CPI Aerostructures Reports Fourth Quarter and Full Year 2023 Results
- 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.
- None.
Insights
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 to16.1% ; - 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 to19.6% ; - 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
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
“We ended the year with a strong backlog of
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 | ||||||
FAQ
What was CPI Aerostructures, Inc.'s revenue in the fourth quarter of 2023?
How did the net income change for CPI Aerostructures, Inc. in 2023 compared to 2022?
What was the earnings per share for CPI Aerostructures, Inc. in 2023?
Did CPI Aerostructures, Inc. reduce debt in 2023?
What was the backlog amount for CPI Aerostructures, Inc. at the end of 2023?
