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CPI Aerostructures Reports Fourth Quarter and Full Year 2023 Results

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CPI Aerostructures, Inc. (CVU) reported fourth quarter 2023 revenue of $23.5 million, a slight decrease from $24.1 million in 2022. Net income surged to $14.8 million from $6.8 million, and earnings per share rose to $1.20. Full-year 2023 revenue reached $86.5 million, up from $83.3 million in 2022, with net income of $17.2 million. The company reduced debt by $2.7 million and ended with a backlog of $513.4 million.
Positive
  • Increase in full-year 2023 revenue to $86.5 million from $83.3 million in 2022.
  • Net income grew to $17.2 million in 2023 compared to $9.2 million in 2022.
  • Earnings per share rose to $1.40 in 2023 from $0.74 in 2022.
  • Cash flow from operations reached $3.9 million in 2023, allowing a reduction of debt by $2.7 million.
  • Strong backlog of $513.4 million at the end of 2023 for continued growth in 2024.
Negative
  • None.

The reported earnings by CPI Aerostructures show a mixed financial performance in the fourth quarter of 2023. While there was a slight decline in revenue year-over-year, the company managed to increase its gross profit and gross margin. The substantial boost in net income is primarily due to a significant deferred tax asset valuation allowance reduction. This one-time tax benefit has inflated earnings per share (EPS), which, when adjusted, shows a more modest increase. The reduction in debt and a healthy cash flow from operations signify a stable financial position.

Investors should be cautious in interpreting the EPS jump as a sign of operational growth, as the underlying earnings growth is less dramatic when tax benefits are excluded. The increase in gross margin, albeit slight, suggests some improvement in cost management or pricing power. The reduction in debt is a positive sign, indicating the company's commitment to improving its balance sheet. However, the slight dip in revenue could be a point of concern, warranting a closer look at market demand and competitive dynamics.

CPI Aero's backlog of $513.4 million is a robust indicator of future revenue, reflecting confidence in the company's growth trajectory. This backlog, coupled with the introduction of new programs, suggests potential for continued expansion in 2024. A strong backlog often correlates with future financial stability and can be a reassuring sign for investors looking for long-term holdings.

However, it is essential to analyze the nature of these new programs and the company's ability to convert its backlog into revenue efficiently. The aerospace and defense industry, where CPI Aero operates, is subject to long sales cycles and fluctuating government budgets, which can impact the timing and certainty of these revenues. Stakeholders should monitor the company's execution on these new programs and the impact of external factors such as defense spending trends and global economic conditions.

The financial results of CPI Aero need to be contextualized within the broader economic environment. The company's performance, especially the operational cash flow improvement, is indicative of adept management in a potentially challenging economic climate. The ability to generate cash and pay down debt is particularly valuable if the economy faces headwinds, as it provides a buffer against downturns.

Furthermore, the increase in net income and EPS, even when adjusted for the deferred tax asset valuation allowance reduction, is a positive signal. However, the true test of the company's economic resilience will be its capacity to sustain growth without such one-time benefits. Long-term investors should consider the company's strategic positioning, cost structure and the economic outlook of the defense sector, which can be influenced by geopolitical tensions and government policies.

Fourth Quarter 2023 vs. Fourth Quarter 2022

  • Revenue of $23.5 million compared to $24.1 million;
  • Gross profit of $4.1 million compared to $3.9 million;
  • Gross margin of 17.4% compared to 16.1%;
  • Net income of $14.8 million compared to net income of $6.8 million;
  • Earnings per share of $1.20 ($0.09 excluding the fourth quarter 2023 deferred tax asset valuation allowance reduction of $1.11) compared to earnings per share of $0.55 ($0.03 excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $0.52);
  • Cash flow from operations of $3.1 million compared to $0.1 million.

Full Year 2023 vs. Full Year 2022

  • Revenue of $86.5 million compared to $83.3 million;
  • Gross profit of $17.1 million compared to $16.3 million;
  • Gross margin of 19.7% compared to 19.6%;
  • Net income of $17.2 million compared to $9.2 million;
  • Earnings per share of $1.40 ($0.28 excluding the fourth quarter 2023 deferred tax asset valuation allowance reduction of $1.12) compared to $0.74 ($0.28 excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $0.52 less the first quarter of 2022 severance accrual of $0.06);
  • Cash flow from operations of $3.9 million compared to $0.9 million;
  • Debt as of December 31, 2023 of $20.1 million compared to $22.8 million as of December 31, 2022.

EDGEWOOD, N.Y., April 05, 2024 (GLOBE NEWSWIRE) -- CPI Aerostructures, Inc. (“CPI Aero” or the “Company”) (NYSE American: CVU) today announced financial results for the three and twelve month periods ended December 31, 2023.

“We reported solid full-year results, delivering 3.8% increased revenue and a 4.7% increase in gross profit in 2023. Our net income, including the deferred tax asset valuation allowance reduction of $14.2 million described below, was up 87.5% with EPS up 88.8% from prior year. We generated $3.9 million in cash flow from operations during 2023, which allowed us to reduce debt by $2.7 million,” said Dorith Hakim, President and CEO.

Added Ms. Hakim, “After reevaluating our net operating loss carryforwards (“NOLs”), and based on our performance outlook, we determined that the valuation allowance we maintain on our deferred tax asset should be reduced by $14.2 million, and we realized a tax benefit in the fourth quarter of 2023 of the same amount upon recording this reduction.”

“We ended the year with a strong backlog of $513.4 million, which includes multiple exciting new programs providing us an opportunity for continued growth in 2024. We remain confident in CPI Aero’s long-term outlook and look forward to the multiple opportunities ahead as we continue to build on our positive relationships with our customers.”

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.

Forward-looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included or incorporated in this press release are forward-looking statements. The words “expect,” “outlook,” “opportunities ahead,” and similar expressions are intended to identify these forward-looking statements. These forward-looking statements include the Company’s expected financial results for the year ending December 31, 2024. The Company does not guarantee that it will actually achieve the plans, intentions or expectations disclosed in its forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements.

Forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by its forward-looking statements, including those important factors set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2023 filed with the Securities and Exchange Commission. Although the Company may elect to do so at some point in the future, the Company does not assume any obligation to update any forward-looking statements and it disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.

Contacts: 
Investor Relations Counsel
LHA Investor Relations
Jody Burfening
(212) 838-3777
cpiaero@lhai.com
CPI Aerostructures, Inc.
Andrew L. Davis
Chief Financial Officer
(631) 586-5200
adavis@cpiaero.com
www.cpiaero.com
  


CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 
  December 31,
2023
  December 31,
2022
 
ASSETS        
Current Assets:        
Cash $5,094,794  $3,847,225 
Accounts receivable, net  4,352,196   4,857,772 
Insurance recovery receivable     3,600,000 
Contract assets, net  35,312,068   27,384,540 
Inventory  1,436,647   2,493,069 
Refundable income taxes  40,000   40,000 
Prepaid expenses and other current assets  678,026   975,830 
Total Current Assets   46,913,731   43,198,436 
         
Operating lease right-of-use assets  4,740,193   6,526,627 
Property and equipment, net  794,056   1,124,556 
Deferred tax asset  19,938,124   6,574,463 
Goodwill  1,784,254   1,784,254 
Other assets  189,774   238,744 
Total Assets  $74,360,132  $59,447,080 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current Liabilities:        
Accounts payable $10,487,012  $8,029,996 
Accrued expenses  10,275,695   7,344,590 
Litigation settlement obligation     3,600,000 
Contract liabilities  5,937,629   6,001,726 
Loss reserve  337,351   576,549 
Current portion of line of credit  2,400,000   1,200,000 
Current portion of long-term debt  44,498   1,719,766 
Operating lease liabilities  1,999,058   1,817,811 
Income taxes payable  30,107   11,396 
Total Current Liabilities   31,511,350   30,301,834 
         
Line of credit, net of current portion  17,640,000   19,800,000 
Long-term operating lease liabilities  3,100,571   5,077,235 
Long-term debt, net of current portion  26,483   70,981 
Total Liabilities   52,278,404   55,250,050 

Commitments and Contingencies (see note 16)
        
Shareholders’ Equity:        
Common stock - $.001 par value; authorized 50,000,000 shares, 12,771,434 and 12,506,795 shares, respectively, issued and outstanding  12,771   12,507 
Additional paid-in capital  73,872,679   73,189,449 
Accumulated deficit  (51,803,722)  (69,004,926)
Total Shareholders’ Equity   22,081,728   4,197,030 
Total Liabilities and Shareholders’ Equity  $74,360,132  $59,447,080 
 


CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
Years ended December 31, 2023 and 2022
  2023  2022 
       
Revenue $86,466,321  $83,335,764 
         
Cost of sales  69,400,693   67,031,502 
         
Gross profit  17,065,628   16,304,262 
         
Selling, general and administrative expenses  10,758,624   11,410,067 
Income from operations  6,307,004   4,894,195 
         
Interest expense  (2,455,214)  (2,271,101)
Income before benefit for income taxes  3,851,790   2,623,094 
         
Benefit from income taxes  (13,349,414)  (6,553,131)
Net income $17,201,204  $9,176,225 
         
         
Income per common share-basic $1.40  $0.74 
Income per common share-diluted $1.38  $0.74 
         
Shares used in computing income per common share:        
Basic  12,311,219   12,389,890 
Diluted  12,471,961   12,389,890 

CPI Aerostructures, Inc. reported revenue of $23.5 million in the fourth quarter of 2023.

CPI Aerostructures, Inc.'s net income surged to $17.2 million in 2023 from $9.2 million in 2022.

CPI Aerostructures, Inc.'s earnings per share reached $1.40 in 2023.

Yes, CPI Aerostructures, Inc. reduced debt by $2.7 million in 2023.

CPI Aerostructures, Inc. ended 2023 with a backlog of $513.4 million.
CPI Aerostructures, Inc.

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About CVU

cpi aero is a u.s. manufacturer of structural assemblies and value-added kits for fixed wing and rotary wing aircraft in both the commercial aerospace and defense markets. cpi aero also manufactures pod-based, airborne avionics systems for intelligence surveillance and reconnaissance (isr), electronic warfare (ew) and radar end-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.