Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Air Industries Group (AIRI, Financial) achieved a gross margin increase of 320 basis points in Q1 2025 compared to Q1 2024, despite lower sales.
- The company's book-to-bill ratio was 1.34:1, indicating strong business development efforts and a healthy pipeline.
- AIRI's funded backlog reached a record $120 million, with total backlog exceeding $0.25 billion, reflecting strong future sales potential.
- Adjusted EBITDA for Q1 2025 increased by nearly 60% compared to the same period in 2024.
- The company remains in compliance with all covenants of its loan agreement, indicating financial stability.
Negative Points
- Consolidated net sales for Q1 2025 were $12.1 million, down from $14.1 million in Q1 2024.
- Operating loss increased to $746,000 in Q1 2025 from $259,000 in Q1 2024, largely due to noncash stock compensation expenses.
- Net loss for Q1 2025 was $988,000, compared to a loss of $706,000 in the same period of 2024.
- Lead times for raw materials remain long, ranging from 9 to 15 months, which could impact production schedules.
- Operating expenses increased by 28.4% in Q1 2025, with a significant portion attributed to noncash stock compensation.
Q & A Highlights
Q: Could you provide clarity on the first quarter revenue and the impact of long lead times or purchase order timing? What trends are you seeing for the second quarter?
A: Luciano Melluzzo, President and CEO: The products shipped in the first quarter were based on materials ordered a year ago, affected by long lead times. While acquiring materials has eased, lead times remain long. We are meeting customer delivery expectations and have ordered additional materials to stay ahead. Scott Glassman, CFO: There has been no hesitation from customers due to recent economic events.
Q: Are there any concerns about customer hesitations due to recent economic conditions?
A: Scott Glassman, CFO: No, there has been no hesitation from customers. Luciano Melluzzo, President and CEO: Our programs are relatively insulated. For example, the CH-53K and E-2D platforms are on schedule. The F-35 might face future pressures, but we are working to increase our content on that platform.
Q: What are your expectations for the Paris Air Show? Are there specific new customers you aim to engage with?
A: Luciano Melluzzo, President and CEO: Our schedule for the Paris Air Show is fully booked, with interest from large overseas manufacturers. We have successfully gained large clients from past shows. We are targeting new customers, including those in the electric vehicle and electric plane sectors.
Q: Was the stock-based compensation expense a one-time event for this year?
A: Scott Glassman, CFO: The stock-based compensation expense will likely be lower in future quarters.
Q: How are you managing the impact of tariffs and changes in the defense budget?
A: Luciano Melluzzo, President and CEO: We believe the impact of tariffs will be muted due to price protection from customers. The proposed Pentagon budget is described as a surge budget, but we do not expect significant benefits or reductions from it. We reaffirm our belief that 2025 will exceed 2024 results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
