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):
August 19, 2007
AIR INDUSTRIES GROUP, INC.
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(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 August 19, 2007, the Registrant issued a press release reporting on its
results of operations for the six months ended June 30, 3007 and its financial
condition as of June 30, 2007. A copy of the press release, correcting and
replacing an earlier release issued August 14, 2007, is attached as Exhibit 99.
Item 7.01. Regulation FD Disclosure.
On August 19, 2007, the Registrant issued a press release reporting on its
results of operations for the six months ended June 30, 3007 and its financial
condition as of June 30, 2007. A copy of the press release, correcting and
replacing an earlier release issued August 14, 2007, is attached as Exhibit 99.
The information in this Form 8-K, including Exhibit 99 attached hereto,
shall not be deemed to be "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 or the Exchange Act, regardless of
any general incorporation language in such filing, unless expressly incorporated
by specific reference in such filing.
Exhibit No.
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99 Press Release issued by Registrant on August 19, 2007
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: August 20, 2007
AIR INDUSTRIES GROUP, INC.
By: /s/ Peter D. Rettaliata
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Peter D. Rettaliata
President and CEO
Exhibit 99
CORRECTING and REPLACING Air Industries Group Reports Second Quarter 2007
Financial Results
CORRECTION...by Air Industries Group, Inc.
BAY SHORE, N.Y.--(BUSINESS WIRE)--August 19, 2007 Please replace the release
dated August 14, 2007 with the following corrected version due to multiple
revisions in the balance sheet. Also, headline of release should read: Air
Industries Group Reports Second Quarter 2007 Financial Results (sted Air
Industries Group Reports First Quarter 2007 Financial Results).
The corrected release reads:
AIR INDUSTRIES GROUP REPORTS SECOND QUARTER 2007 FINANCIAL RESULTS
Air Industries Group, Inc. (OTCBB: AIRI), a holding company established to
consolidate manufacturers, engineering integrators and specialized service
providers to the aerospace/defense industry, today announced financial results
for the second quarter ended June 30, 2007. The financial results reported by
the Company include results from Sigma Metals, a distributor of specialty
metals, from the date of acquisition in April 2007. Financial results and
business development highlight for the year to date include:
- -- Net Sales Increase 19% from 2Q06 and 47% from 1Q07
- -- Gross Profit Margin Jumps to 22% in 2Q07 from 17% in 1Q07 and 19% in 2Q06
- -- New Commercial Customers Added
- -- Participation in Two New Commercial Product Platforms
- -- Acquisition Strategy Progressed with Completion of Sigma Metals
- -- Welding Metallurgy to Close Imminently
- -- Firm Backlog at Record Level at June 30th
- -- Raised Over $8 Million in Oversubscribed Offering
Second Quarter 2007 Financial Results
Net sales for the three months ended June 30, 2007 were $10,989,536, an increase
of 19% as compared to net sales of $9,220,165 in the second quarter of 2006, and
an increase of 47% as compared to $7,488,130 in the first quarter of 2007. The
increase in net sales from the prior periods was primarily attributable to an
improvement in order releases for parts and related defense components to one of
the Company's prime aerospace customers as well as the contribution of Sigma
Metals from the date of acquisition in April 2007.
Gross profit in the second quarter 2007 was $2,372,838, an increase of 35% as
compared to gross profit of $1,752,839 for the same period of 2007, and an
increase of 90% from $1,248,646 in the first quarter 2007. As a percentage of
sales, gross margin in the second quarter 2007 was 22%, as compared to 19% for
the same period of 2006 and 17% in the first quarter of 2007. The increase in
the gross profit as well as gross profit as a percentage of sales for the second
quarter of 2007 primarily reflects the higher level of revenue and related
improvement in manufacturing efficiencies and, to a lesser extent, higher margin
contributions from Sigma Metals revenues.
Selling, general and administrative ("SG&A") expenses for the second quarter
were $2,330,498 as compared to $1,167,093 for the same period in 2006 and
$1,126,792 in the first quarter 2007. The increase in SG&A reflects the increase
in the Company's financial personnel and continued expenses for professional
fees associated with the Company's acquisition program, including the addition
of Sigma Metals in April 2007, enhancing its reporting systems and other public
company compliance matters, including the cost of complying with Section 404 of
the Sarbanes-Oxley Act by year-end.
The Company incurred a net loss before provision for income taxes of ($237,305)
for the three months ended June 30, 2007, as compared to a pre tax profit of
$224,423 for the three months ended June 30, 2006, and a pre tax net loss of
($6,723) in the three months ended March 31, 2007.
The net loss for the second quarter of 2007 was ($315,443), or ($0.01) per
share, as compared to a net loss of ($40,432), or $0.00 per share, in the same
period of 2006, and a net loss of ($71,487), or $0.00 per share, in the first
quarter of 2007.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the second quarter 2007 was $306,908, as compared to $864,998 in the same period
of 2006 and $290,458 for the first three months 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.
First Half 2007 Financial Results
Net sales for the first six months of 2007 was $18,477,666, as compared to net
sales of $18,118,437 for the same period in 2006. SG&A expenses for the first
half of 2007 were $3,457,290 as compared to $2,172,178 for the same period in
2006. The net loss before provision for income taxes was ($244,028) for the
first six months of 2007, compared to income before provision for income taxes
of $460,641 for the 2006 period. The Company's net loss for the first half of
2007 was ($386,931) after nonrecurring items, as compared to net income of
$275,933 in the same period of 2006.
At June 30, 2007, Air Industries Group had bank and other long-term debt of
$12,894,937, and availability of approximately $1,000,000 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.
In April 2007, Air Industries raised $8,023,000 in gross proceeds from
institutional and accredited investors through a private placement of 802,300
shares of its Series B Convertible Preferred Stock. A portion of the proceeds
has been allocated toward the cash component for the acquisition of Sigma
Metals. The common stock underlying the Series B Convertible Preferred Stock has
been registered with the Securities and Exchange Commission and applied toward
an average weighted shares outstanding basis to the Company's earnings per share
calculations for the second quarter of 2007.
Management's Comments
"The improvements in revenue and gross margin, as well as progress with our
consolidation strategy, as exhibited in the second quarter of 2007 are a
harbinger of the growth to come in the second half of the year," said Peter
Rettaliata, Air Industries Group President and Chief Executive Officer.
"Importantly, resulting from our growth initiatives, we look forward to a return
to profitability in the second half of the year. Our growth platforms and the
apparently unabating activity in the commercial and military aerospace markets
contributed toward our successful completion of an offering of securities that
raised over $8 million. The offering was oversubscribed primarily as a result of
stronger than anticipated demand from institutional investors."
"Integral to our growth strategy is our commitment to expand our products lines
and diversify our revenue streams. This strategy is clearly being executed as
evidenced by the closing of our acquisition of Sigma Metals in April. With high
margin revenues, Sigma's contributions are already having a positive impact. We
anticipate the closing of the Welding Metallurgy transaction, our third
acquisition, to take place later this month, which will further diversify our
business and add high margin revenues for the balance of the year. Our sights
have been set on additional acquisitions that will augment our three growth
platforms: Contract Manufacturing; Raw Materials Distribution; and, Welding &
Fabrication."
"Within our Contract Manufacturing platform - represented by our Air Industries
Machining Corp. (AIM) subsidiary, we have been progressing through the
previously announced order delays arising from scheduling difficulties at one of
AIM's largest customers. Shipments for previously received awards to this
customer are expected to be back on schedule in the second half of 2007.
However, we have received sizable new contract awards from this customer during
the second quarter, serving as a clear indication that our revenue trajectory
will continue to rise. Other progress in this platform was demonstrated by new
awards from commercial customers for both new parts and new aircraft programs.
With diversification and market share expansion at the core of our growth
strategy, we believe our efforts are delivering their intended results."
Backlog and Guidance for 2007
The Company provides firm backlog as well as its projected backlog as two
indicators of future activity. As of June 30, 2007, Air Industries Group had a
firm 18-month backlog that was in excess of $48.0 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 June 30th reflects a 29%
increase as compared to the prior firm backlog of $37.3 million as of March 31,
2007.
The firm backlog at June 30, 2007, represents fully authorized orders for
products to be delivered within the next 18 months. Additionally, Air Industry
Group's projected backlog, which includes both the firm backlog as well as
anticipated order releases, totaled approximately $65 million at June 30, 2007.
These figures do not include orders relating to Sigma Metals, which was acquired
in April 2007, or the pending acquisition of Welding Metallurgy.
The Company previously announced financial results guidance that includes a
consolidation of AIM and Sigma Metals and Welding Metallurgy from their
respective dates of acquisition. 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.
Earnings Results Conference Call
Management of Air Industries Group will conduct a conference call today at,
August 14, 2007, at 2:00 p.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) 510-0710 (domestic) or (617)
597-5378 (international), and enter the passcode "75106411" 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 "25898434", starting approximately two hours after the
conclusion of the call and available until September 14, 2007.
ABOUT AIR INDUSTRIES GROUP, INC.
Air Industries Group, Inc. (OTCBB: AIRI) (formerly Gales Industries) is a
holding company established to consolidate manufacturers, engineering
integrators and specialized service providers to the aerospace/defense and
commercial aviation industries. The Company is focused on flight safety and
other critical componentry. Consolidation opportunities include companies
operating within highly synergistic disciplines of manufacturing, technical
services and strategic products distribution. The Company's strategy is to
execute its consolidation principally amongst middle market aerospace/defense
subcontractors. Air Industries Group offers a tailored exit strategy or
management continuity strategy in exchange for qualified acquisitions, and
targets technically superior organizations with revenues of up to $100 million
annually. Information on the Company and its products may be found online at
www.airindmc.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.
AIR INDUSTRIES GROUP, INC.
Condensed Consolidated Statement of Operations
For the three month period ended June 30,
2007 2006
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(unaudited) (audited)
Net sales 10,989,536 9,220,165
Cost of sales 8,616,698 7,467,326
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Gross profit 2,372,838 1,752,839
Operating costs and expenses:
Selling and marketing 525,536 142,543
General and administrative 1,804,962 1,024,550
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Income from operations 42,340 585,746
Interest and financing costs 280,869 362,126
Gain on sale of life insurance policy -- --
Gain on Sale of Real Estate (9,509) --
Other Income (8,441) (803)
Other Expenses 16,726 --
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Loss (income) before income taxes (237,305) 224,423
Provision for income taxes 78,138 84,855
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Net (Loss) income (315,443) 139,568
Less: Dividend attributable to preferred
stockholders 110,964 180,000
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Loss attributable to common stockholders ($ 426,407) ($ 40,432)
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Income (Loss) per share (basic and diluted) ($ 0.01) $ 0.00
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Weighted average shares outstanding 65,667,564 14,723,421
AIR INDUSTRIES GROUP, INC.
Condensed Consolidated Balance Sheet
June 30, December 31,
2007 2006
(unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents $ 1,010,522 $ --
Accounts Receivable, Net of Allowance for
Doubtful Accounts of $204,566 and $176,458 6,331,004 3,508,957
Inventory 20,360,593 15,257,641
Prepaid Expenses and Other Current Assets 661,382 232,749
Deposits 692,578 180,456
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Total Current Assets 29,056,079 19,179,803
Property, Plant, and Equipment, net 3,394,883 3,565,316
Deferred Financing Costs 346,820 369,048
Deferred Tax Asset 60,261 0
Other Assets 86,585 63,522
Goodwill 6,434,281 1,265,963
Deposits 424,490 448,530
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TOTAL ASSETS $ 39,803,399 $ 24,892,182
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts Payable and Accrued Expenses $ 7,501,565 $ 7,648,426
Notes Payable - Revolver 9,899,414 5,027,463
Notes Payable - Current Portion 127,776 127,776
Notes Payable - Sellers - Current Portion 555,004 192,400
Capital Lease Obligations - Current Portion 166,397 407,228
Due to Sellers 0 53,694
Dividends Payable 120,003 120,003
Deferred Gain on Sale - Current Portion 38,033 38,033
Income Taxes Payable 0 653,426
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Total current liabilities 18,408,192 14,268,449
Long term liabilities
Notes Payable - Net of Current Portion 581,570 645,458
Notes Payable - Sellers - Net of Current
Portion 1,603,674 1,290,562
Capital Lease Obligations - Net of Current
Portion 776,988 552,589
Deferred Tax Liability 695,379 512,937
Deferred Gain on Sale - Net of Current
Portion 694,101 713,118
Deferred Rent 134,487 39,371
Letter of Credit 127,500 0
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Total liabilities 23,021,891 18,022,484
Stockholders' Equity
Preferred Stock - $0.001 Par Value,
8,003,716 Shares Authorized -- --
Series B Convertible Preferred - $.001 Par
value, 2,000,000 Shares Authorized,
802,300 and 0 Shares Issued and
Outstanding as of 6/30/07 and 12/31/06
respectively 8,023 --
Common Stock - $.001 Par, 120,055,746 Shares
Auth., 67,008,469 and 57,269,301 Shares
Issued and Outstanding as of 6/30/07 and
12/31/06 respectively 67,009 57,269
Additional Paid-In Capital 18,179,678 7,898,702
Accumulated Deficit (1,473,202) (1,086,273)
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Total Stockholders' Equity 16,781,508 6,869,698
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,803,399 $ 24,892,182
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