CPI Aerostructures Reports Strong First Quarter Financial Results

Date : 05/10/2019 @ 11:30AM
Source : GlobeNewswire Inc.
Stock : Cpi Aerostructures, Inc. (CVU)
Quote : 7.9  0.15 (1.94%) @ 9:00PM

CPI Aerostructures Reports Strong First Quarter Financial Results

C P I Aerostructures (AMEX:CVU)
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3 Months : From Apr 2019 to Jul 2019

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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,
 20192018
 (Unaudited)(Unaudited)
   
Revenue$25,583,531$18,191,623
   
Cost of revenue20,167,72114,141,755
   
Gross profit5,415,8104,049,868
   
Selling, general and administrative expenses2,806,4432,049,840
Income from operations2,609,3672,000,028
Interest expense  510,769  447,263
Income before provision for income taxes2,098,5981,552,765
   
Provision for income taxes440,000296,000
Net income1,658,5981,256,765
   
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:  
  Basic11,736,3058,888,179
  Diluted11,792,8188,940,385

CPI AEROSTRUCTURES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

 March 31,December 31,
 20192018
 (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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