CPI Aerostructures Announces 2018 Third Quarter Financial Results
November 08 2018 - 6:30AM
CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today
announced financial results for the three-month and nine-month
periods ended September 30, 2018.
3Q 2018 vs. 3Q 2017
- Revenue was $19.9 million compared to $20.7 million;
- Gross profit was $4.8 million compared to $4.9 million;
- Gross margin was 24.1% compared to 23.7%
- Pre-tax income was $1.6 million compared to $2.5 million;
- Net income was $1.3 million compared to $1.7 million;
- Earnings per diluted share were $0.15 compared to $0.19 per
diluted share;
- Cash flow from operations was $0.5 million compared to $0.9
million; and
- Total backlog at $442.2 million with multi-year defense
contracts comprising 83%.
Nine Months 2018 vs. Nine Months 2017
- Revenue was $58.4 million compared to $57.5 million;
- Gross profit was $13.4 million compared to $13.1 million;
- Pre-tax income was $4.8 million compared to $5.7 million;
- Net income was $3.8 million compared to $3.7 million;
- Earnings per diluted share of $0.43 compared to $0.42 per
diluted share; and
- Cash flow used in operations was $(3.0) million compared to
$(0.2) million.
Public Offering of Common SharesSubsequent to
the quarter, the Company completed an underwritten public offering
of 2,760,000 shares of its common stock at a public offering price
of $6.25 per share, including 360,000 shares sold at the public
offering price to cover over-allotments. The net proceeds to the
Company (after deducting the underwriting discount and other
customary expenses payable by the Company) were approximately
$16.10 million.
Douglas McCrosson, president and CEO of CPI Aero, stated, “We
are pleased to report another strong quarter of execution,
profitability and positive cash flow while progressing business
development initiatives that yielded a 23% sequential increase in
total backlog. Notable new additions to backlog were: an expansion
of our Next Generation Jammer Pod program; an initial purchase
order from an existing customer in support of an expected $47.5
million multi-year contract; and, the addition of a new customer
for the manufacture of a wing assembly used to launch a new missile
system currently in development. Revenue for the quarter reflected
the anticipated wind-down of our current Northrop Grumman E-2D
multi-year program as we begin transitioning to a new multi-year
contract, partially offset by increased revenue from our prime
contracts direct with the U.S. Government for F-16 components and
T-38 kits.
“Looking ahead, we believe we have before us opportunities for
multi-year top- and bottom-line growth reflecting very favorable
long-term defense spending trends, a growing backlog and a bid
pipeline with several multi-year program awards on the horizon that
will leverage our cost-efficient infrastructure,” continued Mr.
McCrosson. “We believe that our support of key existing and new
defense programs aligns us with the spending priorities in the new
defense authorization bill. We have the manufacturing engineering,
supply chain management and program management skills that make us
an integral part of our customers’ supply chain. In a period where
new work is outpacing our customers’ ability to quickly ramp up
their workforce, we have become a ‘force multiplier’ for them. This
is reflected in our bid pipeline, which includes two near-term,
multi-year revenue catalysts for which we are positioned as the
incumbent Tier 1 supplier: the program award for the re-winging of
up to 112 A-10s, the next multi-year E-2D program.
“Subsequent to the close of the quarter, we completed a public
offering that secures capital necessary for our growth strategy. We
also received a favorable ruling from the New York Supreme Court on
our preliminary injunction motion and we anticipate moving forward
with our acquisition of Welding Metallurgy. With market tailwinds
at our back, a growing need for our capabilities and capital to
execute on our plans, we believe we are very well positioned for
long-term success,” concluded Mr. McCrosson.
Financial Outlook
CPI Aero affirms its prior financial guidance for fiscal 2018
of:
- Revenue in the range of $82.0 million and $85.0 million;
- Pre-tax income in the range of $8.0 million to $8.2
million;
- An effective tax rate in the range of 19% to 21%.
Appointments of Chairman and Chairman
Emeritus
In a separate announcement today, the Company announced that
Terry Stinson has been elected Non-Executive Chairman of the Board,
and Eric Rosenfeld Chairman Emeritus. Mr. Stinson succeeds Mr.
Rosenfeld, who has served as the Company’s Non-Executive Chairman
since 2005 and remains a member of the board of directors and
Chairman of the Strategic Planning Committee. Mr. Stinson joined
CPI Aero’s board in 2014 and will retain his position as the
Chairman of the Compensation Committee.
Conference Call
Management will host a conference call on Thursday, November 8,
2018, 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 via webcast. 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 webcast will be archived and can be
accessed for a period of approximately one year.
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 Aero 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, 2017, and Form 10-Q for the three-month
periods ended March 31, 2018 and June 30, 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 PalazzoloChief
Financial OfficerCPI Aero(631) 586-5200www.cpiaero.com |
|
Investor Relations
Counsel:LHA Investor RelationsSanjay M. Hurry(212)
838-3777cpiaero@lhai.com www.lhai.com |
– Tables to Follow –
CPI AEROSTRUCTURES,
INC.STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$19,944,558 |
|
$20,706,460 |
|
|
$58,397,420 |
|
$57,471,112 |
Cost of sales |
|
15,146,080 |
|
|
15,794,024 |
|
|
|
44,964,256 |
|
|
44,337,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
4,798,478 |
|
|
4,912,436 |
|
|
|
13,433,164 |
|
|
13,133,698 |
Selling, general and
administrative expenses |
|
2,584,560 |
|
|
2,044,304 |
|
|
|
7,192,159 |
|
|
6,210,380 |
Income from
operations |
|
2,213,918 |
|
|
2,868,132 |
|
|
|
6,241,005 |
|
|
6,923,318 |
Interest expense |
|
574,765 |
|
|
402,619 |
|
|
|
1,438,862 |
|
|
1,258,857 |
Income before provision
for |
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes |
|
1,639,153 |
|
|
2,465,513 |
|
|
|
4,802,143 |
|
|
5,664,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
311,000 |
|
|
770,000 |
|
|
|
960,000 |
|
|
1,954,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
1,328,153 |
|
|
1,695,513 |
|
|
|
3,842,143 |
|
|
3,710,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
net of
tax - |
|
|
|
|
|
|
|
|
|
|
|
|
Change in
unrealized gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
interest
rate swap |
|
20,600 |
|
|
(2,300 |
) |
|
|
14,800 |
|
|
1,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
$1,348,753 |
|
$1,693,213 |
|
|
$3,856,943 |
|
$3,712,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share
– basic |
$0.15 |
|
$0.19 |
|
|
$0.43 |
|
$0.42 |
|
|
|
|
|
|
|
|
|
Income per common share
– diluted |
$0.15 |
|
$0.19 |
|
|
$0.43 |
|
$0.42 |
Shares used in
computing income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
8,952,979 |
|
|
8,846,507 |
|
|
|
8,926,734 |
|
|
8,820,379 |
Diluted |
|
8,977,075 |
|
|
8,872,810 |
|
|
|
8,951,640 |
|
|
8,841,397 |
CPI AEROSTRUCTURES,
INC.BALANCE SHEETS
|
September 30, |
|
December 31, |
|
2018 |
|
2017 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash |
$828,594 |
|
$1,430,877 |
|
Accounts receivable, net
of allowance for doubtful accounts of $275,000 and $150,000 as of
September 30, 2018 and December 31, 2017, respectively |
|
6,364,186 |
|
|
5,379,821 |
|
Contract
assets |
|
114,094,962 |
|
|
111,158,551 |
|
Prepaid
expenses and other current assets |
|
2,330,830 |
|
|
2,413,187 |
|
|
|
|
|
|
Total current
assets |
|
123,618,572 |
|
|
120,382,436 |
|
|
|
|
|
|
Property and equipment,
net |
|
2,696,344 |
|
|
2,046,942 |
|
Deferred income taxes,
net |
|
500,318 |
|
|
1,566,818 |
|
Other assets |
|
286,527 |
|
|
188,303 |
|
Total
Assets |
$127,101,761 |
|
$124,184,499 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts
payable |
$10,431,232 |
|
$15,129,872 |
|
Accrued
expenses |
|
1,262,373 |
|
|
1,911,421 |
|
Contract
liabilities |
|
464,823 |
|
|
246,330 |
|
Current
portion of long-term debt |
|
2,435,559 |
|
|
2,009,000 |
|
Line of
credit |
|
27,538,685 |
|
|
22,838,685 |
|
Income
tax payable |
|
- |
|
|
109,327 |
|
|
|
|
|
|
|
|
Total current
liabilities |
|
42,132,672 |
|
|
42,244,635 |
|
|
|
|
|
|
Long-term debt, net of
current portion |
|
5,667,915 |
|
|
7,019,468 |
|
Other liabilities |
|
548,815 |
|
|
607,063 |
|
|
|
|
|
|
Total
Liabilities |
|
48,349,402 |
|
|
49,871,166 |
|
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
|
Common
stock - $.001 par value; authorized 50,000,000 shares, |
|
|
|
|
8,953,137
and 8,864,319 shares, respectively |
|
|
|
|
issued
and outstanding |
|
8,950 |
|
|
8,863 |
|
Additional paid-in capital |
|
54,352,614 |
|
|
53,770,618 |
|
Retained
earnings |
|
24,390,795 |
|
|
20,548,652 |
|
Accumulated other comprehensive income (loss) |
|
- |
|
|
(14,800 |
) |
Total
Shareholders’ Equity |
|
78,752,359 |
|
|
74,313,333 |
|
Total
Liabilities and Shareholders’ Equity |
$127,101,761 |
|
$124,184,499 |
|
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