A 19 percent drop in revenues and 29 percent dive in net income marked a third-quarter bottom-line stumble for CPI Aerostructures, though company officials – referencing a “front-loaded” 2014 contract – downplayed the “expected” declines.
Reporting Tuesday on the third quarter of its 2016 fiscal year (ended Sept. 30), the Edgewood-based aerospace manufacturer also noted drops in gross profits (down 10.7 percent, to $5.6 million), pre-tax income (down 22.8 percent, to $2.7 million) and earnings per diluted share (19 cents, a 32.1 percent dive from 3Q FY2015).
But President and CEO Douglas McCrosson trumpeted “another quarter of solid financial performance” in a company release, touting CPI Aerostructures’ “continued focus on operational excellence and program execution.”
“We were pleased to see steady revenue and improving margin from our commercial market, and meaningful contributions from our newer multiyear defense programs,” McCrosson said.
Among those third-quarter contributions was a $2.7 million contract to work on door and duct assemblies for the U.S. Navy’s E-18G Growler aircraft, announced in September.
The third-quarter revenue and income declines, McCrosson added, are “largely attributed” to losses associated with a multiyear outer-wing panel kit contract that “front-loaded certain program activities from later years into 2015” and “accelerated the timing of revenue recognition.”
The company’s nine-month snapshot – covering the first three quarters of FY2016 – paints a slightly rosier picture, with revenues (up 5.2 percent, to $58.7 million) and gross profits (up 4.5 percent, to $13.7 million) inching higher.
Nine-month net income (down 11.3 percent) and diluted EPS (down 11.7 percent) still dipped compared to the first three quarters of FY2015, but the stronger revenues and profits, combined with a record backlog of $441.5 million as of Sept. 30, give CPI Aerostructures real fiscal optimism over the remainder of this year and into FY2017.
Among other fresh deals, McCrosson, cited that Growler subcontract, awarded by Raytheon Co.
“We continued to build momentum heading into 2017 with significant contract awards from Raytheon and Embraer (in the third quarter),” the CEO said. “Subsequent to the close of the third quarter, we announced a $5 million defense contract with Lockheed Martin/Sikorsky, and I’m optimistic that our strategy to focus on the defense market will result in additional defense contracts during the closing months of 2016.
“The success of this strategy can already be measured by our record backlog,” McCrosson added. “As of Sept. 30, $247 million of the backlog consists of defense programs announced during the past 24 months, affording us substantial revenue visibility in future years.”