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Air Industries (AIRI.OB) completes Welding Metallurgy acquisition
Topics: UncategorizedAir Industries Group: AIRI.OB announced today that it completed the acquisition of Welding Metallurgy, which it had purchased for approximately $6 million in cash, debt and restricted stock. Welding Metallurgy is a specialty welding and metallurgical engineering provider with trailing twelve month revenues of approximately $5 million. Air Industries claims the acquisition will be immediately accretive to earnings and could create synergies and cross-selling opportunities. CEO Peter Retalliata explained:
“The acquisition of Welding Metallurgy is an important milestone for Air Industries Group as it establishes the third platform in our acquisition and consolidation strategy that will drive our long term, synergistic growth. Welding Metallurgy significantly increases our core competencies and will serve as the base of our Welding and Fabrication Platform. It is a logical complement to our existing Contract Manufacturing operations and our Materials Distribution operations. Collectively, we have successfully put the necessary infrastructure in place to move up the aerospace supply chain. In other words, we are migrating from a basic contract manufacturer to a provider of comprehensive integration services to the industry’s leading prime manufacturers, with a particular focus on flight safety and other critical componentry, including landing gear, arresting gear, flight controls, and other critical safety and high performance assemblies.”
With the second key acquisition of 2007 now complete, and a strong backlog that should drive second-half demand, all eyes will be on the company’s third quarter earnings report to see if the combined entity can leverage profits to the bottom line.
DISCLOSURE: Long AIRI.OB.
Interested in your take on the amended SEC docs related to the WM acquisition. Any thoughts on the future?
Excellent question. I have only casually reviewed the company’s latest 8-K filing, but did not see anything that alarmed me. The proof, as they say, will be in the pudding. Either the acquisition will be accretive as AIRI originally suggested, or investors will be disappointed. Your thoughts?
OK, I’ll play.
At least they only used 2,035,529 restricted shares and the rest cash and debt. I am very concerned with dilution. There are a lot more shares this year than last. It is much easier to show profits with little or no debt payments. But after dilution it generally kills existing shareholders. Better to take on debt if the pps is lower than fair value. I would only use stock when it was selling at a premium.
At the end of the day they have to put profit to the bottom line to start. Then it has to accelerate if the pps is every going to take off. To me it is the only play in the book that can benefit all shareholders. There are many other plays that benefit management and/or investment bankers. I hope to see this tone adopted by management, but what I hear and read currently is double talk.
I’ll wait through the third and forth quarter which should be good according to management. They should put profit to the bottom. However if they can not constructively do that, I will change my attitude toward this stock.
Not all dilution is equal. Here, the company paid a small portion of the purchase price (under $600k at today’s prices) in restricted shares. 2M shares are not going to kill existing shareholders, Whether the purchase was wise or not depends, as you correctly note, on whether the combined entity can drop profits to the bottom line.
While it is true that the share count has vastly expanded, so has the company. I agree that the next 2 quarters are key and I’ll watch them closely.
[...] New visitor? Consider subscribing by RSS or by email.Air Industries’ (OTCBB:AIRI) 2007 acquisition of Welding Metallurgy has largely been a disappointment. Revenues never accelerated, and the large contracts many had [...]