CPI Aero(US:CVU)2025-08-19 21:23Revenue 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]