CPI Aero(US:CVU)2025-08-19 21:24Executive Summary 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 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, 202546 - Excluding this impact, Q2 2025 gross margin was 17.1% and six-month gross margin was 19.3%46 CEO Commentary and Strategic Outlook 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 Raytheon5 - 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 2.756 - 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 Embraer7 - Management identified a material weakness in internal control over financial reporting related to the classification of debt, which is currently being remediated7 Company Information This section details CPI Aerostructures' business, forward-looking statement disclaimers, and investor relations contact information About CPI Aerostructures 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 systems8 - The company serves both the commercial aerospace and national security markets8 - 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 Forward-Looking Statements 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 uncertainties910 - 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-K10 - The Company disclaims any intention or obligation to update or revise any forward-looking statement10 Investor Relations 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.com12 - Company Contact: Pamela Levesque, Interim Chief Financial Officer, (631) 586-5200, plevesque@cpiaero.com12 - Company website: www.cpiaero.com[11](index=11&type=chunk) Consolidated Financial Statements This section presents CPI Aerostructures' balance sheets and statements of operations for the periods ended June 30, 2025 Consolidated Balance Sheets 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 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 This section provides a reconciliation of non-GAAP Adjusted EBITDA, highlighting its calculation and purpose for financial analysis Adjusted EBITDA Reconciliation 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 expense17 - 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 measures1821 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 |