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CPI Aero reports 9.8% increase in first quarter revenue

CPI Aero chief executive Douglas McCrosson on a

CPI Aero chief executive Douglas McCrosson on a manufacturing floor in Edgewood on March 25, 2014, where leading edges for the Gulfstream G650 aircraft are made. Credit: Heather Walsh

CPI Aerostructures Inc., one of Long Island's homegrown aerospace companies, posted a 9.8 percent year-over-year increase in first quarter revenue to $21.9 million, driven by increased commercial aerospace production.

But CPI Aero's stock fell 7 percent yesterday as the company's order backlog and gross margins contracted.

The Edgewood company reported a 3.4 percent increase in net income to $1.73 million, or 20 cents per diluted share, versus $1.67 million, or 20 cents per share, in the year-ago quarter.

CPI Aero, one of a crop of companies that grew up here in the shadow of giant defense contractor Grumman Corp. -- merged into Northrop Corp. in 1994 -- has scrambled in recent years to balance its government business with work on commercial aircraft.

CEO Douglas McCrosson attributed the quarter's increased revenue to a 30 percent surge from commercial subcontracts to more than $7.2 million.

"This was the result of higher production rates from our contracts with Cessna and Embraer, programs currently in production stage," he said.

Military subcontracts and direct government contracts, meanwhile, inched higher to $14.2 million and $500,000, he said.

Gross margin for the quarter ended March 31 shrank to 20.5 percent from 22.3 percent in the prior year's period. And total backlog -- elements of long-term contracts that have yet to be fulfilled -- was $410.3 million, $21.1 million less than at Dec. 31, 2013.

As of the quarter's end on March 31, the company had logged about $4.7 million in new contracts, compared to $11.5 million in the same period last year.

Shares of CPI, trading on heavy volume, fell 94 cents, or 7.26 percent, to close at $12.

McCrosson also said that he and several members of New York's congressional delegation have been campaigning on Capitol Hill to save the A-10 "Warthog," a jet that the Department of Defense wants to mothball in 2015. CPI Aero is a subcontractor in a program to replace the A-10 fleet's wings.

In a conference call, McCrosson discussed the company's efforts to land contracts for commercial airliners. He said that the company should know within 90 days the outcome of one potential contract. Other airliner contracts in the works, however, would take longer to close, he said.

McCrosson said the company is submitting or preparing proposals for work on the Airbus A380, A350 and A320 Neo; the Boeing 737, 737 Max and 787; and the next generation of Embraer E-jets.

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