Air Industries Group Reports Record Revenues and Gross Profits in First Quarter 2008

BAY SHORE, N.Y.--(Business Wire)--
Air Industries Group, Inc. (OTCBB: AIRI) today announced financial
results for the first quarter ended March 31, 2008.

Financial Performance Highlights for First Quarter 2008:

-- Net Sales Increased to $13.3 Million, Up 77% from 1Q07

-- Gross Profit Rises to $3.6 Million, Up 115% from 1Q07

-- Net Loss of $13,000 Resulting from Higher Growth/Consolidation
Strategy Expenses

-- Current Firm "AIM" 18-Month Backlog at Record $55 Million

"Air Industries Group has reported impressive increases in
year-over-year revenue and gross profit, which reflects the execution
of our consolidation and organic growth strategies," said President
and Chief Executive Officer Peter Rettaliata. "Although our operating
income was impacted by higher levels of general and administrative
expenses associated with our strategic acquisition program, we are
aggressively pursing consolidation prospects to forge a dominant long
term position. We have been investing in engineering capabilities and
developing new products to capitalize on growth opportunities in our
burgeoning industry. The acceleration of our revenues that we are
experiencing is part of the process that will help us create a
powerful, diverse aerospace manufacturer."

The financial results reported by the Company include results from
its three operating subsidiaries, including Air Industries Machining
Corp., Welding Metallurgy, a metallurgical engineering and welding
services provider and manufacturer, from the date of acquisition in
August 2007, and Sigma Metals, a distributor of specialty metals, from
the date of acquisition in April 2007.

First Quarter 2008 Financial Results

Net sales for the first quarter of 2008 were a record $13.3
million, an increase of 77% as compared to $7.5 million in the first
quarter of 2007. The increase in revenues reflect both organic growth
at the Air Industries Machining Corp. subsidiary and an expansion of
the Company as a result of its strategic acquisition program.
Beginning with the fourth quarter of 2007 the Company's net sales
included results from Sigma Metals and Welding Metallurgy for the
respective full quarterly period.

Gross profit in the first quarter 2008 was $3.6 million, an
increase of 115% from $1.7 million in the same period of 2007. As a
percentage of sales, gross margin in the first quarter 2008 was 27.0%,
as compared to 22.3% in the same period of 2007. The increase in the
gross profit as well as gross profit as a percentage of sales for the
first quarter of 2008 primarily reflects an improved revenue mix with
a higher level of revenue and volume-related manufacturing
efficiencies and higher margin contributions from Sigma Metals and
Welding Metallurgy revenues. Gross profit in the first quarter of
2008, while higher year-over-year, were negatively impacted by initial
and lower quantity production levels related to certain products,
including those related to the Airbus A380 program, resulting in lower
margins as compared to the third and fourth quarters of 2007. For new
programs, increased margins are expected with efficiencies gained with
higher production quantities through the life of the contract.

Selling, general and administrative ("SG&A") expenses for the
first quarter 2008 were $3.2 million as compared to $1.1 million for
the same period in 2007. The increase in SG&A in the first quarter
2008 reflects full quarterly contributions for costs associated with
expanded management and the addition of overhead expenses relating to
the inclusion of Sigma Metals and Welding Metallurgy, initiatives
related to internal growth opportunities, and fees and expenses
pertaining to the Company's ongoing consolidation strategy, including
the pending acquisition of the Blair-HSM Group of Companies.
Professional services and other fees and expenses relating to the
present strategic acquisition program, including accounting, legal,
financial and due diligence related expenses, amounted to
approximately $600,000 in the first quarter of 2008.

Operating income for the first quarter of 2008 was $363,000, as
compared to $540,000 in the same period of 2007. The net loss before
provision for income taxes was $27,000 for the three months ended
March 31, 2008, as compared to net income before provision for income
taxes of $411,000 for the 2007 period. With an income tax benefit of
$14,000 in the first quarter of 2008, the Company's net loss was
$13,000, or $0.00 per share, as compared to net income of $152,000, or
$0.00 per share, for the first quarter of 2007.

Earnings before interest, taxes, depreciation and amortization
("EBITDA") for the first quarter of 2008 was $674,000, as compared to
EBITDA of $848,000 in the same period of 2007. Air Industries Group
considers EBITDA to be an important financial indicator of the
Company's operational strength and performance, and uses this
indicator when making decisions regarding investments in the various
components of its business and acquisition valuations. Because EBITDA
is not a measurement determined in accordance with generally accepted
accounting principles ("GAAP"), and is thus susceptible to varying
calculations, EBITDA, as presented, may not be directly comparable to
other similarly titled measures reported by other companies. EBITDA is
computed by adding back interest, taxes, depreciation, amortization
and other non-cash charges into net income.

At March 31, 2008, Air Industries Group had total funded debt of
approximately $19.0 million as compared to $18.0 million at the
beginning of the year. The Company continues to have availability
under its loan facilities with PNC Bank. All cash balances are applied
on a daily basis to amounts outstanding under the revolving portion of
the Company's loan facilities rather than being accounted for on the
balance sheet as cash. As such, the Company's cash position is not
readily discernable by reviewing the balance sheet.

Backlog and Financial Results Guidance

The Company provides firm backlog as an indicator of future
activity. As of May 15, 2008, Air Industries Group had a firm 18-month
backlog of approximately $55 million. The projected total backlog as
of May 15, 2008 was approximately $75 million and includes both the
firm backlog as well as anticipated order releases against long term
agreements with the Company's prime aerospace customers. This backlog
level, which currently only includes business relating to Air Industry
Group's wholly-owned operating subsidiary, Air Industries Machining
Corp., is the largest in the Company's history. Backlog figures do not
include contribution from the pending acquisition of the Blair-HSM
Group, which at the present time would add in excess of $25 million to
Air Industry's record firm backlog level at May 15. Combining
Blair-HSM Group with Air Industries Machining Corp. would yield a firm
backlog of nearly $80 million.

Because the closing of the pending acquisition of the Blair-HSM
Group will influence aggregate reported financial results, the Company
intends to wait until the acquisition has been completed before
announcing financial results guidance for 2008. In light of this
decision, Mr. Rettaliata concluded, "For our existing businesses, we
anticipate achieving record financial performance in 2008. This is
driven by our participation in several large, long term programs, as
well as the opportunity to expand our base by bidding on additional
commercial and military opportunities. Our backlog already promises to
deliver our best year ever, with incremental opportunities augmenting
our base business in 2008 and beyond.

Earnings Results Conference Call

Management of Air Industries Group will conduct a conference call
May 20, 2008, at 4:30 p.m. Eastern Time to review the Company's
financial results for the first quarter ended March 31, 2008.

To access the conference call, please dial (800) 237-9752
(domestic) or (617) 847-8706 (international), and enter the passcode
"18359592" when prompted. Please access the call approximately 10
minutes prior to the start time.

For those unable to listen to the live broadcast, a replay will be
available by dialing (888) 286-8010 (domestic) or (617) 801-6888
(international), with playback access code "75781554", starting
approximately two hours after the conclusion of the call.

ABOUT AIR INDUSTRIES GROUP, INC.

Air Industries Group, Inc. (OTCBB: AIRI) is an integrated
manufacturer of precision components and provider of supply chain
services for the aerospace and defense industry. The Company has over
35 years of experience in the industry and has developed leading
positions in several important markets that have significant barriers
to entry. With embedded relationships with many leading aerospace and
defense prime contractors, the Company designs and manufactures
structural parts and assemblies that focus on flight safety, including
landing gear, arresting gear, engine mounts and flight controls. Air
Industries Group also provides sheet metal fabrication, tube bending,
and welding services, as well as distributing specialty metals that
are a critical component in the aerospace supply chain. Information on
the Company and its products may be found online at
www.airindustriesgroup.com.

Certain matters discussed in this press release are
'forward-looking statements' intended to qualify for the safe harbors
from liability established by the Private Securities Litigation Reform
Act of 1995. In particular, the Company's statements regarding trends
in the marketplace, firm backlog, projected backlog, potential future
results and acquisitions, are examples of such forward-looking
statements. The forward-looking statements include risks and
uncertainties, including, but not limited to, the timing of projects
due to the variability in size, scope and duration of projects,
estimates, projections and forecasts made by management with respect
to the Company's critical accounting policies, firm backlog, projected
backlog, regulatory delays, government funding and budgets, matters
pertaining to potential and pending acquisitions subject to and after
closings, and other factors, including results of financial audits and
general economic conditions, not within the Company's control. Certain
of the Company's forward looking statements, with the projected
backlog in particular, are formulated based on management's extensive
industry experience and understanding and assessment of industry
trends, customer requirements, and related government spending.
Projected backlog may be subject to variability and may increase or
decrease at any time based on a variety of factors, including but not
limited to modifications of previously released orders, acceleration
of orders under general purchase agreements, etc. The factors
discussed herein and expressed from time to time in the Company's
filings with the Securities and Exchange Commission could cause actual
results and developments to be materially different from those
expressed in or implied by such statements. The forward-looking
statements are made only as of the date of this press release and the
Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances.

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*T
AIR INDUSTRIES GROUP, INC.
Condensed Consolidated Balance Sheet

March 31 December 31
2008 2007
------------ ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents - -
Accounts receivable, net of allowance for
doubtful accounts of approximately
$440,000 and $302,000 $ 8,006,000 $ 7,675,000
Inventory 24,334,000 21,820,000
Prepaid expenses and other current assets 112,000 230,000
Deposits 834,000 905,000
------------ ------------
Total current assets 33,286,000 30,630,000

Property and equipment, net 4,898,000 4,786,000
Intangible assets, net 5,755,000 5,877,000
Goodwill 6,373,000 6,373,000
Capitalized engineering costs, net 1,671,000 1,522,000
Deferred financing costs, net, deposits and
other assets 1,541,000 1,102,000
------------ ------------
TOTAL ASSETS $53,524,000 $50,290,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of notes payable and
capital lease obligations $18,841,000 $17,687,000
Accounts payable and accrued expenses 8,919,000 6,586,000
Dividends payable 120,000 267,000
Income taxes payable 371,000 391,000
------------ ------------
Total current liabilities 28,251,000 24,931,000
Long term liabilities
Notes payable and capital lease
obligations - net of current portion 3,867,000 4,219,000
Deferred tax liability 1,884,000 1,879,000
Deferred gain on sale of real estate 665,000 675,000
Deferred rent 277,000 230,000
------------ ------------
Total liabilities 34,944,000 $31,934,000

Commitments and contingencies

Stockholders' equity
Preferred stock - par value, $0.001,
8,003,716 shares authorized - -
Series A convertible preferred - $0.001
par value, 1,000 shares authorized no
shares issued and outstanding at March
31, 2008 and December 31, 2007,
respectively - -
Series B convertible preferred - $0.001
par value 2,000,000 shares authorized,
845,554 and 829,098 shares issued and
outstanding at March 31, 2008 and
December 31, 2007; Liquidation value,
$18,060,000 1,000 1,000
Common stock - $0.001 par, 250,000,000
shares authorized, 69,262,227 shares
69,122,227 shares issued and outstanding
at March 31, 2008 and December 31, 2007,
respectively 69,000 69,000
Additional paid-in capital 18,981,000 18,744,000
Accumulated deficit (471,000) (458,000)
------------ ------------
Total stockholders' equity 18,580,000 18,356,000

Total liabilities and stockholders'
equity $53,524,000 $50,290,000
============ ============
*T

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*T
AIR INDUSTRIES GROUP INC.
Condensed Consolidated Statement of Operations
(unaudited)

Three Months Ended
March 31
--------------------------
2008 2007
------------ -------------
(as restated)

Net sales $13,288,000 $ 7,488,000

Cost of sales 9,704,000 5,821,000
------------ -------------

Gross profit 3,584,000 1,667,000

Operating costs and expenses:
Selling and marketing 465,000 95,000
General and administrative 2,756,000 1,032,000
------------ -------------
Total operating costs 3,221,000 1,127,000

Income from operations 363,000 540,000

Interest and financing costs 392,000 131,000
Other income, net (2,000) (2,000)
------------ -------------

(Loss) income before income taxes (27,000) 411,000

Benefit (provision) for income taxes 14,000 (259,000)
------------ -------------

Net (loss) income (13,000) 152,000

Less: Dividend attributable to preferred
stockholders 148,000 -
------------ -------------

Net (loss) income attributable to common
stockholders $ (161,000) $ 152,000
============ =============

(Loss) income per share (basic and diluted) ($0.00) $ 0.00
============ =============

Weighted average shares outstanding (basic) 69,250,000 58,334,000
============ =============

Weighted average shares outstanding
(diluted) 69,250,000 60,203,000
============ =============
*T

Darrow Associates, Inc.
Jordan M. Darrow, 631-367-1866
jdarrow@darrowir.com

Copyright Business Wire 2008