CPI Aerostructures Reports Strong First Quarter Financial Results
May 10 2019 - 6:30AM
CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today
announced financial results for the three month period ended March
31, 2019.
First Quarter 2019 vs. First Quarter 2018
- Revenue of $25.6 million compared to $18.2 million
- Gross profit of $5.4 million compared to $4.0 million
- Gross margin was 21.2% compared to 22.3%
- Pre-tax income of $2.1 million compared to $1.6 million
- Net income of $1.7 million compared to $1.3 million
- Earnings per diluted share of $0.14 compared to $0.14 on a
higher number of shares outstanding
- Total backlog at $452.9 million with multi-year defense
contracts comprising 84%
- Cash flow from operations was $(2.3) million compared to $(2.6)
million
“2019 is off to a very strong start with higher revenue, gross
profit and net income year-over-year and excellent execution on key
strategic priorities for the year. We completed the consolidation
of Welding Metallurgy, Inc. (“WMI”) into our facility on schedule
and we have been hitting our customer’s production milestones on
the new programs that cumulatively underpin our growth expectations
this year and beyond,” stated Douglas McCrosson, president and CEO
of CPI Aero.
“Revenue growth in the quarter was driven predominantly by the
increase in production rate of our Next Generation Jammer Pod
program for Raytheon and revenue from our WMI subsidiary. We also
had a strong booking quarter for both CPI Aero and WMI. Our
consolidated shipping backlog increased by approximately 14% during
the quarter and now is approximately $134 million, for a
book-to-bill ratio of approximately 2.0 during the quarter.”
“Looking ahead, we have several revenue catalysts on the horizon
that give us confidence for the balance of 2019 and strength going
into 2020,” continued Mr. McCrosson. “For example, we have
begun performing work on the F-16V Rudder Island and Drag Chute
Canister assemblies that were awarded to us from Lockheed Martin
earlier this year. We anticipate receiving authorization
during the next several months from Raytheon to proceed with
additional production orders of Next Generation Jammer pods.
And, the U.S. Navy recently awarded Northrop Grumman a
multi-billion dollar contract for an additional 24 E-2Ds. We
have previously announced an $8.1 million contract for advanced
funding to manufacture kits used to produce outer wing panels for
the E-2D. With Northrop’s recent Navy award we expect the
value of our contract to approach $47.5 million over the next four
years.”
“The recent publication of the 2020 defense budget request
includes funding for the A-10 re-winging program, one of the
largest potential future awards in our 2019 bid pipeline. The Air
Force is expected to select a prime contractor for this effort
within the next couple of months. As I’ve stated before, CPI
Aero has extensive experience on the A-10 and on the new wing
specifically, so we feel we have a competitive edge to be part of
the winning contractor’s supply chain. The 2020 defense
budget request also indicates growth in proposed funding levels for
technologies and capabilities that CPI Aero has been making
strategic business development priorities, including electronic
warfare (EW), intelligence, reconnaissance and surveillance (ISR),
advanced missiles, and autonomous systems. We are currently
preparing proposals in response to customer demand in these
areas.”
Concluded Mr. McCrosson, “Defense prime contractors favor
companies with a broader set of capabilities and have experience
managing large programs in a competitive pricing environment.
CPI Aero is proud to have earned a reputation as a trusted Tier 1
supply chain partner to the world’s leading aerospace and defense
companies. The addition of WMI and its specialized
capabilities further add to our value proposition. We believe
we are very well positioned to leverage market tailwinds to drive
continued growth.”
Financial Outlook
CPI Aero reaffirms its prior guidance for fiscal 2019 of:
- Revenue in the range of $98.0 million to $102.0 million as
compared to $83.9 million in the fiscal 2018 full year ended
December 31, 2018;
- Pre-tax income in the range of $11.0 to $11.3 million as
compared to $6.8 million in fiscal 2018;
- Cash Flow from Operations in excess of $3.5 million as compared
to a use of cash of $(2.5) million in 2018;
- Effective tax rate of 20% - 22%.
Explanatory Note Regarding Financial Information (Note 1
of Consolidated Financial Statements) The financial
information contained in this release should be read in conjunction
with the financial information contained in CPI Aero’s Annual
Report filed on Form 10-K with the Securities and Exchange
Commission on April 1, 2019.
Conference Call Management will host a
conference call on Friday, May 10, 2019, at 8:30 a.m. ET to discuss
these results as well as recent corporate developments. After
opening remarks, there will be a question and answer period.
Interested parties may participate in the call by dialing
844-378-6486 or 412-542-4181. Please call in 10 minutes before the
conference call is scheduled to begin and ask for the CPI Aero
call. The conference call will also be broadcast live over the
Internet. Additionally, a slide presentation will accompany the
conference call. To listen to the live call, please go to
www.cpiaero.com, click on the Investor Relations section, then to
the Event Calendar. Please go to the website 15 minutes early to
download and install any necessary audio software. If you are
unable to listen live, the conference call will be archived and can
be accessed for approximately 90 days.
About CPI Aero
CPI Aero is a U.S. manufacturer of structural assemblies, for
fixed wing aircraft, helicopters and airborne Intelligence
Surveillance and Reconnaissance pod systems in both the commercial
aerospace and national security markets. Within the global
aerostructure supply chain, CPI Aero is either a Tier 1 supplier to
aircraft OEMs or a Tier 2 subcontractor to major Tier 1
manufacturers. CPI also is a prime contractor to the U.S.
Department of Defense, primarily the Air Force. In conjunction with
its assembly operations, CPI Aero provides engineering, program
management, supply chain management, and MRO services. CPI Aero is
included in the Russell Microcap® Index.
The above statements include forward looking statements that
involve risks and uncertainties, which are described from time to
time in CPI Aero's SEC reports, including CPI Aero's Form 10-K for
the year ended December 31, 2018.
CPI Aero® is a registered trademark of CPI Aerostructures, Inc.
For more information, visit www.cpiaero.com, and follow us on
Twitter @CPIAERO.
Contact:
Vincent Palazzolo
Investor Relations Counsel:
Chief Financial Officer
LHA Investor
Relations
CPI
Aero
Sanjay M. Hurry
(631) 586-5200
(212) 838-3777
www.cpiaero.com
cpiaero@lhai.com
www.lhai.com
– Tables to Follow –
CPI AEROSTRUCTURES, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME
|
|
|
|
For the Three Months Ended March 31, |
|
2019 |
2018 |
|
(Unaudited) |
(Unaudited) |
|
|
|
Revenue |
$25,583,531 |
$18,191,623 |
|
|
|
Cost of revenue |
20,167,721 |
14,141,755 |
|
|
|
Gross profit |
5,415,810 |
4,049,868 |
|
|
|
Selling, general and administrative expenses |
2,806,443 |
2,049,840 |
Income from operations |
2,609,367 |
2,000,028 |
Interest expense |
510,769 |
447,263 |
Income before provision for income taxes |
2,098,598 |
1,552,765 |
|
|
|
Provision for income taxes |
440,000 |
296,000 |
Net income |
1,658,598 |
1,256,765 |
|
|
|
Other comprehensive income (loss) net of tax - |
|
|
Change in unrealized gain-(loss) interest rate swap |
- |
(5,800) |
|
|
|
Comprehensive income |
$1,658,598 |
$1,250,965 |
|
|
|
Income per common share – basic |
$0.14 |
$0.14 |
|
|
|
Income per common share – diluted |
$0.14 |
$0.14 |
Shares used in computing earnings per common share: |
|
|
Basic |
11,736,305 |
8,888,179 |
Diluted |
11,792,818 |
8,940,385 |
CPI AEROSTRUCTURES, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
March 31, |
December 31, |
|
2019 |
2018 |
|
(Unaudited) |
(Note 1) |
ASSETS |
|
|
Current Assets: |
|
|
Cash |
$617,161 |
$4,128,142 |
Restricted cash |
|
2,000,000 |
2,000,000 |
Accounts receivable, net of allowance for doubtful accounts of
$275,000 as of March31, 2019 and December 31, 2018 |
|
6,583,155 |
|
8,623,329 |
Contract assets |
|
120,749,918 |
|
113,333,491 |
Inventory |
|
11,090,995 |
|
9,711,997 |
Refundable income taxes |
|
435,000 |
|
435,000 |
Prepaid expenses and other current assets |
|
1,205,297 |
|
1,972,630 |
Total current assets |
|
142,681,526 |
|
140,204,589 |
|
|
|
Operating lease right-of-use assets |
|
4,927,810 |
|
- |
Property and equipment, net |
|
3,533,038 |
|
2,545,192 |
Refundable income taxes |
|
- |
|
435,000 |
Deferred income taxes |
|
486,664 |
|
279,318 |
Other assets |
|
229,552 |
|
249,575 |
Total Assets |
$151,858,590 |
$143,713,674 |
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$12,364,039 |
$9,902,481 |
Accrued expenses |
|
1,089,803 |
|
1,558,160 |
Contract liabilities |
|
3,496,449 |
|
3,805,106 |
Current portion of long-term debt |
|
2,506,099 |
|
2,434,981 |
Operating lease liabilities |
|
1,593,243 |
|
- |
Line of credit |
|
23,738,685 |
|
24,038,685 |
Income tax payable |
|
253,798 |
|
115,000 |
|
|
|
Total current liabilities |
|
45,042,116 |
|
41,854,413 |
|
|
|
Long-term operating lease liabilities |
|
3,837,678 |
|
- |
Long-term debt, net of current portion |
|
3,601,883 |
|
3,876,238 |
Deferred income taxes |
|
4,028,553 |
|
4,028,553 |
Other liabilities |
|
- |
|
531,124 |
|
|
|
Total Liabilities |
|
56,510,230 |
|
50,290,328 |
|
|
|
Shareholders’ Equity: |
|
|
Common stock - $.001 par value; authorized 50,000,000 shares, |
|
|
11,736,386 and 11,718,246 shares, respectively issued and
outstanding |
|
11,736 |
|
11,715 |
Additional paid-in capital |
|
70,917,811 |
|
70,651,416 |
Retained earnings |
|
24,418,813 |
|
22,760,215 |
Total Shareholders’ Equity |
|
95,348,360 |
|
93,423,346 |
Total Liabilities and Shareholders’
Equity |
$151,858,590 |
$143,713,674 |
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