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Overview of CPI Aerostructures (CPI Aero)
CPI Aerostructures, Inc. (NYSE American: CVU) is a U.S.-based manufacturer specializing in structural assemblies and pod-based avionics systems for fixed-wing and rotary-wing aircraft. Operating in both the commercial aerospace and defense markets, CPI Aero plays a critical role in the global aerostructure supply chain. The company functions as a Tier 1 supplier to original equipment manufacturers (OEMs) and a Tier 2 subcontractor to major Tier 1 manufacturers, while also serving as a prime contractor to the U.S. Department of Defense (DoD), primarily supporting the U.S. Air Force.
Core Business Areas
CPI Aero's operations encompass a diverse range of products and services designed for both commercial and defense applications:
- Structural Assemblies: Manufacturing critical structural components for fixed-wing aircraft and helicopters.
- Pod-Based Avionics Systems: Specializing in systems for Intelligence, Surveillance, and Reconnaissance (ISR), Electronic Warfare (EW), and radar applications.
- Value-Added Services: Offering engineering, program management, supply chain management, and Maintenance, Repair, and Overhaul (MRO) services.
Market Segments and Supply Chain Role
Within the aerospace and defense industries, CPI Aero operates across multiple market segments, including:
- Commercial Aerospace: Supplying structural components for aircraft used in global commercial aviation.
- Defense and National Security: Delivering critical systems and components for military aircraft, including ISR and EW applications.
As a Tier 1 and Tier 2 supplier, CPI Aero is integral to the aerostructure supply chain, collaborating closely with OEMs and Tier 1 manufacturers to deliver high-quality, precision-engineered components. This strategic positioning allows the company to address both large-scale production needs and specialized military requirements.
Competitive Differentiation
CPI Aero distinguishes itself through its expertise in pod-based avionics systems, a niche area within aerospace and defense. These systems are essential for ISR, EW, and radar operations, which are critical to modern military and defense strategies. Additionally, the company's ability to integrate engineering and program management services with its manufacturing capabilities provides a comprehensive solution for its clients, enhancing its value proposition.
Prime Contractor for the U.S. Department of Defense
As a prime contractor, CPI Aero supports key U.S. defense programs, supplying components for aircraft such as the E-2D Advanced Hawkeye, the A-10 Thunderbolt, and the UH-60 BLACK HAWK. This role underscores the company's importance in maintaining the operational readiness of the U.S. military's aerial fleet.
Value-Added Services
In addition to manufacturing, CPI Aero offers a suite of value-added services that enhance its competitive edge:
- Engineering and Program Management: Providing technical expertise and oversight to ensure project success.
- Supply Chain Management: Streamlining procurement and logistics to optimize production efficiency.
- Maintenance, Repair, and Overhaul (MRO): Ensuring the longevity and reliability of aircraft components.
Industry Significance
CPI Aero's dual focus on commercial and defense markets, combined with its specialized capabilities in ISR and EW systems, positions it as a key player in the aerospace and defense sectors. Its role as both a supplier and a prime contractor highlights its versatility and importance within the global aerostructure supply chain.
CPI Aerostructures (CVU) announced a three-year pricing agreement with Collins Aerospace to support the MS-110 Multispectral Airborne Reconnaissance System, valued at approximately $20 million. The agreement includes initial funding of $1.2 million received in Q1 2022. CPI Aero has been involved with the DB-110 Airborne Pods since 2012, and this new contract reinforces their role in integrated airborne structures. CEO Dorith Hakim emphasized the significance of this deal for their growing aerosystems segment.
CPI Aerostructures (CVU) has secured a five-year IDIQ contract from Sikorsky, a Lockheed Martin company, for the manufacture of gunner window assemblies for the UH-60M Black Hawk helicopter. Shipments are anticipated to start in 2023 and continue until 2027. This contract marks the third consecutive multi-year agreement for CPI Aero, reflecting its long-standing relationship with Sikorsky. The company has been producing these components since 2010, showcasing its ongoing commitment and performance in the defense aerospace sector.
CPI Aerostructures, Inc. (CVU) has announced new orders from Embraer S.A. for engine inlet assemblies for the Phenom 300 business jets, part of an ongoing Long Term Agreement. Deliveries are scheduled to continue through 2023. CPI Aero has been part of the Phenom 300 program for over a decade, emphasizing the strong demand for these aircraft. CEO Dorith Hakim expressed confidence in maintaining their partnership with Embraer beyond 2023.
CPI Aerostructures, Inc. (CVUA) announced a new order from Lockheed Martin to manufacture structural assemblies for the F-16V fighter aircraft. This order funds additional Rudder Island and Drag Chute Canister assemblies, totaling $20.6 million authorized under a multi-year contract. Deliveries are expected to commence in Q4 2023 and continue through mid-2024. CEO Dorith Hakim expressed pride in being part of the F-16 Program, highlighting ongoing interest from Allied Nations.
CPI Aerostructures, Inc. (NYSE American: CVU) announced its common stock will be delisted from NYSE American due to non-compliance with SEC reporting requirements. Trading will move to OTC under the symbol CVUA starting May 20, 2022. The company has not filed required annual and quarterly reports, expecting delays due to audit processes. Despite this, CPI states it met financial targets in 2021, achieving growth with a backlog of approximately $500 million, and intends to appeal the delisting decision.
CPI Aerostructures, Inc. (NYSE American: CVU) reported mixed results for Q3 2021. Revenues decreased to $23.9 million from $25.6 million, with a gross profit decline to $3.7 million and a gross margin of 15.3%. Net income soared to $5.4 million, largely due to $4.8 million in PPP loan forgiveness. For the nine-month period, revenue increased to $77.0 million, with a substantial net income rise to $7.3 million. The funded backlog stood at approximately $138 million, primarily from government contracts, though down 27% year-on-year. The company anticipates over $100 million in revenue for 2021.
CPI Aerostructures, Inc. (CVU) reported strong financial results for Q2 2021, with revenue of $22.3 million, up 13.1% from Q2 2020. Gross profit nearly doubled to $3.6 million, yielding a gross margin of 16.1%. The company achieved net income of $0.6 million, a turnaround from a net loss of $(1.4) million last year. For the first half of 2021, revenue rose 45% to $53.1 million, with net income of $1.9 million compared to a loss of $(4.7) million. The funded backlog stood at $157 million, with expectations for over $500 million total by year-end.
CPI Aerostructures, Inc. (CVU) announced an extension from the NYSE American to comply with listing standards regarding timely financial reporting. The new deadline is set for May 24, 2022, giving the company time to file delayed Quarterly Reports for March, June, and September 2021, as well as the Annual Report for December 2021. Failure to meet this deadline may result in delisting actions by the Exchange. CPI Aero, a key supplier in the aerospace sector, is currently addressing its reporting obligations to restore compliance.
CPI Aerostructures has appointed Dorith Hakim as its new Chief Executive Officer, President, and director, effective immediately. Ms. Hakim comes with extensive experience from her previous role as Group Vice President at Parker Hannifin Aerospace, overseeing $1.9 billion in spending across multiple divisions. She has held significant positions at Triumph Group and Sikorsky Aircraft. Her background in operations, supply chain management, and customer relations is expected to positively influence CVU as the company continues to serve national security markets.
CPI Aerostructures (CVU) announced a purchase order from Collins Aerospace for the manufacturing of the Tactical Synthetic Aperture Radar (TacSAR) system. This award follows a previous contract where CPI Aero developed necessary documentation for the TacSAR pod. The new contract focuses on completing non-recurring engineering and tool development to build a prototype pod for testing. CPI Aero emphasizes its strategic evolution beyond aircraft structures, further solidifying its role as a crucial supplier in advanced aerospace systems.
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