CPI Aero stock falls after firm restates financials

Shares of CPI Aerostructures Inc. fell Wednesday after the aerospace contractor restated financial results for three 2018 quarters as part of a delayed filing of its 2019 report.

The stock lost 3% to close Wednesday at $3.20 after the Edgewood company released several government filings following Tuesday's market close.

In a news release, the maker of structures for the A-10 "Warthog" ground-support aircraft and the E-2D Advanced Hawkeye early-warning aircraft, said it has "comprehensively completed" the restatement of its financial statements for 2018, including the quarters ended March 31, June 30 and Sept. 30. 

CPI Aero, which had 258 full-time employees as of Aug. 17, said it is working on reports for the quarters ended March 31, 2020, and June 30, 2020.

The company's accounting issues stretch back years. In 2015, the company began offering further financial details in its reports in response to a review by the Securities and Exchange Commission, which regulates U.S. financial markets.

Thomas Powers, formerly an executive at aerospace manufacturer the Triumph Group, became the company's acting chief financial officer in February. Powers' appointment followed the resignation in February of CFO Dan Azmon after three months in the job. Azmon had taken the place of Vincent Palazzolo, who left the company in November.

In a statement, CPI Aerostructures president and chief executive Douglas McCrosson said the company is "confident" it has appropriate accounting policies in place for future periods.

The company did not hold a conference call after the release of the reports, but McCrosson said in an email that a call would be held once the report for the first quarter of 2020 was issued. 

CPI Aerostructures said that its lender, BankUnited, had agreed to waive violations of their agreement caused by restatement of its financial reports.

The company reported a net loss of $1.38 million on revenue of $22.7 million in the fourth quarter of 2019 versus a loss of $1.7 million on revenue of $22.4 million the fourth quarter of 2018. 

For the full year of 2019, the company posted a net loss of $4.5 million on revenue of $87.5 million compared with a net loss of $7.5 million on revenue of $70.4 million in 2018.

Although CPI Aerostructures was designated an essential business by New York State and continued operations during the COVID-19 shutdown, McCrosson said the pandemic is expected to have "an adverse impact" on its 2020 results.

"Since the pandemic began, we have experienced some minor supply chain disruptions, higher than normal employee absenteeism, order quantity reductions or cancellations . . . and short-term suspensions of manufacturing at ours or our customers' facilities," he said.

CPI Aerostructures received a $4.8 million loan through the Paycheck Protection Program, a federal program designed to combat the economic impact of the pandemic.

The company also announced that its annual shareholder meeting will be held on Oct. 6 to approve on an advisory basis the compensation packages of its top executives and to ratify the appointment of CohnReznick LLP as its independent public accounting firm for 2020.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.