8-K
Cpi Aerostructures Inc (CVU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 31, 2020
| CPI AEROSTRUCTURES, INC. | ||
|---|---|---|
| (Exact<br> Name of Registrant as Specified in Charter) | ||
| New York | 001-11398 | 11-2520310 |
| --- | --- | --- |
| (State<br> or Other Jurisdiction<br><br> <br>of<br> Incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 91 Heartland Boulevard, Edgewood, New York | 11717 | |
| --- | --- | |
| (Address<br> of Principal Executive Offices) | (Zip<br> Code) |
Registrant’s telephone number, including area code: (631) 586-5200
| N/A |
|---|
| (Former<br> Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Securities<br>registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common<br> stock, $0.001 par value per share | CVU | NYSE<br> American |
| Item 2.02 | Results of Operations and Financial Condition. | |
| --- | --- |
On December 31, 2020, CPI Aerostructures, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2020. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.
The information furnished under this Item 2.02, including the exhibit related thereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure. |
|---|
The information set forth under Item 2.02 is incorporated under this Item by reference.
| Item 9.01 | Financial Statements and Exhibits. | |
|---|---|---|
| (d) | Exhibits: | |
| Exhibit No. | Description | |
| 99.1 | Press Release, dated December 31, 2020. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: December 31, 2020 | CPI AEROSTRUCTURES, INC. | |
|---|---|---|
| By: | /s/ Douglas McCrosson | |
| Douglas McCrosson | ||
| Chief Executive Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CPIAEROSTRUCTURES REPORTS THIRD QUARTER 2020 RESULTS
ThirdQuarter 2020 vs. Third Quarter 2019
| • | Revenue<br> of $25.6 million compared to $22.7 million; |
|---|---|
| • | Gross<br> profit of $4.2 million compared to $1.9 million; |
| --- | --- |
| • | Gross<br> margin was 16.4% compared to 8.5%; |
| --- | --- |
| • | Net<br> income of $0.82 million compared to net loss of $1.3 million; |
| --- | --- |
| • | Earnings<br> per diluted share of $0.07 compared to loss per diluted share of $0.11; |
| --- | --- |
| • | Cash<br> used by operations was $2.4 million compared to a use of $0.65 million; |
| --- | --- |
| • | Total<br> backlog as of September 30, 2020 of $536.9 million including multi-year defense contracts<br> of $480.2 million compared to total backlog as of September 30, 2019 of $523.3 million,<br> including multi-year defense contracts of $454.1 million; |
| --- | --- |
| • | Total<br> funded backlog of $189.6 million as of September 30, 2020, of which 97% or $183.9 million<br> is comprised of defense orders, compared to total funded backlog of $153.4 as of September<br> 30, 2019, of which 91%, or $139.7 million is comprised of defense orders. |
| --- | --- |
NineMonths 2020 vs. Nine Months 2019
| • | Revenue<br> of $62.2 million compared to $64.8 million; |
|---|---|
| • | Gross<br> profit of $7.5 million compared to $6.7 million; |
| --- | --- |
| • | Gross<br> margin of 12.0% compared to 10.3%; |
| --- | --- |
| • | Net<br> loss of $2.6 million compared to a net loss of $3.1 million; |
| --- | --- |
| • | Loss<br> per share of $0.22 compared to a loss per share of $0.26; |
| --- | --- |
| • | Cash<br> flow used by operations of $3.3 million compared to a use of $4.0 million |
| --- | --- |
EDGEWOOD,N.Y. – December 31, 2020 – CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today announced financial results for the three and nine month periods ended September 30, 2020. In addition, CPI Aero has filed Form 10-Q for the quarter ended September 30, 2020; as a result, the company is now current with SEC financial reporting requirements and has regained compliance with the NYSE’s timely filing criteria.
“Third quarter revenue surged 30% over the second quarter as we began to ramp up production on newer defense programs. This production ramp up along with continued effective execution of our funded defense backlog drove a 38% sequential increase in revenue from defense contracts, which more than compensated for ongoing softness in our commercial aviation business. As a result, for the third quarter gross profit margin expanded 330 basis points to 16.4% and the bottom line swung $1.4 million to net income of $0.8 million,” said Douglas McCrosson, president and CEO of CPI Aero.
“Based on our solid third quarter results, we are increasingly confident in our expectations for accelerated revenue and margin improvement for the second half of 2020 compared to the first half and for revenue growth and higher operating income for 2020 compared to 2019. Looking ahead to 2021, our $183.9 million funded defense backlog gives us a high degree of confidence to affirm our previous 2021 outlook for growth in revenue, operating income and operating cash. Our demonstrated track record of competing for and winning new opportunities should help us sustain our strong backlog which will position us well for attractive long-term growth.”
| CPI Aero Q3’20 Earnings<br> Press Release | Page<br> 2 |
|---|---|
| December<br> 31, 2020 |
ConferenceCall
Management will host a conference call on Monday, January 4, 2021 at 8:30 AM ET to discuss these results. After opening remarks there will be a question and answer period. Interested parties may participate in the call by dialing 844-378-6486 or 412-542-4181. Please call 10 minutes before the conference call is scheduled to begin and ask for the CPI Aero call. The conference call will also be broadcast live over the Internet. Additionally, a slide presentation will accompany the conference call. To listen to the live call, please go to www.cpiaero.com, click the Investor Relations section, then the Event Calendar. Please go to the website 15 minutes early to download and install any audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days.
About CPI Aero
CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance and Electronic Warfare pod systems, primarily for national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services. CPI Aero is included in the Russell Microcap® Index.
The above statements include forward looking statements that involve risks and uncertainties, which are described from time to time in CPI Aero's SEC reports, including CPI Aero's Form 10-K for the year ended December 31, 2019 and Forms 10-Q for the three-month periods ended March 31, 2020, June 30, 2020,and September 30, 2020.
CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.
Contact:
Investor Relations Counsel:
LHA Investor Relations
Jody Burfening
(212) 838-3777
www.lhai.com
– Tables to Follow –
| CPI Aero Q3’20 Earnings<br> Press Release | Page<br> 3 |
|---|---|
| December<br> 31, 2020 |
CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash | 3,589,095 | $ | 4,052,109 | ||
| Restricted cash | 1,380,684 | 1,380,684 | |||
| Accounts receivable, net of allowance for doubtful accounts of 239,547 as of September 30, 2020 and 230,855 as of December 31, 2019 | 7,309,323 | 7,029,602 | |||
| Contract assets | 18,409,267 | 15,280,807 | |||
| Inventory | 8,742,093 | 5,891,386 | |||
| Refundable income taxes | 35,459 | 474,904 | |||
| Prepaid expenses and other current assets | 600,889 | 721,964 | |||
| Total current assets | 40,066,810 | 34,831,456 | |||
| Operating lease right-of-use assets | 2,730,567 | 3,886,863 | |||
| Property and equipment, net | 2,618,887 | 3,282,939 | |||
| Intangibles, net | 281,250 | 375,000 | |||
| Goodwill | 1,784,254 | 1,784,254 | |||
| Other assets | 205,844 | 179,068 | |||
| Total assets | 47,687,612 | $ | 44,339,580 | ||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||
| Current Liabilities: | |||||
| Accounts payable | 13,009,645 | $ | 8,199,557 | ||
| Accrued expenses | 3,333,335 | 2,372,522 | |||
| Contract liabilities | 2,469,441 | 3,561,707 | |||
| Loss contract reserve | 1,569,447 | 2,650,963 | |||
| Current portion of long-term debt | 5,377,559 | 2,484,619 | |||
| Operating lease liabilities | 1,821,136 | 1,709,153 | |||
| Income tax payable | 1,216 | 1,216 | |||
| Total current liabilities | 27,581,779 | 20,979,737 | |||
| Line of credit | 20,738,685 | 26,738,685 | |||
| Long-term operating lease liabilities | 1,212,573 | 2,596,784 | |||
| Long-term debt, net of current portion | 7,811,467 | 1,764,614 | |||
| Total liabilities | 57,344,504 | 52,079,820 | |||
| Shareholders’ Deficit: | |||||
| Common stock - .001 par value; authorized 50,000,000 shares, 11,926,177 and 11,818,830 shares, respectively, issued and outstanding | 11,926 | 11,819 | |||
| Additional paid-in capital | 71,972,011 | 71,294,629 | |||
| Accumulated Deficit | (81,640,829 | ) | (79,046,688 | ) | |
| Total Shareholders’ Deficit | (9,656,892 | ) | (7,740,240 | ) | |
| Total Liabilities and Shareholders’ Deficit | 47,687,612 | $ | 44,339,580 |
All values are in US Dollars.
| CPI Aero Q3’20 Earnings<br> Press Release | Page<br> 4 |
|---|---|
| December<br> 31, 2020 |
CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | 2020 | **** | 2019 | **** | **** | 2020 | **** | **** | 2019 | **** | |
| Revenue | $ | 25,576,718 | $ | 22,689,762 | $ | 62,175,872 | $ | 64,779,858 | |||
| Cost of sales | 21,394,243 | 20,757,649 | 54,715,508 | 58,120,687 | |||||||
| Gross profit | 4,182,475 | 1,932,113 | 7,460,364 | 6,659,171 | |||||||
| Selling, general and administrative expenses | 3,050,644 | 2,806,498 | 8,958,986 | 8,259,945 | |||||||
| Income (Loss) from operations | 1,131,831 | (874,385 | ) | (1,498,622 | ) | (1,600,774 | ) | ||||
| Interest expense | 309,008 | 378,195 | 1,085,805 | 1,464,376 | |||||||
| Income (Loss) before provision for income taxes | 822,823 | (1,252,580 | ) | (2,584,427 | ) | (3,065,150 | ) | ||||
| Provision for income taxes | 7,614 | 2,471 | 9,714 | 5,784 | |||||||
| Net loss | $ | 815,209 | $ | (1,255,051 | ) | $ | (2,594,141 | ) | $ | (3,070,934 | ) |
| Income (Loss) per common share – basic | $ | 0.07 | $ | (0.11 | ) | $ | (0.22 | ) | $ | (0.26 | ) |
| Income (Loss) per common share – diluted | $ | 0.07 | $ | (0.11 | ) | $ | (0.22 | ) | $ | (0.26 | ) |