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 21, 2008
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 21, 2008, the Registrant issued a press release reporting on its
results of operations for the six months ended June 30, 2008 and its financial
condition as of June 30, 2008. A copy of the press release is attached hereto as
Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
On August 21, 2008, the Registrant issued a press release reporting on its
results of operations for the six months ended June 30, 2008 and its financial
condition as of June 30, 2008. 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 Second Quarter Financial
Results.
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 22, 2008
AIR INDUSTRIES GROUP, INC.
By: /s/ Peter D. Rettaliata
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Peter D. Rettaliata
President and Chief Executive Officer
Exhibit Index
99.1 Press Release: Air Industries Group Reports Second Quarter Financial
Results.
Exhibit 99.1
Press Release
Air Industries Group Reports Second Quarter Financial Results
Thursday August 21, 7:30 am ET
BAY SHORE, N.Y.--(BUSINESS WIRE)--Air Industries Group, Inc. (OTCBB: AIRI -
News), a leading supplier of specialty aircraft components and systems, today
announced financial results for the second quarter ended June 30, 2008. The
financial results reported by the Company include results from its three
operating subsidiaries - Air Industries Machining Corp., Welding Metallurgy, and
Sigma Metals.
Financial Performance Highlights for Second Quarter 2008:
o Net Sales rose to $12.7 Million - up 16% from 2Q07
o Gross Profit increased to $3.5 Million - up 24% from 2Q07
o Net Loss of $20,000, versus a loss of $113,000 in 2Q07
o Current Firm "AIM" 18-Month Backlog at record $55 million
"Despite continued heavy demand for aircraft parts and assemblies, our operating
results were partially impacted by capital constraints this quarter," said Peter
Rettaliata, President and Chief Executive Officer. "Due to the Company's
expanding customer base and new awards - as indicated by our record backlog -
additional working capital was necessary to meet our clients' needs. Late in the
second quarter, we secured additional funding to procure raw materials and
hardware in support of these requirements. This investment will result in
increased revenue during the third and fourth quarters.
"We continued to invest in initiatives related to future development programs
and, at the same time, we incurred expenses this quarter associated with our
ongoing effort to acquire the Blair-HSM companies. We have been working
cooperatively with Blair-HSM on a number of potential new business projects and
have already identified many synergies to be realized upon consolidation. Once
the transaction is complete, we believe we will be in a more competitive
position from which to pursue a broader range of business opportunities and
achieve higher margins.
"While our growth initiatives remain intact, we are also intent on improving our
profitability. To this end, the Company has implemented a cost reduction
campaign aimed at reducing our general and administrative expenses. These
actions, combined with our internal growth plans and acquisition of Blair-HSM,
will leave Air Industries well positioned for improved performance in 2009."
Second Quarter 2008 Financial Results
Net sales for the second quarter of 2008 were $12.7 million, an increase of 16%
as compared with $11.0 million in the second quarter of 2007. The increase in
revenue reflects both organic growth at the Air Industries Machining subsidiary
and an expansion of the Company as a result of its strategic acquisition
program.
Gross profit in the second quarter 2008 was $3.5 million, an increase of 24%
from $2.8 million in the same period of 2007. Gross margin in the second quarter
2008 was 27.4%, as compared with 25.5% in the same period of 2007. The increase
in the gross profit as well as gross margin primarily reflects an improved
product mix with a higher level of revenue and volume-related manufacturing
efficiencies at Air Industries Machining, along with higher margin contributions
from Welding Metallurgy.
Selling, general and administrative ("SG&A") expenses for the second quarter
2008 were $3.0 million as compared with $2.4 million for the same period in
2007. The increase in SG&A during the second quarter 2008 reflects costs
associated with expanded management and the addition of overhead expenses
relating to the inclusion of Sigma Metals and Welding Metallurgy, along with
initiatives related to internal growth opportunities, and fees and expenses
pertaining to the Company's ongoing consolidation strategy, including the
pending acquisition of the Blair-HSM Group of Companies.
Operating income for the second quarter of 2008 was $503,000, as compared with
$421,000 in the same period of 2007. The net loss before income taxes was
$13,000 for the three months ended June 30, 2008, as compared to net income
before taxes of $141,000 for the 2007 period. The Company's net loss was
$20,000, or $0.00 per share, as compared to a net loss of $113,000, or $0.00 per
share, for the second quarter of 2007.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the second quarter of 2008 was $1.1 million, as compared with EBITDA of $0.6
million in the same period 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. EBITDA is computed by adding back
interest, taxes, depreciation, amortization and other non-cash charges into net
income.
First Half 2008 Financial Results
Net sales for the first six months of 2008 were $26.0 million as compared with
net sales of $18.5 million for the same period in 2007. SG&A expenses for the
first half of 2008 were $6.2 million, versus $3.5 million for the corresponding
period of 2007. The net loss before income taxes was $40,000 for the first six
months of 2008, compared with net income before taxes of $552,000 for the 2007
period. The Company's net loss for the first half of 2008 was $33,000, as
compared with net income of $39,000 in the same period during 2007.
At June 30, 2008, Air Industries Group had total funded debt of approximately
$21.6 million as compared with $19.0 million at March 31, 2008. The Company
continues to have availability under its 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. As such, the Company's cash position is not readily
discernable by reviewing the balance sheet.
On June 23, 2008, the Company sold junior subordinated notes due in 2010 as well
as 983,324 shares of common stock to raise, in aggregate, $2,950,000. The
proceeds from this sale of securities were applied to working capital, in
support of increased customer requirements as previously mentioned.
Backlog and Financial Results Guidance
The Company provides firm backlog as an indicator of future activity. As of
August 15, 2008, Air Industries Machining had a firm 18-month backlog of
approximately $55 million - the largest in the Company's history. Backlog
figures do not include contributions from the pending acquisition of the
Blair-HSM Group.
Because the closing of the pending acquisition of the Blair-HSM Group will
influence aggregate reported financial results, the Company intends to wait
until the acquisition has been completed before announcing financial results
guidance.
Earnings Results Conference Call
Management of Air Industries Group will conduct a conference call on August 21,
2008, at 9:00 a.m. Eastern Time to review the Company's financial results for
the second quarter ended June 30, 2008.
Participating in the conference call will be Peter Rettaliata, President and
Chief Executive Officer, and Louis Giusto, Vice Chairman and Chief Financial
Officer. To access the conference call, please dial (866) 700-6293 (domestic) or
(617) 213-8835 (international), and enter the passcode "74478676" 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 "33779220", starting approximately two hours after the
conclusion of the call.
ABOUT AIR INDUSTRIES GROUP, INC.
Air Industries Group, Inc. (OTCBB: AIRI - News) 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.
AIR INDUSTRIES GROUP, INC.
Condensed Consolidated Balance Sheet
June 30 December 31
2008 2007
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents -- --
Accounts receivable, net of allowance for doubtful accounts of approximately
$134,000 and $302,000 $ 7,873,000 $ 7,675,000
Inventory 24,981,000 21,820,000
Prepaid expenses and other current assets 177,000 230,000
Deposits 728,000 905,000
Total current assets 33,759,000 30,630,000
Property and equipment, net 5,082,000 4,786,000
Intangible assets, net 5,632,000 5,877,000
Goodwill 6,373,000 6,373,000
Capitalized engineering costs, net 1,989,000 1,522,000
Deferred financing costs, net, deposits and other assets 1,683,000 1,102,000
TOTAL ASSETS $ 54,518,000 $ 50,290,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of notes payable and capital lease obligations $ 19,459,000 $ 17,687,000
Accounts payable and accrued expenses 7,471,000 6,586,000
Dividends payable 120,000 267,000
Income taxes payable 410,000 391,000
Total current liabilities 27,460,000 24,931,000
Long term liabilities
Notes payable and capital lease obligations - net of current portion 5,281,000 4,219,000
Deferred tax liability 1,883,000 1,879,000
Deferred gain on sale of real estate 656,000 675,000
Deferred rent 325,000 230,000
Total liabilities 35,605,000 $ 31,934,000
Commitments and contingencies
Stockholders' equity
Preferred stock - par value, $0.001, 8,003,716 shares authorized -- --
Series A convertible preferred - $0.001 par value, 1,000 shares authorized
no shares issued and outstanding at June 30, 2008 and December 31, 2007, -- --
respectively
Series B convertible preferred - $0.001 par value 2,000,000 shares authorized,
865,569 and 829,098 shares issued and outstanding at June 30, 2008
and December 31, 2007; Liquidation value, $18,060,000 1,000 1,000
Common stock - $0.001 par, 250,000,000 shares authorized, 70,445,513 shares
and 69,122,227 shares issued and outstanding at June 30, 2008 and
December 31, 2007, respectively 70,000 69,000
Additional paid-in capital 19,332,000 18,744,000
Accumulated deficit (490,000) (458,000)
Total stockholders' equity 18,913,000 18,356,000
Total liabilities and stockholders' equity $ 54,518,000 $ 50,290,000
AIR INDUSTRIES GROUP INC.
Condensed Consolidated Statement of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
(as restated) (as restated)
Net sales $ 12,739,000 $ 10,990,000 $ 26,027,000 $ 18,478,000
Cost of sales 9,249,000 8,183,000 18,953,000 14,004,000
Gross profit 3,490,000 2,807,000 7,074,000 4,474,000
Operating costs and expenses:
Selling and marketing 476,000 526,000 941,000 298,000
General and administrative 2,511,000 1,860,000 5,267,000 3,215,000
Total operating costs 2,987,000 2,386,000 6,208,000 3,513,000
Income from operations 503,000 421,000 866,000 961,000
Interest and financing costs 526,000 281,000 918,000 412,000
Other income, net (10,000) (1,000) (12,000) (3,000)
(Loss) income before income taxes (13,000) 141,000 (40,000) 552,000
Benefit (provision) for income taxes (7,000) (254,000) 7,000 (513,000)
Net (loss) income (20,000) (113,000) (33,000) 39,000
Less: Dividend attributable to preferred stockholders 151,000 111,000 299,000 111,000
Net loss attributable to common stockholders $ (171,000) $ (224,000) $ (332,000) $ (72,000)
Loss per share (basic and diluted) $ 0.00 $ 0.00 $ 0.00 $ 0.00
Weighted average shares outstanding (basic and diluted) 69,340,000 65,668,000 69,295,000 62,241,000
Contact:
Darrow Associates, Inc.
Jordan M. Darrow, 631-367-1866
jdarrow@darrowir.com