CPI Aerostructures Inc., the Edgewood aircraft parts maker, Tuesday said its first quarter profits slipped as across-the-board spending cuts took effect in Washington.
The company's net income dropped 13 percent, to $1.7 million, or 20 cents a share. Revenue was virtually flat, at $19.9 million
"The federal budget sequester has resulted in delayed contract decisions by many prime contractors in the aerospace and defense sector, including our customers," CPI president and chief executive Edward J. Fred said.
CPI, which makes parts for the U.S. Air Force and other branches of the military, secured roughly $11.5 million in new contracts as of March 31, including $4.5 million in government subcontracts and $7 million in commercial work. That's down 64 percent from last year, when the company landed $31.7 million in new contracts.
Earlier this year CPI warned investors that sales were likely to slip as it became clear lawmakers were failing to secure a budget deal and would trigger a landslide of spending cuts.
As the drama unfolded in Washington, much of the aerospace industry was paralyzed with uncertainty. Now that cuts are in place and it's clear what military programs have been hit, CPI expects sales to rebound.
"Sequestration has become a reality, and as the company and our customers have more definite information regarding certain key defense programs, we expect new orders for military aircraft to accelerate in the coming months," Fred said.
Tuesday's earning reports exceeded the expectations of analysts, who predicted CPI would hit $17.8 million in sales. Nonetheless, the company's stock dipped 11 cents to $9.44 in trading Tuesday.