Air Industries (US:AIRI)2020-08-10 22:38Financial Data and Key Metrics Changes - Net sales for Q2 2020 were $8.5 million, representing a 36% decline from the prior year [8] - Gross profit declined by $1.6 million, or 76%, which was a greater decline than sales [8] - For the first six months, sales totaled $21.9 million, a decline of 21% [10] - The company reported an operating loss of $1.4 million for the first half, with 95% of that loss attributable to Q2 [10] - EBITDA for Q2 was negative, while EBITDA for the first six months was $894,000 [10] Business Line Data and Key Metrics Changes - The business is heavily concentrated on military aircraft components, with little change in demand for military products despite disruptions in commercial aerospace [7] - The backlog of firm orders remains at approximately $100 million, only marginally reduced [7] Market Data and Key Metrics Changes - The company faced significant impacts from COVID-19, including employee absenteeism and temporary shutdowns of subcontractors, which affected production and shipping [5][6] - Total manufacturing hours were 8,000 hours less than in Q2 2019, leading to under absorption of manufacturing overheads [9] Company Strategy and Development Direction - The company announced a major investment in equipment totaling about $2.5 million to accelerate production and enhance manufacturing capabilities [11] - The new machinery is expected to be operational by Q4 2020 and reflects the company's confidence in future demand [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the workforce is stabilizing and absenteeism has returned to historical levels of 2% to 3% [15] - The company is optimistic about alleviating bottlenecks in production with new machinery, which will allow for increased efficiency and capability [22][25] Other Important Information - The company has maintained compliance with all loan covenants and expects to continue doing so [10] - There have been cancellations and reductions in commercial business, but military product production is being accelerated to fill gaps [7][28] Q&A Session Summary Question: Update on second quarter conditions and supplier stability - Management indicated that suppliers are stabilizing and returning to normal operations, with most of the workforce maintained [13][15] Question: Impact of new machinery on bottlenecks - The new equipment is expected to alleviate significant portions of current bottlenecks and enhance production capabilities [22][24] Question: Status of long-term agreement for thrust struts - Management confirmed a push out on order requirements but noted that there are no cancellations, and military product production is being accelerated to fill gaps [28][30]