Revenue Performance - Revenue for Q4 2024 was $21.8 million, down from $23.5 million in Q4 2023, while full year revenue decreased to $81.1 million from $86.5 million[7]. Profitability Metrics - Gross profit margin improved by 150 basis points to 20.0% in Q4 2024, and for the full year, gross margin increased to 21.3% from 19.7%[4][7]. - Net income for Q4 2024 was $1.0 million, significantly lower than $14.8 million in Q4 2023, with full year net income at $3.3 million compared to $17.2 million[4][7]. - Earnings per share (EPS) for Q4 2024 was $0.08, down from $1.20 in Q4 2023, and for the full year, EPS decreased to $0.26 from $1.40[7]. - Adjusted EBITDA for Q4 2024 was $2.3 million, up from $1.8 million in Q4 2023, while full year adjusted EBITDA increased to $7.8 million from $7.5 million[7]. Cash Flow and Debt Management - Cash flow from operations for 2024 was $3.6 million, compared to $3.9 million in 2023, with total cash from operations for the year at $4.4 million[5][7]. - The company reduced its debt by $2.7 million in 2024, achieving a debt balance of $17.4 million, the lowest since 2011[5]. - The Debt-to-Adjusted EBITDA Ratio at year-end was 2.2, marking the eighth consecutive quarter-end below 3.0[5]. Future Outlook - The backlog at year-end 2024 was $510 million, including new program awards from L3Harris, Raytheon, and Embraer[6]. - The company remains confident in its long-term outlook and plans to capitalize on future opportunities while strengthening customer relationships[8].

Government Contracts and Funding Risks - Company relies heavily on U.S. Government contracts, with significant revenue contributions from major defense contractors: Raytheon (36%), Lockheed Martin (24%), and United States Air Force (14%) for 2024[101] - Company faces risks related to government funding, which is subject to congressional budget authorization and may lead to contract terminations or adjustments if appropriations are delayed or reduced[95] - The competitive bidding process poses risks, including unforeseen technological difficulties and cost overruns, which may adversely affect profitability[98] - Loss of small business status could limit eligibility for government contracts and special programs, adversely affecting competitive positioning[116] - The company’s contracts with the U.S. government are subject to the Federal Acquisition Regulation (FAR), which dictates allowable costs for pricing[275] Financial Performance and Position - Revenue for the year ended December 31, 2024 was $81,078,864, a decrease of $5,387,457 or 6.2% compared to $86,466,321 for 2023[160] - Revenue from prime government contracts was $11,677,152, a slight decrease of $164,993 or 1.4% compared to $11,842,145 for 2023[161] - Revenue from government subcontracts decreased by $4,968,232 or 7.1% to $64,704,370 for the year ended December 31, 2024[162] - Cost of sales for the year ended December 31, 2024 was $63,840,803, a decrease of $5,559,890 or 8.0% compared to $69,400,693 for 2023[164] - Gross profit for the year ended December 31, 2024 was $17,238,061, an increase of $172,433 or 1.0% compared to $17,065,628 for 2023[168] - Gross profit margin increased to 21.3% for the year ended December 31, 2024, compared to 19.7% for 2023[168] - Net income for the year ended December 31, 2024 was $3,299,334, a decrease of $13,901,870 or 80.8% compared to $17,201,204 in 2023[174] - Basic earnings per share decreased to $0.26 for the year ended December 31, 2024, down $1.14 or 81.4% from $1.40 in 2023[175] - Working capital increased to $17,122,111 at December 31, 2024, an increase of $1,719,730 or 11.2% from $15,402,381 in 2023[177] - Cash balance increased to $5,490,963 at December 31, 2024, an increase of $396,169 or 7.8% from $5,094,794 in 2023[182] - Total assets decreased to $67,982,002 in 2024 from $74,360,132 in 2023, reflecting a decline of 8.5%[241] - Total liabilities decreased to $42,048,760 in 2024 from $52,278,404 in 2023, a reduction of 19.5%[241] - Shareholders' equity increased to $25,933,242 in 2024 from $22,081,728 in 2023, an increase of 17.5%[241] Internal Controls and Compliance - The company has identified material weaknesses in internal control over financial reporting, leading to multiple restatements of its consolidated financial statements[128] - A settlement with the SEC requires the company to remediate its internal control weaknesses by December 31, 2024, with a potential civil monetary penalty of $400,000 if it fails to comply[129] - Management confirmed that as of December 31, 2024, the company has fully remediated its material weaknesses in internal control over financial reporting[204] - The financial statements present the Company's financial position as of December 31, 2024, in conformity with generally accepted accounting principles[224] - The audit opinion confirms that the financial statements are free of material misstatement, whether due to error or fraud[224] Risks and Liabilities - Company is subject to strict environmental regulations, with potential fines and remediation expenses for non-compliance, impacting financial condition[102] - The company faces potential liability for product failures, and any material product liability not covered by insurance could adversely affect its financial condition[121] - Increased scrutiny regarding environmental, social, and governance (ESG) responsibilities could expose the company to additional costs and impact its liquidity and stock price[122] - The company has exposure to interest rate risk as its borrowing costs are based on the Prime Rate, which can negatively impact profitability[127] Revenue Recognition and Accounting - The Company recognized approximately $80.1 million in revenue over time for the year ended December 31, 2024, from long-term contracts[229] - The revenue recognition method used is based on an input method that reflects the ratio of costs incurred to total estimated costs at completion[229] - The company’s revenue recognition follows ASC 606, recognizing revenue when control of goods or services is transferred to customers[257] - The company utilizes the cost-to-cost input method to measure progress on performance obligations, which reflects the transfer of control to the customer[265] - Income taxes are accounted for under the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[293] Operational and Financial Management - The company’s working capital requirements can vary significantly, potentially affecting liquidity and capital resources if cash flows from operations are insufficient[113] - The company has undergone multiple amendments to its Amended and Restated Credit Agreement since March 2016, indicating ongoing financial management[218] - The company maintains an allowance for credit losses on accounts receivable and contract assets, assessed quarterly based on factors such as the age of receivables[278] - The company has right-of-use assets of $2,856,200 and lease liabilities of $3,100,572 as of December 31, 2024, down from $4,740,193 and $5,099,629 in 2023, respectively[284] Miscellaneous - The company has not paid any dividends to date and intends to retain earnings for business operations[145] - As of December 31, 2024, the company has 310,458 securities available for future issuance under equity compensation plans[147] - The effective tax rate for 2024 was 25.7%, compared to an effective tax benefit rate of (346.6%) in 2023[173] - The company reported a decrease in contract liabilities from $5,937,629 in 2023 to $2,430,663 in 2024, a decline of 59.0%[241] - Operating cash flow for 2024 was $3,558,935, compared to $3,928,341 in 2023, a decrease of 9.4%[249] - The company performed its annual impairment assessment of goodwill as of December 31, 2024, concluding that goodwill was not impaired[286] - The company’s long-lived assets were determined not to be impaired as of December 31, 2024, based on expected cash flows[287] - Basic and diluted income per common share for the years ended December 31, 2024 and 2023 were calculated using 116,024 and 160,742 incremental shares, respectively[291] - The company complies with FASB ASC Topic 260 for earnings per share calculations, using the treasury stock method[290]

Core Insights - CPI Aerostructures, Inc. reported a decrease in revenue for 2024 compared to 2023, but improved gross profit margin by 150 basis points [3][6] - The company achieved a net income increase of 22.2% and earnings per share (EPS) growth of 19.5% due to operational efficiencies and reduced costs [3][6] - CPI Aero ended 2024 with a strong backlog of $510 million, including new program awards from major clients [5] Financial Performance - Fourth Quarter 2024 revenue was $21.8 million, down from $23.5 million in Q4 2023; gross profit increased to $4.3 million from $4.1 million [6] - Full Year 2024 revenue totaled $81.1 million, a decrease from $86.5 million in 2023; gross profit slightly increased to $17.2 million from $17.1 million [6][15] - Net income for Q4 2024 was $1.0 million, significantly lower than $14.8 million in Q4 2023; full year net income was $3.3 million compared to $17.2 million in 2023 [6][15] Operational Efficiency - The company generated $3.6 million in cash from operations in 2024 and reduced debt by $2.7 million, achieving the lowest debt level since 2011 [4] - The Debt-to-Adjusted EBITDA Ratio at year-end was 2.2, marking the eighth consecutive quarter-end below 3.0 [4] Backlog and Future Outlook - CPI Aero's backlog of $510 million includes multiple new program awards from L3Harris, Raytheon, and Embraer, indicating confidence in future growth [5] - The company aims to capitalize on long-standing customer relationships and multiple opportunities ahead [5]

Core Insights - CPI Aerostructures, Inc. has received funded orders totaling $7 million for the overhaul and repair of outboard stabilator assemblies for the Sikorsky MH-60 SEAHAWK helicopter, under a five-year IDIQ contract from Sikorsky [1] - The company emphasizes its core capability in repair and overhaul services, which is foundational for growth in its Repair & Overhaul business, having delivered over 1,000 stabilators for the Seahawk Helicopter fleet [2] Company Overview - CPI Aero is a U.S. manufacturer specializing in structural assemblies for fixed-wing aircraft, helicopters, and airborne Intelligence Surveillance and Reconnaissance systems, serving both commercial aerospace and national security markets [3] - Within the global aerostructure supply chain, CPI Aero operates as either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers, and is a prime contractor to the U.S. Department of Defense, primarily the Air Force [3]

Core Viewpoint - CPI Aerostructures, Inc. has secured contracts worth $4.3 million for gunner window assemblies for the UH-60M Black Hawk helicopter, as part of a five-year indefinite delivery indefinite quantity (IDIQ) contract [1] Group 1: Company Overview - CPI Aero has delivered over 6,000 gunner window assemblies to Sikorsky since 2010, showcasing its commitment to quality and customer satisfaction [2] - The company is a U.S. manufacturer specializing in structural assemblies for fixed wing aircraft, helicopters, and airborne Intelligence Surveillance and Reconnaissance pod systems, serving both commercial aerospace and national security markets [3] - CPI Aero operates as a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers, and is a prime contractor to the U.S. Department of Defense, primarily the Air Force [3] Group 2: Contract Details - The recent contracts for gunner window assemblies are part of a previously announced five-year IDIQ contract, indicating a long-term relationship with the U.S. military [1] - The contracts total $4.3 million, reflecting the ongoing demand for components related to the Black Hawk helicopter fleet [1]

Core Points - CPI Aerostructures, Inc. has been authorized by Raytheon Technologies to manufacture pod structures and air management system components for the Next Generation Jammer Mid-Band (NGJ-MB) program, with a contract value of up to $33.4 million [1][2] - The NGJ-MB program is designed to enhance airborne electronic attack capabilities, providing force-level spectrum superiority in modern military environments [2] - CPI Aero is committed to delivering the NGJ-MB pods on or ahead of schedule, emphasizing the critical need for this capability as communicated by Raytheon [3] Company Overview - CPI Aero is a U.S. manufacturer specializing in structural assemblies for fixed-wing aircraft, helicopters, and airborne Intelligence Surveillance and Reconnaissance pod systems, serving both commercial aerospace and national security markets [4] - The company operates as a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers, and is a prime contractor to the U.S. Department of Defense, primarily the Air Force [4]

Core Viewpoint - CPI Aerostructures, Inc. has appointed Carey Bond as the new Chairman of its Board of Directors, succeeding Terry Stinson, who has served for six years [1][2][3] Company Leadership - Carey Bond, previously Vice-Chairman, has extensive experience in the aerospace industry, having held leadership roles at various companies including Sikorsky Aircraft and Bell Helicopter Textron [3] - Terry Stinson will remain on the Board as Vice-Chairman, continuing to provide strategic insights [2] Company Overview - CPI Aerostructures is a U.S. manufacturer specializing in structural assemblies for fixed-wing aircraft, helicopters, and airborne Intelligence Surveillance and Reconnaissance systems [4] - The company operates as a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers and is a prime contractor to the U.S. Department of Defense, primarily the Air Force [4]

Revenue Performance - Revenue for Q3 2024 was $19.4 million, a decrease of 4.9% compared to $20.4 million in Q3 2023[1] - For the nine months ended September 30, 2024, revenue was $59.3 million, down 5.9% from $63.0 million in the same period of 2023[2] Profitability Metrics - Gross profit increased to $4.2 million, up 13.5% from $3.7 million in Q3 2023, resulting in a gross margin of 21.7%, up from 18.2%[1][4] - Gross profit for the nine months was $12.9 million, slightly down from $13.0 million, with a gross margin increase to 21.7% from 20.6%[2] - Net income for Q3 2024 was $0.7 million, a 133.3% increase compared to $0.3 million in Q3 2023[1][4] - Net income for the nine months was $2.3 million, a decrease of 4.2% compared to $2.4 million in the same period of 2023[2] EBITDA Analysis - Adjusted EBITDA for Q3 2024 was $1.7 million, representing a 15.6% increase from $1.4 million in Q3 2023[1][4] - Adjusted EBITDA for September 2024 is $1,653,193, compared to $1,429,625 for September 2023, reflecting an increase of approximately 15.7%[17] - Total Adjusted EBITDA for the year-to-date period is $5,491,998, down from $5,772,832 in the previous year, indicating a decrease of approximately 4.9%[17] Operational Cash Flow - Cash flow from operating activities for Q3 2024 was $0.7 million, compared to $0.0 million in Q3 2023[1] Debt Management - The company reduced its debt by $2.7 million over the last twelve months, with total debt as of September 30, 2024, at $18.2 million[2][5] Backlog and Awards - The backlog as of September 30, 2024, was $506 million, bolstered by a new award from L3Harris for the Next Generation Jammer Low Band Pod[6] Expense Management - Depreciation expenses decreased from $117,885 in September 2023 to $102,847 in September 2024, a reduction of approximately 12.8%[17] - Stock-based compensation decreased from $140,715 in September 2023 to $72,713 in September 2024, a decline of about 48.3%[17] Financial Reporting Considerations - The company expects to continue incurring expenses similar to those reflected in the Adjusted EBITDA adjustments, indicating ongoing operational costs[16] - The company emphasizes that Adjusted EBITDA should not be considered in isolation from GAAP financial measures, highlighting the importance of comprehensive financial analysis[16] - The reconciliation of income from operations to Adjusted EBITDA illustrates the impact of depreciation and stock-based compensation on overall financial performance[17] - The company’s financial adjustments may not be computed in the same manner as those of other companies, suggesting variability in financial reporting standards[16] - Investors are advised not to infer that the costs associated with Adjusted EBITDA are unusual or non-recurring, indicating a need for careful financial assessment[16]

Revenue Performance - Total revenue for the three months ended September 30, 2024, was $19,419,879, a decrease of 4.8% from $20,399,369 in the same period of 2023[7] - Revenue for the three months ended September 30, 2024, was $19,419,879, a decrease of 4.8% compared to $20,399,369 for the same period in 2023[17] - Revenue recognized using the over time revenue recognition model for the nine months ended September 30, 2024, was $58,558,552, down from $59,353,845 in 2023, reflecting a decline of 1.3%[18] - Total revenue for the nine months ended September 30, 2024 was $59,311,356, down 5.8% from $62,963,592 in the same period last year, driven by decreases in Sikorsky and Lockheed Martin programs[72] Profitability - Gross profit for the three months ended September 30, 2024, increased to $4,219,669, up 13.8% from $3,706,090 in the prior year[7] - The company reported a gross profit margin of 21.7% for the three months ended September 30, 2024, compared to 18.2% in the same period of 2023[7] - Net income for the three months ended September 30, 2024, was $749,677, compared to $301,364 for the same period in 2023, representing a significant increase of 148.5%[7] - Net income for the nine months ended September 30, 2024, was $2,327,861, a decrease of $113,884 or 4.7% compared to the same period in 2023[101] Expenses - Selling, general and administrative expenses increased to $2,742,036 for the three months ended September 30, 2024, compared to $2,535,065 in the prior year[7] - Stock-based compensation expenses of $529,771 for the three months ended September 30, 2024, down from $659,855 in the same period of 2023, representing a decrease of approximately 19.7%[9] - Interest expense for Q3 2024 decreased to $573,366, down $90,491 or 13.6% from Q3 2023 due to lower interest rates and reduced outstanding debt[91] Assets and Liabilities - Total current assets decreased to $43,372,955 as of September 30, 2024, down from $46,913,731 at December 31, 2023[6] - The company’s total assets decreased to $68,887,763 as of September 30, 2024, from $74,360,132 at December 31, 2023[6] - Total liabilities decreased to $43,948,403 as of September 30, 2024, down from $52,278,404 at December 31, 2023[6] - The company’s accumulated deficit improved to $(49,475,861) as of September 30, 2024, compared to $(51,803,722) at December 31, 2023[6] Cash Flow - Cash flows from operating activities resulted in a net cash used of $837,077 for the three months ended September 30, 2024, contrasting with a net cash provided of $840,128 in the same period of 2023[9] - The balance of cash at the end of the period was $1,708,987, down from $2,609,693 at the end of September 30, 2023, reflecting a decrease of approximately 34.5%[9] - Cash decreased to $1,708,987 as of September 30, 2024, down $3,385,807 or 66.5% from December 31, 2023[108] Shareholder Equity - As of September 30, 2024, the total shareholders' equity increased to $24,939,360, up from $22,531,489 at March 31, 2024, reflecting a growth of approximately 10.7%[8] - The total common stock shares increased to 12,933,408 as of September 30, 2024, from 12,784,768 at March 31, 2024, marking an increase of approximately 1.2%[8] Taxation - The effective income tax rate for the nine months ended September 30, 2024 was 18.7%, compared to 17.1% for the same period in 2023[56] - Provision for income taxes for Q3 2024 was $154,590, a decrease of $51,214 or 24.9% compared to Q3 2023[94] - The effective income tax rate for Q3 2024 was 17.1%, lower than the statutory rate of 21% due to estimated R&D credits and other factors[95] Operational Insights - Total backlog as of September 30, 2024 was $506,021,000, with funded backlog at $91,502,000 and unfunded backlog at $414,519,000[66] - Approximately 96% of the total backlog at September 30, 2024 was attributable to government and military contracts[66] - Revenue from military subcontracts increased by 10.5% to $16,986,106 in Q3 2024 compared to $15,375,337 in Q3 2023, mainly due to Raytheon NGJ – Mid Band Pods[73] - Revenue from government military contracts decreased by 57.6% to $1,673,483 in Q3 2024, primarily due to delays in the USAF T-38 program[75] Compliance and Control - A material weakness was identified in internal control over financial reporting related to income tax accounting as of December 31, 2023[121] - The company plans to implement new controls to remediate the identified material weakness during 2024[122] - The company replaced its outside tax accounting firm and retained a new firm to prepare and review income tax accounting and disclosures for the quarter ended September 30, 2024[123] - Tax accounting has been updated as a high-risk area in the company's financial risk assessment[124]

Revenue Performance - Revenue for Q2 2024 was $20.8 million, a slight increase from $20.5 million in Q2 2023[1] - For the first six months of 2024, revenue decreased to $39.9 million from $42.6 million in the same period of 2023[2] Profitability Metrics - Gross profit for Q2 2024 was $5.1 million, up from $4.6 million in Q2 2023, resulting in a gross margin of 24.6%, compared to 22.4%[1] - Gross profit for the first six months of 2024 was $8.7 million, down from $9.3 million in the same period of 2023, with a gross margin of 21.7%[2] - Net income for Q2 2024 increased by 21.9% to $1.4 million, compared to $1.2 million in Q2 2023[1] - Earnings per diluted share for Q2 2024 was $0.11, compared to $0.09 in Q2 2023[1] EBITDA Analysis - Adjusted EBITDA for Q2 2024 was $2.6 million, a 25.0% increase from $2.1 million in Q2 2023[1] - Adjusted EBITDA for the six months ended June 30, 2024, was $3,838,805, compared to $4,343,207 for the same period in 2023, indicating a decrease of about 11.6%[13] - Adjusted EBITDA for the three months ended June 30, 2024, was $2,617,870, an increase from $2,094,281 for the same period in 2023, representing a growth of approximately 25%[13] Operational Efficiency - Cash flow used in operations for the first six months of 2024 was $(1.6) million, compared to $0.9 million generated in the same period of 2023[2] - Income from operations for the three months ended June 30, 2024, was $2,339,489, an increase from $1,797,520 for the same period in 2023, representing a growth of approximately 30.2%[13] - Depreciation expense for the three months ended June 30, 2024, was $102,846, down from $116,545 in the same period last year, reflecting a reduction of approximately 11.7%[13] - Stock-based compensation for the six months ended June 30, 2024, totaled $457,058, compared to $519,139 for the same period in 2023, showing a decrease of about 12%[13] Debt and Financial Position - The company reduced its debt by $2.4 million over the last twelve months, with a Debt-to-Adjusted EBITDA Ratio of 2.7 as of June 30, 2024[3] - The backlog as of June 30, 2024, was $512 million, indicating a strong competitive position[4]