CPI Aerostructures Reports Third Quarter Financial Results
November 06 2019 - 6:30AM
CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today
announced financial results for the three and nine-month periods
ended September 30, 2019.
Third Quarter 2019 vs. Third Quarter 2018
- Revenue of $25.7 million compared to $19.0 million, an increase
of 35%;
- Gross profit of $5.0 million compared to $3.9 million, an
increase of 28%;
- Gross margin was 19.3% compared to 20.4%, a decrease of 110
basis points;
- Pre-tax income of $2.0 million compared to $0.7 million, an
increase of 186%;
- Net income of $1.7 million compared to $0.6 million; an
increase of 183%
- Earnings per diluted share of $0.14 compared to $0.07, an
increase of 100% on a higher number of shares outstanding;
- Record total backlog at $533.9 million, up $86.3 million during
the quarter;
- Cash flow from operations was $(0.6) million compared to 0.5
million.
Nine Months 2019 vs. Nine Months 2018
- Revenue was $74.5 million compared to $57.5 million, an
increase of 30%;
- Gross profit was $15.3 million compared to $12.5 million, an
increase of 22%;
- Gross margin was 20.6% compared to 21.7%, a decrease of 110
basis points;
- Pre-tax income was $5.8 million compared to $3.9 million, an
increase of 49%;
- Net income was $6.0 million compared to $3.1 million, an
increase of 94%;
- Earnings per diluted share of $0.51 compared to $0.35, an
increase of 46% on a higher number of shares outstanding;
- Cash flow from operations was $(4.0) million compared to $(3.0)
million.
“We delivered an exceptional quarter of growth and performed
well operationally while advancing our strategic priorities for
2019. Revenue growth in the quarter was driven principally by our
WMI subsidiary and from our Northrop Grumman E-2D Advanced Hawkeye
and Raytheon Next Generation Jammer - Mid Band programs. We
continued to win new contracts at a strong pace with the addition
of several substantial awards and incremental new contracts for WMI
and total backlog at September 30 is the highest in our history at
$534 million,” stated Douglas McCrosson, president and CEO of CPI
Aero. “New contract momentum has continued into the fourth quarter,
including an award from Raytheon to produce prototypes of a pod. We
were also pleased to be recognized for our capabilities and
expertise with the receipt last month of an Aviation Week Program
Excellence Award for our work on Next Generation Jammer- Mid
Band.”
Continued Mr. McCrosson, “Our WMI subsidiary is requiring more
operational, financial, and legal resources to execute its business
plan than expected. We have made changes to organizational
structure to lower overhead costs and improve work flow in future
periods. We also changed WMI’s enterprise management system
to an improved platform that will enhance operational performance
and improve working capital management. We are confident
these changes will get WMI back on track heading into 2020. WMI’s
performance has also been hindered by the working capital
deficiency that is the subject of current litigation between CPI
Aero and the seller. Subsequent to the close of the quarter we
received more than $600,000 in purchase price reduction from the
seller, and we are litigating to receive the additional approximate
$3.5 million that we believe we are entitled to under our stock
purchase agreement with the seller.
“We are therefore modifying our financial guidance for 2019 to
reflect: a slight increase to our revenue outlook due to the surge
in new business awards that more than offsets lower projected
revenue from WMI; lower pre-tax income and cash flow outlook due to
lower profit and cash flow contributions from WMI and earlier than
planned working capital increases required to execute our record
backlog.”
Financial Outlook
CPI Aero has modified its financial guidance for fiscal 2019 in
light of earlier-than-anticipated new program starts and lower
profit contributions by WMI. The company now expects:
- An increase in revenue to approximately $103.0 million as
compared to the prior range of $98.0 million to $102.0
million. This compares to $83.9 million in the fiscal 2018
full year ended December 31, 2018;
- A decrease in pre-tax income to approximately $9.0 million as
compared to the prior range of $11.0 million to $11.3
million. This compares to $6.8 million in fiscal 2018;
- Cash flow used in operations of approximately $(1.5) million as
compared to cash flow from operations of greater than $3.5 million.
This compares to a use of cash of $(2.5) million in 2018
Concluded Mr. McCrosson, “Looking ahead to 2020, we are
approaching an inflection point in our business supported by a
growing backlog, business development efforts aligned with defense
spending priorities, and a robust bid pipeline all of which are
grounded in an improved cost structure and better competitiveness.
As a result, we have set a target for a three-year (2019 – 2021)
revenue compound annual growth rate of approximately 16%. Long-term
macro drivers continue to favor positive spending trends and we
believe we are well positioned in light of defense priorities. With
market tailwinds at our back, a growing need for our capabilities
and a strong team of aerospace manufacturing professionals with
which to execute on our plans, we believe we are very well
positioned for long-term success.”
Conference Call Management will host a
conference call today, Wednesday, November 6 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 and June 30, 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 September 30, |
For the Nine Months EndedSeptember
30, |
|
|
2019 |
|
2018 |
|
2019 |
|
|
2018 |
|
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Revenue |
$25,711,153 |
$19,017,301 |
$74,452,935 |
|
$57,470,163 |
Cost of revenue |
|
20,748,065 |
|
15,146,080 |
|
59,117,855 |
|
|
44,964,256 |
Gross profit |
|
4,963,088 |
|
3,871,221 |
|
15,335,080 |
|
|
12,505,907 |
|
|
|
|
|
Selling, general and
administrative expenses |
|
2,594,980 |
|
2,584,560 |
|
8,110,736 |
|
|
7,192,159 |
Income from operations |
|
2,368,108 |
|
1,286,661 |
|
7,224,344 |
|
|
5,313,748 |
|
|
|
|
|
Interest expense |
|
378,195 |
|
574,765 |
|
1,464,376 |
|
|
1,438,862 |
Income before provision for
(benefit from) income taxes |
|
1,989,913 |
|
711,896 |
|
5,759,968 |
|
|
3,874,886 |
|
|
|
|
|
Provision for (benefit from)
income taxes |
|
323,000 |
|
126,000 |
|
(276,000 |
) |
|
775,000 |
Net income |
|
1,666,913 |
|
585,896 |
|
6,035,968 |
|
|
3,099,886 |
|
|
|
|
|
Other comprehensive income net
of tax- Change in unrealized loss on interest rate swap |
|
--- |
|
20,600 |
|
--- |
|
|
14,800 |
Comprehensive income |
$1,666,913 |
$606,496 |
$6,035,968 |
|
$3,114,686 |
|
|
|
|
|
Income per common share –
basic |
$0.14 |
$0.07 |
$0.51 |
|
$0.35 |
|
|
|
|
|
Income per common share –
diluted |
$0.14 |
$0.07 |
$0.51 |
|
$0.35 |
|
|
|
|
|
Shares used in computing
income per common share: |
|
|
|
|
Basic |
|
11,838,862 |
|
8,952,979 |
|
11,796,580 |
|
|
8,926,734 |
Diluted |
|
11,857,534 |
|
8,977,075 |
|
11,815,252 |
|
|
8,951,640 |
|
CPI AEROSTRUCTURES, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS |
|
|
|
|
September 30, |
December 31, |
|
|
2019 |
|
2018 |
|
(Unaudited) |
|
ASSETS |
|
|
Current Assets: |
|
|
Cash |
$468,536 |
$4,128,142 |
Restricted cash |
|
2,000,000 |
|
2,000,000 |
Accounts receivable, net of allowance for doubtful accounts of
$275,000 as of September 30, 2019 and December 31, 2018 |
|
10,284,768 |
|
8,623,329 |
Contract
assets |
|
121,458,084 |
|
113,333,491 |
Inventory |
|
10,404,058 |
|
9,711,997 |
Refundable income taxes |
|
435,000 |
|
435,000 |
Prepaid expenses and other current assets |
|
966,522 |
|
1,972,630 |
Total current
assets |
|
146,016,968 |
|
140,204,589 |
|
|
|
Operating lease right-of-use
assets |
|
4,259,868 |
|
--- |
Property and equipment, net |
|
3,137,194 |
|
2,545,192 |
Refundable income taxes |
|
--- |
|
435,000 |
Deferred income taxes |
|
--- |
|
279,318 |
Other assets |
|
207,096 |
|
249,575 |
Total
assets |
$153,621,126 |
$143,713,674 |
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$10,892,353 |
$9,902,481 |
Accrued expenses |
|
1,458,961 |
|
1,558,160 |
Contract
liabilities |
|
1,823,255 |
|
3,805,106 |
Current portion of long-term debt |
|
2,499,012 |
|
2,434,981 |
Operating lease liabilities |
|
1,673,244 |
|
--- |
Line of credit |
|
26,738,685 |
|
24,038,685 |
Income tax payable |
|
--- |
|
115,000 |
Total current
liabilities |
|
45,085,510 |
|
41,854,413 |
|
|
|
Long-term operating lease
liabilities |
|
3,033,710 |
|
--- |
Long-term debt, net of current
portion |
|
2,371,797 |
|
3,876,238 |
Deferred income taxes |
|
2,964,600 |
|
4,028,553 |
Other liabilities |
|
--- |
|
531,124 |
Total
liabilities |
|
53,455,617 |
|
50,290,328 |
|
|
|
Shareholders’ Equity: |
|
|
Common stock - $.001 par value; authorized 50,000,000 shares,
11,839,065 |
|
|
and 11,718,246 shares, respectively, issued and
outstanding |
|
11,838 |
|
11,715 |
Additional paid-in capital |
|
71,357,488 |
|
70,651,416 |
Retained earnings |
|
28,796,183 |
|
22,760,215 |
Total Shareholders’
Equity |
|
100,165,509 |
|
93,423,346 |
Total Liabilities and
Shareholders’ Equity |
$153,621,126 |
$143,713,674 |
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