Air Industries Group

Hello and welcome to the Air Industries Group year-end 2024 earnings conference call. This time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. 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 could be no assurance that the forward-loading information will prove to be accurate. This clause does not constitute an offer to purchase any securities nor solicitation of a proxy, consent, authorization, or agent designation with respect to the meeting of the company's shareholders. At this time, I'd like to turn the call over to Lou Maluzzo, President and CEO.

Please go ahead. Thank you, Rob, and thank you all for joining us today. 2024 was a successful rebuilding year. Our financial results showed significant improvement over 2023. Our dramatic improved bookings of new business have led to a record backlog at a level we have never seen before. For 2024 compared to 2023, revenue, operating profit, and net income adjusted, but are all improved. Revenue was in excess of 55 million. improvement of nearly $2.6 million or 7%. Operating income by more than $750,000, converting a loss in 2023 to operating profit in 2024. We incurred a net loss for the year, but the loss was reduced by $765,000, a reduction of 36%. Adjusted EBITDA, our primary measure of financial performance, improved by nearly $1 million or 35%. As 2024 came to a close, we continued our accelerated business development and sales efforts. The aerospace industry uses a book to bill ratio, the total number, the total of new business book divided by sales bill to customers to measure the health of a business. A ratio of 1.2 to one is considered healthy and supportive of a growing business. In January of 2023, Our ratio was a dismal 0.75 to 1. At December 2024, it had improved to a 1.29 to 1, an improvement of 72%, now higher than the industry standard. Our new business sales efforts accelerated at the year end and into the first quarter of 2025. Beginning in December and continuing to March 11th of 2025, we announced six major new contracts for LTA's long-term agreements, totaling nearly $60 million of new business. Spread over four aircraft platforms and four customers. Bookings meet the backlog. Over the past two years, in 23 and 24, our full-funded backlog and backlog fully supported by firm customers' purchase orders increased by nearly $32 million, or 36.7%, and is now at almost $118 million. Our total backlog, including unfunded orders, also increased dramatically, and now is in excess of a quarter of a billion dollars. During 2024, we enjoyed improving financial results. Our business development efforts during that year continued to accelerate. This has laid a strong foundation for the future. While we do not expect straight-line improvement, we do expect improvement to continue in 2025 and beyond. Now, let me turn the call over to Scott, who will discuss our results in more detail. And I'll be back to add closing commentary and a bit more specifics on the outlook for some preliminary thoughts on 2025. Before opening it up to questions and answers, so, Scott, let's go over to finances, please.

Good morning, everybody, and thank you, Lou. Before I begin, I would also like to comment on the delay in filing our 10-K. Late last year, our independent audit firm merged. Mergers of accounting firms often result in additional time to complete an audit as new personnel and procedures are involved. The good news is that it was filed yesterday afternoon in the 15-day automatic extension period, so we remain compliant. I, too, share Lou's enthusiasm about the 2024 results. Let me discuss them in some more detail. Our consolidated net sales for the year were $55.1 million. That was 7% higher than the $51.5 million we achieved in 2023. The improvement in gross margin and profit is even more significant news. For the year, gross profit increased by over $1.5 million, or 20.2% compared to that of 2023. Our gross margin for the year was 16.2%. an increase of 1.7 percentage points compared to 2023. Now, while a gross margin of 16.2% remains below our historical average, we anticipate continued improvements in the future. Our operating expenses were controlled as well, even though we are in an inflationary environment. For the year, they were $8.5 million, an increase of $750,000, or 9.7% higher than the previous year. I'd like to point out that included in this increase was an additional $315,000 of stock compensation expense, which is a non-cash item. The increase in stock compensation expense accounted for 42% of the total increase. Had it not been for this non-cash additional expense, our operating expenses would have only increased by $435,000, or 5.6%. Our operating profit for the year was $459,000, which is a significant improvement from the loss we had in 2023. Finally, on the bottom line, we had a net loss of $1,366,000, or 41 cents a share. This is a dramatic improvement from 2023, where we had a net loss of $2.1 million, or 65 cents a share. Adjusted EBITDA for the year was $3,641,000, an increase of $944,000, or 35%, compared to that of 2023. I'm also very pleased to report that we remain in compliance with our loan with our lender. Now, let me quickly highlight a few balance sheet items comparing 2024 to 2023. Our total debt is up by about $3 million, which resulted from additional borrowings under our revolving credit facility and additional borrowings due to the completion of our solar power installation in our Connecticut facility. Our inventory is about $1 million lower than at the end of 2023, and we continue to monitor our inventory levels very diligently. Accounts receivable are up by about $1 million, as are accounts payable and accrued expenses. And with that, I turn the call back to Lou for some other remarks and then to our Q&A. Lou?