Air Industries Group (NYSE:AIRI) Q2 2022 Earnings Conference Call August 8, 2022 4:15 PM ET Company Participants Luciano Melluzzo - CEO Michael Recca - CFO Conference Call Participants John Nobile - Taglich Brothers Operator Good day and welcome to the Air Industries Conference Call. Today’s conference is being recorded. Now for Air Industries' Safe Harbor statement, except for the historical information contained herein the matters discussed in this presentation contain forward-looking statements. The accu ...

Air Industries Group (NYSE:AIRI) Q1 2022 Earnings Conference Call May 3, 2022 11:00 AM ET Company Participants Luciano Melluzzo - CEO Michael Recca - CFO Conference Call Participants Operator Good day and welcome to the Air Industries First Quarter Earnings Conference Call. Today’s conference is being recorded. Except for the historical information contained herein the matters discussed in this presentation contain forward-looking statements. The accuracy of these statements is subject to significant risks ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended September 30, 2021, reflect increased revenue, improved profitability, and positive operating cash flow Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2021 ($) | Dec 31, 2020 ($) | Change ($) | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $40,944,000 | $43,611,000 | -$2,667,000 | | **Total Assets** | $53,521,000 | $57,777,000 | -$4,256,000 | | **Total Current Liabilities** | $23,942,000 | $27,327,000 | -$3,385,000 | | **Total Liabilities** | $37,874,000 | $42,668,000 | -$4,794,000 | | **Total Stockholders' Equity** | $15,647,000 | $15,109,000 | +$538,000 | Condensed Consolidated Statements of Operations Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2021 ($) | Three Months Ended Sep 30, 2020 ($) | Nine Months Ended Sep 30, 2021 ($) | Nine Months Ended Sep 30, 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $14,354,000 | $13,662,000 | $43,519,000 | $35,603,000 | | **Gross Profit** | $2,014,000 | $1,656,000 | $6,414,000 | $4,451,000 | | **Income (Loss) from Operations** | $177,000 | $(240,000) | $644,000 | $(1,613,000) | | **Net (Loss) Income** | $(66,000) | $(477,000) | $21,000 | $(1,003,000) | | **Net (Loss) Income per share - Basic** | $(0.00) | $(0.02) | $0.00 | $(0.03) | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity increased from **$15,109,000** at the beginning of 2021 to **$15,647,000** as of September 30, 2021, driven by stock compensation, common stock issued for director fees, and a small net income for the nine-month period[17](index=17&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Nine Months Ended September 30 (Unaudited) | Activity | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | **Net Cash Provided By (Used In) Operating Activities** | $2,514,000 | $(3,184,000) | | **Net Cash Used In Investing Activities** | $(983,000) | $(1,471,000) | | **Net Cash (Used In) Provided By Financing Activities** | $(3,344,000) | $4,821,000 | | **Net (Decrease) Increase in Cash** | $(1,813,000) | $166,000 | | **Cash and Cash Equivalents at End of Period** | $692,000 | $1,460,000 | - The significant improvement in cash from operations in 2021 was primarily driven by a decrease in inventory and positive net income, compared to a net loss and inventory increase in the prior year period[19](index=19&type=chunk) Notes to Condensed Consolidated Financial Statements - Management believes the company has adequate cash to support operations through at least November 30, 2022, citing improved operating income, sales forecasts, and existing backlog[28](index=28&type=chunk) - The company has significant customer concentration risk, with three customers accounting for **75.5%** of total sales for the nine months ended September 30, 2021[33](index=33&type=chunk) - As of September 30, 2021, total debt to Sterling National Bank (SNB) was **$17.87 million**, consisting of a **$13.46 million** revolving line of credit and a **$4.41 million** term loan[74](index=74&type=chunk) - The company is involved in a lawsuit with Contract Pharmacal Corp., which is seeking damages of **$700,000**, though management disputes the claims and has not accrued a loss as the outcome is not currently estimable[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes sales growth to increased production and improved business conditions, leading to higher gross profit, net income, and enhanced liquidity Business Overview - The company is an aerospace and defense manufacturer specializing in flight safety structural parts (landing gear, engine mounts) and turbine engine components[102](index=102&type=chunk) - Key products are used on high-profile military and commercial aircraft such as the UH-60 Blackhawk, F-35, F-18, F-16, and Boeing 777[102](index=102&type=chunk) - The company's current focus is on maintaining profitability, achieving positive cash flows, and meeting customer needs, supported by recent capital investments in new equipment[104](index=104&type=chunk) Results of Operations Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 ($) | Q3 2020 ($) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $14,354,000 | $13,662,000 | +5.1% | | **Gross Profit** | $2,014,000 | $1,656,000 | +21.6% | | **Net Loss** | $(66,000) | $(477,000) | +86.2% | Nine Months 2021 vs 2020 Performance | Metric | 9M 2021 ($) | 9M 2020 ($) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $43,519,000 | $35,603,000 | +22.2% | | **Gross Profit** | $6,414,000 | $4,451,000 | +44.1% | | **Net Income (Loss)** | $21,000 | $(1,003,000) | N/A | - The increase in gross profit margin for both the three and nine-month periods was attributed to better absorption of manufacturing overhead resulting from higher sales volumes[119](index=119&type=chunk)[126](index=126&type=chunk) Liquidity and Capital Resources - In 2020, the company improved liquidity through government programs, including receiving and subsequently having **$2.4 million** in SBA loans forgiven, deferring **$627,000** in payroll taxes, and receiving a **$1.4 million** NOL tax refund[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - Cash from operating activities for the nine months ended Sep 30, 2021, was **$2.51 million**, a significant turnaround from a use of **$3.18 million** in the same period of 2020[142](index=142&type=chunk) - Cash used in financing activities was **$3.34 million**, primarily due to net repayments on the SNB revolving loan (**$2.19 million**) and term note (**$1.15 million**)[147](index=147&type=chunk) Critical Accounting Policies and Estimates - The company identifies several critical accounting policies requiring significant management judgment, including liquidity, inventory valuation, revenue recognition, income taxes, stock-based compensation, and goodwill[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[155](index=155&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[155](index=155&type=chunk) PART II. OTHER INFORMATION [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The company highlights ongoing uncertainty from the COVID-19 pandemic and other macroeconomic events, which could materially impact its business and financial position - The primary supplemental risk factor discussed is the continued uncertainty surrounding the COVID-19 pandemic and its potential to disrupt business operations, supply chains, and overall financial performance[158](index=158&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, Sarbanes-Oxley certifications, and XBRL data - The report lists various exhibits filed, including CEO and CFO certifications under Sarbanes-Oxley (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL interactive data files[160](index=160&type=chunk)

Air Industries Group (NYSE:AIRI) Q3 2021 Earnings Conference Call November 3, 2021 4:30 PM ET Company Participants Luciano Melluzzo - Chief Executive Officer Michael Recca - Chief Financial Officer Conference Call Participants John Nobile - Taglich Brothers, Inc. Operator Good day, and welcome to the Air Industries conference call. Today's conference is being recorded. Air Industries Group safe harbor statement. Except for the historical information contained herein, the matters discussed in this presentati ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, and an evaluation of internal controls and procedures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with their accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets slightly decreased to $56.25 million, driven by lower cash and inventory, while total liabilities decreased and stockholders' equity increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $515 | $2,505 | | Accounts Receivable, Net | $12,210 | $8,798 | | Inventory | $30,209 | $32,120 | | Total Current Assets | $43,171 | $43,611 | | Total Assets | $56,250 | $57,777 | | Total Current Liabilities | $26,424 | $27,327 | | Total Liabilities | $40,736 | $42,668 | | Total Stockholders' Equity | $15,514 | $15,109 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a significant profitability turnaround, with Q2 2021 net sales growing 81.9% to $15.45 million and H1 2021 sales up 32.9% to $29.17 million, both periods returning to net income Three Months Ended June 30, (in thousands) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $15,453 | $8,494 | 81.9% | | Gross Profit | $2,603 | $614 | 323.9% | | Income (Loss) from Operations | $440 | $(1,292) | N/A | | Net Income (Loss) | $239 | $(1,584) | N/A | | EPS - Diluted | $0.01 | $(0.05) | N/A | Six Months Ended June 30, (in thousands) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $29,165 | $21,941 | 32.9% | | Gross Profit | $4,400 | $2,795 | 57.4% | | Income (Loss) from Operations | $467 | $(1,373) | N/A | | Net Income (Loss) | $87 | $(526) | N/A | | EPS - Diluted | $0.01 | $(0.02) | N/A | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased from $15.11 million to $15.51 million by June 30, 2021, primarily due to net income, stock compensation, and common stock issued for directors' fees - Total stockholders' equity increased by approximately **$405,000** during the first six months of 2021, from **$15,109,000** to **$15,514,000**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, the company experienced a net cash outflow of $1.99 million, driven by uses in operating, investing, and financing activities Cash Flow Summary for Six Months Ended June 30, (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(181) | $(1,043) | | Net Cash Used in Investing Activities | $(631) | $(309) | | Net Cash (Used in) Provided by Financing Activities | $(1,178) | $2,126 | | **Net (Decrease) Increase in Cash** | **$(1,990)** | **$774** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies and financial statement items, covering liquidity, customer concentration, debt, leases, and segment reporting, with management projecting adequate cash through August 2022 - Management believes operations substantially returned to normal in fiscal 2021 and projects adequate cash to support operations through at least **August 31, 2022**[28](index=28&type=chunk) - For the six months ended June 30, 2021, **three customers** represented **77.0%** of total net sales, indicating significant customer concentration risk[33](index=33&type=chunk)[34](index=34&type=chunk) - The company operates in two segments: Complex Machining, generating **$25.9 million** in sales, and Turbine Engine Components, generating **$3.2 million** in sales for the first six months of 2021[94](index=94&type=chunk)[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant financial performance improvement for Q2 and H1 2021, highlighting sales recovery, return to profitability, and enhanced liquidity measures - The company is an aerospace firm primarily serving the defense industry, manufacturing flight safety components for military aircraft like the **F-35, F-18, and UH-60 Blackhawk**[100](index=100&type=chunk) - Recent capital investments in new equipment and expansion of the Connecticut facility are expected to increase production volume, efficiency, and service offerings[102](index=102&type=chunk) Consolidated Financial Performance Summary (in thousands) | Period | Net Sales | Gross Profit | Net Income (Loss) | | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2021** | $15,453 | $2,603 | $239 | | **Three Months Ended June 30, 2020** | $8,494 | $614 | $(1,584) | | **Six Months Ended June 30, 2021** | $29,165 | $4,400 | $87 | | **Six Months Ended June 30, 2020** | $21,941 | $2,795 | $(526) | [Results of Operations](index=26&type=section&id=Results%20of%20Operations) The company demonstrated strong year-over-year recovery, with Q2 2021 net sales surging 81.9% to $15.45 million and H1 2021 sales up 32.9%, both periods returning to net income Q2 2021 vs Q2 2020 Performance (in thousands) | Metric | Q2 2021 | Q2 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $15,453 | $8,494 | 81.9% | | Gross Profit | $2,603 | $614 | 323.9% | | Net Income (Loss) | $239 | $(1,584) | N/A | H1 2021 vs H1 2020 Performance (in thousands) | Metric | H1 2021 | H1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $29,165 | $21,941 | 32.9% | | Gross Profit | $4,400 | $2,795 | 57.4% | | Net Income (Loss) | $87 | $(526) | N/A | - Increased profitability was driven by higher sales volumes, improving fixed factory overhead absorption and leading to higher gross margins of **16.8% in Q2 2021** compared to **7.2% in Q2 2020**[115](index=115&type=chunk)[104](index=104&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company enhanced liquidity in 2020 through CARES Act programs, including $2.4 million in SBA loan forgiveness, and secured a new financing facility with Sterling National Bank, remaining compliant with all loan covenants - In 2020, the company received full forgiveness for **$2.4 million** in SBA loans and deferred **$627,000** in employer Social Security taxes under the CARES Act[127](index=127&type=chunk)[128](index=128&type=chunk) - The company entered a new loan facility with Sterling National Bank (SNB) expiring in December 2022, including a **$16 million** revolving line of credit and a term loan[130](index=130&type=chunk) - As of June 30, 2021, total debt to SNB was **$20.05 million**, and the company was in compliance with all loan covenants, including the Fixed Charge Coverage Ratio[136](index=136&type=chunk)[134](index=134&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of **June 30, 2021**, the company's disclosure controls and procedures were effective[150](index=150&type=chunk) - No material changes were made to the company's internal control over financial reporting during the most recently completed fiscal quarter[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including updates on risk factors, unregistered equity sales, and a list of exhibits filed with the report [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section supplements prior risk factors, specifically addressing the ongoing uncertainty of the COVID-19 pandemic and its potential material impact on the business - The company highlights the ongoing risk from the COVID-19 pandemic, noting that while operations have substantially normalized, its future impact remains uncertain and could materially affect the business[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company confirms no unregistered equity securities were issued or sold during the quarter, beyond those previously disclosed - No unregistered equity securities were issued or sold during the quarter, other than those previously reported[154](index=154&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, loan agreements, and officer certifications - A key exhibit filed with this report is the Second Amendment to the Loan and Security Agreement with Sterling National Bank[155](index=155&type=chunk) - The filing includes certifications from the principal executive officer and principal financial officer as required by the Sarbanes-Oxley Act of 2002[155](index=155&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: September 30, 2020 or ☐ Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to_______ Commission File No. 001-35927 AIR INDUSTRIES GROUP (Exact name of registrant as specified in its charter) 1460 Fifth Avenue, Bay Shore, New York 11 ...