Sigma’s contributions are already having a positive impact. We anticipate the closing of the Welding Metallurgy transaction, our third acquisition, to take place later this month, which will further diversify our business and add high margin revenues for the balance of the year. Our sights have been set on additional acquisitions that will augment our three growth platforms: Contract Manufacturing; Raw Materials Distribution; and, Welding & Fabrication.”
“Within our Contract Manufacturing platform – represented by our Air Industries Machining Corp. (AIM) subsidiary, we have been progressing through the previously announced order delays arising from scheduling difficulties at one of AIM’s largest customers. Shipments for previously received awards to this customer are expected to be back on schedule in the second half of 2007. However, we have received sizable new contract awards from this customer during the second quarter, serving as a clear indication that our revenue trajectory will continue to rise. Other progress in this platform was demonstrated by new awards from commercial customers for both new parts and new aircraft programs. With diversification and market share expansion at the core of our growth strategy, we believe our efforts are delivering their intended results.”