Air Industries Group, Inc. (the "Company" or "Air Industries") Announces First Quarter 2013 Results

Air Industries Group, Inc. (the "Company" or "Air Industries") Announces First 
Quarter 2013 Results 
BAY SHORE, NY -- (Marketwired) -- 05/06/13 --  Air Industries Group,
Inc. (OTCQB: AIRI) (OTCBB: AIRI) 
Financial Results for the three months ended March 31, 2013 and 2012: 
For the three months ended March 31, 2013, consolidated net sales
were $14,325,000 a decrease of $(1,713,000) or (11%) compared to net
sales of $16,038,000 for the first three months of the prior year.
Net sales at the Air Industries Machining Corp. subsidiary for the
three months ended March 2013 were $7,478,000, a decrease of
$(4,665,000) or (38%) from $12,143,000 for the first quarter of the
prior year. Net sales at the Welding Metallurgy, Inc. subsidiary for
the three months ended March 2013 were $3,139,000 a decrease of
$(756,000) or (19%) from $3,895,000 for the comparable period of the
prior year. Net sales at Nassau Tool Works, Inc. ("Nassau Tool
Works") for the first quarter of 2013 were $3,708,000. Air Industries
acquired Nassau Tool Works on June 20, 2012.  
These results for the three months ended March 31, 2013 and 2012 are
summarized below: 


 
                                                                            
                                                                            
                                 Three Months Ended   Increase (decrease)   
(all amounts in 000's)               March 31,          over prior year     
                               --------------------- ---------------------  
Net Sales                         2013       2012       in $       as a %   
------------------------------ ---------- ---------- ----------  ---------  
 Air Industries Machining      $    7,478 $   12,143 $   (4,665)       (38%)
 Welding Metallurgy                 3,139      3,895       (756)       (19%)
 Nassau Tool Works                  3,708          -      3,708        n/m  
                               ---------- ---------- ----------  ---------  
Consolidated                   $   14,325 $   16,038 $   (1,713)       (11%)
                               ========== ========== ==========  =========  

 
Consolidated income from operations for the three months ended March
31, 2013 was $1,178,000, a decrease of $(419,000) or (26%) from
$1,597,000 for three months ended March 31, 2012. 
Consolidated net income for the three months ended March 31, 2013 was
$279,000, a decrease of $(541,000), or (66%) compared with $820,000
for the three months ended March 31, 2012.  
Earnings per common share for the quarter were $.05 a decrease of
$(.18) or (79%) compared with $.23 for the first quarter of the prior
year. This resulted from the decrease in consolidated net income for
the three months end March 31, 2013, an increase in income tax
expense due to the full utilization of our net operating loss carry
forward during 2012 and the increase in the number of shares
outstanding. The Company issued approximately 2.1 million shares in
the second and third quarters of 2012.  
These results for the three months ended March 31, 2013 and 2012 are
summarized below: 


 
                                                                            
                                                                            
(in 000's except per share data)                                            
                                 Three Months Ended   Decrease over prior   
                                     March 31,                year          
                               --------------------- ---------------------  
Consolidated:                     2013       2012       in $       as a %   
------------------------------ ---------- ---------- ----------  ---------  
Operating Income               $    1,178 $    1,597 $     (419)       (26%)
Income before Tax                     768      1,106       (338)       (31%)
Net Income                            279        820       (541)       (66%)
Net Income Per Share           $     0.05 $     0.23 $    (0.18)       (79%)
                                                                            
                                                                            

 
--  Gross profit was $3,647,000, or approximately 25% of sales for the
    three months ended March 31, 2013 compared with $3,271,000 or
    approximately 20% of sales for the three months ended March 31, 2012.
    The Company's gross profit percentage increased for the three months
    ended March 31, 2013 due to the inclusion of the higher profit margins
    of Nassau Tool Works, which were not included during the three months
    ended March 31, 2012.
    
    
--  Operating costs increased by $795,000 to $2,469,000 for the three
    months ended March 31, 2013 compared to $1,674,000 for the three
    months ended March 31, 2012. The increase in operating costs result in
    their entirety from the inclusion of Nassau Tool Works. Operating
    costs as a percentage of net sales increased to 17% in the three
    months ended March 31, 2013 from 10% during the three months ended
    March 31, 2012, reflecting the decrease in net sales.

  
Mr. Peter Rettaliata, Chief Executive Officer of Air Industries
commented: "The decline in earnings for the first quarter is
obviously disappointing. Two factors accentuated the decline in
earnings per share. First, 2012 benefited from the application of the
Company's net operating loss carry forward ('NOL') for tax purposes.
This was not available in 2013 as the NOL was fully utilized. As a
result, income tax expense nearly doubled even though income before
taxes decreased. Further, in 2013, we have significantly more shares
outstanding.  
"In addition, the Company's revenue stream has been negatively
affected by the realities of Sequestration. We believe this situation
is temporary and that we have been more impacted by budgetary
uncertainty, which has caused our customers to limit discretionary
spending of authorized funds for after-market spares. We also believe
that there has not been any substantial reduction in procurement of
aircraft as these have been planned and contracted for. We expect
that once the budget uncertainty is resolved the reductions will be
more evenly balanced between procurement and discretionary expenses. 
"We have responded to this by reducing costs. Beginning in July 2012,
we began to reduce production hours and employment to match demand.
Further measures were taken in 2013 to reduce spending in light of
the reduction in sales. Despite the reduction in sales in the first
quarter, our best guess is that our EBITDA (earnings before
deductions for interest, taxes, depreciation and amortization) for
2013 will be between $9.0 million and $10.0 million. 
"We have also redoubled our marketing efforts, particularly in the
growing Commercial Aircraft sector. We recently hired Mr. Gregg
Aramanda as our Vice President of Business Development. Gregg is
highly experienced and has an impressive track record of success in
our industry. Most recently, Gregg Aramanda was the Vice President of
Business Development at CPI Aerostructures from 2008-2012, a period
of substantial growth from approximately $30mm to $90mm in annual
sales. We believe this investment in marketing will prove very
accretive to our revenue and earnings.  
"In the intermediate and longer run, we believe we are we
ll
positioned to withstand reductions in military procurement. While we
are on exciting new programs, like the F-35, the possible reduction
in production of new aircraft results in the need to keep older
aircraft operable through recently announced life extension programs.
Many if not most of our products are flight-safety or flight-critical
and are used on aircraft already in the military fleet. These
products must be regularly replaced if aircraft are to keep flying.
We believe this will temper any negative effect of the Sequestration. 
"We want our shareholders to understand that we are aggressively
working to grow the Company organically, pursuing several new
business opportunities with our traditional customers and with new
potential customers as well. Currently, we are submitting proposals
for over $50mm in potential near term new business.  
"We also continue to look for select, accretive acquisitions that
offer a strategic 'multiplier effect' of adding additional
capabilities which can then be marketed both to existing and new
customers. We have done this with our acquisition of Nassau Tool
Works, which by every measure has been a success. We now manufacture
full Landing Gear for the F-16, the F-18, and the E2-D aircraft, and
are well positioned to win more work in the future. Small, aggressive
and agile companies like ours have certain advantages in the merger &
acquisition market. We plan on exploiting this advantage for the
benefit of our shareholders." 
The Company uses EBITDA as a supplemental liquidity measure because
management finds it useful to understand and evaluate results,
excluding the impact of non-cash depreciation and amortization
charges, stock based compensation expenses, and nonrecurring expenses
and outlays, prior to consideration of the impact of other potential
sources and uses of cash, such as working capital items. This
calculation may differ in method of calculation from similarly titled
measures used by other companies. 
ABOUT AIR INDUSTRIES GROUP, INC.  
Air Industries Group, Inc. (AIRI) is an integrated manufacturer of
precision equipment assemblies and components for leading aerospace
and defense prime contractors. Air Industries designs and
manufactures flight critical products including flight safety parts,
landing gear and components, arresting gear, flight controls, sheet
metal fabrications and ground support equipment.  
Certain matters discussed in this press release are 'forward-looking
statements' intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of 1995.
In particular, the Company's statements regarding trends in the
marketplace, the ability to realize firm backlog and projected
backlog, potential future results and acquisitions, are examples of
such forward-looking statements. The forward-looking statements are
subject to numerous risks and uncertainties, including, but not
limited to, the timing of projects due to variability in size, scope
and duration, the inherent discrepancy in actual results from
estimates, projections and forecasts made by management regulatory
delays, changes in government funding and budgets, and other factors,
including general economic conditions, not within the Company's
control 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.
631.881.4913
ir@airindustriesgroup.com 
 
 
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