Air Industries Group

Hello, and welcome to the Air Industries Group second quarter of 2025 earnings conference call. At this time, all participants are in listen-only mode. A 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. These 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 forelooking information will prove to be accurate. This call does not constitute an offer to purchase any securities nor 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 Maluzzo, President and CEO. Please go ahead, sir.

Thank you, Joe, and thank you all for joining us today. There is no avoiding the fact that our results for the second quarter in six months of 2025 were disappointing. In the second quarter, we faced some headwinds. Delays in customer approvals, extended lead time from subcontractors definitely impacted our results. Combined with a higher non-cash stock compensation, we had a net loss for the quarter. Despite this, adjusted EBITDA for the first half remained positive. This resulted from the ability to manage cost. To further increase profitability, we have implemented cost-cutting initiatives, including a workforce reduction that will reduce annual payroll by some $1 million. The savings may be a little bit more. Looking to the second half, reflecting the impact of these issues, we have adjusted our outlook. We now expect overall second quarter, second half, results in 2025 to be lower than the first half. We do believe that the fourth quarter will be the strongest quarter of the year. In spite of recent headwinds, I remain confident of our long-term business outlook. In early July of 2025, we successfully completed an at-the-market ATM offering, raising nearly $4 million in gross proceeds from the sale of a million 3,653 common shares, further strengthening our balance sheet. Our backlog reflecting sustained demand for our products grew to record levels in the first half of 2025. The long lead times for raw materials, the long time necessary to manufacture our highly complex, sophisticated products means the sales from our expanded backlog will begin to be realized in fiscal 2026 and in future years. An example highlights this. We recently announced a contract worth over $5 million for landing gear components for the B-52 aircraft. We have ordered the required raw material and expect it will arrive in mid-2026. We anticipate making the first deliveries late in the fourth quarter of 2026, but the overwhelming percentage of sales and deliveries will be in 2027. That means a July 2025 order yields deliveries in 2027, a year and a half or up to two years later. Since returning from the Paris Air Show in late June, our business development team has been extremely busy following up on new opportunities. We conducted several dozen meetings during the show, encompassing both customers, prospects, and suppliers. The meetings were fruitful in terms of assessing the current business climate, future opportunities, and engaging with our supply chain. With that said, I'd like to turn the call over to Scott, who will discuss the financial results in more detail and come back for some closing comments. Scott?

Thank you, Lou, and good afternoon, everyone. As Lou mentioned, our results for the second quarter and the first six months of 2025 fell short. Let me discuss the results in some more detail. Consolidated net sales for the second quarter into June 30, 2025, were $12.7 million. This represents a decrease of about 800,000, or 6.7%, for the same quarter in 2024. Gross profit was $2 million, which represents 16% of sales for Q2. Though inflation has moderated, prices are still increasing. We have been very successful in controlling our operating expenses. Adjusting for non-cash stock compensation expense, our consolidated operating costs were slightly lower this year as compared to 2024. Operating income of $8,000 in the second quarter of 2025 is compared to operating income of $752,000 in 2024. We had a net loss of $422,000 or 11 cents per share during Q2 of 2025, as compared to net income of $298,000, or $0.09 per share, in Q2 of 2024. For the six months ended June 30, 2025, our adjusted EBITDA was $1,469,000, a decrease of $306,000, or 17% from the prior year six-month period. Let me quickly highlight some items on our balance sheet. Our total debt has declined by a little more than $1 million. Inventory has increased by about $1.3 million. Accounts receivable has decreased by close to $2 million, and accounts payable and accrued expenses have increased by approximately $1.2 million. As Lou mentioned earlier, we completed our at-the-market offering in early July, raising nearly $4 million, selling over a million shares at an average price of about $3.95 per share. This enhances our balance sheet, increasing our liquidity, and reducing our net debt as of July by nearly $4 million. And with that, I will return the call over to Lou.