CPI Aerostructures Announces Third Quarter Results; Q3 Revenue Increases 11% and Pretax Profits Up 48%; Nine-Months Revenue and Pretax Profits Up 15% and 114%, Respectively.Business Editors EDGEWOOD, N.Y.--(BUSINESS WIRE)--Nov. 3, 2003 CPI (1) (Characters Per Inch) The measurement of the density of characters per inch on tape or paper. A printer's CPI button switches character pitch. (2) (Counts Per I Aerostructures, Inc. ("CPI") (AMEX AMEX See: American Stock Exchange :CVU CVU Canadian Virtual University CVU Cerner Virtual University CVU Corvo Island, Azores, Portugal (airport code) CVU Case Value Update ) today announced operating results for the third quarter ended September 30, 2003. Primarily due to the public offering of 2,300,000 shares in the first quarter of 2003, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the three and nine month periods are calculated on 83% and 73% more shares than in the respective periods of 2002. Third Quarter 2003 versus 2002: -- Revenue rose 11% to $7,851,067 compared with $7,088,614; -- Gross margin was 32% compared with 31%; -- Pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. was $1,844,804 or 23% of revenue, compared with $1,247,200, or 18% of revenue; however, pretax income included a $41,236 gain on the sale of "assets held for sale - discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ." Excluding the gain, pretax income was $1,803,568 which represents 23% of revenue; -- Net income was $1,844,804 or $0.35 per share and $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $1,248,200, or $0.46 per share and $0.38 per diluted share. Excluding the gain discussed above, net income was $1,803,568. Net income, excluding the non-recurring gain, if taxed at a 40% effective tax rate, would have been $1,082,141, or $0.21 per share and $0.18 on a diluted basis. Nine Months 2003 versus 2002: -- Revenue increased 15% to $20,752,731, compared with $17,988,748; -- Gross margin was 32% compared with 30%; -- Pretax income was $7,104,477, or 34% of revenue, compared with $3,322,892, or 18% of revenue; however, pretax income included a $461,235 gain on the "sale of assets held for sale - discontinued operations" and a $2,431,233 gain on the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. Excluding these gains, pretax income rose 27% to $4,212,009, or 20% of revenue; -- Net income was $7,104,477, or $1.50 per share and $1.31 per diluted share, compared with $2,793,892, or $1.03 per share and $0.89 per diluted share. Excluding the gains discussed above, net income was $4,212,009. Net income, excluding the non-recurring gains, if taxed at a 40% effective tax rate, would have been $2,527,205, or $0.53 per share and $0.47 per diluted share, compared with fully taxed net income of $1,993,735, or $0.74 per share and $0.64 per diluted share in 2002. Non-Recurring Items for the Third Quarter and Nine Months 2003: -- During 2003, CPI sold the remaining assets of Kolar, Inc. (discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. as of 12/31/01), which resulted in a $41,236 gain in the third quarter, a $166,667 gain in the second quarter, and a $253,332 gain in the first quarter. Each of these transactions was recorded as disposition of "assets held for sale - discontinued operations"; -- $2.7 million of the $7.8 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of CPI's February 19, 2003 secondary public offering was used to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. a $4.0 million note and the related accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. interest at a substantial discount, which resulted in a $2.4 million gain from the early extinguishment of debt in the first quarter; -- CPI utilized a portion of its NOL NOL - Never Offline in the first, second and third quarters, so there was no provision for income taxes. Last year, the Company benefited from a tax valuation adjustment resulting in a tax benefit of $1,000 in the third quarter and an effective tax rate of 16% for the nine month period. Edward J. Fred, CPI's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. & President, stated, "We are pleased to have posted another quarter of strong results. Through October 31, 2003, new contract awards were up 37% to $28.9 million compared to the same period last year, which is greater than total awards of $24.5 million booked in all of 2002. In addition to C-5A C-5A Galaxy (USAF cargo aircraft) Galaxy and T-38 Trainer awards, we've seen a resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of A-10 Thunderbolt orders. Our accomplishments have been recognized by Forbes magazine, which recently ranked CPI #10 in its 2003 list of the nation's best small companies based on a combination of investment criteria." Anthony M. D'Agostino, CPI's CFO See Chief Financial Officer. added, "Income from operations rose 25% to $1,798,816 from $1,433,815 due to a confluence confluence /con·flu·ence/ (kon´floo-ins) 1. a running together; a meeting of streams.con´fluent 2. in embryology, the flowing of cells, a component process of gastrulation. of factors. Gross margin for the third quarter improved to 32%, putting us on track to meet our gross margin target of 30%-32% for the full year. SG&A as a percentage of revenue declined to 9% from 11% in last year's third quarter as costs remained in check. Our balance sheet is extremely strong with $3.7 million in cash and $17.5 million in working capital. Moreover, the new three-year $5 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility we secured during the quarter gives us greater financial flexibility to pursue larger RFQs and improves our chances of winning more of them." Mr. Fred added, "We anticipate fourth quarter revenue of approximately $9.2 million and remain comfortable with our 2003 revenue forecast of approximately $30 million, a 25% increase over the prior year, and net income (on an if taxed basis) of approximately $4.0 million, excluding the abovementioned a·bove·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. non-recurring gains. While it is too early to give guidance for 2004, we are confident of continued growth in revenue, new orders and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . Our longstanding relationship with the military and proven ability to execute larger contracts such as the T-38 Trainer give CPI a competitive advantage in the bidding process. Clearly, CPI is poised for long-term prosperity." CONFERENCE CALL Edward Fred and Anthony D'Agostino will host a conference call today, November 3, 2003 at 11 am ET to discuss third quarter 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 973-582-2866. Please call in 10 minutes before the scheduled time In rallying, the Scheduled Time of any crew is the time, calculated at the beginning of the event, that they should arrive at any given control. It is different from Due Time in that Due Time is dynamic, ie it can change throughout the event as competitors drop time; whereas and ask for the CPI Aerostructures call. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to www.cpiaero.com and click on the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section, then click on "Events". Please access the website 15 minutes prior to the call to download and install any necessary audio software. The conference call will be archived and can be accessed for approximately 90 days. Founded in 1980, CPI Aerostructures is engaged in the contract production of structural aircraft parts principally for the U.S. Air Force and other branches of the armed forces. In conjunction with its assembly operations, CPI provides engineering, technical and program management services. Among the key programs that CPI supplies are the C-5A Galaxy cargo jet, the T-38 Talon jet trainer, the A-10 Thunderbolt attack jet and the E-3 Sentry The Boeing E-3 Sentry is a military airborne warning and control system (AWACS) aircraft that provides all-weather surveillance, command, control and communications, to the United States, United Kingdom, France, NATO and other air defense forces. AWACS AWACS (Airborne Warning and Control System) Mobile, long-range radar surveillance-and-control centre for air defense. Used by the U.S. Air Force since 1977, AWACS is mounted in a specially modified Boeing 707 aircraft, with its main radar antenna affixed to a rotating dome. jet. The above statements include forward looking statements that involve risks and uncertainties, which are described from time to time in CPI's SEC reports, including CPI's Form 10-KSB for the year ended December 31, 2002 and Form 10-QSB for the quarter ended June 30, 2003. (See Accompanying Tables)
CPI AEROSTRUCTURES, INC.
CONDENSED STATEMENTS OF INCOME
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
Revenue $7,851,067 $7,088,614 $20,752,731 $17,988,748
Income from
operations 1,798,816 1,433,815 4,340,827 3,638,215
Other income
(expense):
Interest (expense)
/other income 4,752 (186,615) (128,818) (315,323)
Gain on
extinguishment
of debt ----- ----- 2,431,233 -----
Gain on sale of
assets held for
sale -
discontinued
operations 41,236 ----- 461,235 -----
Income before
provision for
income taxes 1,844,804 1,247,200 7,104,477 3,322,892
(Provision for)
benefit from income
taxes ----- 1,000 ----- (529,000)
----------------------------------------------------------------------
Net income $1,844,804 $1,248,200 $7,104,477 $2,793,892
======================================================================
Earnings per common
share - basic $0.35 $0.46 $1.50 $1.03
======================================================================
Earnings per common
share - diluted $0.30 $0.38 $1.31 $0.89
======================================================================
Shares used in
computing earnings
per common share:
Basic 5,217,733 2,734,898 4,730,803 2,700,785
Diluted 6,053,689 3,299,098 5,426,145 3,136,626
----------------------------------------------------------------------
Adjusted Pro Forma removing certain benefits from the comparison
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
Income before
provision for income
taxes $1,844,804 $1,247,200 $7,104,477 $3,322,892
Adjustments to
remove non
recurring gains:
Gain on sale of
assets held for
sale - discontinued
operations (41,236) ----- (461,235) -----
Gain on
extinguishment of
debt ----- ----- (2,431,233) -----
----------------------------------------------------------------------
Pretax Income
excluding non-
recurring gains $1,803,568 $1,247,200 $4,212,009 $3,322,892
Tax provision
(benefit) ----- (1,000) ----- 529,000
Adjustments to tax
provision to make
40% effective rate 721,426 499,880 1,684,804 800,157
Adjusted Net Income $1,082,141 $748,320 $2,527,205 $1,993,735
Basic EPS $0.21 $0.27 $0.53 $0.74
Diluted EPS $0.18 $0.23 $0.47 $0.64
Unaudited Audited
Balance Sheet Highlights 9/30/03 12/31/02
Cash $3,712,088 $91,537
Costs and estimated earnings in excess of
billings on uncompleted contracts 15,620,556 11,382,106
Total current assets 22,385,546 15,202,592
Total assets 22,878,398 15,604,746
Total current liabilities 4,855,370 13,227,018
Working capital 17,530,176 1,975,574
Short-term debt 20,196 8,024,160
Long-term debt 32,656 40,192
Shareholders' equity 17,990,372 2,337,536
Total Liabilities and Shareholders' Equity $22,878,398 $15,604,746
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