Air Industries Group Q3 2025 Earnings Call - Measurable Profit Improvement Amid Debt Refinancing Talks
Summary
Air Industries Group posted a tangible improvement in its third quarter 2025 results, edging close to profitability with a net loss of just $44,000 compared to a $404,000 loss a year ago. Sales rose to $10.3 million, bolstered by cost reduction efforts that lifted gross margin to 22.3%. Adjusted EBITDA for the first nine months climbed 5%. Yet, beneath the surface, the company's debt load increased by $2.4 million, with all debt classified as current due to looming maturities by end-2025 and mid-2026. Management is in active talks with lenders to secure refinancing, a critical detail that tempers optimism. Inventory rose sharply by $5.6 million, signaling stockpiling to meet backlog demand, while receivables eased and payables increased slightly. The balance sheet strain and refinancing urgency contrast with the positive operational tone, leaving investors watching closely as Air Industries aims to capitalize on a strong backlog and stabilize its finances heading into 2026.
Key Takeaways
- Q3 2025 net sales reached $10.3 million, showing improvement from prior quarters and year-ago levels.
- Gross profit margin improved to 22.3%, reflecting effective cost reduction initiatives.
- Operating income was $316,000, with a net loss narrowed drastically to $44,000 compared to $404,000 loss in Q3 2024.
- Adjusted EBITDA for the first nine months of 2025 increased by nearly 5% year-over-year to $2.7 million.
- Total debt rose by approximately $2.4 million, all recorded as current liabilities due to impending maturities.
- Credit facility matures end of December 2025; related party subordinated notes mature July 1, 2026.
- Company is actively engaged in constructive refinancing discussions with all lenders, though no definitive terms disclosed yet.
- Inventory increased $5.6 million to support future deliveries, pointing to a build-up for strong backlog fulfillment.
- Accounts receivable decreased by $2.1 million, indicating improved collections or shipment timings.
- Accounts payable increased by about $2 million, possibly reflecting extended payment terms or inventory acquisition financing.
- Management emphasizes focus on execution, cost control, and shareholder value amid ongoing capital structure adjustments.
- Despite positive operational momentum, refinancing risk and increased debt underline financial tension going into 2026.
Full Transcript
Donna, Conference Call Operator, Air Industries Group: Hello, and welcome to the Air Industries Group Third Quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. A brief question-and-answer session will follow the formal presentation. If you would like to ask a question during that time, please press Star 1 on your telephone keypad. If you require operator assistance during the conference, please press Star 0. This call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, including statements regarding, among other things, the company’s business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date the statement is made. These forward-looking statements are based largely on our company’s expectations and are subject to a number of risks and uncertainties, some of which are beyond our control and cannot be predicted or quantified.
Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. This call does not constitute an offer to purchase any securities nor a solicitation of a proxy, consent, authorization, or agent designation with respect to a meeting of the company’s shareholders. At this time, I would like to turn the call over to Lou Melluzzo, President and CEO. Please go ahead, sir.
Lou Melluzzo, President and CEO, Air Industries Group: Thank you, Donna. Good morning. Before we begin, I’d like to note that given the level of detail in our press release and Form 10Q, we’ll keep our prepared remarks brief. We will, of course, take a few questions at the end if anybody has them. Now, on to the numbers. Before I turn the call over to Scott, I do want to let you know that on our consolidated balance sheet, we are reflecting all of our credit facility and subordinated debt as current. Our credit facility matures at the end of December 2025, and our related party subordinate notes mature on July 1, 2026. At this time, I can’t comment further other than to say that the company is actively engaged in a constructive discussion with all lenders regarding potential refinancing or extension of these obligations.
I encourage you to refer to our Form 10Q for more details on the status of these notes and related disclosures. With that, I’ll turn the call over to Scott for the numbers. Scott.
Scott, Financial Executive (likely CFO), Air Industries Group: Thank you, Lou, and good morning, everyone. Results for the third quarter of 2025 showed a meaningful improvement compared to both the first two quarters of this year and the third quarter of 2024. Net sales for the three months ended September 30th, 2025, were $10.3 million. Gross profit was $2.3 million, or 22.3% of sales. This is a strong improvement reflecting the benefits of our cost reductions initiatives earlier this year. Our operating income, excuse me, came in at $316,000. Our net loss for the quarter was just $44,000, or $0.01 per share, compared to a loss of $404,000 in Q3 of 2024. Adjusted EBITDA for the nine months ended September 30th was $2.7 million, up nearly 5% from the prior year. Let me touch briefly on the balance sheet. Our total debt has increased by approximately $2.4 million.
Inventory has increased by $5.6 million, reflecting our investment in work in process inventory and materials to support future deliveries. Accounts receivable has decreased by $2.1 million, and accounts payable has increased by approximately $2 million. With that, I will turn the call back over to Lou.
Lou Melluzzo, President and CEO, Air Industries Group: Thanks, Scott. As you heard, our third quarter performance showed measurable improvements in profitability and operational discipline. While we remain focused on completing our ongoing lender discussions and finalizing the right capital structure for the future, we are confident in the strength of our core business. We continue to benefit from strong backlog levels and a healthy demand from both existing and new customers. Our focus remains squarely on execution, cost control, and driving shareholder value. We look forward to a strong finish to fiscal 2025 and continued momentum into 2026. Thank you for your time and support. Donna, with that, I would like to open the line to questions and answers, if you may.
Donna, Conference Call Operator, Air Industries Group: Thank you. The floor is now open for questions. If you would like to ask a question, please press Star 1 on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the Star keys. Again, that’s Star 1 to register a question at this time. One moment, please, while we poll for questions. Again, that’s Star 1 to register a question at this time. Mr. Melluzzo, we’re showing no questions in queue at this time. I would like to turn the floor back over to you for closing comments.
Lou Melluzzo, President and CEO, Air Industries Group: Thank you, Donna. Thank you all for taking the time to be on the call today and for your continued interest in Air Industries Group. We look forward to updating you on the progress of our ongoing operations on the next call. Thank you all for joining. Donna, you may end the call.
Donna, Conference Call Operator, Air Industries Group: Thank you. Ladies and gentlemen, this concludes today’s event. You may disconnect your lines at this time and enjoy the rest of your day.
