CPI Aerostructures, Inc. (“CPI Aero ®”) (NYSE MKT: CVU) today announced record results for the 2012 fourth quarter and year ended December 31, 2012. Fourth Quarter 2012 vs. 2011*
- Revenue increased 13.5% to $27,356,029, compared to $24,092,200;
- Gross margin was 28.1%, compared to 27.2%;
- Pre-tax income increased 47.8% to $5,765,354, compared to $3,901,020; and,
- Net income increased 34.7% to $3,600,354, or $0.43 per diluted share, compared to $2,673,020, or $0.37 per diluted share.
- Revenue increased 20.4% to $89,272,582, compared to $74,135,669;
- Gross margin was 27.1%, compared to 25.4%;
- Pre-tax income increased 56.8% to $16,525,130, compared to $10,538,928; and,
- Net income increased 48.5% to $11,011,130 or $1.40 per diluted share, compared to $7,416,928 or $1.04 per diluted share.
Mr. Fred continued, “Gross margin in 2012 was substantially ahead of 2011 as two of our long-term contracts, the NGC E-2D and the Gulfstream G650, are in full scale production and unlike in 2011, we no longer incur excess costs related to engineering and design changes for these contracts. Our 2012 selling, general and administrative (S,G&A) expenses as a percent of revenue substantially decreased to 8.2% as compared to 10.7% in 2011. This was mainly due to changes we implemented in early 2012 in our policy of issuing stock options to our board of directors and also lower accounting, legal and other consulting fees. Additionally, in late 2011 we recorded one-time moving expenses for relocating our operations to a larger facility.”Mr. Fred added, “Higher revenue, lower production costs and lower S,G&A expenses resulted in an approximate 48.5% increase in net income in 2012 as compared to 2011.” Discussing new contract awards, Mr. Fred noted, “In 2012 we received approximately $81.6 million of new contract awards, which included approximately $74.7 million of government subcontract awards, approximately $6.5 million of commercial subcontract awards, and approximately $0.4 million of government prime contract awards, as compared to approximately $83.6 million of new contract awards of all types, in 2011.” Mr. Fred continued, “On a going forward basis, we will discontinue reporting “total bids outstanding,” one of our usual disclosures, which we believe has the ability to provide information that could be detrimental to the bid and award process. Bid backlog was initially reported as a way to inform the investing public that CPI Aero was moving up in scale and scope. As a company that historically had approximately $25 million worth of bids in for potential work, it was important to show the world when that number increased ten-fold, to $250 million, and eventually to nearly $1 billion. This disclosure definitely served its purpose for several years, and currently CPI Aero is at a stage where the world knows we are a 'player' in the big stadium.
“However, we believe that we might be giving out information that limits our competitive advantage, and provides our competitors with insight into our strategies and direction. Going forward, we will disclose bid backlog information in our SEC filings, albeit not in a quantifiable dollar amount. Instead, we will show the breakout of the total bid backlog as it relates to commercial and military components, on a percentage basis, which we believe will provide our investors with valuable information about our business development efforts.”Mr. Fred added, “Although 2012 was the best year in our history, both in terms of revenue and net income, our results were affected by the looming threat of forced, across-the-board government spending cuts, known as sequestration. This threat resulted in delayed contract decisions by many prime contractors in the aerospace and defense sector, including our customers. As a result, releases on previously awarded contracts could be delayed. In addition, a large defense contract for a new program, originally expected in late 2012, is currently projected to be received in 2013.” Discussing the outlook for 2013, Mr. Fred added, “As previously announced, regardless of its actual long-term effect, sequestration which became effective March 1, 2013, has already impacted our business. For 2013, we expect:
- Revenue and earnings to be lower than 2012 and more similar to those of 2011, which was the second best year in the history of our Company.
- Product shipments to be greater than in 2012, or any other year, as many of our programs have transitioned from development to production.
- Commercial programs to generate a larger percentage of our overall revenue as compared to 2012, due to higher production rates.
- Increased shipments, combined with less spending for startup costs associated with new contracts and a decline in non-recurring expenses on our maturing programs, to result in positive cash flow from operations of approximately $3 million.
Mr. Fred concluded, “To support our continued growth going forward, in 2012 we raised approximately $13.5 million through a public offering and we increased our credit lines to a combined borrowing capacity of $39 million.”Conference Call CPI Aero’s President and CEO, Edward J. Fred, and CFO, Vincent Palazzolo, will host a conference call today, Tuesday, March 12, 2013 at 10:00 am ET to discuss third 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, the E-3 Sentry AWACS jet, the Embraer Phenom 300 light business jet and the New Cessna Citation X. 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 Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012.CPI Aero ® is a registered trademark of CPI Aerostructures, Inc.
|CPI AEROSTRUCTURES, INC. CONDENSED STATEMENTS OF INCOME|
|For the Three Months Ended December 31,||For the Twelve Months Ended December 31,|
|Cost of Sales||19,660,870||17,544,770||65,039,969||55,325,729|
|Selling, general and administrative expenses||2,031,631||2,523,313||7,322,630||7,931,586|
|Income from operations||5,663,528||4,024,117||16,909,983||10,878,354|
|Other income (expense), net||101,826||(123,097)||(384,853)||(339,426)|
|Income before provision for income taxes||5,765,354||3,901,020||16,525,130||10,538,928|
|Provision for income taxes||2,165,000||1,228,000||5,514,000||3,122,000|
|Net income||$ 3,600,354||$2,673,020||$11,011,130||$7,416,928|
|Basic net income per common share||$ 0.43||$0.39||$1.43||$1.08|
|Diluted net income per common share||$ 0.43||$0.37||$1.40||$1.04|
|Shares used in computing earnings per common share:|
|CPI AEROSTRUCTURES, INC. CONDENSED BALANCE SHEETS|
|December 31,||December 31,|
|Accounts receivable, net||6,774,346||4,285,570|
|Costs and estimated earnings in excess of billings on uncompleted contracts|
|Deferred income taxes||108,909,844 534,000||79,126,828 257,000|
|Prepaid expenses and other current assets||426,063||662,326|
|Total current assets||119,354,056||85,209,924|
|Property and equipment, net||2,907,476||2,629,569|
|Deferred income taxes||1,001,000||1,105,000|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Billings in excess of costs and estimated earnings on uncompleted contracts||656,853||116,466|
|Current portion of long-term debt||1,100,564||887,380|
|Line of credit||23,450,000||16,100,000|
|Deferred income taxes||102,000||125,000|
|Income taxes payable||106,000||2,802,000|
|Total current liabilities||39,645,331||33,023,488|
|Long-term debt, net of current portion||3,209,873||889,239|
|Deferred income taxes||867,000||660,000|
|Common stock - $.001 par value; authorized 50,000,000 shares,|
|issued 8,371,439 and 7,079,638 shares, respectively, and|
|outstanding 8,371,439 and 6,946,381 shares, respectively||8,371||7,080|
|Additional paid-in capital||49,780,673||35,346,273|
|Accumulated other comprehensive loss||(40,827)||(21,772)|
|Treasury stock, 0 and 133,257 shares, respectively|
|of common stock (at cost)||---||(1,140,226)|
|Total Shareholders’ Equity||80,594,199||54,026,207|
|Total Liabilities and Shareholders’ Equity||$124,883,516||$89,056,573|