AirBoss of America Q3 Earnings Call Highlights

Key Points

• AirBoss returned to profitability in Q3 2026 as gross profit rose to $17 million and gross margin improved to 17.3%, despite sales slipping 1.7% to $98.7 million.
• Rubber Solutions sales grew 6.2%, helping offset lower defense deliveries in Manufactured Products. New awards include up to $100 million in rubber-molded production sales over five years and up to $16.9 million in defense orders.
• Operating cash flow was negative $1.7 million, and net debt increased to $77.8 million. Management expects some cash burn in Q4 before operating cash generation moves toward positive levels by late quarter and into the first half of 2027.

AirBoss of America TSE: BOS reported higher gross profit and a return to profitability in the third quarter of 2026, even as lower defense deliveries contributed to a slight decline in consolidated sales.

Net sales fell 1.7% from a year earlier to $98.7 million, while gross profit rose $0.6 million to $17 million. Gross margin improved to 17.3% from 16.4%, supported by higher volumes and favorable product mix at AirBoss Rubber Solutions and improved margins in both businesses within AirBoss Manufactured Products, Chief Financial Officer Frank Ientile said.

President and Co-CEO Chris Bitsakakis said the company returned to profitability, with a 17% swing in earnings per share compared with the prior-year quarter. The call did not provide an earnings-per-share figure. All dollar amounts discussed were in U.S. dollars unless otherwise noted.

Rubber Solutions Growth Offsets Defense Decline

AirBoss Rubber Solutions sales rose 6.2% to $54.7 million, with volume up 9.3%. Gross profit increased to $7.1 million from $6.3 million, and gross margin climbed to 13% from 12.2%. Ientile attributed the improvement primarily to higher non-tolling volumes and favorable mix.

In response to an analyst’s question, Bitsakakis said he expects year-over-year volume growth at Rubber Solutions to continue as new customers begin ramping up, barring significant geopolitical or economic surprises. He said one of the segment’s top 10 customers had been caught up in the First Brands bankruptcy in late 2025 and early 2026, leaving a gap in volume and margin that AirBoss has worked to fill.

At AirBoss Manufactured Products, sales declined 4.7% to $55.4 million and gross profit fell to $9.9 million from $10.2 million. Lower defense sales followed the completion of deliveries under a previously announced contract in the prior quarter, partially offset by improved sales in rubber-molded products, Ientile said. Bitsakakis said gross margin percentages improved in both manufactured products businesses despite the lower defense volume.

New Awards and Defense Delivery Outlook

Bitsakakis said the rubber-molded products business has secured production awards since the beginning of 2026 that are expected to generate up to $100 million in sales over five years. He attributed the wins in part to prior investments in automation and said the business is seeing more opportunities to quote on products being brought back from overseas.

AirBoss’s defense products business secured new orders valued at up to $16.9 million. Ientile said deliveries were expected to begin in November and continue into early 2027. He estimated that most associated revenue could be recognized in the fourth quarter, with the remainder in the first quarter, although shipment timing and approvals could affect the split.

Bitsakakis also said the company is developing non-automotive molded products it hopes to bring to market in late 2027 or early 2028. On the defense side, he said existing products that have not been major revenue contributors in recent years are attracting interest from NATO partners.

Cash Flow and Financing

AirBoss used $1.7 million in operating cash during the quarter, compared with $8.7 million generated a year earlier. It invested $1.8 million in capital expenditures, and net debt rose to $77.8 million at quarter-end from $67.6 million at the end of 2025.

Ientile said working capital increased partly because the company proactively purchased inventory in response to price increases and geopolitical issues. He also cited the timing of sales late in the quarter and payments associated with the completed Bandolier program. He expects some cash burn in the fourth quarter, followed by a return toward positive operating cash generation at the end of the quarter and into the first half of 2027.

The company’s asset-based revolving credit facility has a maximum borrowing amount of $125 million and a $25 million accordion feature. As of September 30, it had $72.8 million in total available borrowing capacity, with $35.7 million drawn. Bitsakakis said the renewal of the credit facilities extended the company’s financing runway and reduced borrowing costs.

Management cautioned that tariffs, trade policy and uneven customer demand remain sources of uncertainty. Bitsakakis said most products qualify under USMCA or CUSMA, but the company continues to monitor potential changes and assess supply-chain contingency plans.

About AirBoss of America (TSE:BOS)

AirBoss of America is a diversified developer, manufacturer and provider of survivability solutions, advanced custom rubber and polymer compounds and finished products that are designed to outperform in the most challenging environments. Founded in 1989, the company operates through two divisions. AirBoss Rubber Solutions is a North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Manufactured Products is a supplier of anti-vibration and rubber-molded solutions to the North American automotive market and other sectors, and also a global supplier of personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities, through its AirBoss Defense operations.

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