CPI Aerostructures sales miss expectations
CPI Aerostructures Inc., the Edgewood aircraft parts maker, said its fourth quarter sales fell short of expectations due to ongoing fears that Washington lawmakers will fail to reach a budget deal, triggering a landslide of government spending cuts.
The company, whose stock dropped 15.60 percent Wednesday, to $9.74 a share, does not plan to release its fourth-quarter financial results until March. But CPI said revenue was lower than anticipated during October, November and December on concerns that lawmakers would fail to reach a tax and spending deal and avert the "fiscal cliff."
"We underestimated the severity of the marketplace uncertainty that weighed on our industry for the better part of 2012," CPI Aero president and chief executive Edward J. Fred said in a statement.
While Long Island's aerospace industry has shrunk considerably in recent decades, there are still nearly 830 companies here with close ties to the defense, aerospace and homeland security markets. Many have been postponing key decisions and bracing themselves for a drop in orders in the event of $1.2 trillion in automatic spending cuts, known as "sequestration," that would take effect if lawmakers fail to reach a budget deal by March 1.
"They are going to have to hold off in terms of hiring. They are going to have to hold off in terms of making decisions with their suppliers," said Frank Otto, president of the Long Island Forum for Technology, a nonprofit manufacturing trade organization.
CPI, which makes parts for the U.S. Air Force and other branches of the military, released preliminary annual earnings Wednesday for 2012, which overall was the company's best year ever. Revenue climbed 21 percent in 2012 to $89.6 million. Net income rose 50 percent to $11.1 million, or $1.42 per share.
Based on those figures, the company appears to have generated $27.68 million in revenue during the fourth quarter, falling short of the $30.5 million that analysts anticipated. CPI plans to release its full earnings next month, including its fourth quarter figures.
The company also plans to release its 2013 guidance once the outcome of the budget debate is clear. CPI does, however, anticipate that sales will slip this year, Fred said.
"Regardless of whether sequestration occurs," he said, "we believe that its very threat will impact our business in 2013."