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- **Q2 Results**: Net loss due to delays, but adjusted EBITDA positive at $1.469M. $4M ATM offering boosts liquidity.
- **Backlog Growth**: Record $270M backlog, with $120M+ firm funded for 18-24 months. $5M contract delivers in 2026-2027.
- **Cost Management**: $1M annual payroll savings and controlled operating expenses (-99% YoY operating income).
- **Industry Momentum**: Secured $10M in new aftermarket orders and largest long-term agreement with Northrop Grumman.
- **Risks**: Near-term sales timing delays, but confident in long-term backlog conversion.

**【Management Opening Remarks】**
- Q2 2025 results were disappointing due to delays in customer approvals and subcontractor lead times, resulting in a net loss. Adjusted EBITDA remained positive at $1.469 million for the first half, supported by cost-cutting measures including a $1 million annual payroll reduction.
- Outlook adjusted for the second half, with Q4 expected to be the strongest quarter. A $5 million contract for B-52 components will not deliver until 2026-2027, highlighting the 1.5-2 year backlog-to-sales lag.
- Completed an ATM offering in July, raising $4 million to strengthen liquidity and reduce net debt by $4 million.

**【CFO Financial Commentary】**
- Q2 net sales: $12.7 million (-6.7% YoY). Gross profit: $2 million (16% of sales). Operating income: $8,000 (-99% YoY). Net loss: $422,000.
- First half adjusted EBITDA: $1.469 million (-17% YoY). Balance sheet changes: debt down $1M, inventory up $1.3M, AR down $2M, AP up $1.2M.

**【CEO Industry Outlook】**
- Excited about government funding for F-47, E-2D, and F/A-XX programs. Secured largest long-term agreement in history with Northrop Grumman and $10M in new aftermarket orders.
- Despite challenges, confident in converting record backlog of $270 million (firm funded: $120M+ for 18-24 months).

**【Q&A Highlights】**
- **Credit Facility**: Lender discussions ongoing; no immediate liquidity concerns with $4M ATM proceeds.
- **Sales Decline**: Timing issues with customer approvals and first article testing delays, not structural weakness.
- **Tariffs**: Only one product with foreign material has 5%+ cost pass-through protection; others protected via OEM contracts.
- **European Sales**: Limited direct exposure, but spares sales via OEMs may benefit from increased defense spending.
- **Company Sale**: Public company open to strategic options, but management focused on executing current growth strategy.

Air Industries (AIRI)-14 Aug 25-2025 Q2 Earnings call transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

AIRI

AIRI fundamentals

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