CPI Aerostructures, Inc. : CPI Aerostructures Announces Record 2012 Second Quarter Results
08/07/2012| 08:50am US/Eastern
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20% Increase in Second Quarter Revenue
Generated Over 71% Increase in Net Income
Reaffirms 2012 Guidance
CPI Aerostructures, Inc. ("CPI Aero®") (NYSE MKT: CVU) today
announced record results for the 2012 second quarter and six months
ended June 30, 2012.
Second Quarter 2012 vs. 2011
Revenue increased 19.7% to $20,854,627 from $17,426,223;
Gross margin was 27.7% compared to 24.4%;
Pre-tax income increased 92.1% to $4,024,019 compared to $2,094,816;
and,
Net income increased 71.6% to $2,696,019 or $0.36 per diluted share,
compared to $1,570,816, or $0.22 per diluted share.
First Half 2012 vs. 2011
Revenue increased 21.4% to $40,575,722 from $33,435,831;
Gross margin was 26.5% compared to 24.2%;
Pre-tax income increased 64.0% to $6,734,338 compared to $4,106,865;
Net income increased 57.0% to $4,615,338 or $0.63 per diluted share
compared to $2,938,865 or $0.41 per diluted share; and,
Unawarded solicitations remain at a high level with open solicitations
totaling a maximum realizable value of approximately $980 million.
Edward J. Fred, CPI Aero's President & CEO, stated, "The 19.7% increase
in second quarter revenue resulted in a more than 71% increase in net
income, as several of our long-term programs including the NGC E-2D
program, the Gulfstream G650 program and Boeing A-10 program, are in
full scale production and we no longer incur excess costs related to
engineering and design changes for these contracts.
"The 21.4% increase in 2012 first half revenue was due to a $7.6 million
or 185% increase in revenue generated from commercial customers, with
the Gulfstream G650 (up by $4 million) and Honda (up by $1.8 million)
accounting for most of the increase. Revenue generated from prime
government contracts increased by 14% to approximately $3.6 million,
while revenue generated by government subcontracts decreased by 3.5% to
approximately $25.3 million. Of note, for the 2012 first half, revenue
generated from government subcontracts, commercial contracts and prime
government contracts accounted for approximately 62%, 29% and 9% of
total revenue, respectively."
Mr. Fred continued, "Our gross margin for second quarter and first half
of 2012 was in line with our expected annual range of 25%-27%. Our
selling, general and administrative expenses as a percent of revenue for
the second quarter and first half decreased to 7.5% and 9.1%,
respectively, as compared to 11.9% and 11.6%, respectively, in the same
periods of last year, mainly due to changes we implemented in our policy
of issuing stock options to our board of directors."
Mr. Fred continued, "We have continued to receive large contract awards
from existing and new customers. As of August 3, 2012, we have been
awarded approximately $44.6 million in new contracts most of which are
government subcontract awards. Included in this amount are a $12.7
million purchase order from Boeing for assemblies on the A-10 aircraft
and a $10.7 million order from Goodrich Corporation for structural
aerospace assemblies. In the same period last year, we received $58.6
million of new contract awards."
He continued, "Additionally, we have approximately $980 million in
formalized bids outstanding, and we continue to make bids on contracts
on a weekly basis. As previously announced, unawarded solicitations
include two bids totaling approximately $647 million to an international
aerospace company for work on the Boeing 787."
Mr. Fred went on to say, "Our record first half results were in line
with expectations. We are projecting a much better second half, as well,
and a particularly strong fourth quarter, as our newest contracts begin
to generate revenue and income. We are reaffirming our 2012 guidance
which calls for: revenue to be in the range of $95 million to $98
million; gross margin in the range of 25%-27%; and net income in the
range of $12 million to $13 million.
"When we announced our 2012 first quarter results in May, we noted that
our 2012 guidance has factored in the current defense budget environment
and reflects the cuts mandated by the Budget Control Act of 2011. It
remains unclear whether sequestration will take effect in January 2013
and what the impact of even deeper cuts in defense spending will have on
CPI Aero's existing and projected defense contracts. As a result, we
continue to believe it prudent to refrain from providing 2013 guidance
until the federal budget situation becomes sufficiently defined. We
expect to announce our 2013 guidance later on this year, aligning the
timing with guidance announcements from our industry peers."
Mr. Fred concluded, "Finally, to support our continued growth, in June
and July 2012 we raised approximately $13.5 million through a public
offering, which gave us greater financial flexibility. We used $4
million of the net proceeds to repay a portion our revolver and as of
June 30, 2012, we have credit lines in place with a combined borrowing
capacity of $22.5 million."
Conference Call
CPI Aero's President and CEO, Edward J. Fred, and CFO, Vincent
Palazzolo, will host a conference call today, Tuesday, August 7, 2012 at
10:00 am ET to discuss second quarter 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 (201) 493-6739. Please call in 10 minutes before the scheduled
time and ask for the CPI Aero call. The conference call will also be
broadcast live over the Internet. To listen to the live call, please go
to www.cpiaero.com
and click on the "Investor Relations" section, then click on "Event
Calendar". Please access the website 15 minutes prior to the call to
download and install any necessary audio software. The conference call
will be archived and can be accessed for approximately 90 days. We
suggest listeners use Microsoft Explorer as their browser.
About CPI Aero
CPI Aero is engaged in the contract production of structural aircraft
parts for leading prime defense contractors, the U.S. Air Force, and
other branches of the armed forces. CPI Aero also acts as a
subcontractor to prime aircraft manufacturers in the production of
commercial aircraft parts. In conjunction with its assembly operations,
CPI Aero provides engineering, technical and program management
services. Among the key programs that CPI Aero supplies are the E-2D
Advanced Hawkeye surveillance aircraft, the A-10 Thunderbolt attack jet,
the Gulfstream G650, the UH-60 BLACK HAWK helicopter, the S-92®
helicopter, the MH-60S mine countermeasure helicopter, AH-1Z ZULU attack
helicopter, the HondaJet-Advanced Light Jet, the MH-53 and CH-53 variant
helicopters, the C-5A Galaxy cargo jet, and the E-3 Sentry AWACS jet.
CPI Aero is included in the Russell 2000® 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, 2011 and Form 10-Q for the quarter ended March 31, 2012.
CPI Aero® is a registered trademark of CPI Aerostructures,
Inc.
CPI AEROSTRUCTURES, INC.
CONDENSED STATEMENTS OF INCOME
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
2012
2011
2012
2011
(Unaudited)
(Unaudited)
Revenue
$
20,854,627
$
17,426,223
$ 40,575,722
$
33,435,831
Cost of sales
15,085,983
13,181,422
29,842,692
25,340,926
Gross profit
5,768,644
4,244,801
10,733,030
8,094,905
Selling, general and administrative expenses
1,570,231
2,082,464
3,675,112
3,882,887
Income from operations
4,198,413
2,162,337
7,057,918
4,212,018
Interest expense
174,394
67,521
323,580
105,153
Income before provision for income taxes
4,024,019
2,094,816
6,734,338
4,106,865
Provision for income taxes
1,328,000
524,000
2,119,000
1,168,000
Net income
$
2,696,019
$
1,570,816
$ 4,615,338
$
2,938,865
Basic net income per common share
$
0.37
$
0.23
$ 0.65
$
0.43
Diluted net income per common share
$
0.36
$
0.22
$ 0.63
$
0.41
Shares used in computing earnings per common share:
Basic
7,222,554
6,847,357
7,087,732
6,821,437
Diluted
7,414,273
7,148,591
7,280,294
7,124,603
CPI AEROSTRUCTURES, INC.
CONDENSED BALANCE SHEETS
June 30,
December 31,
2012
2011
ASSETS
Current Assets:
Cash
$
3,604,047
$
878,200
Accounts receivable, net
8,719,108
4,285,570
Costs and estimated earnings in excess of billings on uncompleted
contracts
88,717,666
79,010,362
Deferred income taxes
257,000
257,000
Prepaid expenses and other current assets
681,595
662,326
Total current assets
101,979,416
85,093,458
Plant and equipment, net
3,079,313
2,629,569
Deferred income taxes
1,162,000
1,105,000
Other assets
108,080
112,080
Total Assets
$
106,328,809
$
88,940,107
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
9,211,509
$
11,998,244
Accrued expenses
225,358
994,398
Current portion of long-term debt
1,749,487
887,380
Line of credit
14,600,000
16,100,000
Deferred income taxes
125,000
125,000
Income taxes payable
3,653,070
2,802,000
Total current liabilities
29,564,424
32,907,022
Long-term debt, net of current portion
4,000,716
889,239
Deferred income taxes
660,000
660,000
Other liabilities
551,418
457,639
Total Liabilities
34,776,558
34,913,900
Commitments
Shareholders' Equity:
Common stock - $.001 par value, authorized 50,000,000 shares, issued
8,157,719 and 7,079,638 shares, respectively, and outstanding
8,157,719 and 6,946,381 shares, respectively
8,158
7,080
Additional paid-in capital
47,148,011
35,346,273
Retained earnings
24,450,190
19,834,852
Accumulated other comprehensive loss
(54,108
)
(21,772
)
Treasury stock, 0 and 133,257 shares, respectively (at cost)
----
(1,140,226
)
Total Shareholders' Equity
71,552,251
54,026,207
Total Liabilities and Shareholders' Equity
$
106,328,809
$
88,940,107
CPI Aero Vincent Palazzolo Chief Financial Officer 631-586-5200 www.cpiaero.com or Investor
Relations Counsel: The Equity Group Inc. Lena Cati,
212-836-9611 Linda Latman, 212-836-9609 www.theequitygroup.com
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