x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2013
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO ________.
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
20-4458244
(IRS Employer
Identification No.)
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Page No.
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
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1
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
17
|
Item 4. Controls and Procedures
|
24
|
PART II. OTHER INFORMATION
|
|
Item 1A. Risk Factors
|
25
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
25
|
Item 6. Exhibits
|
25
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SIGNATURES
|
26
|
PART I
|
|
FINANCIAL INFORMATION
|
|
Item 1. Financial statements
|
Page No.
|
Condensed Consolidated Financial Statements:
|
2
|
Condensed Consolidated Balance Sheets as of June 30, 2013 (unaudited) and December 31, 2012
|
2
|
Condensed Consolidated Statements of Operations for the six months and three months ended June 30, 2013 and 2012 (unaudited)
|
3
|
Condensed Consolidated Statements of Cash Flows for the six and three months ended June 30, 2013 and 2012 (unaudited)
|
4
|
Notes to Condensed Consolidated Financial Statements
|
5
|
AIR INDUSTRIES GROUP, INC.
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current Assets
|
||||||||
Cash and Cash Equivalents
|
$ | 955,000 | $ | 490,000 | ||||
Accounts Receivable, Net of Allowance for Doubtful Accounts of $789,000 and $705,000
|
9,009,000 | 11,631,000 | ||||||
Inventory
|
28,247,000 | 26,739,000 | ||||||
Prepaid Expenses and Other Current Assets
|
357,000 | 546,000 | ||||||
Deposits - Customers
|
16,000 | 133,000 | ||||||
Total Current Assets
|
38,584,000 | 39,539,000 | ||||||
Property and Equipment, net
|
5,129,000 | 5,883,000 | ||||||
Capitalized Engineering Costs - net of Accumulated Amortization of $3,653,000 and $3,449,000
|
813,000 | 802,000 | ||||||
Deferred Financing Costs, net, deposit and other assets
|
560,000 | 590,000 | ||||||
Intangible Assets, net
|
5,308,000 | 5,889,000 | ||||||
Goodwill
|
453,000 | 453,000 | ||||||
TOTAL ASSETS
|
$ | 50,847,000 | $ | 53,156,000 | ||||
|
||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Notes Payable and Capitalized Lease Obligations - Current Portion
|
$ | 16,746,000 | $ | 19,211,000 | ||||
Accounts Payable and Accrued Expenses
|
7,412,000 | 7,077,000 | ||||||
Lease Impairment - Current
|
78,000 | 85,000 | ||||||
Deferred Gain on Sale - Current Portion
|
38,000 | 38,000 | ||||||
Dividends Payable
|
358,000 | - | ||||||
Income Taxes Payable
|
2,400,000 | 1,448,000 | ||||||
|
||||||||
Total Current Liabilities
|
27,032,000 | 27,859,000 | ||||||
Long term liabilities
|
||||||||
Notes Payable and Capitalized Lease Obligation - Net of Current Portion
|
3,382,000 | 4,640,000 | ||||||
Lease Impairment - Net of Current Portion
|
89,000 | 127,000 | ||||||
Deferred Gain on Sale - Net of Current Portion
|
466,000 | 485,000 | ||||||
Deferred Rent
|
1,094,000 | 1,057,000 | ||||||
|
||||||||
TOTAL LIABILITIES
|
32,063,000 | 34,168,000 | ||||||
|
||||||||
Contingencies
|
||||||||
Stockholders' Equity
|
||||||||
Preferred Stock Par Value $.001-Authorized 8,003,716 shares
|
||||||||
Designated as Series "A" Convertible Preferred - $.001 par Value, 1,000 Shares Authorized 0 Shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively.
|
- | - | ||||||
Designated as Series "B" Convertible Preferred -$.001 Par Value, 4,000,000 Shares Authorized, 0 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively; Liquidation Value, $ 0
|
- | - | ||||||
Common Stock - $.001 Par, 20,000,000 Shares Authorized, 5,711,093 and 5,711,093 Shares Issued and Outstanding as of June 30, 2013 and December 31, 2012, respectively
|
6,000 | 6,000 | ||||||
Additional Paid-In Capital
|
37,203,000 | 37,913,000 | ||||||
Accumulated Deficit
|
(18,425,000 | ) | (18,931,000 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY
|
18,784,000 | 18,988,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 50,847,000 | $ | 53,156,000 |
AIR INDUSTRIES GROUP, INC.
|
||||||||||||||||
Condensed Consolidated Statements of Income
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net Sales
|
$ | 14,639,000 | $ | 15,240,000 | $ | 28,965,000 | $ | 31,278,000 | ||||||||
Cost of Sales
|
11,009,000 | 11,804,000 | 21,687,000 | 24,570,000 | ||||||||||||
Gross Profit
|
3,630,000 | 3,436,000 | 7,278,000 | 6,708,000 | ||||||||||||
Operating Expenses
|
2,552,000 | 2,140,000 | 5,021,000 | 3,816,000 | ||||||||||||
Income from operations
|
1,078,000 | 1,296,000 | 2,257,000 | 2,892,000 | ||||||||||||
Interest and financing costs
|
(393,000 | ) | (472,000 | ) | (775,000 | ) | (970,000 | ) | ||||||||
Other (expense) income, net
|
(29,000 | ) | (142,000 | ) | (58,000 | ) | (135,000 | ) | ||||||||
Income before provision for income taxes
|
656,000 | 682,000 | 1,424,000 | 1,787,000 | ||||||||||||
Provision for income taxes
|
430,000 | 363,000 | 919,000 | 648,000 | ||||||||||||
Net income
|
$ | 226,000 | $ | 319,000 | $ | 505,000 | $ | 1,139,000 | ||||||||
Income per share - basic
|
$ | 0.04 | $ | 0.09 | $ | 0.09 | $ | 0.31 | ||||||||
Income per share - diluted
|
$ | 0.04 | $ | 0.08 | $ | 0.09 | $ | 0.31 | ||||||||
Weighted average shares outstanding - basic
|
5,711,093 | 3,703,011 | 5,711,093 | 3,641,062 | ||||||||||||
Weighted average shares outstanding - diluted
|
5,789,157 | 3,783,324 | 5,799,374 | 3,670,457 |
AIR INDUSTRIES GROUP, INC.
|
||||||||
Condensed Consolidated Statements of Cash Flows For the Six months Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net Income
|
$ | 505,000 | $ | 1,139,000 | ||||
Adjustments to Reconcile Net Income to Net
|
||||||||
Cash provided by Operating Activities
|
||||||||
Depreciation of property and equipment
|
801,000 | 715,000 | ||||||
Amortization of intangible assets
|
582,000 | 84,000 | ||||||
Amortization of capitalized engineering costs
|
203,000 | 225,000 | ||||||
Bad debt expense
|
91,000 | 241,000 | ||||||
Non-cash compensation expense
|
6,000 | 43,000 | ||||||
Amortization of deferred financing costs
|
30,000 | 27,000 | ||||||
Gain on sale of real estate
|
(19,000 | ) | (19,000 | ) | ||||
Adjustments to Lease Impairment
|
- | 53,000 | ||||||
Changes in Assets and Liabilities
|
||||||||
(Increase) Decrease in Operating Assets:
|
||||||||
Accounts Receivable
|
2,530,000 | (3,680,000 | ) | |||||
Inventory
|
(1,508,000 | ) | 1,280,000 | |||||
Prepaid Expenses and Other Current Assets
|
189,000 | 143,000 | ||||||
Deposits
|
117,000 | (124,000 | ) | |||||
Other Assets
|
10,000 | 57,000 | ||||||
Increase (Decrease) in Operating Liabilities
|
||||||||
Accounts payable and accrued expenses
|
334,000 | (735,000 | ) | |||||
Deferred Rent
|
38,000 | 47,000 | ||||||
Income Taxes payable
|
952,000 | 586,000 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
4,861,000 | 82,000 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Cash paid for acquisition
|
- | (11,400,000 | ) | |||||
Capitalized engineering costs
|
(214,000 | ) | (162,000 | ) | ||||
Purchase of property and equipment
|
(46,000 | ) | (243,000 | ) | ||||
Deposit for new property and equipment
|
- | (116,000 | ) | |||||
NET CASH USED IN INVESTING ACTIVITIES
|
(260,000 | ) | (11,921,000 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from Private Placement
|
- | 6,885,000 | ||||||
Payment of Issuance costs for Private Placement
|
- | (553,000 | ) | |||||
Notes payable - Sellers
|
(317,000 | ) | (295,000 | ) | ||||
Capital lease obligations
|
(374,000 | ) | (282,000 | ) | ||||
Note payable - Revolver
|
(2,132,000 | ) | 3,397,000 | |||||
Proceeds from note payable - Term Loan
|
- | 3,900,000 | ||||||
Payments of note payable - Term Loan
|
(900,000 | ) | (500,000 | ) | ||||
Cash paid for deferred financing costs
|
(10,000 | ) | - | |||||
Payments related to Lease Impairment
|
(45,000 | ) | (55,000 | ) | ||||
Dividends Paid
|
(358,000 | ) | - | |||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(4,136,000 | ) | 12,497,000 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
465,000 | 658,000 | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
490,000 | 577,000 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 955,000 | $ | 1,235,000 | ||||
Schedule of noncash activities
|
||||||||
Dividends payable
|
$ | 358,000 | $ | - | ||||
Supplemental cash flow information
|
||||||||
Cash paid during the period for interest
|
$ | 333,000 | $ | 860,000 | ||||
Supplemental cash flow information
|
||||||||
Cash paid during the period for income taxes
|
$ | - | $ | 64,000 | ||||
Supplemental schedule of non-cash investing and financing activities
|
||||||||
Junior Subordinated Note Converted to Common Stock
|
$ | - | $ | 5,204,000 | ||||
Purchase of substantially all assets of Nassau Tool Works, Inc and assumption
|
||||||||
of liabilities in the acquisition as follows:
|
||||||||
Fair Value of Tangible Assets acquired
|
$ | 7,941,000 | ||||||
Intangible assets, subject to amortization
|
4,975,000 | |||||||
Goodwill
|
162,000 | |||||||
Liabilities assumed
|
(660,000 | ) | ||||||
Due to Seller of Old Nassau Tool
|
(718,000 | ) | ||||||
Common Stock
|
(300,000 | ) | ||||||
Cash paid for acquisition
|
$ | 11,400,000 |
Customer
|
Percentage of Sales
|
|||
2013
|
2012
|
|||
(Unaudited)
|
(Unaudited)
|
|||
1
|
28.0
|
33.7
|
||
2
|
17.7
|
31.2
|
||
3
|
13.5
|
*
|
||
* Customer was less than 10% of sales for the six months ended June 30, 2012
|
Customer
|
Percentage of Sales
|
|||
2013
|
2012
|
|||
(Unaudited)
|
(Unaudited)
|
|||
1
|
30.2
|
29.0
|
||
2
|
17.1
|
31.6
|
||
3
|
11.7
|
*
|
||
* Customer was less than 10% of sales for the three months ended June 30, 2012
|
Customer
|
Percentage of Receivables
|
|||
June
|
December
|
|||
2013
|
2012
|
|||
(Unaudited)
|
||||
1
|
23.1
|
18.6
|
||
2
|
15.5
|
10.7
|
||
3
|
10.1
|
*
|
||
4
|
**
|
25.3
|
||
* Customer was less than 10% of receivables at December 31, 2012
|
||||
** Customer was less than 10% of receivables at June 30, 2013
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Weighted average shares outstanding used to compute basic earning per share
|
5,711,093 | 3,703,011 | 5,711,093 | 3,641,062 | ||||||||||||
Effect of dilutive stock options and warrants
|
78,064 | 80,313 | 88,281 | 29,395 | ||||||||||||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share
|
5,789,157 | 3,783,324 | 5,799,374 | 3,670,457 |
June 30,
|
June 30.
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Stock Options
|
12,548 | 15,548 | ||||||
Warrants
|
118,835 | 250 | ||||||
131,383 | 15,798 |
June 30.
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Accounts Receivable Gross
|
$ | 9,798,000 | $ | 12,336,000 | ||||
Allowance for Doubtful Accounts
|
(789,000 | ) | (705,000 | ) | ||||
Accounts Receivable Net
|
$ | 9,009,000 | $ | 11,631,000 |
June 30,
|
December 31,
|
|||||||||
2013
|
2012
|
|||||||||
(Unaudited)
|
||||||||||
Machinery and Equipment
|
$ | 5,818,000 | $ | 5,801,000 |
5 - 8 years
|
|||||
Capital Lease Machinery and Equipment
|
4,503,000 | 4,503,000 |
5 - 8 years
|
|||||||
Tools and Instruments
|
3,984,000 | 3,968,000 |
1.5 - 7 years
|
|||||||
Automotive Equipment
|
55,000 | 55,000 |
5 years
|
|||||||
Furniture and Fixtures
|
232,000 | 232,000 |
5 - 8 years
|
|||||||
Leasehold Improvements
|
612,000 | 612,000 |
Term of Lease
|
|||||||
Computers and Software
|
331,000 | 318,000 |
4-6 years
|
|||||||
Total Property and Equipment
|
15,535,000 | 15,489,000 | ||||||||
Less: Accumulated Depreciation
|
(10,406,000 | ) | (9,606,000 | ) | ||||||
Property and Equipment, net
|
$ | 5,129,000 | $ | 5,883,000 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Customer Relationships
|
$ | 5,815,000 | $ | 5,815,000 | ||||
Trade Names
|
770,000 | 770,000 | ||||||
Technical Know-how
|
660,000 | 660,000 | ||||||
Non-Compete
|
50,000 | 50,000 | ||||||
Professional Certifications
|
15,000 | 15,000 | ||||||
Total Intangible Assets
|
7,310,000 | 7,310,000 | ||||||
Less: Accumulated Amortization
|
(2,002,000 | ) | (1,421,000 | ) | ||||
Intangible Assets, net
|
$ | 5,308,000 | $ | 5,889,000 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Revolving credit note payable to PNC Bank N.A. ("PNC") and
|
||||||||
secured by substantially all assets
|
$ | 13,535,000 | $ | 15,667,000 | ||||
Term loan, PNC
|
2,848,000 | 3,748,000 | ||||||
Capital lease obligations
|
1,686,000 | 2,060,000 | ||||||
Notes payable to sellers of acquired business
|
1,059,000 | 1,376,000 | ||||||
Junior subordinated notes
|
1,000,000 | 1,000,000 | ||||||
Subtotal
|
20,128,000 | 23,851,000 | ||||||
Less: Current portion of notes and capital obligations
|
(16,746,000 | ) | (19,211,000 | ) | ||||
Notes payable and capital lease obligations, net of current portion
|
$ | 3,382,000 | $ | 4,640,000 |
|
(i)
|
a $18,000,000 revolving credit note (includes inventory sub-limit of $12,500,000);
|
|
(ii)
|
a $2,847,604 term loan; and
|
|
(iii)
|
includes the assets acquired from Decimal as part of the collateral.
|
For the twelve months ending
|
Amount
|
|||
June 30, 2014
|
$ | 1,800,000 | ||
June 30, 2015
|
1,048,000 | |||
PNC Term Loan Payable
|
2,848,000 | |||
Less: Current portion
|
(1,800,000 | ) | ||
Long-term portion
|
$ | 1,048,000 |
For the twelve months ending
|
Amount
|
|||
June 30, 2014
|
$ | 861,000 | ||
June 30, 2015
|
401,000 | |||
June 30, 2016
|
397,000 | |||
June 30, 2017
|
189,000 | |||
June 30, 2018
|
47,000 | |||
Total future minimum lease payments
|
1,895,000 | |||
Less: imputed interest
|
(209,000 | ) | ||
Less: current portion
|
(744,000 | ) | ||
Total Long Term Portion
|
$ | 942,000 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Former Welding Stockholders
|
$ | 1,059,000 | $ | 1,376,000 | ||||
Less: Current Portion
|
(667,000 | ) | (644,000 | ) | ||||
Total long-term portion
|
$ | 392,000 | $ | 732,000 |
For the twelve months ending
|
Amount
|
|||
June 30, 2014
|
$ | 667,000 | ||
June 30, 2015
|
392,000 | |||
Former WMI Stockholders Notes Payable
|
1,059,000 | |||
Less: Current portion
|
(667,000 | ) | ||
Long-term portion
|
$ | 392,000 |
2013
|
2012
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Current
|
||||||||
Federal
|
$ | 707,000 | $ | 485,000 | ||||
State
|
212,000 | 163,000 | ||||||
Total Expense
|
919,000 | 648,000 | ||||||
Deferred
|
||||||||
Federal
|
- | - | ||||||
State
|
- | - | ||||||
Total Deferred Taxes
|
- | - | ||||||
Net Expense for Income Taxes
|
$ | 919,000 | $ | 648,000 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
Deferred tax assets:
|
||||||||
Capital loss carry forwards
|
$ | 1,088,000 | $ | 1,088,000 | ||||
Section 1231 loss carry forward
|
86,000 | 86,000 | ||||||
Bad debts
|
315,000 | 282,000 | ||||||
Stock based compensation - options and restricted stock
|
509,000 | 506,000 | ||||||
Capitalized engineering costs
|
474,000 | 447,000 | ||||||
Account payable, accrued expenses and reserves
|
9,000 | 9,000 | ||||||
Deferred rent
|
438,000 | 423,000 | ||||||
Amortization - NTW Transaction
|
277,000 | 138,000 | ||||||
Inventory - 263A adjustment
|
747,000 | 569,000 | ||||||
Lease Impairment
|
67,000 | 85,000 | ||||||
Deferred gain on sale of real estate
|
202,000 | 209,000 | ||||||
Total deferred tax assets before valuation allowance
|
4,212,000 | 3,842,000 | ||||||
Valuation allowance
|
(2,770,000 | ) | (2,269,000 | ) | ||||
Total deferred tax assets after valuation allowance
|
1,442,000 | 1,573,000 | ||||||
Deferred tax liabilities:
|
||||||||
Property and equipment
|
(896,000 | ) | (997,000 | ) | ||||
Goodwill - NTW Transaction
|
(4,000 | ) | - | |||||
Amortization - Welding Transaction
|
(542,000 | ) | (576,000 | ) | ||||
Total Deferred Tax Liability
|
(1,442,000 | ) | (1,573,000 | ) | ||||
Net deferred tax asset
|
$ | - | $ | - |
Three Months Ended June 30,
|
|||||||||
2013
|
2012
|
||||||||
(Unaudited)
|
(Unaudited)
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 8,188,000 | $ | 11,585,000 | |||||
Gross Profit
|
1,599,000 | 2,193,000 | |||||||
Pre Tax Income
|
594,000 | 794,000 | |||||||
Assets
|
23,645,000 | 27,159,000 | |||||||
WMI
|
|||||||||
Net Sales
|
3,307,000 | 3,142,000 | |||||||
Gross Profit
|
894,000 | 1,044,000 | |||||||
Pre Tax Income
|
7,000 | 165,000 | |||||||
Assets
|
9,477,000 | 8,746,000 | |||||||
NTW
|
|||||||||
Net Sales
|
3,144,000 | 513,000 | |||||||
Gross Profit
|
1,137,000 | 199,000 | |||||||
Pre Tax Income
|
228,000 | 154,000 | |||||||
Assets
|
13,247,000 | 13,366,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(173,000 | ) | (431,000 | ) | |||||
Assets
|
11,074,000 | 16,860,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
14,639,000 | 15,240,000 | |||||||
Gross Profit
|
3,630,000 | 3,436,000 | |||||||
Pre Tax Income
|
656,000 | 682,000 | |||||||
Provision for Taxes
|
430,000 | 363,000 | |||||||
Net Income
|
226,000 | 319,000 | |||||||
Elimination of Assets
|
(6,596,000 | ) | (13,860,000 | ) | |||||
Assets
|
50,847,000 | 52,271,000 |
Six Months Ended June 30,
|
|||||||||
2013
|
2012
|
||||||||
(Unaudited)
|
(Unaudited)
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 15,666,000 | $ | 23,728,000 | |||||
Gross Profit
|
3,059,000 | 4,439,000 | |||||||
Pre Tax Income
|
1,088,000 | 1,706,000 | |||||||
Assets
|
23,645,000 | 27,159,000 | |||||||
WMI
|
|||||||||
Net Sales
|
6,446,000 | 7,037,000 | |||||||
Gross Profit
|
1,743,000 | 2,069,000 | |||||||
Pre Tax (Loss) Income
|
(5,000 | ) | 658,000 | ||||||
Assets
|
9,477,000 | 8,746,000 | |||||||
NTW
|
|||||||||
Net Sales
|
6,853,000 | 513,000 | |||||||
Gross Profit
|
2,476,000 | 199,000 | |||||||
Pre Tax Income
|
721,000 | 154,000 | |||||||
Assets
|
13,247,000 | 13,366,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(380,000 | ) | (731,000 | ) | |||||
Assets
|
11,074,000 | 16,860,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
28,965,000 | 31,278,000 | |||||||
Gross Profit
|
7,278,000 | 6,707,000 | |||||||
Pre Tax Income
|
1,424,000 | 1,787,000 | |||||||
Provision for Taxes
|
919,000 | 648,000 | |||||||
Net Income
|
505,000 | 1,139,000 | |||||||
Elimination of Assets
|
(6,596,000 | ) | (13,860,000 | ) | |||||
Assets
|
50,847,000 | 52,271,000 |
Statement of Operations Data
|
||||||||
2013
|
2012
|
|||||||
Net sales
|
$ | 14,639,000 | $ | 15,240,000 | ||||
Cost of sales
|
11,009,000 | 11,804,000 | ||||||
Gross profit
|
3,630,000 | 3,436,000 | ||||||
Operating and interest costs
|
2,945,000 | 2,612,000 | ||||||
Other income (expense) net
|
(29,000 | ) | (142,000 | ) | ||||
Income taxes
|
430,000 | 363,000 | ||||||
Net Income
|
$ | 226,000 | $ | 319,000 | ||||
Balance Sheet Data
|
||||||||
June 30, 2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
||||||||
Cash and cash equivalents
|
$ | 955,000 | $ | 490,000 | ||||
Working capital
|
11,552,000 | 11,680,000 | ||||||
Total assets
|
50,847,000 | 53,156,000 | ||||||
Total stockholders' equity
|
18,784,000 | 18,988,000 |
Three Months Ended June 30,
|
|||||||||
2013
|
2012
|
||||||||
(Unaudited)
|
(Unaudited)
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 8,188,000 | $ | 11,585,000 | |||||
Gross Profit
|
1,599,000 | 2,193,000 | |||||||
Pre Tax Income
|
594,000 | 794,000 | |||||||
Assets
|
23,645,000 | 27,159,000 | |||||||
WMI
|
|||||||||
Net Sales
|
3,307,000 | 3,142,000 | |||||||
Gross Profit
|
894,000 | 1,044,000 | |||||||
Pre Tax Income
|
7,000 | 165,000 | |||||||
Assets
|
9,477,000 | 8,746,000 | |||||||
NTW
|
|||||||||
Net Sales
|
3,144,000 | 513,000 | |||||||
Gross Profit
|
1,137,000 | 199,000 | |||||||
Pre Tax Income
|
228,000 | 154,000 | |||||||
Assets
|
13,247,000 | 13,366,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(173,000 | ) | (431,000 | ) | |||||
Assets
|
11,074,000 | 16,860,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
14,639,000 | 15,240,000 | |||||||
Gross Profit
|
3,630,000 | 3,436,000 | |||||||
Pre Tax Income
|
656,000 | 682,000 | |||||||
Provision for Taxes
|
430,000 | 363,000 | |||||||
Net Income
|
226,000 | 319,000 | |||||||
Elimination of Assets
|
(6,596,000 | ) | (13,860,000 | ) | |||||
Assets
|
50,847,000 | 52,271,000 |
Customer
|
Percentage of Sales
|
|||
2013
|
2012
|
|||
(Unaudited)
|
(Unaudited)
|
|||
Sikorsky Aircraft
|
30.2
|
29.0
|
||
Goodrich Landing Gear Systems
|
17.1
|
31.6
|
||
United States Department of Defense
|
11.7
|
*
|
||
* Customer was less than 10% of sales for the three months ended June 30, 2012
|
●
|
Consolidated: Gross profit from operations for 2nd Qtr 2013 increased by approximately $194,000 or 5.6%, to approximately $3,630,000 or approximately 24.8% of sales as compared to gross profit of $3,436,000 or approximately 22.6% for the comparable period in 2012.The increase in gross profit results from the inclusion of NTW for the entire quarter of 2013. NTW earns a greater gross profit margin on sales than our other subsidiaries.
|
|
●
|
AIM: Gross profit for 2nd Qtr 2013 at AIM decreased by approximately $(594,000) or (27.1%) to $1,599,000 as compared to $2,193,000 for the comparable period in 2012. The decrease in gross profit at AIM is attributable to and declined by a comparable percentage as the decrease in net sales.
|
|
●
|
WMI: Gross profit at Welding for 2nd Qtr 2013 decreased by approximately $(150,000) or (14.4%) to $894,000 for 2012 compared to $1,044,000 for the comparable period in 2012. The decrease in gross profit at WMI was attributable in part to lower sales, offset in part to an increase in gross margin resulting from the reclassification of costs of certain personnel to General and Administrative expense from indirect labor.
|
|
●
|
NTW: Gross profit for 2nd Qtr 2013 was $1,137,000.
|
●
|
Consolidated SG&A costs for 2nd Qtr 2013 totaled $2,552,000 and increased by $412,000 or 19.3% compared to $2,140,000 for 2nd Qtr 2012. SG&A costs at NTW accounted for all of the increase. Beginning January 1, 2013, the Company began to allocate all of the corporate SG&A costs of Air Industries Group, Inc to AIM, WMI and NTW. For 2013 these are allocated 50% to AIM and 25% to each of WMI and NTW. For 2012 SG&A costs have been reclassified to reflect an allocation of AIRI corporate costs of 75% to AIM and 25% to WMI. (NTW was acquired on June 20, 2012). The amount reclassified in 2nd QTR 2012 is approximately $304,000 to AIM and $101,000 to WMI.
|
o
|
AIM: SG&A costs for the 2nd Qtr 2013 totaled approximately $787,000 and decreased by $(152,000) or (16.2%) compared to $939,000 for comparable period 2012. The decline in SG&A costs at AIM results from the reclassification of AIRI corporate costs described above and from other cost reductions.
|
o
|
WMI: SG&A costs for the 2nd Qtr 2013 totaled approximately $855,000 and increased by $104,000 or approximately 14.3% compared to $751,000 for the comparable period in 2012.
|
o
|
NTW: SG&A costs totaled approximately $910,000 for the 2nd Qtr 2013. SG&A costs were $ 44,000 for the period June 20 to June 30, 2012.
|
Statement of Operations Data
|
||||||||
2013
|
2012
|
|||||||
Net sales
|
$ | 28,965,000 | $ | 31,278,000 | ||||
Cost of sales
|
21,687,000 | 24,570,000 | ||||||
Gross profit
|
7,278,000 | 6,708,000 | ||||||
Operating and interest costs
|
5,796,000 | 4,786,000 | ||||||
Other income (expense) net
|
(58,000 | ) | (135,000 | ) | ||||
Income taxes
|
919,000 | 648,000 | ||||||
Net Income
|
$ | 505,000 | $ | 1,139,000 | ||||
Balance Sheet Data
|
||||||||
June 30,2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
||||||||
Cash and cash equivalents
|
$ | 955,000 | $ | 490,000 | ||||
Working capital
|
11,552,000 | 11,680,000 | ||||||
Total assets
|
50,847,000 | 53,156,000 | ||||||
Total stockholders' equity
|
18,784,000 | 18,988,000 |
Six Months Ended June 30,
|
|||||||||
2013
|
2012
|
||||||||
(Unaudited)
|
(Unaudited)
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 15,666,000 | $ | 23,728,000 | |||||
Gross Profit
|
3,059,000 | 4,439,000 | |||||||
Pre Tax Income
|
1,088,000 | 1,706,000 | |||||||
Assets
|
23,645,000 | 27,159,000 | |||||||
WMI
|
|||||||||
Net Sales
|
6,446,000 | 7,037,000 | |||||||
Gross Profit
|
1,743,000 | 2,069,000 | |||||||
Pre Tax (Loss) Income
|
(5,000 | ) | 658,000 | ||||||
Assets
|
9,477,000 | 8,746,000 | |||||||
NTW
|
|||||||||
Net Sales
|
6,853,000 | 513,000 | |||||||
Gross Profit
|
2,476,000 | 199,000 | |||||||
Pre Tax Income
|
721,000 | 154,000 | |||||||
Assets
|
13,247,000 | 13,366,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(380,000 | ) | (731,000 | ) | |||||
Assets
|
11,074,000 | 16,860,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
28,965,000 | 31,278,000 | |||||||
Gross Profit
|
7,278,000 | 6,707,000 | |||||||
Pre Tax Income
|
1,424,000 | 1,787,000 | |||||||
Provision for Taxes
|
919,000 | 648,000 | |||||||
Net Income
|
505,000 | 1,139,000 | |||||||
Elimination of Assets
|
(6,596,000 | ) | (13,860,000 | ) | |||||
Assets
|
50,847,000 | 52,271,000 |
Customer
|
Percentage of Sales
|
|||
2013
|
2012
|
|||
(Unaudited)
|
(Unaudited)
|
|||
Sikorsky Aircraft
|
28.0
|
33.7
|
||
Goodrich Landing Gear Systems
|
17.7
|
31.2
|
||
United States Department of Defense
|
13.5
|
*
|
||
* Customer was less than 10% of sales for the six months ended June 30, 2012
|
Customer
|
Percentage of Receivables
|
|||
June
|
December
|
|||
2013
|
2012
|
|||
(Unaudited)
|
||||
GKN Aerospace
|
23.1
|
18.6
|
||
Goodrich Landing Gear Systems
|
15.5
|
10.7
|
||
Sikorsky Aircraft
|
10.1
|
*
|
||
Northrup Grumman Corporation
|
**
|
25.3
|
||
* Customer was less than 10% of receivables at December 31, 2012
|
||||
** Customer was less than 10% of receivables at June 30, 2013
|
●
|
Consolidated: Gross profit from operations for the six months ended June 30, 2013 increased by approximately $570,000 or 8.5% to approximately $7,278,000 or approximately 25.1% of sales as compared to gross profit of $6,708,000 or approximately 21.4% for the comparable period in 2012.The increase in gross profit results from the inclusion of NTW for the entire six month period in 2013 which offset the decline in gross profit at both AIM and WMI.
|
|
●
|
AIM: Gross profit for the six months ended June 30, 2013 at AIM decreased by approximately $(1,380,000) or (31.1%) to $3,059,000 as compared to $4,439,000 for the comparable period in 2012. The decrease in gross profit at AIM is attributable to and declined by a comparable percentage as the decline in net sales.
|
|
●
|
WMI: Gross profit at Welding for six months ended June 30, 2013 decreased by approximately $(326,000) or (15.8%) to $1,743,000 for the six months ended June 30, 2013 compared to $2,069,000 for the comparable period in 2012. The decrease in gross profit at WMI was attributable to lower sales, offset in part by an increase in gross margin resulting from the reclassification of costs of certain personnel from indirect labor – factory overhead expense - to General and Administrative expense. This reclassification was made in June 2012.
|
|
●
|
NTW: Gross profit for six months ended June 30, 2013 was $2,476,000.
|
●
|
Consolidated SG&A costs for the six months ended June 30, 2013 totaled $5,021,000 and increased by $1,205,000 or 31.6% compared to $3,816,000 for the comparable period in 2012. SG&A costs at NTW accounted for all of the increase. Beginning January 1, 2013, the Company began to allocate all of the corporate SG&A costs of Air Industries Group, Inc. to its three subsidiaries. For 2013, these are allocated 50% to AIM and 25% to each of WMI and NTW. For 2012 SG&A costs have been reclassified to reflect an allocation of AIRI corporate SG&A costs of 75% to AIM and 25% to WMI. (NTW was acquired on June 20, 2012). The amount reclassified for the 1st Half 2012 is approximately $588,000 to AIM and $196,000 to WMI.
|
o
|
AIM: SG&A costs for the six months ended June 30, 2013 totaled approximately $1,582,000 and decreased by $(243,000) or (13.3%) compared to $1,825,000 for comparable period in 2012. The decline in SG&A costs at AIM results from the reclassification of AIRI corporate SG&A costs described above and from other cost reductions.
|
o
|
WMI: SG&A costs for the six months ended June 30, 2013 totaled approximately $1,684,000 and increased by $522,000 or approximately 45.0% compared to $1,161,000 for the comparable period in 2012. A portion of this increase is related to the allocation of corporate expenses to WMI.
|
o
|
NTW: SG&A costs totaled approximately $1,755,000 for six months ended June 30, 2013. SG&A costs were $44,000 for the period June 20 to June 30, 2012.
|
Six months ended
|
Six months ended
|
|||||||
June 30, 2013
|
June 30, 2012
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Cash Provided by (used in):
|
||||||||
Operating activities
|
$ | 4,861 | $ | 82 | ||||
Investing activities
|
(260 | ) | (11,921 | ) | ||||
Financing Activities
|
(4,136 | ) | 12,497 | |||||
Net increase in cash and cash equivalents
|
$ | 465 | $ | 658 |
31.1
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
31.2
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
32.1
|
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition
|
|
101.LAB*
|
XBRL Taxonomy Extension Label
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation
|
AIR INDUSTRIES GROUP, INC.
|
|||
By:
|
/s/ Peter D. Rettaliata
|
||
Peter D. Rettaliata
|
|||
President and Chief Executive Officer
|
|||