AIR Global (NASDAQ:AIIR) reported higher third-quarter revenue and earnings as flavored shisha molasses shipments recovered from first-half supply chain disruption, though higher logistics and manufacturing costs weighed on margins.
The company reiterated its 2026 operating outlook but raised its year-end leverage forecast, citing refinancing costs and working capital tied to the disruption. It also outlined plans for a dividend and share repurchases as it pursues growth in the U.S. vaping market.
Shipments recover, but costs pressure margins
Third-quarter revenue rose 11.1% to $100 million from $90 million a year earlier, while adjusted EBITDA increased 7.7% to $31 million. Gross profit rose 9.8% to $53 million, and profit for the period increased to $8 million from $7 million. Basic earnings per share were $0.05.
Flavored shisha molasses shipment volumes grew 5.8% in the quarter after falling 9% in the first half. Price and mix contributed a further 5% to growth, CEO Stuart Brazier said. For the first nine months, shipment volumes fell 4.6%, while price and mix increased 11.1%.
Adjusted EBITDA margin declined to 31% from 31.9% in the third quarter of 2025. CFO Bassem Lotfy said elevated logistics, materials and factory footprint costs continued to weigh on margins.
Lotfy said the company established alternative shipping routes after the closure of the Strait of Hormuz. Higher energy, shipping, insurance, security and raw material costs linked to the Middle East conflict are affecting the industry, he said. AIR expects modest margin compression in 2026 and is responding with alternative routes, pricing and a reorganization of its manufacturing footprint. Its Romania facility remains on track to open in the first quarter of 2027.
Asked about the shipment recovery, Head of Investor Relations and Corporate Strategy Gaurav Jain said some inventory replenishment contributed to the rebound. He said the company did not expect excess or insufficient inventories relative to end demand by year-end. Brazier said raw material stocks at factories were higher because of supply chain uncertainty and the transfer of U.S. production to Poland.
By region, Americas revenue increased 25.6% to $22 million in the quarter, although adjusted EBITDA fell 3.6% to $8 million, mainly because of higher cost of goods sold. Revenue in the Middle East, Africa and Asia region rose 9.4% to $64 million, while adjusted EBITDA increased 2.4% to $25 million.
Outlook and leverage
For the first nine months of 2026, revenue rose 6% to $307 million and adjusted EBITDA increased 2.3% to $103 million. AIR reported a $74 million loss for the period under IFRS, with listing-related expenses among the largest adjustments to EBITDA.
Lotfy said adjustments included $48 million of noncash expense for equity issued in connection with the business combination, $48 million of transaction fees and $10 million of public company readiness costs. He cautioned that adjusted EBITDA is not a substitute for IFRS results or cash flow.
AIR continues to expect broadly stable shipment volumes for 2026, revenue growth of 4% to 6% in U.S. dollars and low- to mid-single-digit adjusted EBITDA growth. The company now expects year-end net debt to adjusted EBITDA of approximately 2.5 times, compared with its prior forecast of 2.1 times.
Jain said roughly one-third of the increase in the leverage forecast was attributable to debt refinancing and two-thirds to higher working capital. The company expects the working capital impact to unwind over time and is targeting leverage of 2 times or below by December 2027.
AIR lowered its full-year capital expenditure forecast to $11 million to $14 million from $15 million to $18 million. Its expected effective tax rate remains approximately 15%.
Looking beyond this year, Brazier told analysts that gross margin could improve by approximately 300 basis points over time if costs normalize. Jain described that as a medium-term comment rather than a limit on potential margin improvement.
Dividend, buybacks and vaping plans
AIR issued $425 million of senior unsecured notes on Oct. 1, using the proceeds to refinance its term loan and repay its outstanding revolving credit facility. The notes carry a 7.875% coupon and mature in 2031.
Subject to board approval, the company intends to initiate an annual dividend of $0.28 per share, paid quarterly beginning with its first-quarter 2027 results. It is also establishing a program to repurchase up to $100 million of shares through December 2029, subject to market conditions, capital requirements and approvals.
Brazier said AIR submitted a U.S. Premarket Tobacco Product Application for its rechargeable pod vape, Crown Switch, in early November. He said the platform uses Greentank’s Quantum Chip technology and that AIR’s investment in Greentank provides access to the technology and a long-term supply arrangement.
The CEO said AIR is prioritizing vapes over nicotine pouches because of its limited resources, experience in disposable vapes and its view of profitability trends in the two markets. He said regulatory decisions, consumer adoption and execution will determine how quickly Crown Switch can scale.
About AIR Global (NASDAQ:AIIR)
Cantor Equity Partners III Inc. is a blank check company. It formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Cantor Equity Partners III Inc. is based in NEW YORK.
