Core Points - CPI Aerostructures, Inc. has received multiple purchase orders totaling $10.2 million under an IDIQ contract from the U.S. Air Force, increasing the total funded value of the contract to $61.1 million [1] - The contract supports the T-38C Pacer Classic III Fuselage Structural Modification Kit Integration program and the Talon Repair Inspection and Maintenance program, extending the service life of the T-38 aircraft beyond 2030 [2] - CPI Aero has been providing Kitting and Supply Chain Management services to the U.S. Air Force for seven years, emphasizing its commitment to supporting the T-38 program [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 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. reported financial results for Q2 and the first half of 2025, highlighting a significant impact from the termination of the A-10 Program, which led to write-offs and losses, but also noted progress in transitioning to new programs and maintaining a strong backlog of orders [3][4][5]. Financial Performance - For Q2 2025, revenue was $15.2 million, down from $20.8 million in Q2 2024, with a gross profit of $0.7 million compared to $5.1 million, resulting in a gross margin of 4.4% (17.1% excluding A-10 impact) [8][17]. - The net loss for Q2 2025 was $(1.3) million, compared to a net income of $1.4 million in Q2 2024, leading to a loss per share of $(0.10) versus earnings per share of $0.11 [8][17]. - For the first half of 2025, revenue was $30.6 million, down from $39.9 million in the same period of 2024, with a net loss of $(2.6) million compared to a net income of $1.6 million in 2024 [8][17]. Debt and Financial Health - The company reduced its total debt to an all-time low of $16.2 million as of June 30, 2025, down from $18.9 million a year earlier, with a Debt-to-Adjusted EBITDA Ratio of 2.7 excluding the A-10 Program impact [4][8]. - Management identified a material weakness in internal control over financial reporting related to debt classification but believes it does not affect the financial results for Q2 [5]. Operational Developments - CPI Aero achieved key development milestones, including the first delivery of the Advanced Tactical Flight Pod to Raytheon, and ended the quarter with a strong backlog of $506 million, including new program awards from major clients [4][5]. - The company is focused on optimizing its portfolio and transitioning from legacy programs to future-oriented programs [5].

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides a high-level overview of CPI Aerostructures' Q2 and six-month 2025 financial performance, strategic outlook, and key operational highlights [Second Quarter and Six Months 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%20and%20Six%20Months%202025%20Financial%20Highlights) CPI Aerostructures reported significant Q2 and H1 2025 revenue and gross profit declines, primarily due to the A-10 Program termination impact Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Revenue | $15.2 million | $20.8 million | -26.9% | | Gross Profit | $0.7 million | $5.1 million | -86.3% | | Gross Margin | 4.4% | 24.6% | -20.2 pp | | Net (Loss) Income | $(1.3) million | $1.4 million | N/A | | (Loss) Earnings per share | $(0.10) | $0.11 | N/A | | Adjusted EBITDA | $(1.7) million | $2.6 million | N/A | | Adjusted EBITDA (excl. A-10) | $0.6 million | $2.6 million | N/A | Six Months 2025 vs Six Months 2024 Financial Performance | Metric | 6M 2025 | 6M 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Revenue | $30.6 million | $39.9 million | -23.3% | | Gross Profit | $2.3 million | $8.7 million | -73.5% | | Gross Margin | 7.6% | 21.7% | -14.1 pp | | Net (Loss) Income | $(2.6) million | $1.6 million | N/A | | (Loss) Earnings per share | $(0.21) | $0.13 | N/A | | Adjusted EBITDA | $(2.5) million | $3.8 million | N/A | | Adjusted EBITDA (excl. A-10) | $2.0 million | $3.8 million | N/A | - The A-10 Program termination resulted in a **$2.3 million** write-off in Q2 2025 and a **$4.5 million** impact for the six months ended June 30, 2025[4](index=4&type=chunk)[6](index=6&type=chunk) - Excluding this impact, Q2 2025 gross margin was **17.1%** and six-month gross margin was **19.3%**[4](index=4&type=chunk)[6](index=6&type=chunk) [CEO Commentary and Strategic Outlook](index=1&type=section&id=CEO%20Commentary%20and%20Strategic%20Outlook) CEO commentary highlighted A-10 impact, new program milestones, reduced debt, a strong backlog, and remediation of a material weakness in financial reporting - The company continued its transition to new programs, achieving key development milestones like the first Advanced Tactical Flight Pod delivery to Raytheon[5](index=5&type=chunk) - Total debt was reduced to an all-time low of **$16.2 million** as of June 30, 2025, and the Debt-to-Adjusted EBITDA Ratio (excluding A-10 impact) improved to **2.7**[5](index=5&type=chunk)[6](index=6&type=chunk) - CPI Aero ended the quarter with a strong backlog of **$506 million**, including multiple new program awards from Raytheon, Sikorsky, Lockheed, the US Air Force, and Embraer[7](index=7&type=chunk) - Management identified a material weakness in internal control over financial reporting related to the classification of debt, which is currently being remediated[7](index=7&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section details CPI Aerostructures' business, forward-looking statement disclaimers, and investor relations contact information [About CPI Aerostructures](index=2&type=section&id=About%20CPI%20Aero) CPI Aero manufactures structural assemblies for fixed-wing aircraft, helicopters, and ISR pod systems, serving commercial and national security markets - CPI Aero is a U.S. manufacturer of structural assemblies for fixed-wing aircraft, helicopters, and airborne Intelligence Surveillance and Reconnaissance (ISR) pod systems[8](index=8&type=chunk) - The company serves both the commercial aerospace and national security markets[8](index=8&type=chunk) - CPI Aero acts as a Tier 1 supplier to aircraft OEMs, a Tier 2 subcontractor to major Tier 1 manufacturers, and a prime contractor to the U.S. Department of Defense (primarily the Air Force)[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This disclaimer indicates forward-looking statements involve risks and uncertainties, with no guarantee of future performance or obligation to update - The press release contains forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties[9](index=9&type=chunk)[10](index=10&type=chunk) - Actual results could vary materially from forward-looking statements due to important factors, including those outlined in the Company's Annual Report on Form 10-K[10](index=10&type=chunk) - The Company disclaims any intention or obligation to update or revise any forward-looking statement[10](index=10&type=chunk) [Investor Relations](index=2&type=section&id=Investor%20Relations) This section provides investor relations contact details for Alliance Advisors IR and CPI Aerostructures' Interim Chief Financial Officer - Investor Relations Counsel: Alliance Advisors IR, (212) 838-3777, cpiaero@allianceadvisors.com[12](index=12&type=chunk) - Company Contact: Pamela Levesque, Interim Chief Financial Officer, (631) 586-5200, plevesque@cpiaero.com[12](index=12&type=chunk) - Company website: www.cpiaero.com[11](index=11&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents CPI Aerostructures' balance sheets and statements of operations for the periods ended June 30, 2025 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows total assets increased to **$72.3 million** and total liabilities to **$48.5 million** by June 30, 2025, with shareholders' equity decreasing Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | **ASSETS** | | | | | Total Current Assets | $39,321,774 | $43,592,453 | -9.9% | | Operating lease right-of-use assets | $10,220,405 | $2,856,200 | +257.8% | | Deferred tax asset, net | $20,153,104 | $18,837,576 | +6.9% | | Total Assets | $72,255,967 | $67,982,002 | +6.3% | | **LIABILITIES** | | | | | Total Current Liabilities | $26,255,391 | $26,470,342 | -0.8% | | Line of credit, net of current portion | $13,140,000 | $14,640,000 | -10.3% | | Long-term operating lease liabilities | $9,087,405 | $938,418 | +868.4% | | Total Liabilities | $48,482,796 | $42,048,760 | +15.3% | | **SHAREHOLDERS' EQUITY** | | | | | Total Shareholders' Equity | $23,773,171 | $25,933,242 | -8.3% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 reported a net loss of **$(1.3) million** and **26.9%** revenue decline, while H1 2025 saw a net loss of **$(2.6) million** and **23.3%** revenue decrease Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Revenue | $15,179,108 | $20,810,334 | -26.9% | | Cost of sales | $14,515,726 | $15,694,910 | -7.5% | | Gross profit | $663,382 | $5,115,424 | -86.3% | | (Loss) income from operations | $(1,990,642) | $2,339,489 | N/A | | Net (Loss) income | $(1,324,959) | $1,409,946 | N/A | | Income per common share, basic | $(0.10) | $0.11 | N/A | Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Revenue | $30,579,716 | $39,891,477 | -23.3% | | Cost of sales | $28,266,859 | $31,222,304 | -9.5% | | Gross profit | $2,312,857 | $8,669,173 | -73.5% | | (Loss) income from operations | $(3,176,944) | $3,179,334 | N/A | | Net (Loss) income | $(2,648,883) | $1,578,184 | N/A | | Income per common share, basic | $(0.21) | $0.13 | N/A | [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) This section provides a reconciliation of non-GAAP Adjusted EBITDA, highlighting its calculation and purpose for financial analysis [Adjusted EBITDA Reconciliation](index=5&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section reconciles Adjusted EBITDA, a non-GAAP measure, showing Q2 2025 at **$(1.7) million** (or **$0.6 million** excluding A-10) and H1 2025 at **$(2.5) million** (or **$2.0 million** excluding A-10) - Adjusted EBITDA is a non-GAAP measure defined as GAAP income from operations plus depreciation, amortization, and stock-compensation expense[17](index=17&type=chunk) - The company provides Adjusted EBITDA to help investors evaluate financial performance on a consistent basis and enhance understanding of operating results, but it should not be construed as an alternative to GAAP measures[18](index=18&type=chunk)[21](index=21&type=chunk) Reconciliation of Income From Operations to Adjusted EBITDA | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income From Operations | $(1,990,642) | $2,339,489 | $(3,176,944) | $3,179,334 | | Depreciation | $88,598 | $102,846 | $187,365 | $202,413 | | Stock Based Compensation | $168,583 | $175,535 | $488,812 | $457,058 | | **Adjusted EBITDA** | **$(1,733,461)** | **$2,617,870** | **$(2,500,767)** | **$3,838,805** | | A-10 Termination Adjustment | $2,322,831 | - | $4,468,528 | - | | **Adjusted EBITDA Excluding A-10 adjustment** | **$589,370** | **$2,617,870** | **$1,967,761** | **$3,838,805** |

Revenue and Profitability - Revenue for Q2 2025 was $15.18 million, a decrease of 27.3% compared to $20.81 million in Q2 2024[9] - Gross profit for the first half of 2025 was $2.31 million, down 73.3% from $8.67 million in the same period of 2024[9] - Net loss for the six months ended June 30, 2025, was $2.65 million, compared to a net income of $1.58 million for the same period in 2024[9] - Basic income per share for Q2 2025 was $(0.10), compared to $0.11 in Q2 2024[9] - For the three months ended June 30, 2025, total revenue was $15,179,108, a decrease of 27.1% compared to $20,810,334 for the same period in 2024[21] - For the six months ended June 30, 2025, total revenue was $30,579,716, down 23.4% from $39,891,477 in 2024[21] - Gross profit for the three months ended June 30, 2025, was $663,382, down 87.0% from $5,115,424 in the prior year[9] - The net loss for the three months ended June 30, 2025, was $(1,324,959), compared to net income of $1,409,946 for the same period in 2024[9] Cash Flow and Financial Position - Cash at the end of Q2 2025 was $674,481, a decrease from $1.94 million at the end of Q2 2024[11] - Operating cash flow for the first half of 2025 was $(3.32) million, compared to $(1.55) million in the same period of 2024[11] - The net cash used in operating activities for the six months ended June 30, 2025 was $3,317,875, compared to $1,552,224 in 2024, indicating a significant increase in cash outflow[11] - Total shareholders' equity as of June 30, 2025, was $23.77 million, down from $24.12 million at the end of Q2 2024[10] - Cash at the end of the period was $674,481, a significant decrease from $1,936,697 at the end of the same period in 2024[11] Debt and Interest Expenses - The company incurred $2.65 million in interest expense for the first half of 2025, compared to $1.22 million in the same period of 2024[9] - The company had $16,140,000 outstanding under the Revolving Loan as of June 30, 2025, compared to $17,390,000 as of December 31, 2024[46] - The company’s interest rate on the Revolving Loan was 9.5% as of June 30, 2025, based on a Prime Rate of 7.5%[45] - The company incurred $864,820 in interest expenses during the period, compared to $1,218,775 in the previous year[11] Compliance and Regulatory Matters - The Company has a civil monetary penalty of $400,000 due to the SEC by June 30, 2025, if it fails to comply with various undertakings related to internal controls[58] - The Company is required to fully remediate its material weaknesses in Internal Controls over Financial Reporting by December 31, 2024[58] - The Company was not in compliance with financial covenants as of June 30, 2025, and obtained a waiver from lenders for non-compliance[43] - On August 14, 2025, the Lenders issued a waiver for the Company's Financial Covenant non-compliance for the quarter ended June 30, 2025[63] Contractual Obligations and Assets - As of June 30, 2025, the aggregate amount of transaction price allocated to remaining performance obligations was approximately $86.8 million[26] - Contract assets as of June 30, 2025, were $31,027,022, a decrease from $32,832,290 as of December 31, 2024[28] - Contract liabilities as of June 30, 2025, were $1,896,936, down from $2,430,663 as of December 31, 2024[28] - Inventory as of June 30, 2025, totaled $1,025,172, an increase from $918,288 as of December 31, 2024[29] Stock-Based Compensation - Stock-based compensation expense for the three months ended June 30, 2025, was $168,583, compared to $175,536 for the same period in 2024[33] - The Company has 308,818 shares available for grant under the 2016 Long Term Incentive Plan as of June 30, 2025[31] - As of June 30, 2025, the company had unamortized stock-based compensation costs related to restricted share arrangements amounting to $271,967[38] - Stock-based compensation expense for the six months ended June 30, 2025, totaled $488,812, compared to $457,058 for the same period in 2024, reflecting a 6.5% increase[33] Customer Concentration - The company’s four largest customers accounted for 31%, 24%, 15%, and 14% of revenue for the six months ended June 30, 2025[48] - For the six months ended June 30, 2025, the four largest customers accounted for 31%, 24%, 15%, and 14% of revenue, compared to 32%, 25%, 13%, and 12% for the same period in 2024[48] - As of June 30, 2025, 41%, 26%, and 17% of contract assets were from three of the largest customers, up from 27%, 20%, 16%, and 15% from the four largest customers as of December 31, 2024[49] Lease Obligations - The company’s operating lease expense for the six months ended June 30, 2025, was $1,189,958, an increase from $1,059,249 for the same period in 2024[51] - Future minimum lease payments under non-cancellable operating leases total $13,704,101 as of June 30, 2025[52] - The company’s right-of-use assets increased to $10,220,405 as of June 30, 2025, from $2,856,200 as of December 31, 2024[52] Tax Matters - The effective income tax rate for the six months ended June 30, 2025, was 34.2%, primarily due to estimated R&D credits[55] - The company adopted ASU No. 2023-09 in 2025, which requires expanded income tax disclosures[17]

Core Points - CPI Aerostructures, Inc. has received multiple purchase orders totaling $2.5 million under a contract with the U.S. Air Force, which is valued at up to $65.7 million for structural modification kits and support services [1] - The total funded value of the contract has now reached $50.8 million, with deliveries expected to continue into 2028 [1] - The T-38 Talon aircraft, which has been in service for over 60 years, will benefit from the PCIII and TRIM programs, extending its operational life beyond 2030 [2] Company Overview - CPI Aero is a U.S. manufacturer specializing in structural assemblies for fixed-wing aircraft, helicopters, and airborne 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] - CPI Aero provides a range of services including engineering, program management, supply chain management, and maintenance, repair, and overhaul (MRO) services [4] Management Commentary - The CEO of CPI Aero expressed pride in supplying critical aircraft modification kits to the U.S. Air Force, highlighting the importance of Kitting and Supply Chain Management in the company's portfolio [3]

Core Insights - CPI Aerostructures, Inc. has received follow-on orders totaling $2.4 million for welding complex structural assemblies for a U.S. military helicopter, with deliveries expected through mid-2026 [1][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 pod systems, serving both commercial aerospace and national security markets [3] - 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 [3] - In addition to assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services [3] Industry Position - CPI Aero's fusion welding capability is highly regarded in the industry, with NADCAP certification to numerous OEM welding specifications, highlighting its commitment to excellence in supporting U.S. Defense and Allied Forces [2]

Core Insights - CPI Aerostructures, Inc. has appointed Paula Castellano as Senior Vice President of Operations, highlighting the company's focus on strengthening its leadership team in the aerospace sector [1][4]. 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 [5]. - 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 [5]. Leadership Experience - Paula Castellano, 59, brings extensive experience in Operations leadership, Lean and Six Sigma methodologies, production control, engineering, planning, and customer service [2]. - Prior to joining CPI Aero, she served as Site Director at GKN Aerospace, overseeing operational performance and continuous improvement [2]. - Castellano has held various significant roles at Air Industries Machining Group, including General Manager and Director of Contracts and Planning [3]. Strategic Importance - The appointment of Paula Castellano is seen as a strategic move to enhance CPI Aero's management team and align with the company's objectives to deliver consistent, industry-leading results [4].

Core Points - CPI Aerostructures, Inc. has signed a Long-Term Agreement with MST Manufacturing for component supply until the end of 2028 [1] - The agreement reflects the strong relationship and performance of MST as a critical supplier [2] - CPI Aero is a manufacturer of structural assemblies for various aircraft and is a prime contractor to the U.S. Department of Defense [3] Company Overview - CPI Aero specializes in structural assemblies for fixed wing aircraft, helicopters, and airborne systems in both commercial and national security markets [3] - The company operates as a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers [3] - CPI Aero provides engineering, program management, supply chain management, and MRO services alongside its assembly operations [3] MST Manufacturing Overview - MST Manufacturing is located in Claremore, Oklahoma, with over 75,000 square feet of manufacturing space and more than 110 employees [4] - The company holds AS9100, ISO9001, and ITAR certifications, positioning itself as a leading CNC machining and fabrication company in Oklahoma [4] - MST operates over 60 CNC machines and offers complex machining services, including 5-axis milling and multi-axis turning [4]

Financial Performance - Revenue for Q1 2025 was $15.4 million, down from $19.1 million in Q1 2024, representing a decrease of approximately 19.2%[9] - Gross profit for Q1 2025 was $1.6 million, compared to $3.6 million in Q1 2024, resulting in a gross margin of 10.7%, down from 18.6%[9] - The company reported a net loss of $1.3 million in Q1 2025, compared to a net income of $0.2 million in Q1 2024, marking a significant decline[9] - Adjusted EBITDA for Q1 2025 was $(0.8) million, a decrease from $1.2 million in Q1 2024[9] Debt and Cash Flow - The total debt was reduced to an all-time low of $16.7 million, with a Debt-to-Adjusted EBITDA Ratio of 2.9, maintaining below 3.0 for nine consecutive quarters[5] - Cash flow used in operations was $2.7 million in Q1 2025, compared to $1 million in Q1 2024, indicating increased operational cash outflow[9] Backlog and Client Engagement - The company ended Q1 2025 with a strong backlog of $516 million, including new program awards from major clients such as L3Harris, Raytheon, Lockheed, and Embraer[6] Operational Challenges - The company recognized a pre-tax loss of $2.1 million on the A-10 Program due to higher manufacturing costs on a fixed-price contract[4] - Selling, general and administrative expenses increased to $2.8 million in Q1 2025 from $2.7 million in Q1 2024[16] Strategic Focus - The company remains committed to operational improvements and transitioning from legacy programs to future-oriented programs[6]

Core Viewpoint - CPI Aerostructures, Inc. reported a significant financial impact in Q1 2025 due to a pre-tax loss of $2.1 million on the A-10 Program, which has higher manufacturing costs under a fixed-price contract from 2019. The company is taking steps to mitigate further financial degradation from this program [3]. Financial Performance - Revenue for Q1 2025 was $15.4 million, down from $19.1 million in Q1 2024 [9]. - Gross profit decreased to $1.6 million, compared to $3.6 million in the same period last year, resulting in a gross margin of 10.7%, down from 18.6% [9]. - The company reported a net loss of $1.3 million in Q1 2025, compared to a net income of $0.2 million in Q1 2024 [9]. - Adjusted EBITDA was $(0.8) million, a decline from $1.2 million in Q1 2024 [9]. Balance Sheet and Debt Management - The total debt was reduced to an all-time low of $16.7 million, with a Debt-to-Adjusted EBITDA Ratio of 2.9, marking the ninth consecutive quarter below 3.0 [4]. - Total assets as of March 31, 2025, were $65.36 million, down from $67.98 million at the end of 2024 [12][13]. Operational Outlook - The company ended the quarter with a strong backlog of $516 million, including new program awards from major clients such as L3Harris, Raytheon, Lockheed, and Embraer [5]. - CPI Aero is focused on operational improvements and transitioning from legacy programs to future-oriented programs [5].