Air Industries Group Annual Report: A Performance Summary

I’ve put together this guide to help you understand how Air Industries Group (AIRI) performed this year. My goal is to translate complex financial filings into plain English so you can decide if this company fits your investment strategy.

1. What does this company do?

Air Industries builds high-precision parts, such as landing gear and engine components, for the aerospace and defense industry. They work in two main areas: Aerostructures and Turbine Engine Components.

They are a key supplier for giants like Boeing, Lockheed Martin, and GE Aerospace. Once they win a contract for a specific aircraft—like the Black Hawk helicopter or the F-35 fighter jet—they often become the only supplier. This gives them a "moat," as it is expensive and difficult for customers to switch to a new provider.

2. Financial performance

In 2025, the company brought in $47.9 million in revenue, up from $46.5 million in 2024. Despite this growth, the company lost $1.3 million. This loss was mainly due to high operating costs and interest payments on debt.

• Growing Pipeline: Their "backlog"—the value of signed orders they haven't finished yet—grew 16% to $136.8 million. This gives them a clear view of future revenue for the next two to three years.
• Strong Demand: Their "book-to-bill" ratio was 1.36. For every $1.00 of product they shipped, they secured $1.36 in new orders. This shows they are growing faster than they can currently build.
• Diversification: They are expanding beyond defense into commercial aerospace. Demand for commercial jet engine parts rose 12%, helping balance out the ups and downs of government defense spending.

3. Major wins and challenges

• The Merger: In February 2026, the company announced a merger with Tenax Aerospace, a firm that provides specialized aviation services. If this deal closes, the business will shift from a parts manufacturer to a service provider. Current shareholders will keep about 5% of the new company, while Tenax owners will hold 95%.
• Operational Focus: The company spent $2.5 million in 2025 on new machinery to build F-35 parts faster. Management expects these heavy costs to drop in 2026, which should improve cash flow and reduce the need for more debt.

4. Key risks

• The Merger: The deal needs regulatory and shareholder approval. If it fails, the company must continue operating with high debt and limited cash.
• Ownership Dilution: The merger significantly reduces your ownership. Existing shareholders will see their stake in future earnings cut by 95% once the deal closes.
• Concentration: About 60% of revenue still comes from military aircraft. Any cuts to the F-35 budget would directly hurt the company’s bottom line.
• Predictability: They lack long-term service contracts. Because they rely on individual purchase orders, their revenue can be "lumpy," making quarterly earnings hard to predict.

5. Future outlook

The company is betting its future on the Tenax merger. By combining manufacturing with Tenax’s specialized aviation services, the board hopes to win higher-profit government contracts. The company’s success now depends on its ability to move away from low-margin manufacturing, which carries significant execution risk.

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Final Thought for Investors: When considering this investment, weigh the potential of the Tenax merger against the significant dilution of your current shares. If you believe in the shift toward specialized aviation services, the current backlog suggests a strong foundation, but the company’s reliance on the F-35 program and the uncertainty of the merger remain the most critical factors to watch.