AIRI - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the Air Industries Conference Call. Today's conference is being recorded. Air Industries Group Safe Harbor Statement, except for the historical information contained herein the matter discussed in this presentation contained forward-looking statements. The accuracy of these statements is subject to significant risk and uncertainties. Actual results could differ maturely from those contained in the forward-looking statements. filings the XX-K Company SEC important XX-Q Company's about information and the on and Form for See related risk. items. as as to the other uses results, expenses and used finds impact charges, stock-based non-cash of is a prior working and measure amortization cash, liquidity of EBITDA non-recurring expenses, because depreciation it and useful and the to understand potential excluding evaluate outlays, capital sources compensation and such impact of supplemental management consideration of calculation method companies. titled This in measures used similarly differ calculation from may of by other conference At to would this time, like I Melluzzo. to turn the over Lou Please go ahead.

Lou Melluzzo

you, Thank Becky.

Air the Michael first results. have Recca, On thank quarter myself; and Good CFO. our the afternoon and Chairman; as we Industries today, our joining, all XXXX Michael line for Taglich, summarize we

call, on revenue to plan our number discussed with in first drive are we our profitability. quarter line on solid results As our while focusing year-end

be machines, is to where product machines machines. creating running so backlog. is a on continue to necessary allows first times processes. about allows machine the almost In is two it accomplishing face. of to quarter, at backlog has are cells we cases, we inefficiencies guy one face to increased on sitting location production in at two our cases execute cost we existing new to and guy our are every is from the few basis. most that execute our optimize our meet At to customer We screening capital eliminating working its this examples fulfill to give AIM in our demands like three you We're the that point, how profitable our all and customer a while processes. one that one continuing One align machines I'd best minimize for some needs In schedules two continue working disciplined Tool this operator in man running up between comfortable couple move Nassau Works, that. for to

cell heavy of pieces part that's it's looking at to We're in We have and air in. consolidation a spot programs dedicated the a in deep in moved now machining. important a -- of biggest we two is for weeks in-sourcing for we at feel very was process. for that several the XX-foot are numbers This that a have running dedicated control -- part We're midst one in-sourcing. hole looking I most the in successfully important machine equipment better need in our of last

processes at these Special were the to relate two. Right our month customers we our ID/OD on very with So, to products. get It's looking or processes, little grinding. to start the approvals application do in they current as our to processes into for are try outside parts a the be grinding and coming we considered next vendors, now, those shop special process. are back

You get approvals. got to

approval permission have to it to and to process entire got an there's You it. inside bring

and lead-time not initiatives they're reduce of only are cost, going reduce going inventory improve kind but these to to turns. Now,

Then call the to the business our the I'll to know To The at from you're close call. on the further end Mike You execution. turn proceeds to to WMI the provide May. over continue enable Mike sale sale like return target details on. net of Mike. will numbers, the is close on I'd to of financial Recca.

Michael Recca

me, Can you hear Lou?

Lou Melluzzo

Yes

Michael Recca

you. Thank here. I'm

with our operations the I Before that of just financial serving without are on discontinued we out we WMI one statement. operations remind start, to want presenting

all for numbers not year. So, results these do the include their

increase, that's this note million. and sales quarter flat rest quarter fourth significant increased from of to the to million, comparing XX.X been we year prior of quarter the will XXXX, I the XXXX are was quarter for results it first So were with year. that essentially what keeping X.X XX.X consolidated the the sales to I of XX.X for feel for that think and a million improving dollars was

were a million this was to profits primarily some $X.X X.X for Historically, curve. following three article, operating for on Our the improvement. to hope always million were continuing quarter of -- quarter measures decrease we That gross slightly introductions first some X.X in later. million. quarters, year. and prior as higher Operating $X a the learning that first to Lou had expenses the about the resulted our you begin million product expenses production higher about new in had F-XX begin more first and climb in than the that will cost-saving gross the to lower speak are profit show particularly than from They first to

adjusted operations and and were sales flat from year positive was Our EBITDA was was the this even still down, with XXX,XXX a showing continuing though even EBITDA. essentially prior profit gross

we're from guidance given a EBITDA XXX did. that continues first about improve. operations we previously at positive quarter continuing constant and backlog and liquidity remains to The to show have going million We

capital should over Lou in and execute of await couple weeks a turn working further and later. on when we be And with your that, questions to managed I'll and the of call backlog continue metallurgy. the improved diligently to are welding conclude the We back our sale liquidity

Lou Melluzzo

and a the Thank you, the close Mike. with our initiatives. call coming quarter few will summary of on go-to-market a thoughts out I near-term

we have appropriately need we customers' align reflect fourth of in to stated recognized to XXXX, As previously needs. more quarter the revenue our the

refocused business company in backlogs we We XXXX well as in results to on a take correctly and quarter that upon additional products based meet on existing to We gear complex as first turbine our landing are confident applications. positioned its also engine part the for machining commitments. aircraft remain jet

remains million. Our backlog continuing operations from at $XXX over

revenue This sold fiscal levels operation million. unit the of exceed Our be $XX.X end goal January XXXX. for continues at MK XXXX, will that fiscal XXXX that of to excludes continuing was the

reflected schedule by the focus operational on the summer. our goal which liquidity XXXX. improve and of a implementing per continued expenses to operations remains steps It efficiencies, positive out to of including will million about is completed to of consolidation for we to In continue our dollars in be the quarter as quarter, EBITDA end pull the first addition, on facilities, our of and

is lines to would goal the this Operator, As call, our growth continuous we concludes to achieve please remarks will session. in Q&A in prior and our participant it open up afternoon formal the quarterly stated EBITDA. answers now This the for open question. you you to our

Operator

Instructions] our question. go [Operator we'll to And first

John Nobile

John $XXX sure Nobile pretty with I is of backlog, WMI. that said a make that just to have wanted continuing the operation. and it's this with you Hello, before is your your Brothers. Taglich consistent noticed backlog was million I sale funded

sale to discontinued imagining operation? really I'm that the you So lost backlog in much of haven't of regard

Lou Melluzzo

correct, That’s the at The of and backlog bulk Air Machining Nassau the our John. Tool resides Works.

yet. So pushback, much like we I it of not little all. it's but at took don’t a bit

John Nobile

No, that operations was to anticipated. million how over I I wasn't see mean that much XXX drop, than nice now better might sure with was see. the continuing backlog to still I right but had

Lou Melluzzo

welding recollection about My we that at is $X.X the million. had in was January backlog

John Nobile

XXX before last number. drop, the think the million I number only because and since really Okay was X

wanted So sure, I anyway… just to make

Lou Melluzzo

is million, XX say backlog complex at I Again, is at XX, it the of of would in machining. machining a majority of complex XXX

John Nobile

performance again outlook NTW, focus I'm QX, but like once for past outlook in -- your its over the it weak given I AIM curious your looking about like still and was Sterling on and core kind your in the weak competencies year.

wasn't and before, So continue turnaround asked John do yes, I call, sure know for now in had profitability Lavery, think this the I curious, to consider the you or his original, see here? he's in you see we managing it the but mentioned of a I'm if sale Sterling is near pickup you term? I while I've when Sterling just that does I name believe you underperform, might might some something now. this know last know

if curious things man just are starting and there turn So to I'm around that right the indeed see helm? the hopefully at to

Lou Melluzzo

now been has he for managing six weeks. Yes, Sterling

John Nobile

okay. weeks, six Only

last ago. actually wasn't that call long While the

sales only continued get erosion of for numbers Okay so Sterling just March show to this the an because outlook there. XXst,

company? just curious, us if regard you I’m outlook the to have share for with So in this anything to

Lou Melluzzo

question. John, that's a great

was Here biggest Power. is where customer we’re with Sterling. GE Sterling's

the has GE in generation. power a setback Now taken ground

received are confident it's a starts some not programs but of that planes stuff a we close we run done dozen business. we've business, that of it's year, a We've have on midsized the I’m up. minimize half visited that And gear. I'm very in focus landing It’s have they -- with that will the new we've that on -- division to that side development is being just So John capacity, able business I again. before -- a upswing. new we’re some folks up have. we that of forward the out moving productions. customers table. and are cautious in the that the of our the confident the some some the a of matter few starting actually before on to going It’s follow that as how matter time beginning and customers myself certainly of of nature, but spends that it’s meantime, that be to hitters got swarm say bring coming the the interested have John got it's talent before military interested down or just know. of from gets and been our They the any well divisions pretty business time to In that and included pretty a what table there, great turbofan. It that much in the have matter to to other made have anything RFQ anything time big to them gear facility, equipment two turbine We of business the they in to it’s already. operations pretty

So, and people. we’re the taking the we’re right right calling steps

John Nobile

two existing customers customers right you new or have RFQs are Customers, and now?

Lou Melluzzo

GE, even months new or the they're is well customers, customers that’s that six of a it's them out, new mix not And brand us. customers, There, for so ago. in lead out of but new are one three evened

John Nobile

a million report that’s to find there’s believe that to on And the that this $X have you’re was call, as is so last of inventory, been inventory find management, up to find could inventory mean -- buyer? that for it is -- a to a up I am to on like just in a far trying the anything purchased I mentioned large looking this, amount was to out if how it as in chance to way curious you purchased. I your going was trying And million speculative former by trying X buyer

Lou Melluzzo

forefront business the at That and initiative responsibility our of as well forefront John is of at the development.

not were year, We’re looking been the with another, before. have contact mix ever in three that last or we four buyers in probably actively, potential or

We of in are and momentum think from some interest some I that now we at will divesting and inventory. gaining point far not time some start

John Nobile

in just I while because you this how am to and revenue if next to see haven’t mix -- your year a I could, do mix just And asked only over the and out changing curious mix only and two? as that is be military how it this current find I commercial not that currently or

Lou Melluzzo

please Mike and here. commercial. help me military But and XX% to to Recca, I XX% are believe XX% believe the about I we rest XX% military, out

the at up starting up certainly Now, great like starting we’re pick Turbofan, in to Geared pick we’re this a to are military time. that Predominantly, programs pace. they’re ramp, few

a in We’re business.

Unidentified Analyst

sounds year. it commercial like over bit you last over sound think the did mix? It it going it year did into I the little more XX% go really -- were, military sounds because a like

Lou Melluzzo

that got programs one new some in couple excited a being of I'm of and content Turbofan them. Geared about We've

John Nobile

Okay.

Lou Melluzzo

million what even of I we’re look as a think I’d X right Sterling, and was really there, a military. for say commercial X I But at now, probably hoping John, you million of

X it’s complex together Machining then probably to XX% income -- Air are XX military. at that’s So machining

XX% XXX% So, I are the you're of to the military that a hoping that now, XX%, doubles. in as that’s am XX%, becomes probably military commercial XX% the

John Nobile

We it's actually And reading that let WMI, so upon saw that. sale the met obtaining just cue structures contingent financing, sale with the CPI aero I see through of curious…

Lou Melluzzo

can’t longer remember no I earlier CPI. is It upon with that. want to week, I We sometime contingent with when. met get last

John Nobile

at out just today, contingent. queue I that’s -- The mentioned early looking was actually did yesterday, it I in yesterday just why came but it printed it, was,

contingent not point? this upon financing it's at So the

Lou Melluzzo

financing, their of by contract, couple in There’re we’ve was got issue the not is original that ready one continuances an they’re CPI to them told been close. the that

We’ve all attempt that consents and all from the received rescheduled but customers delay that I were closing. the consents. was customers our CPI horizon we’ve that so we’ll May anything Second from five perfect, that, that’s the end, by five get that’s consents tenant major necessary. we so target. month those to and on five to nice month get that's would beyond don’t clean at a going XXst it’s close, see end of And

John Nobile

The cash infusion should be nice.

Lou Melluzzo

out. usually in going and coming It's better

John Nobile

one on details and And was margins stated the believe if final the just mix I that question can XX-Q. you gross that the in margins the product gross was quarter to first some It was hoping…. I get will improve. reduction due

Michael Recca

Gross half reducing we expense, all do factory Tool margin of real improve our refractory not on F-XX one revenues in so for it. being Nassau to working And goes you second and expense a are as thoughts estate because they'll products want sold, should don't you least because Lou, should first-time it's we our One overhead the improve as new two should be more hopefully a our percentage and as on, exiting will in you other at overhead reasons. and comment location more and of QX? absorb that people year decline have efficient. space improve, introductions be higher should and the

Lou Melluzzo

the and lagging then expedited deliveries earlier five program, our them moved we've and customer parts in these just AXXX developments. additional F-XX, stated on we the was and quarter, was you F-XX timely out there were really fourth in of you breakneck were these shop part realigned were we There on a the some I parts talking to it the on back talking pace the but As through that get to fashion, operations, and behind programs. in brand-new

building than So at parts that queue we left had and now a there through. optimize first-time the so to heavy be quarter won't be going around developmental forward,

there. kind So back of set that's

John Nobile

It's were first-time like percentage quarter R&D What we first quarter which looking really very of related products, XX.X was have percentage quarter understand for at the up everything. of what to that heavy time? the well total was this in first hard that the and with So are tooling things I did a you parts or and the that much how first-time really sales the from that. really but

Lou Melluzzo

be automated, our facility get have to percentage parts lead a have eight somebody, to parts that times, they all are with need sometimes takes, now as much and parts to Those operations. happen. out so to on delivery every managed. make operation and to track on, by back not be expedited to so the back times but carried Those of parts they're get effort the It's pulled John. those and and -- needed requirements, we hand it were eight not But it we stops as they step some in sometimes that we customer

John Nobile

going seen right So of quarter you've should product? to we less a into second first what the from see non-existent in now first quarter related effect the time our

Lou Melluzzo

always…. we've accurate an not repo, is Non-existent

John Nobile

adverse Lesser effect.

Lou Melluzzo

that amount is lesser A correct, John.

Operator

to check next mute your please your question. Hello, will [Operator go function. line is Instructions] caller open, And our

Unidentified Analyst

the just government the that? Sikorsky the had like Kates. press haven't reading actually of reasons stock about because flight you'd calls wondered, Sikorsky of time and and the or course that a any Larry the is has from it I connection any I the in boxes. of to Company same at off connection was main heard contract much you and has quite about bought the And Sikorsky these the tell this with one Company and large anything of about was gotten This us I helicopter bit releases I if

Lou Melluzzo

agencies the to very ready base. going Sikorsky contracts come to ours. through going who can big is Yes, on come and certainly -- time proposals Certainly, takes I the they government for countries, foreign this. customer find are are out of be from it Sikorsky we a or for go to supply the down get. out Once address to they who's

not basically all, any proposals programs are military, compliance go these of of Act. them Negotiations a lot Truth to of a in through substance all have lot almost that being military, Now are but TINA

on of proposals Sikorsky by frame government the be the those proposals folks. any OEM. to spot same standard buy the time audited as with by Those types have not major are So, internally

-- will it's awarded has to overnight out Sikorsky been just through the to does that the a process have contract it way. come not mean We long so eventually But its because it make sub-tiers. does

Larry. Our quoting better you on what activity that with I Sikorsky than has been tell usual can that's

Unidentified Analyst

contracts make assume crossed, hope in good looking eyes of for the t's soon get some will Well, those that industries as that's the to I you investors of and bigger all to I'm you are I i's hear. dotted happen. and the that people. are as even and

Lou Melluzzo

with know It's at all strongly due pursuing, contracts Big you. it this and you it something is I diligence takes we're agree is but are time. it time. what definitely

Operator

go And we'll to our question. next

Unidentified Analyst

How Brown. are the the doing conferences just future the towards and investor you Are cleaned kind kind now up afternoon? in growth guys Stephen Company of is that of This interested you you any this in doing phase? heading

Lou Melluzzo

I think happen you're future to week I swing not-too-distant to or this the the it of back things, not I'm that is, sure, yes. going eventually month? into think to the going yes. when in answer Is this but

Unidentified Analyst

figure I with of guess by the the consolidation, plan August. And end you

be finished or guys is it finished? out will You there of mostly

Lou Melluzzo

on right Yes, We're mid-summer it's looking moving schedule. to a late-summer along for completion.

it. pieces So biggest biggest that we've of the two equipment a that there's of are weeks weeks than move weeks less the left really two really in on in piece in our and to to not was last two equipment making guys managed our moved and foot move many chips XX risk, we

to they job. did them, kudos So great a

Unidentified Analyst

the your turning even the concerned letter stuff a and possibly inventory always of in WMI chance of that and future? but going better. with a I foresee concern going there's guess over scaring like Did you investors, a sale And the going notice forward auditors

Michael Recca

would fundamental concern prevent may. profitability. goal. That's a we business by going like that I to is way the get there I year. our to if answer return We aim. this That's to of hopefully The end to our

you. that have at is is in you're side when not going think time a flow that's point avenue think I net when you're best I and income we cash on against argue your time you're positive to a the showing opinion. concern But

Unidentified Analyst

is to my on. kind last military slow Okay, just the know do of has question I

starting receiving, bidding seeing Are services? increased for they're the that any you Now, activity your government. to federal from funding the guys receive

Lou Melluzzo

The under increased. and the has definitely at. definitely activity. elevated RFQ funds activity releasing We're We've of Trump looking seeing President that the seen he's

Operator

[Operator Lou Instructions] to hand I'll statements. We or call have time, no more Melluzzo at additional the questions this for any over back so closing

Lou Melluzzo

Becky. you, Thank

So with a everyone that, time up. once on our today to Becky, again wrap the taking to think I'd call for thank and I that's like participate to back you.

Operator

does thank all We conclude conference. for That today's participation. your you

Air Industries (AIRI) 16 May 182018 Q1 Earnings call transcript