CPI Aerostructures Announces Fourth Quarter and Full Year 2016 Financial Results
EDGEWOOD, NY -- (Marketwired) -- 03/07/17 -- 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
Source: CPI Aerostructures, Inc.