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CPI Aerostructures, Inc.$10.45$.05.48%

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 CPI Aerostructures Announces Fourth Quarter and Full Year 2016 Financial Results
   Tuesday, March 07, 2017 7:00:29 AM ET

Defense backlog at $321.7 Million, up 16% from 2015 year-end; multi-year defense contracts now represent 77% of total backlog; 2016 Full Year EPS and Adjusted EPS at $(0.42) and $0.71, respectively; 2016 Fourth Quarter EPS and Adjusted EPS at $0.24 and $0.24, respectively

EDGEWOOD, NY--(Marketwired - Mar 7, 2017) - CPI Aerostructures, Inc. ("CPI Aero®") (NYSE MKT: CVU) today reported fourth-quarter and full-year 2016 financial results.

Full Year 2016 vs. Full Year 2015

Revenue of $81.3 million compared to $100.2 million; 

Gross profit was $4.3 million compared to $16.6 million;

Pre-tax income (loss) was $(5.7) million compared to $8.0 million;

Net income (loss) was $(3.6) million compared to $5.0 million;

Earnings (loss) per diluted share were $(0.42) per diluted share compared to $0.58 per diluted share; and

Backlog at $416.3 Million, up approximately $29.0 Million or 7%, compared to $387.3 million.

Fourth Quarter 2016 vs. Fourth Quarter 2015

Revenue of $24.3 million compared to $31.6 million;

Gross profit of $5.9 million compared to $3.6 million;

Pre-tax income of $3.4 million compared to $1.6 million;

Net income of $2.1 million compared to $0.7 million; and

Earnings per diluted share of $0.24 compared to $0.08.

Full year 2016 results were impacted by a non-cash charge related to the Company’s A-10 Wing Replacement Program (WRP) taken during the first quarter of 2016. In reporting first quarter 2016 results, CPI Aero announced that it had incurred a non-cash charge of approximately $13.5 million related to its estimate to perform through the conclusion of the order. The results presented on an adjusted basis that excludes the impact of the A-10 WRP from the applicable periods are provided in the schedules that accompany this release.

"Our financial results for fiscal 2016 reflect continued successful execution on a strategy first undertaken in 2014 to drive growth and profitability by leveraging our roots in the defense market and placing greater sales emphasis on multi-year opportunities," stated Douglas McCrosson, president and chief executive officer of CPI Aero. "We are pleased to report that multi-year defense programs comprise approximately 77% of backlog at year-end with the majority just beginning or about to begin generating revenue, thereby giving us significant revenue visibility in the coming years. In an ongoing, tight spending environment, we booked new orders totaling approximately $85 million in the second-half of fiscal 2016. Notable among those in the fourth quarter were Bell Helicopter/Textron and Sikorsky, both of which illustrate our ability to leverage superior program execution to secure additional awards.

"In 2017, we expect increased global spending on defense systems will be a tailwind to drive demand for our products," continued Mr. McCrosson. "As the U.S. Air Force balances its spending priorities between modernization and readiness, our technical and cost advantages and supply chain expertise are significant competitive differentiators in the market. Continued strength in spending on new equipment bodes well for our F-35, E-2D and Next Generation Jammer pod contracts. More spending to maintain the legacy fleets could be positive for our F-16, T-38, A-10 and Black Hawk programs. Further, increased spending internationally is expected to boost demand for our DB-110 pod and E-2D kits for the Japanese version of the E-2D. Our bid pipeline is aligned with our sales emphasis on defense opportunities, and we are seeing strong interest in our Aerosystems segment -- our pod-based systems business -- in which we now have a reputation for manufacturing at an OEM level, but at a lower cost. Opportunities in this business, as well as other programs we anticipate will be awarded in fiscal 2017, will continue to drive growth in our defense backlog."

Financial Outlook Continued Mr. McCrosson, "The new Administration and Congress have indicated a disposition towards increasing defense funding levels. However, we are five months into the 2017 government fiscal year without a signed 2017 Defense Appropriations Bill. The Department of Defense is operating on a Continuing Resolution that is estimated to be in place through April, if not longer. This is creating uncertainty in the timing of awards for certain defense programs. As a result, we are updating financial guidance for 2017 to reflect a more conservative outlook for revenue growth in the range of 1.5% to 7%. This tempers our initial financial guidance provided in our third quarter 2016 earnings release on November 8, 2016 for top line growth in the range of 5% and 10% compared to 2016. Further, though we are heartened by recent news of plans to continue A-10 fleet operations through 2021 and we remain optimistic that the U.S. Air Force will ultimately decide to continue to replace the A-10’s wings via a new follow-on program, there is presently too much uncertainty to include any revenue or profit contribution from such a new A-10 re-wing contract in our 2017 forecast. In addition, 2017 revenue will be driven in large part by new defense awards that carry lower gross margins at the beginning of their project lifecycles. Therefore, gross profit margin for full year 2017 is expected to be on the lower end of our historical range of between 22% and 24%." 

2017 financial guidance is as follows:

Revenue in the range of $82.5 million to $87.0 million as compared to $81.3 million in the fiscal 2016 full year ended December 31, 2016;

Pre-tax income in the range of $8.1 million to $8.5 million as compared to a pre-tax loss of $5.8 million in fiscal 2016;

Effective tax rate of approximately 37%.

Mr. McCrosson concluded, "As we enter fiscal 2017, we will begin to see the results of defense programs won over the past two years. With the defense sector in an upcycle and armed with our proven sales strategy and technical capabilities, we have a solid framework for continued organic growth. We seek to supplement our organic growth with acquisitions. We have begun a process to identify companies principally focused on the defense market that complement and enhance our current capabilities and could enable us to more quickly gain scale. We believe this is an important attribute that should enhance our competitive position and permit us to more rapidly gain a larger defense portfolio. Improved cost and process efficiencies made in prior years, coupled with our diversified backlog today and the opportunities ahead of us, have CPI Aero positioned to succeed in fiscal 2017 and beyond."

Conference Call Management will host a conference call today at 8:30 a.m. ET to discuss the company’s 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. 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. 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, 2015, and Form 10-Q for the three-month periods ended March 31, 2016, June 30, 2016, and September 30, 2016.

CPI Aero® is a registered trademark of CPI Aerostructures, Inc.

For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.

                                                                                                                      
                                                                                                                      
CPI AEROSTRUCTURES, INC.                                                                                                   
STATEMENTS OF OPERATIONS                                                                                                   
                                                                                             
Years ended December 31,                                          2016                  2015                
                                                             (Unaudited)                          
                                                                                   
Revenue                                                           $      81,329,858     $      100,202,557  
                                                                                   
Cost of sales                                                       77,010,940       83,600,854   
                                                                                   
Gross profit                                                        4,318,918        16,601,703   
                                                                                   
Selling, general and administrative expenses                        8,614,190        7,636,148    
Income (loss) from operations                                       (4,295,272 )          8,965,555    
                                                                                   
Other expense:                                                                          
                           Interest/other expense              (22,659    )          (40,433     )
                           Interest expense                    (1,356,645 )          (918,129    )
Total other expense, net                                            (1,379,304 )          (958,562    )
Income (loss) before provision for (benefit from) income taxes      (5,674,576 )          8,006,993    
                                                                                   
Provision for (benefit from) income taxes                           (2,066,000 )          2,991,000    
                                                                                   
Net income (loss)                                                 $      (3,608,576 )        $      5,015,993    
                                                                                   
Income (loss) per common share - basic                            $      (0.42      )        $      0.59         
Income (loss) per common share - diluted                          $      (0.42      )        $      0.58         
Shares used in computing earnings per common share:                                     
                           Basic                               8,655,848        8,552,817    
                           Diluted                             8,655,848        8,579,986    
                                                                                   
                                                                                                                                                                                                                      
CPI AEROSTRUCTURES, INC.                                                                                                                                                                                                   
BALANCE SHEETS                                                                                                                                                                                                             
                                                                                                                                                                                                                      
                                                                                                                                                           December 31,           December 31,         
                                                                                                                                                           2016                   2015                 
                                                                                                                                                           (Unaudited)                            
ASSETS                                                                                                                                                                                  
Current Assets:                                                                                                                                                                         
                 Cash                                                                                                                                      $      1,039,586       $      1,002,023     
                 Accounts receivable, net                                                                                                                    8,514,613         7,665,837     
                 Costs and estimated earnings in excess of billings on uncompleted contracts                                                                 99,578,526        102,622,387   
                 Prepaid expenses and other current assets                                                                                                   2,155,481         1,065,473     
                                                                                                                                                                                   
Total current assets                                                                                                                                              111,288,206       112, 355,720  
                                                                                                                                                                                   
Property and equipment, net                                                                                                                                       2,298,610         2,358,736     
Deferred income taxes                                                                                                                                             3,952,598         1,890,000     
Other assets                                                                                                                                                      252,481           108,080       
Total Assets                                                                                                                                                    $      117,791,895     $      116,712,536   
                                                                                                                                                                                   
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                    
Current Liabilities:                                                                                                                                                                    
                 Accounts payable                                                                                                                          $      14,027,457      $      18,379,469    
                 Accrued expenses                                                                                                                            1,386,147         1,057,682     
                 Billings in excess of costs and estimated earnings on uncompleted contracts                                                                 115,337           175,438       
                 Current portion of long-term debt                                                                                                           1,341,924         1,011,491     
                 Contract loss                                                                                                                               1,377,171         549,723       
                 Line of credit                                                                                                                              22,438,685        23,700,000    
                 Income tax payable                                                                                                                          6,000             189,000       
                                                                                                                                                                                   
Total current liabilities                                                                                                                                         40,692,721        45,062,803    
                                                                                                                                                                                   
Long-term debt, net of current portion                                                                                                                            8,860,724         483,961       
Other liabilities                                                                                                                                                 632,744           633,663       
                                                                                                                                                                                   
Total Liabilities                                                                                                                                                 50,186,189        46,180,427    
                                                                                                                                                                                   
Shareholders’ Equity:                                                                                                                                                                   
                 Common stock - $.001 par value; authorized 50,000,000 shares, 8,739,836 and 8,583,511 shares, respectively, issued and outstanding     8,738             8,584         
                 Additional paid-in capital                                                                                                                  52,824,950        52,137,384    
                 Retained earnings                                                                                                                           14,781,018        18,389,594    
                 Accumulated other comprehensive loss                                                                                                        (9,000      )          (3,453       )
Total Shareholders’ Equity                                                                                                                                        67,605,706        70,532,109    
Total Liabilities and Shareholders’ Equity                                                                                                                      $      117,791,895     $      116,712,536   
                                                                                                                                                                                   
 
CPI AEROSTRUCTURES, INC.
ADJUSTED STATEMENT OF EARNINGS
31-DEC-16
 
Adjusted Earnings (arrived at by eliminating the Company’s A-10 Program with Boeing from reported results) is not derived in accordance with generally accepted accounting principles ("GAAP"). Adjusted Earnings is a key metric CPI Aero has used in evaluating its financial performance. Adjusted Earnings is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. CPI Aero considers Adjusted Earnings important in evaluating its financial performance on a consistent basis across various periods. Due to the significance of the non-cash and non-recurring change in estimate recognized in the three months ended March 31, 2016, Adjusted Earnings enables the Company’s Board of Directors and management to monitor and evaluate the business on a consistent basis. CPI Aero uses Adjusted Earnings as a measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating decisions and investments. The presentation of Adjusted Earnings should not be construed as an inference that CPI Aero’s future results will be unaffected by unusual or non-recurring items or by non-cash items, such as changes in estimates. Adjusted Earnings should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.
 
                                                                                                                                          
                                                           For the Year ended December 31, 2016 (Unaudited)                                    
                                                                                                            
                                                           GAAP                                    Adjusted           
                                                           as Reported           Adjustments            Earnings           
                                                                                             
                                                                                             
Revenues                                                        $      81,329,858     $      457,905         $      81,787,763  
                                                                                             
Cost of sales                                                     77,010,940       (14,826,245 )          62,184,695  
                                                                                             
                       Gross profit                          4,318,918        15,284,150        19,603,068  
                                                                                             
Selling, general and administrative exp                           8,614,190        -                 8,614,190   
                                                                                             
                       Income (loss) from operations         (4,295,272 )          15,284,150        10,988,878  
                                                                                             
Other expense, net                                                (1,379,304 )          -                 (1,379,304 )
                                                                                             
Income before provision for (benefit from) income taxes           (5,674,576 )          15,284,150        9,609,574   
                                                                                             
Provision for (benefit from) income taxes                         (2,066,000 )          (5,573,000  )          (3,507,000 )
                                                                                             
Net income (loss)                                               $      (3,608,576 )        $      9,711,150       $      6,102,574   
                                                                                             
                       Diluted earnings (loss) per share   $      (0.42      )                     $      0.71        
                                                                                        
                                                                                                                             
                                                     For the Three months ended December 31, 2016 (Unaudited)                     
                                                                                               
                                                     GAAP                             Adjusted           
                                                     as Reported           Adjustments     Earnings           
                                                                                     
                                                                                     
Revenues                                                  $      24,268,033     (1,207,562  )        $      23,060,471  
                                                                                     
Cost of sales                                               18,368,380     (1,207,562  )          17,160,818  
                                                                                     
                       Gross profit                    5,899,653      -                 5,899,653   
                                                                                     
Selling, general and administrative exp                     2,010,873      -                 2,010,873   
                                                                                     
                       Income from operations          3,888,780      -                 3,888,780   
                                                                                     
Interest expense                                            (441,781   )        -                 (441,781   )
                                                                                     
Income before provision for (benefit from) income taxes     3,446,999      -                 3,446,999   
                                                                                     
Provision for income taxes                                  (1,312,000 )        -                 (1,312,000 )
                                                                                     
Net income                                                $      2,134,999      -               $      2,134,999   
                                                                                     
                       Diluted earnings per share    $      0.24                      $      0.24        
                                                                                
                                                                                                                             
                                             For the Year Ended December 31, 2015                                                 
                                                                                               
                                             GAAP                                     Adjusted           
                                             as Reported            Adjustments            Earnings           
                                                                                
                                                                                
Revenues                                          $      100,202,557     $      (13,393,109 )        $      86,809,448  
                                                                                
Cost of sales                                       83,600,854        (16,400,878 )          67,199,976  
                                                                                
                Gross profit                   16,601,703        3,007,769         19,609,472  
                                                                                
Selling, general and administrative exp             7,636,148         -                 7,636,148   
                                                                                
                Income from operations         8,965,555         3,007,769         11,973,324  
                                                                                
Interest expense                                    (958,562    )          -                 (958,562   )
                                                                                
Income before provision for income taxes            8,006,993         3,007,769         11,014,762  
                                                                                
Provision for income taxes                          (2,991,000  )          (1,084,000  )          (4,075,000 )
                                                                                
Net income                                        $      5,015,993       $      1,923,769       $      6,939,762   
                                                                                
                Diluted earnings per share   $      0.58                         $      0.81        
                                                                           
                                                                                                                           
                                             For the Three Months Ended December 31, 2015                                       
                                                                                             
                                             GAAP                                   Adjusted           
                                             as Reported           Adjustments           Earnings           
                                                                              
                                                                              
Revenues                                          $      31,590,790     $      (589,316   )        $      31,001,474  
                                                                              
Cost of sales                                       28,035,959       (3,589,316 )          24,446,643  
                                                                              
                Gross profit                   3,554,831        3,000,000        6,554,831   
                                                                              
Selling, general and administrative exp             1,668,026        -                1,668,026   
                                                                              
                Income from operations         1,886,805        3,000,000        4,886,805   
                                                                              
Interest expense                                    (255,125   )          -                (255,125   )
                                                                              
Income before provision for income taxes            1,631,680        3,000,000        4,631,680   
                                                                              
Provision for income taxes                          (980,000   )          (1,662,000 )          (2,602,000 )
                                                                              
Net income                                        $      651,680        $      1,378,000      $      2,029,680   
                                                                              
                Diluted earnings per share   $      0.08                       $      0.24        

Contact: Vincent Palazzolo Chief Financial Officer CPI Aero (631) 586-5200 www.cpiaero.com Investor Relations Counsel: LHA Jody Burfening/Sanjay M. Hurry (212) 838-3777 Email Contact www.lhai.com



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