CPI Aerostructures Reports Second Quarter Financial Results
August 07 2019 - 6:30AM
CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today
announced financial results for the three and six-month periods
ended June 30, 2019.
Second Quarter 2019 vs. Second Quarter 2018
- Revenue of $23.2 million compared to $20.3 million
- Gross profit of $5.0 million compared to $4.6 million
- Gross margin was 21.4% compared to 22.6%
- Pre-tax income of $1.7 million compared to $1.6 million
- Net income of $2.7 million compared to $1.3 million, including
a tax benefit of approximately $1.0 million due to the reversal of
a portion of the approximately $3.1 million liability that was
recorded at December 31, 2018 for an uncertain tax position related
to a federal income tax audit
- Earnings per diluted share of $0.23 compared to $0.14 on a
higher number of shares outstanding, including $0.09 per diluted
share arising from the aforementioned reversal of a tax
liability
- Total backlog at $447.6 million with multi-year defense
contracts comprising 86%
- Cash flow from operations was $(1.1) million compared to $(1.0)
million
1H 2019 vs. 1H 2018
- Revenue was $48.7 million compared to $38.5 million
- Gross profit was $10.4 million compared to $8.6 million
- Gross margin was 21.3% compared to 22.5%
- Pre-tax income was $3.8 million compared to $3.2 million
- Net income was $4.4 million compared to $2.5 million, including
the tax benefit as described above
- Earnings per diluted share of $0.37 compared to $0.28 on a
higher number of shares outstanding
- Cash flow from operations was $(3.4) million compared to $(3.6)
million
“We delivered solid, year-on-year growth in revenue and net
income in the second quarter that reflects continued operational
execution and progression on our strategic priorities,” stated
Douglas McCrosson, president and CEO of CPI Aero. “Similar to the
first quarter, bookings at CPI Aero and WMI were strong, and
product sales backlog now stands at $153.2 million, up 14 % from
the end of the first quarter. We also continued to execute on our
Next Generation Jammer pod program, as well as our three new key
programs that are central to our growth expectations in 2019 and
support a multi-year growth trajectory.
“Subsequent to the close of the quarter we were awarded a $65.7
million IDIQ from the U.S. Air Force to provide structural
modification kits, program management and logistics, and other
sustainment services in support of two T-38 aircraft service life
extension programs. This contract, the second -largest contract
with the DoD in the company’s history and our largest in 15 years,
illustrates the success of our strategy to focus on defense market
opportunities and bring to bear our world-class engineering
capabilities and exceptional supply chain management and program
management expertise to build our multi-year backlog.
“Looking ahead to the second half of the year, we have business
momentum with a $448 million backlog and pipeline supporting
opportunities for new program starts and follow on orders,”
concluded Mr. McCrosson. “We expect to finalize the potential $47.5
million, E-2D Advanced Hawkeye (Multi-Year 2) contract we
announced last October for the U.S. Navy version. We recently
received authorization from Northrop Grumman to begin work on
long-lead items required for the Japanese variant of the E-2D that
should lead to a contract for nine additional aircraft. A decision
on the A-10 re-winging program is expected by the end of September,
and we believe we are competitively positioned with all competing
prime contractors. Beyond 2019, defense spending trends – both
domestically and internationally – and investments we have made in
areas of growth in the broader defense market serve as tailwinds
for our continued growth into 2020 and beyond.”
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 million 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;
Amended Credit Agreement
On June 25, 2019, CPI Aero entered into a fifth amendment to
amend its credit agreement (the “Agreement”) with BankUnited
extending the term of the Company’s term loan and revolving line of
credit to June 30, 2021. Concurrently, BNB Bank replaces Citizens
Bank, N.A. as a lender under the Agreement.
Conference Call Management will host a
conference call today, Wednesday, August 7 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 and Electronic Warfare 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, and Form 10-Q for the three-month
period ended March 31, 2019.
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 June
30, |
For the Six Months Ended June
30, |
|
|
2019 |
|
|
2018 |
|
2019 |
|
|
2018 |
|
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Revenue |
$ |
23,158,251 |
|
$ |
20,261,239 |
$ |
48,741,782 |
|
$ |
38,452,862 |
|
|
|
|
|
Cost of revenue |
|
18,202,069 |
|
|
15,676,421 |
|
38,369,790 |
|
|
29,818,176 |
|
|
|
|
|
Gross profit |
|
4,956,182 |
|
|
4,584,818 |
|
10,371,992 |
|
|
8,634,686 |
|
|
|
|
|
Selling, general and administrative expenses |
|
2,709,313 |
|
|
2,557,759 |
|
5,515,756 |
|
|
4,607,599 |
Income from operations |
|
2,246,869 |
|
|
2,027,059 |
|
4,856,236 |
|
|
4,027,087 |
Interest expense |
|
575,412 |
|
|
416,834 |
|
1,086,181 |
|
|
864,097 |
Income before provision for (benefit from) income taxes |
|
1,671,457 |
|
|
1,610,225 |
|
3,770,055 |
|
|
3,162,990 |
|
|
|
|
|
Provision for (benefit from) income taxes |
|
(1,039,000 |
) |
|
353,000 |
|
(599,000 |
) |
|
649,000 |
Net income |
$ |
2,710,457 |
|
$ |
1,257,225 |
$ |
4,369,055 |
|
$ |
2,513,990 |
|
|
|
|
|
Other comprehensive income net of tax - |
|
|
|
|
Change in unrealized gain interest rate swap |
|
--- |
|
|
20,600 |
|
--- |
|
|
14,800 |
|
|
|
|
|
Comprehensive income |
$ |
2,710,457 |
|
$ |
1,277,825 |
$ |
4,369,055 |
|
$ |
2,528,790 |
|
|
|
|
|
Income per common share – basic |
$ |
0.23 |
|
$ |
0.14 |
$ |
0.37 |
|
$ |
0.28 |
|
|
|
|
|
Income per common share – diluted |
$ |
0.23 |
|
$ |
0.14 |
$ |
0.37 |
|
$ |
0.28 |
Shares used in computing earnings per common share: |
|
|
|
|
Basic |
|
11,607,415 |
|
|
8,938,331 |
|
11,710,357 |
|
|
8,913,394 |
Diluted |
|
11,644,768 |
|
|
8,980,155 |
|
11,747,711 |
|
|
8,953,321 |
|
|
|
|
|
|
|
|
|
|
|
CPI AEROSTRUCTURES, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
June 30 |
December 31, |
|
2019 |
2018 |
|
(Unaudited) |
|
ASSETS |
|
|
Current Assets: |
|
|
Cash |
$ |
752,607 |
$ |
4,128,142 |
Restricted cash |
|
2,000,000 |
|
2,000,000 |
Accounts receivable, net of allowance for doubtful accounts of
$275,000 as of June 30, 2019 and December 31, 2018 |
|
8,399,920 |
|
8,623,329 |
Contract assets |
|
120,254,379 |
|
113,333,491 |
Inventory |
|
11,956,006 |
|
9,711,997 |
Refundable income taxes |
|
435,000 |
|
435,000 |
Prepaid expenses and other current assets |
|
1,118,620 |
|
1,972,630 |
Total current assets |
|
144,916,532 |
|
140,204,589 |
|
|
|
Operating lease right-of-use assets |
|
4,626,916 |
|
--- |
Property and equipment, net |
|
3,362,084 |
|
2,545,192 |
Refundable income taxes |
|
--- |
|
435,000 |
Deferred income taxes |
|
488,319 |
|
279,318 |
Other assets |
|
230,258 |
|
249,575 |
Total Assets |
$ |
153,624,109 |
$ |
143,713,674 |
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ |
11,540,234 |
$ |
9,902,481 |
Accrued expenses |
|
927,672 |
|
1,558,160 |
Contract liabilities |
|
3,488,823 |
|
3,805,106 |
Current portion of long-term debt |
|
2,507,060 |
|
2,434,981 |
Operating lease liabilities |
|
1,637,869 |
|
--- |
Line of credit |
|
25,738,685 |
|
24,038,685 |
Income tax payable |
|
453,828 |
|
115,000 |
|
|
|
Total current liabilities |
|
46,294,171 |
|
41,854,413 |
|
|
|
Long-term operating lease liabilities |
|
3,464,146 |
|
--- |
Long-term debt, net of current portion |
|
2,981,869 |
|
3,876,238 |
Deferred income taxes |
|
2,638,415 |
|
4,028,553 |
Other liabilities |
|
--- |
|
531,124 |
|
|
|
Total Liabilities |
|
55,378,601 |
|
50,290,328 |
|
|
|
Shareholders’ Equity: |
|
|
Common stock - $.001 par value; authorized 50,000,000 shares, |
|
|
11,820,390 and 11,718,246 shares, respectively issued and
outstanding |
|
11,813 |
|
11,715 |
Additional paid-in capital |
|
71,104,425 |
|
70,651,416 |
Retained earnings |
|
27,129,270 |
|
22,760,215 |
Total Shareholders’ Equity |
|
98,245,508 |
|
93,423,346 |
Total Liabilities and Shareholders’ Equity |
$ |
153,624,109 |
$ |
143,713,674 |
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