By GREGORY ZELLER //
Don’t be fooled by the numbers at CPI Aerostructures Inc., which on Tuesday reported a dramatic decline in fourth-quarter and Fiscal Year 2016 revenues – but according to President and CEO Douglas McCrosson is following a well-considered, multiyear growth plan.
Reporting on the fourth quarter of FY2016, which ended Dec. 31, the Edgewood-based aerospace manufacturer (Nasdaq: CVU) reported quarterly revenues of $24.3 million, down from the $31.6 million reported in the fourth quarter of FY2015.
However, the rest of the fourth-quarter numbers were up, year over year, with CPI Aero reporting healthy increase in gross profits ($5.9 million, up from $3.6 million), pre-tax income ($3.4 million, up from $1.6 million) and net income ($2.1 million, up from $700,000).
Put it all together, and CPI Aero recorded a year-over-year spike in fourth-quarter earnings per diluted share, up 200 percent to 24 cents.
The manufacturer’s full-year numbers were not as bright. For FY2016, CPI Aero reported revenues of $81.3 million, down from the $100.2 million reported for FY2015, as well as a pre-tax loss of $5.7 million – down from the previous year’s $8 million pre-tax income – and a net loss of $3.6 million, well off FY2015’s $5 million net income.
All told, CPI Aero’ FY2016 loss per diluted share was 42 cents, compared to FY2015 earnings of 58 cents per diluted share.
McCrosson blamed the sour numbers on a non-cash charge related to the company’s A-10 Wing Replacement Program taken during the first quarter of 2016. In reporting its first quarter 2016 results last spring, CPI Aero announced it had incurred a non-cash charge of approximately $13.5 million “related to its estimate to perform through the conclusion of the order.”
In a statement to investors Tuesday, McCrosson said the A-10 WRP could be revived by President Donald Trump, but said there was “too much uncertainty” to include the program in the company’s 2017 forecasts.
Even without including the Wing Replacement Program, CPI Aero is predicting a bottom-line bounce this fiscal year, with revenues approaching $87 million and pre-tax income in the range of $8.1 million to $8.5 million.
The company’s FY2017 got off to a strong start in January, when CPI Aero announced a new indefinite delivery/indefinite quantity contract from Texas-based Bell Helicopter to manufacture engine-cowl assemblies and support assemblies for the AH-1Z Viper attack helicopter. The open-ended contract, which runs through December 2020, carries a potential value of $14.8 million.
That deal – combining military interests and long-term production – represents the heart of CPI Aero’s growth plan, according to its CEO.
“Our financial results for fiscal 2016 reflect continued successful execution on a strategy first undertaken in 2014 to drive growth and profitability by leveraging our roots in the defense market and placing greater sales emphasis on multiyear opportunities,” McCrosson said Tuesday, noting multiyear defense programs comprised about 77 percent of the company’s year-end backlog, “with the majority just beginning or about to begin generating revenue.”
“In 2017, we expect increased global spending on defense systems will be a tailwind to drive demand for our products,” McCrosson added.