Air Industries Group

Hello and welcome to the Air Industries Group first quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. At that time, if you would like to ask a question, please press star 1 on your telephone keypad. You may press star 2 if you would like to remove your questions from the queue. You may need to pick up your handset before pressing the star keys if you are using speaker equipment. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. This call and the accompanying webcast 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 of 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 development 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 now like to turn the call over to Lou Melozo, President and CEO. Please go ahead, sir.

Thank you, Shivali. Thank you, everyone, for joining us today. The first quarter of 2024 saw revenue growth as compared to the first quarter of last year. as well as compared to revenues we achieved during the fourth quarter of 2023. More importantly, the strong order and opportunity flow we experienced during the fourth quarter of last year continues and remains strong. We achieved bookings of $12.95 million, and our backlog increased to $99.3 million. Our quarterly book-to-bill ratio, which is simply quarterly bookings divided by quarterly net sales, was 0.92 to 1, Q2 has started strong with new activity, and although timing is always difficult to predict, given the opportunities we see, I believe that our annual book-to-bill ratio in fiscal 2024 will continue to exceed the industry standards of 1.2 to 1. After the market closed today, we announced an $8.2 million order for Blackhawk and H92 components. Our funded backlog of $99.3 million represents the net future sales we expect to realize from funded orders we have already received. These funded orders issued by our customers come from long-term agreements, spot buys, and other contracts. It is important to understand that our backlog does not include what is sometimes referred to as unfunded orders. Unfunded orders represent future orders possible under existing long-term agreements and other contracts. When you take a step back, The total value of contracts awarded to us as of March 31st, 2024, including our $99.3 million of funded backlog was $179.1 million. The $179.1 million amount provides some multi-year visibility into our future revenue and validates that key partnerships we have with our customers. Importantly, As I mentioned earlier, we remain laser focused on several large opportunities we eventually expect to close. All in all, I am confident that fiscal 2024 will be a year of growth. Now let me turn the call over to Scott who will discuss our Q1 results. I'll be back to add some closing commentary and a bit more specifics on our 2024 outlook before opening it up to questions and answers. Scott, you may proceed.

Thanks, Lou. As Lou mentioned, we remain confident that fiscal 2024 will be a year of growth. Let me discuss our results. Consolidated net sales for the first quarter ended March 31, 2024, were $14 million. This was higher than the $12.5 million we achieved in Q1 of 2023. And in fact, it was even higher than the $13.5 million we achieved in the fourth quarter of 2023. although I caution everyone not to annualize any particular quarter's results. This quarter's sales level shows you a sense of our current production capabilities at our current staffing levels. Gross profit as a percentage of sales in Q1 2024 was 13.6%, as compared to the 15% we achieved in Q1 of 2023. It was lower than what we had achieved in Q4 of 2023, which was 16%. This quarter, our gross margins were impacted by several new products. We also experienced some hiccups in our Connecticut manufacturing facility, specifically incurring lower-than-expected hours. However, I am confident that gross margin will improve later in the year as we refine our operations and accelerate our products. Operating expenses in Q1 2024 were $2.2 million, or 15.4 percent of sales. When compared to Q1 of 2023, these metrics were very similar. Our Q1 2024 operating loss, largely driven by the lower gross profit, was $259,000 compared to the Q1 2023 loss of $158,000. Interest expense in Q1 2024 was $462,000, down slightly as compared to the $476,000 in Q1 of 2023. Finally, on the bottom line, net loss was $706,000 for the quarter compared to Q1 2023 loss of $618,000. With respect to adjusted EBITDA, we generated $362,000 in 2024 compared to $578,000 in 2020-23. A detailed reconciliation of this non-GAAP financial metric is included in our press release that was issued last evening. Now let me quickly highlight a few items on the balance sheet. We finished the quarter with $225,000 of cash. Our debt level was approximately $23,936,000, a slight increase from Q4 of 2024. As of March 31st, 2024, we unfortunately did not meet our fixed coverage charge ratio in our credit facility with Webster Bank. However, we did make all required principal payments pursuant to the terms of the credit facility, and we are working with Webster to obtain adjusted or new financing that better meet our operating requirements. Accounts receivable at quarter end was $8 million, and inventory was $29.3 million. Both amounts are very similar to how we finished Q4 of 2023. And with that, I will turn the call back to Lou for some closing remarks and an update on our 2024 business outlook. Lou? Thank you, Scott.