UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 9, 2016
CPI AEROSTRUCTURES, INC.
(Exact Name of Registrant as Specified in Charter)
New York |
001-11398 |
11-2520310 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
91 Heartland Boulevard , Edgewood, N ew Y ork |
11717 |
(Address of Principal Executive Offices) |
(Zip Code) |
(631) 586-5200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Item 1.01. |
Entry into a Material Definitive Agreement |
On May 9, 2016, CPI Aerostructures, Inc. (the “ Registrant ”) entered into a First Amendment and Waiver to Amended and Restated Credit Agreement (the “Amendment”) with the Lenders named therein and BankUnited, N.A., as Sole Arranger, Agent and Collateral Agent, dated as of March 24, 2016 (the “Credit Agreement”) to (i) amend certain terms of the Credit Agreement and (ii) waive non-compliance by the Registrant of the Net Income, Debt Service Coverage and Leverage Coverage Ratio financial covenants contained in the Credit Agreement as of the end of the fiscal quarter ended March 31, 2016.
The Amendment changes the definition of EBITDA for the Leverage Coverage Ratio covenant for the remainder of 2016 and changes the maximum leverage ratio from 3 to 1 to 3.5 to 1 for the quarters ending June 30, 2016 and September 30, 2016. Also, the Amendment increases the interest rate on the Credit Agreement by 50 basis points and requires the prepayment of a portion of the Term Loan if, and to the extent that, the Registrant receives any contract reimbursement payments from its current request for equitable adjustment with Boeing on the A-10 program. In addition, the Amendment adds a new covenant to the Credit Agreement, which requires the Registrant’s EBITDA at the end of each quarter to be within 25% of the Registrant’s quarterly projections. For the purposes of the new covenant, EBITDA shall be calculated without the request for equitable adjustment with Boeing for the A-10 program.
The foregoing description is qualified in its entirety by reference to the Amendment, a copy of which is attached to this Form 8-K as Exhibit 10.1 and incorporated herein by reference.
Item 2.02. |
Results of Operations and Financial Condition. |
On May 10, 2016, the Registrant issued a press release announcing its financial results for the quarter ended March 31, 2016. The press release is attached to this Form 8-K as Exhibit 99.1.
The information furnished under this Item 2.02, including the exhibit related thereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any disclosure document of the Registrant, except as shall be expressly set forth by specific reference in such document.
Item 9.01. |
Financial Statement and Exhibits. |
(d) Exhibits:
Exhibit | Description | |
10.1 |
First Amendment and Waiver to Amended and Restated Credit Agreement, dated as of May 9, 2016 by and between CPI Aerostructures, Inc. the several lenders from time to time party thereto, and BankUnited, N.A., as Sole Arranger, Administrative Agent and Collateral Agent. |
99.1 |
Press Release dated May 10, 2016, reporting the Registrant’s financial results for its quarter ended March 31, 2016. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 10, 2016 |
CPI AEROSTRUCTURES, INC. |
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By: |
/s/ Vincent Palazzolo |
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Vincent Palazzolo |
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Chief Financial Officer |
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EXHIBIT INDEX
Exhibit | Description |
10.1 |
First Amendment and Waiver to Amended and Restated Credit Agreement, dated as of May 9, 2016 by and between CPI Aerostructures, Inc. the several lenders from time to time party thereto, and BankUnited, N.A., as Sole Arranger, Administrative Agent and Collateral Agent. |
99.1 |
Press Release dated May 10, 2016, reporting the Registrant’s financial results for its quarter ended March 31, 2016. |
Exhibit 10.1
FIRST AMENDMENT AND WAIVER TO
AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT AND WAIVER (the “ Amendment ”) entered into as of May 9, 2016 by and between CPI AEROSTRUCTURES, INC. (the “ Borrower ”), and BANKUNITED, N.A., a national banking association, as Sole Arranger, Agent, and a Lender, CITIZENS BANK, N.A., a national banking association, as a Lender, and the other financial institutions from time to time parties thereto as lenders (collectively, the “ Lender ”), BANKUNITED, N.A., a national banking association, as administrative agent and collateral agent for the Lender thereunder (in such capacities, the “ Administrative Agent ” and the “ Collateral Agent ,” respectively and each an “ Agent ”).
WHEREAS , the Borrower, the Agent and the Lender are parties to that Amended and Restated Credit Agreement dated as of March 24, 2016, as same may be hereafter amended and modified (the “ Agreement ”); and
WHEREAS , the Borrower has requested that the Agent and the Lender (i) amend certain provisions of the Agreement, and (ii) waive certain covenant non-compliance under the Agreement; and
WHEREAS , the Agent and the Lender is willing to accede to such request to (i) amend certain terms of the Agreement, and (ii) waive certain covenant non-compliance under the Agreement, in each case subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE , in consideration of the premises and the agreements hereinafter set forth and for other good and valuable consideration, the parties hereto hereby agree as follows:
1. All capitalized terms used herein, unless otherwise defined herein, have the same meanings provided therefor in the Agreement.
2. Subject to the terms and conditions hereof, the Agreement is hereby amended as follows:
(A) Section 1.1 of the Agreement (Defined Terms) is amended by deleting the following definitions and substituting the following therefor:
“ A-10 Contract Reimbursement Payment ”: shall mean any modification, contract reduction, contract reimbursement, penalty, refund or damage payments or other similar fees, damages, refunds or other amounts payable in connection with the foregoing, including (without limitation) any related income tax refund in connection therewith, in each case with respect to or derived from the modification and adjustment of the 2008 contract or other related contract with The Boeing Company with respect to the Boeing A-10 Wing Replacement Program, excluding the A-10 2015 REA Payment.
“ Applicable Margin ”: means, from time to time with respect to Revolving Credit Loans and Term Loans and the fees payable under Section 3.5(a), the following percentages per annum, adjusted quarterly based upon the Borrower’s Maximum Leverage Ratio for the fiscal quarter then-ended (the “Financial Covenant”) as set forth in the most recent Compliance Certificate received by Administrative Agent pursuant to Section 6.2(a):
Pricing Level |
Leverage Ratio |
Eurodollar Rate Margin |
Base Rate Margin |
Commitment Fee |
1 |
> 2.75x |
3.25% |
0.75% |
0.50% |
2 |
> 2.00x < 2.75x |
3.00% |
0.50% |
0.50% |
3 |
> 1.00x; < 2.00x |
2.75% |
0.50% |
0.50% |
4 |
< 1.00x |
2.50% |
0.50% |
0.50% |
Any increase or decrease in the Applicable Margin resulting from a change in the Financial Covenant shall become effective as of the first Business Day of the month immediately following the date a Compliance Certificate is delivered pursuant to Section 6.2(a); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 1 shall apply as of the first Business Day of the month following the date such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. The Applicable Margin in effect from the Closing Date through March 31, 2016 shall be determined based upon Pricing Level 2.
Notwithstanding anything to the contrary contained in this definition, the determination of Applicable Margin for any period shall be subject to the provisions of Section 3.1(j).
“ Contract Termination Payment ”: shall mean any termination, cancellation, rejection or similar fee or amount received by Borrower upon any early termination, cancellation, rejection, expiration or inability to agree with respect to any Designated Contract or any damages or other amounts received by Borrower for the foregoing. Neither an A-10 Contract Reimbursement Payment nor an A-10 2015 REA Payment shall be deemed to constitute a Contract Termination Payment.
“ Designated Amount ”: shall mean (a) with respect to Contract Termination Payments, the lesser of (i) fifty (50%) percent of each Contract Termination Payment received by the Borrower (less amounts due to subcontractors), or (ii) the outstanding principal balance of the Term Loan; or (b) with respect to A-10 2015 REA Payments, the lesser of (i) one hundred (100%) of each A-10 2015 REA Payment received by Borrower, or (ii) the outstanding principal balance of the Term Loan.
“ EBITDA ”: means:
(I) for the fiscal periods ended 6/30/16, 9/30/16 and 12/31/16, an amount equal to Net Income of the Borrower and its Subsidiaries on a consolidated basis for the most recently completed measurement period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Expense, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense and (iv) other non-recurring expenses reducing such Net Income which do not represent a cash item in such period or any future period (in each case of or by the Borrower and its Subsidiaries for such measurement period) minus (b) the following to the extent included in calculating such Net Income: (i) Federal, state, local and foreign income tax credits, (ii) all non-cash items increasing Net Income (in each case of or by the Borrower and its Subsidiaries for such measurement period), and (iii) the sum of all non-recurring reimbursement and termination payments including (without limitation) all A-10 Contract Reimbursement Payments, Contract Termination Payments and A-10 2015 REA Payments and plus (c) the additional costs to complete 38 additional shipsets with respect to the Boeing A-10 Wing Replacement Program in the approximate aggregate amount not to exceed $15,300,000; and
(II) at any date of determination other than as described in clause (I) above, an amount equal to Net Income of the Borrower and its Subsidiaries on a consolidated basis for the most recently completed measurement period plus (a) the following to the extent deducted in calculating such Net Income: (i) Interest Expense, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense and (iv) other non-recurring expenses reducing such Net Income which do not represent a cash item in such period or any future period (in each case of or by the Borrower and its Subsidiaries for such measurement period) and minus (b) the following to the extent included in calculating such Net Income: (i) Federal, state, local and foreign income tax credits, (ii) all non-cash items increasing Net Income (in each case of or by the Borrower and its Subsidiaries for such measurement period), and (iii) the sum of all non-recurring reimbursement and termination payments including (without limitation) all A-10 Contract Reimbursement Payments, Contract Termination Payments and A-10 2015 REA Payments.
(B) Section 1.1 of the Agreement (Defined Terms) shall be amended by adding the definition “A-10 2015 REA Payment” as follows:
“ A-10 2015 REA Payment ”: shall mean payments made to the Borrower from The Boeing Company pursuant to that Request for Equitable Adjustment made in fiscal year 2015 in the approximate amount of $3,000,000 to reimburse the Borrower for additional costs incurred with respect to the Boeing A-10 Wing Replacement Program.
(C) Section 2.7 of the Agreement (Repayment of Term Loan) is amended by deleting same and substituting the following therefor:
“2.7 Repayment of Term Loan . The principal balance of the Term Loan shall be payable to the Administrative Agent for the account of each Term Lender (in accordance with each Term Lender’s respective Term Loan Percentage) in consecutive monthly installments of principal, (i) the first twelve (12) of which (payments 1 through 12) shall be in an amount equal to Forty One Thousand Six Hundred Sixty-Six and 67/100 ($41,666.67) Dollars each, (ii) the next twelve (12) of which (payments 13 through 24) shall be in an amount equal to One Hundred Twenty-Five Thousand and 00/100 ($125,000.00) Dollars each and (iii) the next eleven (11) of which (payments 25 through 35) shall be in an amount equal to One Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 ($166,666.67) Dollars each; such payments (i) through (iii) commencing on May 1, 2016 with each succeeding installment being due on the first Business Day of each month thereafter until March 1, 2019 with a final payment due on the applicable Term Loan Maturity Date in an amount equal to the then outstanding principal balance of the Term Loan. Notwithstanding the foregoing, upon Borrower’s receipt of either a Contract Termination Payment (if any) or a A-10 2015 REA Payment, Borrower shall then (at Borrower’s option) either (1) prepay the Term Loan (which in the case of Eurodollar Term Loans shall be on the last day of the current Interest Period) in the principal amount equal to the applicable Designated Amount plus all accrued and unpaid interest through the date of prepayment, or (2) deposit into a bank account held by and pledged (as additional collateral for the Loans and any related interest rate swap obligations, if applicable) to the Agent on behalf of the Term Lenders, on terms and documentation satisfactory to the Agent and its counsel, an amount equal to the applicable Designated Amount. Each Term Lender shall receive its Term Loan Percentage of each installment of principal paid under the Term Loan.”
(D) Section 3.4(h) of the Agreement is amended by deleting same and substituting the following therefor:
“(h) Upon Borrower’s receipt of (i) either a Contract Termination Payment (if any) or an A-10 2015 REA Payment, Borrower shall comply with the prepayment or cash security provisions of Section 2.7; and (ii) each A-10 Contract Reimbursement Payment (if any), Borrower shall comply with the prepayment provisions of Section 2.3.”
(E) Section 7.1(b) of the Agreement (Maximum Leverage Ratio) is amended by deleting same and substituting the following therefor:
“(b) Maximum Leverage Ratio . Permit the Leverage Ratio of the Borrower at the end of each fiscal quarter for the trailing four quarter period then ended to be more than (i) 3.5 to 1.0 for the fiscal quarters ending June 30, 2016 and September 30, 2016, and (ii) at all other times, 3.0 to 1.0. “Leverage Ratio” shall mean Funded Debt, divided by EBITDA.”
(F) A new section, Section 7.1(d) (Minimum EBITDA) has been added to the Agreement as follows:
“(d) Minimum EBITDA . Permit the sum of Borrower’s EBITDA minus any A-10 2015 REA Payment received at the end of each fiscal quarter for the fiscal quarter then-ended to be less than the following:
Fiscal Quarter End : | Amount : |
6/30/16 |
$2,100,000 |
9/30/16 |
$2,400,000 |
12/31/16 |
$2,600,000 |
3/31/17 |
$2,400,000 |
6/30/17 |
$1,800,000 |
9/30/17 |
$2,000,000 |
12/31/17 |
$2,300,000 |
3/31/18 and thereafter |
$2,000,000” |
(G) Except as amended herein, all other provisions of the Agreement and the Loan Documents shall remain in full force and effect, and are hereby ratified.
3. The Lender and the Borrower agree that as of May 6, 2016, the aggregate outstanding principal amount of: (i) the Revolving Credit Loans as evidenced by each Revolving Credit Note is $20,738,684.58, (ii) the Term Loan as evidenced by each Term Loan Note is $9,958,333.33.
4. The Borrower hereby represents and warrants to the Lender that:
(a) Each and every of the representations and warranties set forth in the Agreement is true as of the date hereof and with the same effect as though made on the date hereof, and is hereby incorporated herein in full by reference as if fully restated herein in its entirety; provided, however, that the September 30, 2015 date in Sections 4.1 and 4.2 shall be deemed to be December 31, 2015.
(b) No Default or Event of Default and no event or condition which, with the giving of notice or lapse of time or both, would constitute such a Default or Event of Default, now exists or would exist after giving effect hereto.
(c) There are no defenses or offsets to the Borrower’s obligations under the Agreement, the Notes or the Loan Documents or any of the other agreements in favor of the Lender referred to in the Agreement.
(d) The WHEREAS clauses set forth hereinabove are true and correct.
5. Non-compliance by the Borrower with the following covenants, for the following fiscal period(s) ended on the date(s) set forth below, is hereby waived by the Agent and the Lender, solely to the extent and subject to the facts and terms and for the period(s) set forth below:
(a) Section 7.1(a) of the Agreement, Minimum Debt Service Coverage Ratio, which should have been at least 1.50 to 1.0 for the trailing four fiscal quarters ended March 31, 2016, but was actually a negative (3.93) to 1.0 as of the end of such fiscal quarter.
(b) Section 7.1(b) of the Agreement, Maximum Leverage Ratio, which should have been not greater than 3.0 to 1.0 for the trailing four fiscal quarters ended March 31, 2016, but was actually a negative (5.06) to 1.0 as of the end of such fiscal quarter.
(c) Section 7.1 (c) of the Agreement, Minimum Net Income, which should have been at least $1 as of the end of the fiscal quarter ended on March 31, 2016, but was actually a loss of $(9,220,221.00) as of the end of such fiscal quarter.
6. It is expressly understood and agreed that all collateral security for the Loans and other extensions of credit set forth in the Agreement prior to the amendment provided for herein is and shall continue to be collateral security for the Loans and other extensions of credit provided in the Agreement as herein amended, including (without limitation) Borrower’s obligations under the Master Agreement. Without limiting the generality of the foregoing, the Borrower hereby absolutely and unconditionally confirms that each Loan Document, document and instrument executed by the Borrower pursuant to the Agreement continues in full force and effect, is ratified and confirmed and is and shall continue to be applicable to the Agreement (as herein amended).
7. The amendments and waivers set forth herein are limited precisely as written, based on the facts disclosed in writing to the Lender, for the periods stated and shall not be deemed to (a) be a consent to or a waiver of, or future waiver of any further violation or non-compliance with any of the indicated covenants or any other term or condition of the Agreement or any of the documents referred to therein, or (b) prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Agreement or any documents referred to therein. Whenever the Agreement is referred to in the Amendment or any of the instruments, agreements or other documents or papers executed and delivered in connection therewith, it shall be deemed to mean the Agreement as modified by this Amendment.
8. The Borrower agrees to pay on demand, and the Agent may charge any deposit or loan account(s) of the Borrower, all expenses (including reasonable attorney’s fees) incurred by the Lender in connection with the negotiation and preparation of the Agreement as amended hereby.
9. This Amendment shall become effective on such date as all of the following conditions shall be satisfied retroactive to the date hereof:
(a) The Agent shall have received four (4) executed, original counterparts of this Amendment.
(b) The Agent shall have received executed counterparts of any action (in form and substance satisfactory to the Agent and its counsel) taken by the Borrower to authorize the execution, delivery and performance of this Amendment and such other documents as the Lender or its counsel may require.
(c) Payment by the Borrower of Lender’s Amendment and Waiver fee in the amount of $100,000.00, together with all out of pocket costs, expenses and reasonable attorneys’ fees incurred by the Agent in connection with this Amendment and the related documents.
10. This Amendment is dated as of the date set forth in the first paragraph hereof and shall be effective (after satisfaction of the conditions set forth in paragraph 9 above) on the date of execution by the Agent and the Lender, retroactive to such date.
11. This Amendment may be executed in counterparts, each of which shall constitute an original, and each of which taken together shall constitute one and the same agreement.
[NO FURTHER TEXT ON THIS PAGE]
SIGNATURE PAGE
FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT
IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written.
CPI AEROSTRUCTURES, INC.,
as Borrower
By: ______________________
Name:
Title:
BANKUNITED, N.A.,
as Arranger, Agent, and a Lender
By: ______________________
Name:
Title:
BANKUNITED, N.A.,
as Administrative Agent and Collateral Agent
By: ______________________
Name:
Title:
CITIZENS BANK, N.A.,
as a Lender
By: ______________________
Name:
Title:
Exhibit 99.1
FOR IMMEDIATE RELEASE
CPI AEROSTRUCTURES ANNOUNCES 2016 FIRST QUARTER FINANCIAL RESULTS
Company Takes Non-Cash Charge Related to A-10 WRP Program
Reports Revenue of $12. 7 Million, EPS of $(1.0 7 ); Revenue , as adjusted (e xcluding A-10 Program ) , of $19. 5 Million, as adjusted EPS of $0.0 5
EDGEWOOD, N.Y. – May 10 , 2016 – CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE MKT: CVU) today reported first-quarter 2016 financial results.
First quarter 2016 results included a one-time, non-cash charge of approximately $13.5 million related to the Company’s estimate to perform its A-10 Wing Replacement Program (WRP) through the conclusion of its 173-wing order, and consists of: 1) a reduction of revenue of approximately $8.9 million; 2) an increase in cost of sales of approximately $4.6 million.
Revenue for the 2016 first quarter was $12.7 million compared with $19.9 million for the 2015 first quarter. Gross loss was $11.6 million for the first quarter of 2016, versus gross profit $3.6 million for the 2015 first quarter. Net loss for the 2016 first quarter was $9.2 million, or a loss of $1.07 per diluted share compared with net income of $928 thousand, or $0.11 per diluted share in the 2015 first quarter.
On an as adjusted basis, which excludes the impact of the A-10 program on the Company’s financial performance for both time periods, revenue for the 2016 first quarter was $19.5 million compared with $15.7 million for the 2015 first quarter. Gross profit was $3.7 million for the first quarter of 2016, versus $3.6 million for the 2015 first quarter. Net income for the 2016 first quarter was $0.41 million, or $0.05 per diluted share, compared with $0.94 million, or $0.11 per diluted share, in the 2015 first quarter.
Commenting on the non-cash charge, Douglas McCrosson, president and chief executive officer, stated, “The future of the A-10 remains very uncertain. Despite earlier declarations that the Air Force intended to defer retirement of the aircraft until 2022, it appears now that the Air Force intends to begin retirement much earlier than that. We anticipate that Congress will continue to prevent the Air Force from retiring the A-10 until another platform proves capable of meeting the Close Air Support mission and we still believe that the Air Force will need to acquire new wings beyond what is already on order with Boeing. However, we recognize that the quantity and timing of any future orders remain too uncertain for us to consider such anticipated orders in our current financial results. Therefore, in the first quarter of 2016 we are accounting for all of the remaining costs to complete all open orders under our contract with Boeing under the assumptions that we will neither receive firm orders for additional wing subassemblies in 2016 nor will we receive an adjustment to our contract for the claims we have submitted to our customer. It is important to note that our cash receipts from Boeing over the remainder of the contract are expected to exceed our cash expenses by approximately $1.5 million and that the A-10 WRP is expected to have net inflows of cash each quarter through completion in early 2017.”
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
Page 2 |
Mr. McCrosson added, "Due to the loss incurred in the quarter ended March 31, 2016, we were not in compliance with the debt service coverage ratio, leverage ratio and net income ratio covenants contained in our Credit Agreement with BankUnited and Citizen’s Bank. On May 9, 2016, the Company entered in an amendment and waiver to the Credit Agreement which, among other things, provided for a waiver of the covenants and amended the Credit Agreement to account for the one-time A-10 related charge taken during the first quarter of 2016.”
Continued Mr. McCrosson, “During the first quarter, our total backlog increased to $407.4 million, an increase of more than $20 million, primarily as a result of a new contract from Northrop Grumman to produce outer wing panel kits for the E-2D Advanced Hawkeye it is manufacturing for Japan. Our funded backlog increased to $104.0 million, up from $101.1 at the end of 2015, largely a result of new delivery orders for our commercial product lines, particularly the Gulfstream G-650 leading edges and the Embraer Phenom 300 engine inlet assemblies.”
Financial Outlook
We recognize that the A-10 charge makes it difficult to assess the company’s ongoing operating performance. Therefore, we are presenting updated guidance for 2016 under GAAP as well as on an as adjusted basis that excludes the A-10 WRP program revenue and costs (see accompanying table.)
Prior Guidance
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Updated Guidance
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Variance Explanation
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GAAP Revenue |
$97.5 - $103.5 million |
$82.2 - $88.2 million |
See Footnote (1) |
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Adjusted Revenue |
None |
$82.5 - $88.5 million |
See Footnote (2) |
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GAAP Pre-Tax Income |
$9.8 - $10.5 million |
($4.8) – ($5.5) million |
See Footnote (3) |
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Adjusted Pre-Tax Income |
None |
$9.8 - $10.5 million |
See Footnote (4) |
( 1 ) A-10 WRP GAAP revenue is expected to be approximately $(0.3) for the full year 2016. In 1Q16, we booked an $(8.9 million) adjustment to revenue for A-10 WRP. We earned $2.1 million in A-10 revenue in the first quarter and estimate we will book an additional $6.5 million in A-10 revenue for the remainder of 2016. Approximately $2 million of revenue on the full 173 shipset order from Boeing will remain at the end of 2016 and is expected to carry over into 2017.
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
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(2) Excludes all 2016 projected A-10 WRP revenue from forecast.
( 3 ) Adjusted for $(15.3 million) impact on gross profit now that we anticipate the A-10 WRP contract running through completion with no additional A-10 WRP revenue beyond the current contract value.
( 4 ) Excludes all 2016 activity related to the A-10, including the $15.3 negative impact on gross profit.
Concluded Mr. McCrosson, “Since November 2014, CPI has announced new defense contracts with a total value of approximately $225 million. As of March 31, 2016 more than $200 million remains in our backlog. These new programs will begin to positively impact the top and bottom lines during the balance of 2016 through 2020 or beyond in some cases. We continue to see opportunities for new defense orders, particularly for pod structures within our aerosystems segment, and believe new program wins will add to the base of long term contracts already in our backlog and will provide additional growth potential.”
Conference Call
Management will host a conference call on Tuesday, May 10, 2016, at 8:30 a.m. ET to discuss these 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 and ask for the CPI Aero call. 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. Please go to the website 15 minutes early to download and install any necessary audio software. 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. Among the key national security programs that CPI Aero supplies are the E-2D Advanced Hawkeye surveillance aircraft, the UH-60 BLACK HAWK® helicopter, the MH-53/CH-53 variant helicopters, the F-16 fighter aircraft, the MH-60S mine countermeasure helicopter, the AH-1Z ZULU attack helicopter, the DB-110 reconnaissance pod and the ALMDS mine detecting pod. In the commercial aviation market CPI Aero manufactures products for the Gulfstream G650 ultra-large cabin business jet, the HondaJet advanced light jet, the Embraer Phenom 300 business jet, the new Cessna Citation X+, and the S-92® helicopter. CPI Aero is included in the Russell Microcap® Index.
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
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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.
CPI Aero® is a registered trademark of CPI Aerostructures, Inc.
Contact:
Vincent Palazzolo |
Investor Relations Counsel: |
Chief Financial Officer |
LHA |
CPI Aero |
Jody Burfening/Sanjay M. Hurry |
(631) 586-5200 |
(212) 838-3777 |
www.cpiaero.com |
cpiaero@lhai.com |
www.lhai.com |
– Tables to Follow –
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
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CPI AEROSTRUCTURES, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, |
201 6 |
201 5 |
||||||
Revenue |
$ | 12,670,032 | $ | 19,876,566 | ||||
Cost of sales |
24,309,136 | 16,274,495 | ||||||
Gross profit (loss) |
(11,639,104 | ) | 3,602,071 | |||||
Selling, general and administrative expenses |
2,720,383 | 2,019,365 | ||||||
Income (loss) from operations |
(14,359,487 | ) | 1,582,706 | |||||
Interest expense |
275,733 | 214,586 | ||||||
Income (loss) before provision for (benefit from) income taxes |
(14,635,220 | ) | 1,368,120 | |||||
Provision for (benefit from) income taxes |
(5,415,000 | ) | 440,000 | |||||
Net income (loss) |
(9,220,220 | ) | 928,120 | |||||
Other comprehensive income, net of tax - |
||||||||
Change in unrealized gain-interest rate swap |
3,453 | 1,007 | ||||||
Comprehensive income (loss) |
$ | (9,216,767 | ) | $ | 929,127 | |||
Income (loss) per common share – basic |
$ | (1.07 | ) | $ | 0.11 | |||
Income (loss) per common share – diluted |
$ | (1.07 | ) | $ | 0.11 | |||
Shares used in computing earnings per common share: |
||||||||
Basic |
8,596,538 | 8,516,973 | ||||||
Diluted |
8,596,538 | 8,594,479 |
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
Page 6
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CPI AEROSTRUCTURES, INC.
BALANCE SHEETS
March 31, |
December 31, |
|||||||
2015 |
2015 |
|||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash |
$ | 824,347 | $ | 1,002,023 | ||||
Accounts receivable, net |
9,739,827 | 7,665,837 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
92,884,034 | 102,622,387 | ||||||
Prepaid expenses and other current assets |
1,264,895 | 1,065,473 | ||||||
Total current assets |
104,713,103 | 112,355,720 | ||||||
Property and equipment, net |
2,486,981 | 2,358,736 | ||||||
Deferred income taxes |
7,305,000 | 1,890,000 | ||||||
Other assets |
223,472 | 108,080 | ||||||
Total Assets |
$ | 114,728,556 | $ | 116,712,536 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
||||||||
Accounts payable |
$ | 14,925,457 | $ | 18,379,469 | ||||
Accrued expenses |
1,143,460 | 1,057,682 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts |
71,974 | 175,438 | ||||||
Current portion of long-term debt |
641,919 | 1,011,491 | ||||||
Contract loss |
5,159,214 | 549,723 | ||||||
Line of credit |
20,738,685 | 23,700,000 | ||||||
Income taxes payable |
23,970 | 189,000 | ||||||
Total current liabilities |
42,704,679 | 45,062,803 | ||||||
Long-term debt, net of current portion |
9,809,084 | 483,961 | ||||||
Other liabilities |
626,392 | 633,663 | ||||||
Total Liabilities |
53,140,155 | 46,180,427 | ||||||
Commitments |
||||||||
Shareholders’ Equity: |
||||||||
Common stock - $.001 par value; authorized 50,000,000 shares, 8,596,982 and 8,583,511 shares, respectively, issued and outstanding |
8,596 | 8,584 | ||||||
Additional paid-in capital |
52,410,431 | 52,137,384 | ||||||
Retained earnings |
9,169,374 | 18,389,594 | ||||||
Accumulated other comprehensive loss |
- | (3,453 | ) | |||||
Total Shareholders’ Equity |
61,588,401 | 70,532,109 | ||||||
Total Liabilities and Shareholders’ Equity |
$ | 114,728,556 | $ | 116,712,536 |
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
Page 7
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CPI AEROSTRUCTURES, INC. |
Adjusted Statement of Earnings |
31-Mar-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 Three Months Ended March 31, 2016 |
||||||||||||
GAAP |
Adjusted |
|||||||||||
as Reported |
Adjustments |
Earnings |
||||||||||
Revenues |
$ | 12,670,032 | $ | 6,820,981 | $ | 19,491,013 | ||||||
Cost of sales |
24,309,136 | (8,470,714 | ) | 15,838,422 | ||||||||
Gross profit |
(11,639,104 | ) | 15,291,695 | 3,652,591 | ||||||||
Selling, general and administrative expenses |
2,720,383 | 2,720,383 | ||||||||||
Income from operations |
(14,359,487 | ) | 15,291,695 | 932,208 | ||||||||
Other income (expense), net |
||||||||||||
Interest expense |
275,733 | 275,733 | ||||||||||
Income before provision for income taxes |
(14,635,220 | ) | 15,291,695 | 656,475 | ||||||||
Provision for income taxes |
(5,415,000 | ) | 5,658,000 | 243,000 | ||||||||
Net income (loss) |
$ | (9,220,220 | ) | $ | 9,633,695 | $ | 413,475 | |||||
Diluted Earnings per share |
$ | (1.07 | ) | $ | 0.05 |
CPI Aero Q1’16 Earnings Press Release May 10, 2016 |
Page 8
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For the Three Months Ended March 31, 2015 |
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GAAP |
Adjusted |
|||||||||||
as Reported |
Adjustments |
Earnings |
||||||||||
Revenues |
$ | 19,876,566 | $ | (4,225,533 | ) | $ | 15,651,033 | |||||
Cost of sales |
16,274,495 | (4,238,510 | ) | 12,035,985 | ||||||||
Gross profit |
3,602,071 | 12,977 | 3,615,048 | |||||||||
Selling, general and administrative expenses |
2,019,365 | 2,019,365 | ||||||||||
Income from operations |
1,582,706 | 12,977 | 1,595,683 | |||||||||
Other income (expense), net |
||||||||||||
Interest expense |
214,586 | 214,586 | ||||||||||
Income before provision for income taxes |
1,368,120 | 12,977 | 1,381,097 | |||||||||
Provision for income taxes |
440,000 | 2,000 | 442,000 | |||||||||
Net income (loss) |
$ | 928,120 | $ | 10,977 | $ | 939,097 | ||||||
Diluted Earnings per share |
$ | 0.11 | $ | 0.11 |
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