Cpi Aerostructures (NYSE AMEX:CVU)

EDGEWOOD, N.Y.--(BUSINESS WIRE)--CPI Aerostructures, Inc. ("CPI Aero®") (NYSE Amex:CVU) today announced that it has received its first new business award for 2012, a purchase order valued at $12.7 million from the Boeing Defense, Space & Security unit of The Boeing Company ("Boeing") for assemblies for the A-10 aircraft. This represents a follow-on order for CPI Aero’s previously announced long-term requirements contract to support Boeing's A-10 Wing Replacement Program (WRP). The A-10 WRP contract between Boeing and CPI Aero is worth up to approximately $84 million for the production of a variety of structural assemblies for up to 242 enhanced wings. To date, CPI Aero has received firm requirements for 117 ship sets at a value of approximately $47.3 million for the A-10 WRP program.

In addition, CPI Aero announced that new business awards from all customers for the year ended December 31, 2011 was approximately $83.6 million compared to $61.7 million for all of 2010.

Third Quarter 2011 Results

• Revenue increased 28% to $16,607,638 from $12,976,084;
• Gross margin was 25.1% as compared to 26.1%;
• Pre-tax income increased 17% to $2,531,042, compared to $2,171,363; and,
• Net income increased 26% to $1,805,042, or $0.25 per diluted share, compared to $1,429,363, or $0.21 per diluted share.

 As expected, 2011 third quarter revenue increased by only 28% with the big surge in revenue to come in the fourth quarter. As we are now well into the fourth quarter, we can say with added confidence that the fourth quarter of 2011 will be the highest revenue quarter in CPI Aero’s history by a significant margin.

EDGEWOOD, N.Y.--(BUSINESS WIRE)--CPI Aerostructures, Inc. ("CPI Aero®") (NYSE Amex:CVU) today announced that it has received authorization from Spirit AeroSystems, Inc. (“Spirit”) (NYSE SPR) for work on wing leading edge assemblies for business jet aircraft that extend CPI Aero’s backlog through September 2013. In March 2008, Spirit and CPI Aero entered into a long term agreement to provide Spirit with leading edges for the wing of the business jet. Spirit designs and manufactures the entire wing for this business jet customer.

The total 2011 year-to-date awards for CPI Aero from all customers is $81.5 million, compared to $57.7 million for the same period of 2010 and $61.7 million for all of 2010.

Second Quarter 2011 vs. 2010 

• Revenue increased 38.9% to $17,426,223 from $12,544,625;
• Gross margin was 24.4% compared to 26.7%;
• Pre-tax income increased 14.7% to $2,094,816 compared to $1,826,254; and,
• Net income increased 30.3% to $1,570,816 or $0.22 per diluted share, compared to $1,205,254, or $0.18 per diluted share.

Edward J. Fred, CPI Aero’s President & CEO, stated, “The current second quarter and six month periods were our best ever reporting periods in terms of revenue and net income. The increase in revenue is primarily the result of work performed for the Boeing Company on the A-10 attack jet and Northrop Grumman Corporation on the E-2D surveillance airplane. Revenue for these two programs accounted for approximately 74% of government subcontracting revenue and approximately 58% of total revenue for first half of 2011.”

He continued, “As was the case in the first quarter of 2011, our gross margin in the second quarter was slightly below our targeted gross margin range of 25%-27%. This was primarily due to the lower gross margin for the C-5 TOP order received in the first quarter of 2011, as well as travel and labor required for supplier surveillance on the early stage of production for our three major programs: the A-10 attack jet, the E-2D surveillance airplane and the Gulfstream G650 aircraft. Additionally, because of the continued development of new suppliers, and the new contracts won in the first half of 2011, these costs should remain in effect through year-end, resulting in a gross margin range of 24%-25% for second half of 2011.”

Mr. Fred added, “As of June 30, 2011, new contract awards totaled $58.6 million, which included approximately $8.8 million of government prime contract awards, approximately $19.9 million of government subcontract awards and approximately $29.9 million of commercial subcontract awards, compared to a total of $31.1 million of new contract awards, of all types, in the same period last year, and $61.7 million for all of 2010.”

Mr. Fred went on to say, “Lastly, because some anticipated contract awards have been delayed by a customer, we are providing revised guidance for both revenue and net income. The net income reduction will also take into account the additional cost to relocate the Company to the larger facility, which was obviously not anticipated when we issued the original guidance. Therefore, we now project that 2011 revenue will be approximately $74 million, with a resulting net income in the range of $7.4 million to $7.5 million.

“However, because of this award delay that pushes revenue into 2012, and the strong year we have had to date in receiving new orders, we are pleased to be able to raise 2012 guidance to the following: we expect that revenue should be in the range of $95 million to $98 million, with a resulting net income in the range of $12 million to $13 million.”

He concluded, “As a final piece of the guidance discussion, we expect third quarter revenue for 2011 to be the lowest revenue quarter of the year, while the fourth quarter will be the highest revenue quarter in CPI Aero’s history, and by a significant margin. While we don’t typically issue quarterly guidance, we feel it is important to point out the revenue level expectations for these quarters, as the revenue timing is somewhat different than it has been historically. This is simply due to the timing of deliveries, and the requirement to purchase materials to coincide with these delivery schedules.”

EDGEWOOD, N.Y.--(BUSINESS WIRE)--CPI Aerostructures, Inc. (“CPI Aero”) (NYSE Amex: CVU) announced today that on June 30, 2011 it entered into a lease agreement, with Heartland Boys II L.P. for the premises located at 91 Heartland Boulevard, Edgewood, New York, directly across the street from CPI Aero’s current location. The approximate 171,000 square foot building will be used as the Company’s assembly facility, principal offices and corporate headquarters. CPI Aero intends to move all of its operations presently at 60 Heartland Boulevard, Edgewood, New York to the new facility by December 31, 2011. The term of the new lease commences on July 1, 2011 and expires on April 30, 2022.

Commenting Edward J. Fred, CPI Aero’s President & CEO, stated, “Our planned move into premises that are nearly three times the size of our current location is indicative of our expectations for continued growth in orders, customers, programs and of course revenue and profits over the coming years. Since the landlord of both properties is the same, our old lease has been amended and we no longer pay rent at the 60 Heartland Boulevard location, although we have use of it through year end as well as of the the new location immediately. We were able to negotiate attractive rental terms for the new location and we are pleased that it will cause no dislocation to our employees.”

First Quarter Results:

• Revenue increased 45% to $16,009,608 from $11,005,529;
• Gross margin was 24%, compared to 25%;
• Pretax income increased 54% to $2,012,050, compared to $1,303,815;
• Net income increased 59% to $1,368,050, or $0.19 per diluted share, compared to $860,815, or $0.14 per diluted share

Edward J. Fred, CPI Aero’s President & CEO, stated, "We started 2011 on a strong note with revenue and net income increasing by 45% and 59%, respectively, compared to the first quarter of 2010. In addition, revenue for the three months ended March 31, 2011 made the current quarter our best ever quarter in terms of revenue. The increase in revenue is primarily due to work performed for the Boeing Company on the A-10 attack jet and for Northrop Grumman Corporation on the E-2D surveillance airplane."

Mr. Fred concluded, "We are once again confirming our 2011 guidance which calls for revenue to be in the range of $78 million to $81 million, a 77% to 84% increase over 2010, primarily due to increased work on our three major long-term programs: A-10, E-2D and G650. Net income for 2011 is expected to be in the range of $9.2 million to $9.5 million. Our gross margin for the year should be in the range of 25% to 27%. In addition, we continue to expect that for 2012, revenue should be in the range of $88 million to $91 million, with resulting net income of between $11 million and $12 million."

• Revenue was $7,464,546 from $12,729,858 
• Gross margin was (45%), compared to 30% in last year’s fourth quarter;
• Pre-tax loss was $4,758,535, compared to pre-tax income of $2,240,661; and,
• Net loss was $2,965,535, or $0.44 per diluted share, compared to net income of $1,559,661, or $0.25 per diluted share.

Edward J. Fred, CPI Aero’s CEO & President, stated, "As previously announced, the termination of the T-38 program one release year earlier than expected, resulted in a revenue adjustment based on a change in estimate for the fourth quarter and the year. This non-cash adjustment is a GAAP change in estimate, and conforms to the procedures used for the percentage of completion method ("POC") of accounting.

"The adjustments that we made for the T-38 program and two other contracts subject to early termination/completion that are accounted for in a similar manner, eliminate the possibility of similar revenue adjustments on these ongoing contracts in future years.

"Without the impact of the above adjustment, we would have slightly exceeded our 2010 guidance of revenue in the range of $49 million to $51 million and net income in the range of $4.6 million to $4.8 million."

Mr. Fred concluded, "Our 3-year, compounded annual growth rate guidance for revenue in the range of 30% to 35%, and for net income in the range of 50% to 60% - provided by CPI Aero in 2008, remains intact. We remain confident that we will achieve our 2011 guidance which calls for revenue to be in the range of $78 million to $81 million, a 77% to 84% increase over 2010, primarily due to increased work on our three major long-term programs: A-10, E-2D and G650. Net income for 2011 is expected to be in the range of $9.2 million to $9.5 million. Our gross margin for the year should be in the range of 25% to 27%. In addition, we estimate that for 2012, revenue should be in the range of $88 million to $91 million, with resulting net income of between $11 million and $12 million."

Second Quarter 2010 vs. 2009

• Revenue increased 10% to $12,544,625 from $11,437,691;
• Gross margin was 26.7% compared to 24.8%;
• Pre-tax income increased 31% to $1,826,254, compared to $1,389,489; and,
• Net income increased 33% to $1,205,254 or $0.18 per diluted share, compared to $903,489, or $0.14 per diluted share. Diluted earnings per share were calculated on 8.7% more shares in 2010 second quarter vs. 2009 second quarter.

Reaffirms Long-Term Guidance

Mr. Fred added, “We are again reaffirming our long-term guidance which is based on our expectation that our three major long-term production programs (A-10, E-2D and G650) will be in full scale production and producing consistent significant revenue during 2011. For 2011 we expect that revenue will be in the range of $78 million to $81 million, with resulting net income in the range of $8.9 million to $9.5 million. Using 2008 as the baseline, we expect a three-year compound annual growth rate for revenue in the range of 30% to 35%, with a resulting compound annual growth rate for net income in the range of 50% to 60%.”

“Based on results for the first half of the year and expectations for a strong second half, we are confident that we will reach our 2010 guidance which calls for revenue to be in the range of $48 million to $51 million, with resulting net income in the range of $4.3 million to $4.8 million.”

Raises $3.5 Million through Registered Direct Offering

Mr. Fred concluded, “As previously announced, in the second quarter of 2010 we completed a registered direct offering raising $3.5 million in net proceeds through the sale of 500,000 shares of our common stock. As a result, we strengthened our financial position in preparation for continued growth and enhanced the potential liquidity of our stock.”

2008 Year end comments:

“As previously reported, our 2009 new contract awards approximated $23.4 million. Of this amount, approximately $10.6 million, $6.9 million and $5.8 million were government prime contract awards, government subcontract awards and commercial subcontract awards, respectively. Although this total was well below contract awards for 2008, orders in the fourth quarter of 2009 were significantly higher compared to the previous quarters of the year. From the start of the year through March 15, 2010 we have received a total of $3.6 million in new contracts, compared to $2.5 million in the same period last year. We look forward to additional new orders from existing contracts as well as from the unawarded solicitations of approximately $270 million that we have bid on as of March 15, 2010.”

Mr. Fred concluded, “As previously announced, based on the visibility we currently have, we project that 2010:

• Revenue will be in the range of $48 million to $51 million,
• Net income in the range of $4.3 million to $4.8 million.

It is our expectation that our three major long-term production programs (A-10, E-2D and G650) will be in full scale production and producing consistent significant revenue during 2011, and we therefore project that 2011:

• Revenue will be in the range of $78 million to $81 million,
• Net income in the range of $8.9 million to $9.5 million.

 Additionally, using 2008 as the baseline, our 2011 guidance affirms our expectations for a three-year compound annual growth rate for revenue in the range of 30% to 35%, with a resulting compound annual growth rate for net income in the range of 50% to 60%.”

Source: Business Wire (March 23, 2010)

Based upon the year-to-date results and our expectations for the fourth quarter, we confirm that we will achieve our 2009 guidance, which calls for revenue in the range of $42 million to $45 million, and net income of between $3.9 million to $4.3 million. We are fully cognizant of the fourth quarter results that are required to meet these targets, and with approximately seven weeks left in our fiscal year, we are confident of our ability to achieve these results.”

Source: Business Wire (November 10, 2009)

^aThe above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^b CPI Aerostructures did not provide EPS guidance. The GeoTeam® calculated an implied EPS figure using the current outstanding share count of 6,250,021.

Guidance Update: 

Mr. Fred continued, "We are able to reaffirm our 2009 guidance which calls for revenue to be in the range of $42 million to $45 million, with resulting net income in the range of $3.9 million to $4.3 million. Additionally, using 2008 as the baseline, for the three-year period ending in 2011, we expect to achieve a compounded annual growth rate for revenue in the range of 30% to 35%, with a resulting compounded annual growth rate for net income in the range of 50% to 60%."

Source: Business Wire (November 4, 2008)