Breaking Down Air Industries Group (AIRI) Financial Health: Key Insights for Investors

You're looking at Air Industries Group (AIRI) and wondering if the operational improvements are defintely sticking, especially with the stock sentiment leaning bearish despite recent wins. The Q3 2025 results give us a clear answer: the company is showing a disciplined shift toward profitability, but the top-line still needs a boost. Specifically, the third quarter saw a dramatic jump in gross margin to 22.3%, a significant leap from 15.5% in Q3 2024, which helped them nearly erase the net loss, reducing it to just $(44,000) for the quarter. Here's the quick math: on net sales of $10.3 million, that margin expansion is the key story. Still, the near-term risk is real; the company is actively considering refinancing its credit facilities which mature at the end of December 2025, and while the forecasted annual revenue of $57 million for 2025 is a positive sign, you need to see that record-level backlog-which reportedly exceeds a quarter of a billion dollars-start translating into consistent, higher sales before you can call this a full turnaround.

Revenue Analysis

You need to understand where Air Industries Group (AIRI) is actually making its money, especially when the near-term revenue figures look a little soft. The direct takeaway is this: while trailing twelve-month (TTM) revenue is down, the core business-precision components for aerospace and defense-is supported by a record backlog, suggesting a timing issue, not a demand problem. The TTM revenue for AIRI, as of the third quarter of 2025, stands at approximately $52.26 Million USD, reflecting a year-over-year decline of around -5.15%.

The company is fundamentally a manufacturer of complex components and subassemblies for major aerospace and defense prime contractors. This means its revenue is highly concentrated in a few key product areas, which is a strength but also a risk if a major program is cut. The primary revenue sources are not services, but high-precision products like:

• Landing Gear components and systems.
• Actuation Systems for aircraft control.
• Aerostructures, which are structural parts of aircraft.

Near-Term Revenue Trends and Growth Rate

The year-over-year revenue growth rate for Air Industries Group in 2025 shows a clear, albeit temporary, contraction. The TTM revenue decline of -5.15% is a headwind, but the quarterly numbers show the volatility.

Here's the quick math on the quarterly performance for 2025 versus 2024:

The drop in sales is significant, but it comes with a crucial caveat: the company's funded backlog-firm customer orders-was at a record $120 million as of early 2025. The Book-to-Bill ratio (new orders divided by sales) was a healthy 1.34 to 1.00 at the end of Q1 2025, well above the industry standard of 1.20 to 1.00. This tells you demand is strong; the problem is simply the long lead times for raw materials-sometimes 9 to 15 months-which delays revenue recognition. That's a supply chain bottleneck, defintely.

Customer Segment Contribution

While Air Industries Group does not typically break out revenue by internal operating segment in its quarterly reports, we can map the contribution by primary customer type, which is the key driver of their business. The majority of their revenue comes from supplying large aerospace and defense prime contractors, and the split between government and commercial sales is the most telling factor.

The significant change in revenue streams over the past year has been the increasing reliance on government contracts. In 2024, the increase in net sales was primarily driven by higher sales to the U.S. Government, which grew by $3.8 million, and increased commercial sales, which grew by $1.5 million. This momentum continues into 2025 with major contract wins, like a recent $5.4 million contract for Landing Gear components for the US Air Force B-52 Bomber. This focus on defense provides stability, as these contracts are less vulnerable to commercial aviation cycles. For more context on their long-term strategy, you can review the Mission Statement, Vision, & Core Values of Air Industries Group (AIRI).

Profitability Metrics

You need to know if Air Industries Group (AIRI) can make money, and the most recent data shows a distinct improvement, though the year-to-date picture is still challenging. The third quarter of 2025 (Q3 2025) results show that cost-cutting and operational focus are starting to pay off, with the company nearly breaking even on the net income line.

For the nine months ended September 30, 2025, Air Industries Group reported net sales of $35.1 million, resulting in a Gross Profit of $6.4 million. This translates to a Gross Profit Margin of 18.1% for the nine-month period, which is an improvement from the 16.2% margin reported for the same period in 2024.

Operational Efficiency and Margin Trends

The real story is the operational efficiency (cost management) improvement, especially in Q3 2025. The Gross Profit Margin surged to 22.3% in the quarter, up significantly from 15.5% in Q3 2024. This improvement is a direct result of cost reduction initiatives implemented earlier in the fiscal year. Honestly, that kind of margin jump is a clear signal of management discipline.

Here's the quick math on the core profitability metrics for the recent quarter:

• Gross Profit Margin (Q3 2025): 22.3% on $10.3 million in sales.
• Operating Profit Margin (Q3 2025): 3.07% (Operating Income of $316,000 / Sales of $10.3 million).
• Net Profit Margin (Q3 2025): -0.43% (Net Loss of $44,000 / Sales of $10.3 million).

What this estimate hides is the year-to-date drag: the 9-month Operating Loss was still $422,000, and the Net Loss was $1.5 million, reflecting the higher operating expenses and losses from the first half of the year.

Peer Comparison and Near-Term Risks

Air Industries Group's Q3 2025 Gross Margin of 22.3% is defintely a win, as it outperforms the typical 18-20% gross margin range seen among many of its peers in the aerospace and defense component manufacturing sector. This suggests their operational focus is giving them a competitive edge at the production level.

However, the company's Trailing Twelve Months (TTM) Operating Margin, as of November 2025, remains negative at -4.53%, indicating that while production costs are well-managed, overhead and interest expenses continue to erode the profit. The net loss for Q3 2025 was only $44,000, a dramatic improvement from the $404,000 loss a year prior, so they are right on the cusp of consistent net profitability. The next step is to read the Mission Statement, Vision, & Core Values of Air Industries Group (AIRI). to understand the strategic pillars supporting this operational turnaround.

Debt vs. Equity Structure

The core of Air Industries Group (AIRI)'s financial health right now isn't about growth potential-it's about capital structure and near-term liquidity. You need to understand how the company funds its operations, and the current picture shows a heavy reliance on debt that is coming due very quickly. This is a high-stakes financing environment.

As of June 30, 2025, Air Industries Group reported total debt of approximately $25,222,000 against total stockholders' equity of only $15,266,000. This is a significant imbalance. The company's Debt-to-Equity (D/E) ratio currently sits around 1.65:1. To put that in perspective, the average D/E ratio for the broader Aerospace & Defense industry is a much lower 0.35 as of November 2025. Air Industries Group is carrying nearly five times the leverage of its industry peers. This much debt is defintely a risk factor.

• Total Debt (June 30, 2025): $25,222,000
• Total Equity (June 30, 2025): $15,266,000
• Calculated Debt-to-Equity Ratio: 1.65:1
• Industry Average D/E Ratio: 0.35

The Short-Term Debt Wall

The immediate risk is not just the amount of debt, but its maturity schedule. In the Q3 2025 earnings call, management noted that on the consolidated balance sheet, all credit facility and subordinated debt are currently classified as current liabilities. This is a red flag. The main credit facility is set to mature at the end of December 2025, and the related party subordinated notes mature on July 1, 2026. The company is actively working to address this, having announced a pay down of $1.0M of subordinated debt earlier in February 2025.

Here's the quick math on the debt composition as of mid-2025, showing the urgency of the refinancing talks:

What this estimate hides is the precarious position the company is in: it is in default of its Fixed Charge Coverage Ratio, clocking in at 0.76x against a required 1.05x. This covenant breach is what triggers the 'substantial doubt about going concern' disclosure, making the refinancing discussions critical.

Balancing Debt and Equity Funding

To balance the scales and fund capital equipment purchases (which were $2,113,000 in H1 2025), management has been leaning on equity funding via an At-The-Market (ATM) offering. This strategy raised $1,243,000 in gross proceeds in the first half of 2025 and an additional $3,623,000 subsequent to June 30, 2025. This equity raise is a necessary move to inject cash and reduce leverage pressure, but it also means dilution for existing shareholders. The company is walking a tightrope, using equity to buy time for a debt solution. For a deeper dive into who is buying these shares, check out Exploring Air Industries Group (AIRI) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

The liquidity profile for Air Industries Group (AIRI) shows a classic working capital squeeze: the company is technically liquid but relies heavily on inventory, and its near-term cash position is tight. This is a common situation for a defense manufacturer investing in its future, but it brings real, immediate risks. You need to look past the top-line numbers and focus on the quality of their current assets.

For the trailing twelve months (TTM) ending Q2 2025, the Current Ratio sits at 1.34. This means Air Industries Group has $1.34 in current assets for every $1.00 in current liabilities, which is generally acceptable. However, the Quick Ratio (or acid-test ratio), which strips out less-liquid inventory, is a very low 0.28. This tells us that if sales slow, the company would struggle to cover its short-term obligations without selling off inventory or securing new financing. That's defintely something to watch.

Working Capital and Inventory Trends

Air Industries Group's working capital stood at $9,766,000 as of June 30, 2025. The trend is driven by a significant investment in inventory, which increased by approximately $5.6 million in Q3 2025 alone. This is a double-edged sword: it reflects management's confidence in future deliveries against a strong backlog, but it also ties up a lot of cash. The company is essentially pre-funding its future revenue. To be fair, a decrease of $2.1 million in accounts receivable in Q3 2025 is a positive sign of better collections, but the corresponding increase of approximately $2 million in accounts payable in the same quarter suggests they are also using supplier credit to manage this inventory build.

• Current Ratio: 1.34 (TTM Q2 2025).
• Quick Ratio: 0.28 (TTM Q2 2025).
• Working Capital: $9,766,000 (June 30, 2025).

Cash Flow Dynamics and Near-Term Risk

The cash flow statement for the first half of 2025 (H1 2025) shows a mixed picture. Operationally, the company is improving: net cash provided by operating activities was a positive $1,870,000. This is a substantial improvement over the prior year and a key strength. But, capital expenditures for new equipment meant cash used in investing activities was $(2,113,000). This investment is necessary to support their Mission Statement, Vision, & Core Values of Air Industries Group (AIRI)., but it creates a cash deficit. The financing section reflects the need to raise capital, including gross proceeds of $4,866,000 from equity raises in and subsequent to H1 2025.

Here's the quick math on the cash flow for H1 2025 (in thousands):

The Critical Liquidity Concern

The biggest near-term risk is the debt structure. Air Industries Group's cash on hand was a low $507,000 as of June 30, 2025. More critically, a significant portion of their total debt of $25,222,000 is classified as current, including a term loan of $6,380,000 that matures on December 30, 2025. The company is actively working on refinancing this credit facility, but the maturity date is fast approaching. Plus, they are already in default on their Fixed Charge Coverage Ratio (FCCR), which creates 'substantial doubt about going concern' according to filings. This means the market sees a real possibility of default if the refinancing isn't completed successfully and soon. The improving operating cash flow is a strong argument for the refinancing, but the clock is ticking.

Valuation Analysis

You want to know if Air Industries Group (AIRI) is overvalued or undervalued, and the simple answer is that it's complicated, which is often the case with smaller aerospace and defense companies. Based on the latest 2025 fiscal year data, the stock looks cheap on assets but expensive on earnings, suggesting a turnaround story is already priced in, but not yet fully realized.

The stock is currently trading around $2.92 as of November 14, 2025, which is near the low end of its 52-week range of $2.80 to $4.90. The price has been under pressure, dropping -10.70% over the last 10 days alone. This downward trend is a clear near-term risk you need to watch, but it also creates an opportunity if you believe the fundamental improvements will stick.

Here's the quick math on the key valuation multiples (ratios):

• Price-to-Earnings (P/E): The trailing twelve months (TTM) P/E ratio is a negative -7.17. This is the biggest red flag, as a negative P/E means the company is losing money. The consensus Earnings Per Share (EPS) forecast for the full fiscal year ending December 2025 is a loss of -$0.61.
• Price-to-Book (P/B): This is where the value argument starts. The P/B ratio is a low 0.74, which is below the crucial 1.0 threshold. This suggests the market is valuing the company at less than its net tangible assets (book value), which is a classic sign of a potentially undervalued stock.
• Enterprise Value-to-EBITDA (EV/EBITDA): Since the P/E is negative, we look at Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to gauge operational performance. For the nine months ended September 30, 2025, Adjusted EBITDA was a positive $2.7 million, with the Enterprise Value (EV) sitting at approximately $20.3 million. This operational profitability is the core of the bull case, but the EV/EBITDA multiple is not explicitly stated.

The company does not pay a dividend. Its dividend yield is 0.00% and the payout ratio is 0.00, which is typical for a smaller company focused on reinvesting capital for growth and operational stability.

Analyst sentiment is cautious but not outright bearish. The current consensus rating is a Hold, reflecting the mixed signals from the fundamentals. Technical analysis, however, has recently downgraded the stock to a Sell Candidate. Honestly, the valuation is a tug-of-war: the low P/B of 0.74 says it's cheap on assets, but the negative P/E of -7.17 says it's expensive on current earnings. You're betting on the management's efforts to translate that positive Adjusted EBITDA into sustained net income.

To be fair, the market is looking past the current losses toward future contracts. For a deeper dive into who is buying and why, you should check out Exploring Air Industries Group (AIRI) Investor Profile: Who's Buying and Why?

What this estimate hides is the potential for significant swings, typical of a low-float stock with a market capitalization of only $13.93 million. The low P/B is the core argument for a value play, but you defintely need to see a path to positive net income for that to materialize.

Risk Factors

You need to look past the recent stock momentum in Air Industries Group (AIRI) because the core financial risks are significant, specifically around liquidity and debt. The most immediate concern is the auditor raising a 'Going Concern' doubt in April 2025, which is a major red flag about the company's ability to meet its obligations over the next year. This is not a drill; it's a structural issue.

The financial pressure is real and visible in the balance sheet. Air Industries Group's debt-to-equity ratio sits at a high 159.3%, with total debt of approximately $24.3 million against total equity of $15.3 million. Plus, the company has less than a year of cash runway based on its current free cash flow, which means the planned refinancing of its credit facilities, which mature at the end of December 2025, is defintely a mission-critical event for the near-term. They're moderately leveraged, but the cash is tight.

Operationally, the struggle to convert a strong backlog into consistent revenue is a persistent risk. While the funded backlog of firm customer orders still exceeds a quarter of a billion dollars, net sales for the first nine months of 2025 were $35.1 million, a figure that still reflects a drop from the prior year. This sales contraction, combined with external pressures, creates a challenging environment:

• Order Delays: Customer delays impacted Q2 2025 results.
• Supply Chain: Extended raw material lead times range from 6 to 18 months.
• Government Dependence: Reliance on defense spending and government budgets.
• Dilution Risk: Shareholder dilution was flagged as a major risk in August 2025.

Here's the quick math on the overall profitability picture for the first nine months of 2025 (9M 2025) compared to the prior year, showing the increased net loss despite revenue efforts:

The company is fighting back with cost-cutting measures, including a workforce reduction expected to save $1 million annually, and a focus on operational efficiency that drove Q3 2025 gross margin to a strong 22.3%. They also raised approximately $4 million through an at-the-market (ATM) offering in July 2025 to bolster the balance sheet. Still, the increased net loss for the nine-month period shows that these improvements haven't fully offset the sales and expense headwinds yet. The key is monitoring if the improved gross margin can be sustained and if the company successfully executes the December 2025 credit facility refinancing. You can get a deeper dive into the valuation metrics in our full article: Breaking Down Air Industries Group (AIRI) Financial Health: Key Insights for Investors.

Growth Opportunities

You need to know if Air Industries Group (AIRI) can pivot its recent operational improvements into sustained revenue growth, and the answer is a cautious yes, driven by their deep-rooted defense work and a sharp focus on the high-margin aftermarket sector.

The company is defintely leaning into its core strength: being a Tier 1 manufacturer of flight-critical components for the U.S. Department of Defense. This focus is translating directly into a strong, visible revenue pipeline, even as they work through current financial pressures like the need to refinance credit facilities maturing at the end of December 2025.

Key Growth Drivers: Aftermarket and Defense Contracts

The biggest near-term opportunity for Air Industries Group is the Maintenance, Repair, and Overhaul (MRO) market, often called the aftermarket. CEO Lou Melluzzo has made penetrating this sector a primary goal for 2025, and the results are already showing up in their order books.

Since the end of the first quarter of 2025, the company's total aftermarket bookings have surged to more than $13 million, which represents nearly 50% of their new business during that period. This shift is smart because MRO work typically carries higher margins than original equipment manufacturing (OEM). Plus, they are securing substantial long-term contracts, including the largest long-term agreement in company history secured in Q2 2025.

• Secure $11 million contract for U.S. Navy E-2D Advanced Hawkeye landing gear (production starts H2 2025).
• Won a $5.4 million contract for B-52 Bomber landing gear components (deliveries start late 2026).
• Focus on MRO is a direct play on the global aircraft MRO market's expected 4.8% Compound Annual Growth Rate (CAGR) from 2025-2030.

Revenue Projections and Earnings Estimates

While the company is showing operational discipline-with Q3 2025 Gross Profit at $2.3 million and a Gross Margin of 22.3%-the overall revenue picture is mixed but has a solid foundation. For the first nine months of fiscal 2025, Air Industries Group reported net sales of $35.1 million and an Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $2.7 million, up nearly 5% year-over-year. What this estimate hides is that the consensus earnings per share (EPS) forecast for the full fiscal year ending December 2025 is still a loss of $(0.61), so profitability remains the key challenge.

Here's the quick math on their recent performance:

Competitive Advantages and Strategic Actions

Air Industries Group maintains a powerful competitive moat through its highly specialized manufacturing capabilities and long-standing relationships. Their expertise in complex machining of hard metals and deep-hole drilling for components like landing gear and engine mounts makes them hard to replace. They are the sole supplier of landing gear components for the U.S. Navy's E-2D Advanced Hawkeye, which gives them a critical, non-negotiable position in a major defense program.

The company is also taking clear, actionable steps to improve the bottom line:

• Implemented cost-cutting measures expected to yield $1 million in annual savings.
• Maintained a robust backlog of over $120 million in firm, fully-funded orders extending to 2027.
• Actively engaged in discussions to refinance credit facilities, a crucial step for capital structure stability.

This backlog provides a clear line of sight on future revenue, which is a rare comfort in the small-cap aerospace space. If you want to dig deeper into who is betting on this turnaround, check out Exploring Air Industries Group (AIRI) Investor Profile: Who's Buying and Why?