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CPI Aero says revenue down 25%; expects defense work to pick up

Edgewood-based CPI Aerostructures sees the federal defense contract

Edgewood-based CPI Aerostructures sees the federal defense contract pipeline improving. Credit: Google Maps

CPI Aerostructures Inc., an Edgewood aerospace contractor, on Tuesday posted lower year-over-year sales and profit results for the second quarter, but said it saw signs that federal contracts were beginning to flow through the supply chain, portending an improved business climate.

Revenue at the maker of structural assemblies for fixed- and rotary-wing aircraft fell 25 percent to $16.7 million compared with $22.3 million in the 2016 quarter, the company said. Net income was $800,000, or 9 cents per diluted share, versus $1.8 million, or 21 cents per diluted share, in the prior year’s period.

CPI Aerostructures president and chief executive Douglas McCrosson said in a telephone interview that second quarter financial results were weakened by expedited shipment of products in the first quarter. That’s reflected in revenue and net income for the year’s first six months that were higher than in the 2016 period, he said.

“We now expect to be cash-flow positive in each of the third and fourth quarters of this year,” McCrosson said.

He cited the U.S. Army’s contract with Black Hawk helicopter manufacturer Sikorsky signed in June as evidence that the outlook for defense contractors is improving.

“We were subsequently awarded a five-year, $21 million supply agreement by Sikorsky for fuel panel assemblies for the Black Hawk,” he said. “Our defense exposure and backlog, together with improving defense fundamentals and consistent execution across all facets of our business, place us firmly on a growth trajectory.”

McCrosson said the company is “optimistic” that it will resume a subcontract to refurbish the wings of the A-10 Warthog attack jet in 2018 if not sooner. In 2014, the Pentagon announced plans to retire the jet, but Congress has authorized $103 million in the 2018 budget for A-10 wings.

CPI Aeroof reaffirmed its financial guidance for fiscal 2017, calling for revenue of $82.5 million to $87 million and pretax income of $8.1 million to $8.4 million. The company’s stock closed down Tuesday 3.8 percent to $8.95. Shares have climbed about 28 percent over the past 12 months.

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