AIRI - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Air Industries Conference Call. Today's conference is being recorded. Except for the historical information contained herein, the matters discussed in this presentation contain forward-looking statements. The accuracy of these statements is subject to significant risks and uncertainties. Actual results could differ materially from these contained in the forward-looking statements. filings the XX-K company SEC important XX-Q company's about information and the on and Forms for See related risks. items. as as to the other uses results, expenses and used finds impact charges, stock-based noncash of is a prior working and measure amortization cash, liquidity of EBITDA nonrecurring 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 over At CEO, like this time, to I'd Melluzzo. turn the conference to Lou Please go ahead.

Lou Melluzzo

in you, summarize thank Air and you quarter Good for we results ended as third the us nine September. Thank Industries' the Jennifer. and for morning, for joining that months

discuss million. impact our lessening close also is will Net of have to the $XX.X continuing, Air to operations. average of in sales pre-pandemic the were This on sales quarter returned for levels. sales all Industry quarterly XXXX. very our third COVID-XX the We

Our percentage but points gross norms. historical for nearly five by lower than quarter, remains the margin increased profit

the lesser During By in to we things disruptions supply to September, back pretty normal. degree were much August. to and quarter, in July, chain continued a experience

our quarter. margins in expect to the continue improve We gross to fourth

significant As some know, you we the have capital quarter. during investments made

factory, by operational additions. four arrived Island our be in to purchased will soon. declined are our sales. work-in-process that net four will being machines facility. Connecticut. our at room very and now I slowed production One to To conference we inventories have discussed soon. to quarter Three existing our am million. inventory, how have other machines arrive $X our make in are last is is machines two slated have We primarily and They million. These be in these nearly installed as the our increased pandemic major machines, $X.X inventory, The third we call, spending to new relocated the pleased very Long of mid-November. our there operational In the facility fourth report about very adding

is Our unlike industry, and weighted many only. consist with others the firm of products, orders backlog in heavily military

slight still, remains through call. our seen near financial that, backlog Financial $XXX With decline it over to our in I'll like I close to pandemic, Officer, the but Mike the a Chief million. this to return have for We the call recap. Then Recca, turn Mike? would

Mike Recca

at are I you, pandemic of of kind you, dissipated agree the really with effects the this the the and and Thank point. effects Lou. decline

$X.X months, the our XX% are second For quarter. the that sales occurred down nine of million, decline but about in

in quarter, sales our the for about quarter, the The third part than up first sales and In the percentage that's mentioned QX. points third. subpar million, but it QX. margin gross a quarter, XX% five We for was other was at higher the increased bit in it's in $X by – third little was

had percentage margin. percent Also expect sadly, pandemic, the return the because bank have to X.X% we cost what product closely. XXXX we from the rate fourth improvement to on I'll a positive about our that's extra we We under quarter. through negative gross is directly in control. X.X% our it's the and higher operating QX greatly being in produced EBITDA remain turn line, Despite we call And of And of EBITDA, disruption higher and sales QX, sold. to XX-plus QX. further lower which in QX, looking nine much the the positive we credit in for in normal sales In going year-to-date that the to watch to the Lou. months. returned and back through a the expect of is higher-margin XXXX. Adjusted benefit expenses to most a interest this product continue affects volume, And at planned

Lou Melluzzo

Thank you, Mike.

our workforce heading achieved that are All the keep reorganization fact signs to of decline, we've hope has thoughts healthy the V-Shaped shop into all remainder a the XXXX. few of a close our floors, with steep The the Let able me that on call a been the of Industries short, rebound. sharp Air positive are the equipment, year. new the indications for by recovery, followed installation

like call about open the of over the first the to our remainder back Jennifer Instructions] that, to to We And and would we'll lines participant are the With year beyond. to Jennifer? go confident caller. [Operator I to turn questions.

Unidentified Analyst

How Lou, good you? are morning. Mike, Hi,

Mike Recca

John. morning, Good

Lou Melluzzo

Good morning, John.

Unidentified Analyst

what from Fourth to wise? be actually was wanted to to XX% expect revenue I just that think, on what able you – to plus. revenue I QX of what And level is be margins, in to of higher due expand gross of quarter, idea QX. get in part said believe you'd clarification. an expect a I be a a is you you seeing going little might little bit, us hoping give that you

Mike Recca

been QX. about incurred. XX%. of expect forward those, extra to second it about we day disruption significant costs The gross third XXXX. never margin quarter Absent the up where be above to QX quarter that have the back would looking We was of in I'm it because in have and down we the to speak

we don't better. yet. weeks, just of quarter want some best it another Maybe want specific that. to guidance is We a the QX, think So appropriate we'll give to year. couple in the number on of do I

Lou Melluzzo

the it's we in out mix go John, to product also have that QX. slated door the

Unidentified Analyst

which Sterling yet, gross level I probably see Q of or prospects the a for about would Sterling, to quarter, regard the know margins? out if positive need would I can was not Sterling. I also little this that you particular you in positive for And was what think was at talk hoping sales Okay. didn't approximately, but

Lou Melluzzo

of – it's military. was not Most very, very there. facilities, commercial, slightly to programs Long our Sterling Island are we exposed many

of And have declined by in commercial half. and sales some making – quarter that also of last obviously a we quarter, because that is can New of so at seen Sterling, – we have out Here they power And the the prices has of content up here. part of we're move work we've mix the relatively into because low, that ground-based had actually, some uptick. gas an moving is generation, higher being But here which of product product. York

earlier things in on very increasing the I combination a product, coming year. of the commercial So know the sales it work generation And there's side in and business of kind still for the magnitude – aggressive also out power – power and was getting we're in than We're XXXX. shipping we're but can gen the part. lives development out market pull run pull just in for exploring what that our we loss. for of the make try the to can we what There's see the to not letting to most up industry of the other commercial

Unidentified Analyst

you handle to on gross basis, of revenue might Sterling, to level at a say, what need wanted a positive get on I a quarterly margin. – to get

Mike Recca

positive gross Sterling $X be a million about breakeven is would sales. in margin That –

overhead. but moving the in here, – we're manufacturing because Now see their at, production of see absorption their up you'll manufacturing you sales reduction a will recorded

sales of So and that of a mix outside It's that. might is costs. much kind of really inside how transfer lower much is how

Unidentified Analyst

a that's quarterly number, $X you're annual million about talking The number, right? an number, Okay. not

Mike Recca

That is correct.

Lou Melluzzo

An annual number yes.

Mike Recca

correct. is That

Unidentified Analyst

right. Right,

about that. basis, get I is If I think gross bit it a backlog. was quarterly at $XX.X million current Okay, in about a a breakeven $X.X your you least little could talk margins, the that on million

on shaping that is idea know an I XX-month for up, I of XXXX if can you XX-month what and backlog wondering backlog, a Now get to your it's maybe firm give you would how period? an an a believe estimate it's backlog, us but be was

Mike Recca

back have But remember understand you on to how – John, available, information works. I'd I frankly be it's important don't it. happy backlog that but to get to

thousand there's If you making of to at dollars this couple up, number and month, in the backlog. I'm a look hundred eighteenth

the you $X starting past – which November, million the backlog million. or backlog look starts to or Sunday, not including is Saturday probably $X If probably dues, for

we Customers they they need lead with because over based dates. declines it to something, on it delivery order When time. So consider backlog firm add orders their time. – only the

So a a this, statistic – mind eat couldn't through we'll matter – the to an numbers we that it – our grows we to fill the to of wouldn't it's the and is That's use, becomes of think to just it production go. moving in important bank, million, I the new machinery. that, backlog. basically, goal of backlog, And it the sales. is months be of are able million as keep But if not year, million be is orders in current. XX $XX million a did Connecticut as production, as to just add But is that's $XX – even up goal quarter, which is $XX we more to $XX

Unidentified Analyst

are or a you for of very two you and quarterly responsible they the actually yearly I each about was little your Sikorsky And hoping talk Okay. a basis. prospects company. over for Goodrich, see a sales could now on thirds

Lou Melluzzo

expect Hawk quarter, for which some timing We it. year. is a be They've due. We this working degree to Sikorsky sometime that's issue. in the Black Yes. at It's would awarded contract, Well, MYXX now that multiyear it. a midyear that first it coming ten, They're bid on is several the maybe had of months.

on side. the Sikorsky getting orders, still So spot that's spot buys.

pretty press every course the order, $X pretty steady. just been that's of throughout million We steady but that's been So year. don't the

actually year, last though – in year. even this not that almost line it's incoming Our It's with not is bad. pandemic the

to with to program at be going up going in is XXXX. F-XX the grabs point Aerospace be and due, for I to going Goodrich, – for would up Now say, that's that's Collins some become another is

to prospects we got done we're in we two, we've works. hopeful past, will backlog the the that the plus between to contribute other like able the in be that So

Unidentified Analyst

I these really Okay. your of hanging imagine would most on backlog two is But companies?

Lou Melluzzo

We've say They our platforms a no that. it. different and and But now. Northrop lot of say over a work, spread lot commodity and folks. at seeing a Northrop There's wouldn't lot becoming question of a other all But it. portion I government customers. would a customers. indirect of we're Grumman activity biggest both direct is we're of about done a Air good direct I of Industries. lot of hot for are

So there. there's opportunities

Unidentified Analyst

for Okay hear. you to Thank well that. that’s good

read When it one made release, question. the there. mentioned press Just in final was I –

to quarter you returned and but that adversely I a quantify your could about And near talk if numbers talked have You was about that September. more pre-pandemic pronounced in what that, little by? might that. third about hoping more July a even affected give levels us the little could affected specifics August you costs that

Mike Recca

requires The course hard million, $X a by lot processing. is work It's $X product you be facility production product happens, finally over product – houses processing will down, and in of But all when to four that example were And the it for of and third outside typically built million, the as an inventory the accomplished, was three be before quarter to of or to processed and give remember, how And the the process. quantify. times that to process. second it's our leave that time-sensitive very finished. is it shut had

you gets put on – heat operation, heat to has if piece, the not it So treated the be before shelf. next it then a is got treated available,

was because we really got because same big the of position And guys everybody when of in. that's were business, these in they the in had back So inventory. a processing growth backlog the

those at And someone prices expediting were we we up. pay costs behind else’s had with costs product margin. all to So our customers, move to impact gross and went our additional because

Unidentified Analyst

Okay.

Mike Recca

by was And days the a good Now industry. back kind there's and to that because – processing by of the that old big great throughout ameliorated bottleneck to September, kind days like old the have in seems in supply, good of that way. weren't it the

Unidentified Analyst

have easing, of definitely would the the lot fourth in equipment But in bottleneck? you quarter, now I new anticipate a help should that

Mike Recca

additional about talking wasn't shifting additional and processing, facility increase sales. has bottleneck here to Connecticut additional machinery initiative and outside the to processing throughput normal, of we're a production great. returned what that normal and but is bottleneck outsourcing therefore, eventually should our The and The which the

Unidentified Analyst

I the have. the I’m in have things way Okay. great. quarter. That’s Well looking up that’s especially this fourth quarter all forward shaped

I’ll others to So that Thanks you open up have may questions. guys. it

Mike Recca

Thanks John.

Lou Melluzzo

Thank you, John.

Operator

are no [Operator Instructions] this time there And questions. further at

Lou Melluzzo

Thank Jennifer. you,

for the that, for can Thank the you. with the conclude now. attention you, on once again, call you your today time be thank questions. So and and everyone, Operator, to call taking

Operator

participation. Thank today's thank We you. your conclude This does for conference. you

Air Industries (AIRI) 31 Oct 202020 Q3 Earnings call transcript