8-K
Cpi Aerostructures Inc (CVU)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
WASHINGTON,D.C. 20549
______________
FORM8-K
CURRENTREPORT
PURSUANTTO SECTION 13 OR 15(d) OF THE
SECURITIESEXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 30, 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 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 September 30, 2020, CPI Aerostructures, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 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<br> No. | Description |
|---|---|
| 99.1 | Press Release dated September 30, 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: September<br> 30, 2020 | CPI<br> AEROSTRUCTURES, INC. | |
|---|---|---|
| By: | /s/<br> Douglas McCrosson | |
| Douglas<br> McCrosson | ||
| Chief<br> Executive Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CPI AEROSTRUCTURESREPORTS FIRST QUARTER 2020 RESULTS
First Quarter 2020 vs. Restated FirstQuarter 2019
| • | Revenue of $16.9 million compared to $22.0 million; |
|---|---|
| • | Gross profit of $0.7 million compared to $2.5 million; |
| --- | --- |
| • | Gross margin was 4.1% compared to 11.3%; |
| --- | --- |
| • | Net loss of $2.8 million compared to $0.9 million; |
| --- | --- |
| • | Loss per diluted share of $0.24 compared to $0.08; |
| --- | --- |
| • | Cash flow from operations was $(1.4) million compared to $(2.3) million; |
| --- | --- |
| • | Total backlog as of March 31, 2020 of $556.4 million compared to $561.9<br>million as of December 31, 2019, including multi-year defense contracts of $499.1 million as of March 31, 2020 versus $496.7 million<br>as of December 31, 2019; |
| --- | --- |
| • | Total funded backlog of $211.1 million as of March 31, 2020 compared<br>to $147.6 million as of December 31, 2019, of which 98% or $206.4 million is comprised of defense orders. |
| --- | --- |
EDGEWOOD,N.Y. – September 30, 2020 – CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE American: CVU) today announced financial results for its first quarter ended March 31, 2020.
“Our successful execution of a defense-centric business development strategy over the past few years is paying off. We posted another record defense backlog at quarter end by leveraging long-term relationships with the largest aerospace and defense companies in the world. We are pleased that we received several new firm orders during the quarter that increased our funded defense backlog by more than $60 million during the quarter to $206.4 million. This gives us a stable business near term and attractive long-term growth opportunities,” said Douglas McCrosson, president and CEO of CPI Aero.
“The first quarter decline in revenue was largely a matter of timing as we had significant revenue in the first quarter of 2019 for our Next Generation Jammer Mid-Band (NGJ-MB) Pod we produce for Raytheon Technologies. One development phase of the NGJ – MB pod program was virtually completed by the end of 2019 and there was little revenue for this program in the first quarter of this year. CPI Aero has recently begun the next phase of the NGJ-MB pod program and the program is expected to be a strong revenue program during the second half of 2020. Additionally, revenue declined as our commercial programs had lower demand even prior to the COVID-19 pandemic that, subsequent to the end of the first quarter, resulted in deferred and cancelled orders for certain business jet programs.” added Mr. McCrosson.
“An unfavorable product mix also negatively affected margins during the quarter, created largely by the reduction in NGJ-MB pod program revenue mentioned above. We also revised our estimate for our factory overhead rate to account for the lower absorption of fixed costs largely resulting from the anticipated impact of the COVID-19 pandemic on certain business jet programs. Revising overhead rate estimates had a cumulative “catch-up” effect on program profitability that resulted in a gross profit of 4% for the quarter. We expect that margins will have reached their low point in 1Q20 and that full-year 2020 gross margin percentage will be higher than it was in 2019 as our product mix for the remainder of 2020 returns to a more favorable mix between commercial and defense programs.”
“We remain very focused on cash flow and liquidity and we were able to improve cash flow from operations by approximately $900,000 on lower revenue compared to the year ago period, notwithstanding approximately $578,000 in non-recurring accounting and legal expenses in the first quarter related to the restatement and ongoing litigation resulting from the restatement.”
| CPI Aero Q1’20 Earnings Press Release | Page 2 |
|---|---|
| September 30, 2020 |
“Looking forward, we continue to believe we are well positioned to increase revenue and return to profitability in fiscal 2020 despite incurring COVID-19 related expenses and significant non-recurring professional expenses expected to be approximately $1.5 million during the year. In addition, cash savings from continued cost management and careful control of inventory levels and other working capital improvement initiatives are expected to largely offset the cash projected to be used to pay non-recurring legal and accounting expenses.” concluded McCrosson.
ConferenceCall
Management will host a conference call on Thursday, October 1, 2020 at 8:30 a.m. to discuss these results as well as recent corporate developments. 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.
AboutCPI 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 Form 10-Q for the three-month period ended March 31, 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
cpiaero@lhai.com
www.lhai.com
– Tables to Follow –
| CPI Aero Q1’20 Earnings Press Release | Page 3 |
|---|---|
| September 30, 2020 |
CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
| December 31,<br><br>2019 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets: | |||||
| Cash | 1,998,697 | $ | 4,052,109 | ||
| Restricted cash | 1,380,684 | 1,380,684 | |||
| Accounts receivable, net of allowance for<br> doubtful accounts of 235,588 as of March 31, 2020 and 230,855 as of December 31, 2019 | 6,107,968 | 7,029,602 | |||
| Contract assets | 15,814,549 | 15,280,807 | |||
| Inventory | 6,940,139 | 5,891,386 | |||
| Refundable income taxes | 473,398 | 474,904 | |||
| Prepaid<br> expenses and other current assets | 688,006 | 721,964 | |||
| Total current assets | 33,403,441 | 34,831,456 | |||
| Operating lease right-of-use assets | 3,507,760 | 3,886,863 | |||
| Property and equipment, net | 3,061,106 | 3,282,939 | |||
| Intangibles, net | 343,750 | 375,000 | |||
| Goodwill | 1,784,254 | 1,784,254 | |||
| Other assets | 151,041 | 179,068 | |||
| Total assets | 42,251,352 | $ | 44,339,580 | ||
| LIABILITIES AND SHAREHOLDERS’<br> DEFICIT | |||||
| Current Liabilities: | |||||
| Accounts<br> payable | 8,255,635 | $ | 8,199,557 | ||
| Accrued<br> expenses | 3,051,727 | 2,372,522 | |||
| Contract<br> liabilities | 4,749,373 | 3,561,707 | |||
| Loss reserve | 2,145,556 | 2,650,963 | |||
| Current<br> portion of long-term debt | 2,460,639 | 2,484,619 | |||
| Operating<br> lease liabilities | 1,745,616 | 1,709,153 | |||
| Income<br> tax payable | 1,216 | 1,216 | |||
| Total current liabilities | 22,409,762 | 20,979,737 | |||
| Line of credit | 26,738,685 | 26,738,685 | |||
| Long-term operating lease liabilities | 2,142,574 | 2,596,784 | |||
| Long-term debt, net of current<br> portion | 1,165,905 | 1,764,614 | |||
| Total liabilities | 52,456,926 | 52,079,820 | |||
| Shareholders’ Deficit: | |||||
| Common stock<br> - .001 par value; authorized 50,000,000 shares, 11,837,218 and 11,818,830 shares, respectively, issued and outstanding | 11,837 | 11,819 | |||
| Additional<br> paid-in capital | 71,641,796 | 71,294,629 | |||
| Accumulated<br> Deficit | (81,859,207 | ) | (79,046,688 | ) | |
| Total Shareholders’<br> Deficit | (10,205,574 | ) | (7,740,240 | ) | |
| Total Liabilities<br> and Shareholders’ Deficit | 42,251,352 | $ | 44,339,580 |
All values are in US Dollars.
| CPI Aero Q1’20 Earnings Press Release | Page 4 |
|---|---|
| September 30, 2020 |
CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2020 | 2019 | |||||
| Revenue | $ | 16,858,386 | $ | 21,988,384 | ||
| Cost of sales | 16,160,567 | 19,504,968 | ||||
| Gross profit | 697,819 | 2,483,416 | ||||
| Selling, general and administrative expenses | 3,093,090 | 2,905,686 | ||||
| Loss from operations | (2,395,271 | ) | (422,270 | ) | ||
| Interest expense | 416,670 | 510,769 | ||||
| Loss before provision for (benefit from) income taxes | (2,811,941 | ) | (933,039 | ) | ||
| Provision for (benefit from) income taxes | 578 | 1,677 | ||||
| Net loss | $ | (2,812,519 | ) | $ | (934,716 | ) |
| Loss per common share – basic | $ | (0.24 | ) | $ | (0.08 | ) |
| Loss per common share – diluted | $ | (0.24 | ) | $ | (0.08 | ) |
| Shares used in computing loss per common share: | ||||||
| Basic | 11,837,014 | 11,736,305 | ||||
| Diluted | 11,837,014 | 11,736,305 |