SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
November 16, 2007
AIR INDUSTRIES GROUP, INC.
--------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
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State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
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Address of principal executive offices
Registrant's telephone number: (631) 968-5000
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations or Financial Conditions
On November 16, 2007, the Registrant issued a press release reporting on
its results of operations for the nine months ended November 30, 2007 and its
financial condition as of November 30, 2007. A copy of the press release is
attached hereto as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On November 16, 2007, the Registrant issued a press release reporting on
its results of operations for the nine months ended November 30, 2007 and its
financial condition as of November 30, 2007. A copy of the press release is
attached hereto as Exhibit 99.1.
The information in this Form 8-K, including Exhibit 99.1 attached hereto,
shall not be deemed as "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liability
of such Section, nor shall it be deemed incorporated by reference in any filing
by the Registrant under the Securities Act of 1933, as amended, or the Exchange
Act, regardless of any general incorporation language in such filing, unless
expressly incorporated by specific reference in such filing.
Item 9.01. Exhibits.
99.1 Press Release: Air Industries Group Reports Record Revenues, Net Income
and EBITDA in Third Quarter 2007.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 16, 2007
AIR INDUSTRIES GROUP, INC.
By: /s/ Peter D. Rettaliata
-------------------------------------
Peter D. Rettaliata
President and Chief Executive Officer
3
EXHIBIT INDEX
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99.1 Press Release: Air Industries Group Reports Record Revenues, Net Income
and EBITDA in Third Quarter 2007.
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4
[LOGO] Air Industries Group
For Immediate Release
Air Industries Group Reports Record Revenues, Net Income and
EBITDA in Third Quarter 2007
BAY SHORE, NY -- November 16, 2007 -- Air Industries Group, Inc. (OTCBB: AIRI)
today announced financial results for the third quarter ended September 30,
2007. The financial results reported by the Company include results from Welding
Metallurgy, a metallurgical engineering and welding services provider and
manufacturer, from the date of acquisition in August 2007.
Financial Performance Highlights for Third Quarter 2007:
o Net Sales Increased to Record $12.8 Million, Up 63.0% from 3Q06
o Gross Profit Margin Increased to Record 28%, Up from 19.3% in 3Q06
o Gross Profit Increased to Record $3.6 Million, Up 136.1% from 3Q06
o EBITDA to Record $1.2 Million, Up 85% from 3Q06
o Pre-tax Income to Record $469,355, Up 975.5% from 3Q06
o Net Income to Record $422,594 Compared to Prior Year Loss
o Current Firm Backlog at Record Level of $50 Million
o Fourth Quarter Guidance Reiterated
Corporate Development Highlights for Third Quarter 2007:
o New Commercial Customers Added
o Engineering and Design Capabilities Enhanced
o Shipped New Parts for Commercial and Defense Test Programs with
Potential Market Value Up to $700 Million
o $15 Million Award from Sikorsky Brings Year-to-Date Orders to $75
Million
o Closed Welding Metallurgy Acquisition
o Leadership Strengthened at Management and Board Levels
"We are exceptionally proud of the entire Air Industries Group team," said Peter
Rettaliata, Chief Executive Office of Air Industries Group. "Our third quarter
performance set records for financial performance by the Company. The
contributions were derived from each operating area. Net sales were at the
highest level in our history, driven by internally generated growth as well as
through acquisitions. The aerospace industry is, we believe, in the early stages
of a powerful secular growth trend and Air Industries Group should continue to
be a beneficiary. Industry trends and the continued execution of our vertically
integrated growth strategy should allow us to build on the momentum that we have
generated."
Third Quarter 2007 Financial Results
Net sales for the three months ended September 30, 2007 were a record
$12,845,821, an increase of 63.0% as compared to $7,883,485 in the same quarter
of 2006 and 16.9% from $10,989,536 in the second quarter of 2007. The increase
in revenues reflect both organic growth at the Air Industries Machining Corp.
subsidiary and the expansion of the Company as a result of recent acquisitions.
Third quarter net sales include results from the Sigma Metals subsidiary for the
full quarter and contribution from the Welding Metallurgy subsidiary from the
time of acquisition in late August through the end of the quarter.
Gross profit in the third quarter 2007 was a record $3,591,483, an increase of
136.1% as compared to $1,521,409 in the same quarter of 2006 and 51.4% from
$2,372,838 in the second quarter of 2007. As a percentage of sales, gross margin
in the third quarter 2007 was 28.0%, as compared to 19.3% for the same period of
2006 and 21.6% in the second quarter of 2007. The increase in the gross profit
as well as gross profit as a percentage of sales for the third quarter of 2007
primarily reflects an improved revenue mix with a higher level of revenue and
volume-related manufacturing efficiencies and, to a lesser extent, higher margin
contributions from Sigma Metals and Welding Metallurgy revenues.
Selling, general and administrative ("SG&A") expenses for the third quarter were
$2,617,134 as compared to $1,284,166 for the same period in 2006 and $2,330,498
in the second quarter 2007. The increase in SG&A reflects the incremental costs
associated with expanded management and the addition of overhead expenses
relating to the inclusion of recently consummated acquisitions.
The Company reported record net income before provision for income taxes of
$469,355 for the three months ended September 30, 2007, as compared to a pre tax
profit/loss of ($53,610) for the three months ended September 30, 2006, and a
pre tax net loss of ($237,305) in the three months ended June 30, 2007.
Net income for the third quarter of 2007 was a record $422,594, or $0.01 per
share, as compared to third quarter 2006 net loss of ($32,000), or ($0.00) per
share, and a net loss of ($315,443), or ($0.00) per share, in the second quarter
of 2007.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the third quarter 2007 was a record $1,175,388, as compared to $366,155 in the
same period of 2006 and $218,819 for the second quarter 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.
Nine Months 2007 Financial Results
Net sales for the first nine months of 2007 was $31,323,487, as compared to net
sales of $26,001,922 for the same period in 2006. SG&A expenses for the first
nine months of 2007 were $6,074,424 as compared to $3,456,344 for the same
period in 2006. Net income before provision for income taxes was $225,327for the
first nine months of 2007, compared to a net income before provision for income
taxes of $406,331 for the 2006 period. The Company's net income for the first
nine months of 2007 was $35,663, or $0.00 per share, as compared to net income
of $243,777, or $0.01 per share, in the same period of 2006.
At September 30, 2007, Air Industries Group had bank and other funded debt of
$16,247,882, and availability of approximately $2,927,822 under the Company's
loan facilities with PNC Bank. All cash balances are applied on a daily basis to
amounts outstanding under the revolving portion of the Company's loan facilities
rather than being accounted for on the balance sheet as cash.
The basic and diluted average weighted shares outstanding used in the Company's
earnings per share calculations was 67,838,959 and 70,734,615, respectively, for
the third quarter of 2007 and 64,149,247 for the first nine months of 2007. The
basic and diluted average weighted shares outstanding used in the Company's
earnings per share calculations was 41,545,824 for the third quarter of 2006 and
23,762,472 for the first nine months of 2006.
Management's Comments
Air Industries Group President and Chief Executive Officer Peter Rettaliata
commented, "The value proposition for our Company continues to strengthen. Our
third financial performance is one indicator. In addition, the foundation is now
in place to reach our goal of solidifying our position as an increasingly
progressive and vital player within the aerospace and defense supply chain. "At
Sikorsky Aircraft Corporation, we have made significant progress as an important
partner. Year to date we have received long term general purchase agreements
relating to Sikorsky's BLACK HAWK helicopter program that combine for a total
value of over $75 million. The synergies derived from adding strategic core
competencies to our business are clearly visible at Sikorsky. Our Welding
Metallurgy subsidiary recently received a much coveted quality approval from
Sikorsky.
"Our internally generated growth efforts are grounded in the notion that
diversification may be achieved through commercial and military platforms as
well as from customers domestically and internationally. The Company's Air
Industry Machining Corp. (AIM) subsidiary shipped new mounting systems as part
of a test program relating to the new "gear turbine fan engines" designed for
green technologies and better fuel efficiency. Similar mounts could ultimately
be used on over 3,000 planes, representing a market value for this program
potentially in excess of $600 million, for which AIM is well positioned to
receive a large share. This is just one of the new programs that we are
contemplating for high volume production manufacturing requirements.
"Reflecting our long term vision, the work on the engine mount program, which
required substantial investment, reinforces the need to develop a more
comprehensive engineering design capability. I am pleased to note that we have
been investing in developing a more robust internal design team. This capability
will enable us to work on more products for our prime contractor customers and
garner a greater percentage of market share. We also view our design capability
as a means to enhance our long term profitability, as contracts which are
awarded based on our own design provide us with access to production contracts
and orders for aftermarket parts.
"On the strategic consolidation front, we completed our third acquisition,
Welding Metallurgy. This added a key welding and fabrication component to our
vertically integrated corporate build-out. You may recall that in the second
quarter, we added Sigma Metals to provide a materials distribution component.
Sigma provides many strategic benefits.
"We are building the infrastructure to move up the aerospace supply chain. Our
goal of transitioning from basic contract manufacturing to becoming a provider
of comprehensive integration services to the industry titans is becoming a
reality. To help lead Air Industries Group in this direction, we have added
Kevin Dembinsky to our senior management team. Kevin was formerly the Director
of Business Development for the Northrop Grumman Aerostructures Division. He
will now be focusing his efforts to expand our commercial aircraft marketing
capabilities, spearheading international sales and further developing our
proprietary design programs. At the Board of Directors level, we added industry
veteran David J. Buonanno as the seventh member, which is intended to bolster
our leadership in terms of supply chain management and tactical and strategic
issues. Dave had been the Vice President of Supply Chain Management at Sikorsky
Aircraft.
"In conclusion, we believe that Air Industries Group is now capitalizing on the
investments we made in order to build the foundation of our Company. While those
costs contributed to an unprofitable first half of 2007, they also helped
generate the momentum on which we can build going forward. The Company's
prospects as it relates to building long term value for our shareholders are
compelling. We have a record backlog and an outlook for accelerating revenue,
profitability and cash flow in the fourth quarter and beyond. Moreover, we are
on course to accomplish our long term goal of becoming a formidable middle
market aerospace/defense player. Our target markets remain ripe with
opportunity, benefiting from worldwide volume increases for both commercial and
military aircraft. Air Industries Group's position strengthens every day and we
are very excited by our outlook for growth."
Backlog and Guidance for 2007
The Company provides firm backlog as an indicator of future activity. As of
November 15, 2007, Air Industries Group had a firm 18-month backlog that was in
excess of $50.0 million. This backlog level, which is solely derived from
business relating to Air Industry Group's wholly-owned operating subsidiary, Air
Industries Machining Corp., is the largest in the Company's history. The backlog
at November 15 reflects a 4.2% increase as compared to the prior firm backlog of
$48.0 million as of June 30, 2007.
The Company previously announced financial results guidance that includes a
consolidation of AIM, Sigma Metals and Welding Metallurgy. Management today
reiterated its guidance for consolidated run rates by the end of 2007 for
revenue within the range of $57 million to $60 million, EBITDA within the range
of $4.5 million to $6.0 million, and net income within the range of $2.0 million
to $2.5 million. The Company has already achieved its EBITDA goal with a third
quarter 2007 run rate of $4.8 million.
Earnings Results Conference Call
Management of Air Industries Group will conduct a conference call today,
November 16, 2007, at 9:00 a.m. Eastern Time to review the Company's financial
results for the second quarter ended June 30, 2007.
To access the teleconference, please dial (866) 831-6291 (domestic) or (617)
213-8860 (international), and enter the passcode "69061385" when prompted.
Please access the call approximately 10 minutes prior to the start time.
For those unable to listen to the live broadcast, a replay will be available by
dialing (888) 286-8010 (domestic) or (617) 801-6888 (international), with
playback access code "11874837", starting approximately two hours after the
conclusion of the call.
ABOUT AIR INDUSTRIES GROUP, INC.
Air Industries Group, Inc. (OTCBB: AIRI) is an integrated manufacturer of
precision components and provider of supply chain services for the aerospace and
defense industry. The Company has over 35 years of experience in the industry
and has developed leading positions in several important markets that have
significant barriers to entry. With embedded relationships with many leading
aerospace and defense prime contractors, the Company designs and manufactures
structural parts and assemblies that focus on flight safety, including landing
gear, arresting gear, engine mounts and flight controls. Air Industries Group
also provides sheet metal fabrication, tube bending, and welding services, as
well as distributing specialty metals that are a critical component in the
aerospace supply chain. Information on the Company and its products may be found
online at www.airindustriesgroup.com.
# # #
Certain matters discussed in this press release are 'forward-looking statements'
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. In particular, the Company's
statements regarding trends in the marketplace, firm backlog, projected backlog,
potential future results and acquisitions, are examples of such forward-looking
statements. The forward-looking statements include risks and uncertainties,
including, but not limited to, the timing of projects due to the variability in
size, scope and duration of projects, estimates, projections and forecasts made
by management with respect to the Company's critical accounting policies, firm
backlog, projected backlog, regulatory delays, government funding and budgets,
matters pertaining to potential and pending acquisitions subject to and after
closings, and other factors, including results of financial audits and general
economic conditions, not within the Company's control. Certain of the Company's
forward looking statements, with the projected backlog in particular, are
formulated based on management's extensive industry experience and understanding
and assessment of industry trends, customer requirements, and related government
spending. Projected backlog may be subject to variability and may increase or
decrease at any time based on a variety of factors, including but not limited to
modifications of previously released orders, acceleration of orders under
general purchase agreements, etc. 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.
(Tables to follow)
Contact:
Jordan M. Darrow
Darrow Associates, Inc.
631-367-1866
jdarrow@darrowir.com
AIR INDUSTRIES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2007 2006
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ASSETS
Current assets:
Cash and cash equivalents $ 760,912 $ --
Accounts receivable - trade, net of allowance for
doubtful accounts of $304,451 for 2007 and $176,458
for 2006. 6,760,328 3,508,967
Inventory, net 21,457,096 15,257,641
Prepaid Expenses and Other Current Assets 139,308 232,749
Deposits 338,694 180,456
Total current assets 29,456,338 19,179,803
Property, plant and equipment, net 4,385,643 3,565,316
Deferred Financing Cost 587,203 369,048
Other Assets 406,581 63,522
Goodwill 11,553,546 1,265,893
Income Taxes Receivable 127,613 --
Deposits 471,119 448,530
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Total assets $ 46,988,043 $ 24,892,182
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and Accrued Expenses $ 5,579,317 $ 7,648,426
Notes Payable - Revolver 10,942,980 5,027,463
Notes Payable - Current Portion 4,627,776 127,776
Notes Payable - Sellers - Current Portion 1,066,671 192,400
Capital Lease Obligations - Current Portion 283,551 407,228
Due to Sellers -- 53,694
Dividends Payable 120,003 120,003
Deferred Gain on Sale - Current Portion 38,033 38,033
Income Taxes Payable -- 653,426
------------ ------------
Total current liabilities 22,658,331 14,268,449
Long term liabilities:
Notes Payable - Net of Current Portion 677,126 645,458
Notes Payable - Sellers - Net of Current Portion 2,825,221 1,290,562
Capital Lease Obligations - Net of Current Portion 1,265,094 552,589
Deferred Tax Liability 862,208 512,937
Deferred Gain on Sale - Net of Current Portion 684,591 713,118
Deferred Rent 182,045 39,371
Total liabilities 29,154,616 18,022,484
Commitments and contingencies
Stockholders' Equity:
Preferred Stock - Authorized 8,003,716
Series A Convertible Preferred - $0.001 Par Value,
1,000 shares Authorized 0 shares issued and
outstanding as of September 30, 2007 and December 31,
2006, respectively -- --
Series B Convertible Preferred - $0.001 Par
Value 2,000,000 Shares Authorized 802,300 and 0
Shares issued and outstanding as of September 30,
20074 and December 31, 2006 respectively 802 --
Common stock, $.001 par value, 120,055,746 shares
authorized 69,122,227 and 57,269,301 shares issued
and outstanding as of September 30, 2007 and
December 31, 2006, respectively 69,122 57,269
Additional paid-in capital 18,814,113 7,898,702
Accumulated deficit (1,050,610) (1,086,273)
Total stockholders' equity 17,833,427 6,869,698
Total liabilities and stockholders' deficit $ 46,988,043 $ 24,892,182
AIR INDUSTRIES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Sales $ 12,845,821 $ 7,883,485 $ 31,323,487 $ 26,001,922
Cost of sales 9,254,338 6,362,076 24,110,520 21,214,968
------------ ------------ ------------ ------------
Gross profit 3,591,483 1,521,409 7,212,967 4,786,954
Operating Expenses:
Selling and marketing 384,453 175,515 1,005,331 473,760
General and administrative 2,232,681 1,108,651 5,069,093 2,982,584
------------ ------------ ------------ ------------
Operating expenses 2,617,134 1,284,166 6,074,424 3,456,344
------------ ------------ ------------ ------------
Income from operations 974,349 237,243 1,138,543 1,330,610
Other income (expense):
Interest and Financing costs expense (478,920) (290,853) (890,743) (978,029)
Gain on sale of life insurance policy -- -- -- 53,047
Gain on sale of real estate 9,509 -- 28,527
Other income 15,125 -- 25,012 803
Other expenses (50,708) -- (76,012) --
Other income (expense), net (504,994) (290,853) (913,216) (924,179)
Net income (loss) before income taxes 225,327 469,355 (53,610) 406,431
(Provision) benefit for income 21,455 (46,761) (189,664) (162,654)
Net income (loss) 422,594 (32,155) 35,663 243,777
Preferred stock dividend requirements (136,578) (100,000) (247,542) (460,000)
Net income (loss) applicable to
common stockholders $ 286,016 $ (132,155) $ (211,879) $ (216,233)
Basic net income (loss) per share $ 0.00 $ (0.00) $ (0.00) $ (0.00)
Diluted net income (loss) per share $ 0.00 $ (0.00) $ (0.00) $ (0.00)
Weighted average shares of common stock
outstanding - basic 67,838,959 41,545,824 64,149,247 23,762,472
Weighted average shares of common stock
outstanding - diluted 70,734,615 41,545,824 64,149,247 23,762,472