Financial Performance - Total revenue for the three months ended June 30, 2024, was $20,810,334, a 1.3% increase from $20,547,555 for the same period in 2023[5] - Gross profit for the three months ended June 30, 2024, was $5,115,424, compared to $4,604,000 for the same period in 2023, representing an increase of 11.1%[5] - Net income for the three months ended June 30, 2024, was $1,409,946, up from $1,157,076 in the same period of 2023, reflecting a growth of 21.8%[5] - Basic income per common share for the three months ended June 30, 2024, was $0.11, compared to $0.09 for the same period in 2023, a rise of 22.2%[5] - Net income for the six months ended June 30, 2024, was $1,578,184, a decrease from $2,140,381 in the same period of 2023[8] - Total revenue for the six months ended June 30, 2024, was $39,891,477, compared to $42,564,223 for the same period in 2023, representing a decline of approximately 6.3%[14] - Revenue from military subcontracts for the three months ended June 30, 2024 was $16,963,874, an increase of $461,848 or 2.8% compared to the same period last year[60] - Revenue from government military contracts for the six months ended June 30, 2024 was $5,383,228, an increase of $1,264,269 or 30.7% compared to the same period last year[62] Assets and Liabilities - Total current assets decreased to $44,084,991 in 2023 from $46,913,731 in 2022, a decline of 6.0%[4] - Total liabilities decreased to $46,100,550 in 2023 from $52,278,404 in 2022, a reduction of 12.5%[4] - Total shareholders' equity increased to $24,116,970 in 2023 from $22,081,728 in 2022, an increase of 9.2%[4] - The company’s cash position decreased to $1,936,697 in 2023 from $5,094,794 in 2022, a decline of 62.0%[4] - The company reported a decrease in accounts payable to $14,528,893 in 2023 from $10,487,012 in 2022, an increase of 38.9%[4] - Contract assets as of June 30, 2024, were $34,183,988, down from $35,312,068 as of December 31, 2023[21] - Contract liabilities decreased to $2,482,535 as of June 30, 2024, from $5,937,629 as of December 31, 2023[21] - Cash at the end of the period was $1,936,697, down from $3,080,672 at the end of the same period in 2023[8] Expenses - Total Cost of Sales for the three months ended June 30, 2024 was $15,694,910, a decrease of $248,645 or 1.6% from $15,943,555 in the same period in 2023[64] - Selling, general and administrative expenses for the three months ended June 30, 2024 decreased by $30,545 or 1.1% to $2,775,935 compared to $2,806,480 for the same period in 2023[70] - Other cost of sales for the three months ended June 30, 2024 decreased by $333,410 or 98.4% to $5,533 compared to $338,943 for the same period in 2023[66] - Interest expense for the three months ended June 30, 2024 increased by $46,316 or 8.6% to $587,971 compared to $541,655 for the same period in 2023[71] - The company’s operating lease expense for the six months ended June 30, 2024, was $1,059,249, compared to $1,084,968 for the same period in 2023, indicating a decrease of approximately 2.4%[39] Backlog and Future Revenue - The Company's total backlog as of June 30, 2024 was $511,752,000, slightly down from $513,351,000 as of December 31, 2023[48] - Funded backlog as of June 30, 2024 was $87,049,000, down from $118,218,000 as of December 31, 2023[48] - The company expects to recognize approximately $4.1 million in revenue from contract liabilities that were included in the balance as of January 1, 2024[21] Tax and Compliance - The Company's effective income tax rate for the six months ended June 30, 2024 was 19.4%, compared to 12.2% for the same period in 2023[44] - The provision for income tax for the three months ended June 30, 2024 was $341,572, an increase from $98,789 for the same period in 2023[43] Internal Controls and Risk Management - A material weakness in internal control over financial reporting was identified, specifically related to income tax accounting, which the company is working to remediate in 2024[91] - The company replaced its outside tax accounting firm to improve internal controls and has updated its financial risk assessment to reflect tax accounting as a high-risk area[93] - The company is developing new controls to address the identified material weakness in internal control over financial reporting[92] - There have been no material changes in risk factors that could adversely affect the company's business or financial condition[95] Debt and Financing - As of June 30, 2024, the company had $18,840,000 outstanding under the Revolving Loan, down from $20,040,000 on December 31, 2023, a decrease of approximately 6.0%[35] - The company’s interest rate on the Revolving Loan was 12.00% as of June 30, 2024, based on a Prime Rate of 8.50%[35] - The company has no availability for borrowings under the Revolving Loan and finances operations from internally generated cash flow[84] - The company is required to maintain a minimum debt service coverage ratio of no less than 1.5 to 1.0 and a maximum leverage ratio of no more than 4.0 to 1.0 for the trailing four fiscal quarters[83] Stock and Compensation - The company had 2,364 shares available for grant under the 2009 Performance Equity Plan as of June 30, 2024[23] - The 2016 Long Term Incentive Plan has 331,912 shares available for grant as of June 30, 2024, after increasing the reserved shares to 2,200,000[24] - Total stock-based compensation expense for the three months ended June 30, 2024, was $175,536, compared to $180,216 for the same period in 2023, reflecting a decrease of approximately 3.8%[25] - At June 30, 2024, unamortized stock-based compensation costs related to restricted share arrangements amounted to $482,781[30] Cash Flow - Cash flows from operating activities resulted in a net cash used of $(1,552,224) for the six months ended June 30, 2024, compared to a net cash provided of $875,137 in the same period of 2023[8] - Cash decreased by $3,158,097 or 62% to $1,936,697 at June 30, 2024, primarily due to cash flow used in operating activities and repayment of debt[80] Inflation and Economic Conditions - Inflation has not historically affected operations materially, but the company actively monitors its impact on interest rates and supply chain[88] - The company believes its existing resources will be sufficient to meet current working capital needs for at least the next 12 months[85]
CPI Aero(CVU) - 2024 Q2 - Quarterly Report