Shares of CPI Aerostructures Inc., the Edgewood-based aircraft parts maker, fell sharply Wednesday after the company said fourth quarter sales were unexpectedly low due to fears of sharp cuts to government military spending.
The company, whose stock was down 13 percent, to $10 a share, does not plan to release its fourth-quarter sales figures until March. But CPI officials said revenue sagged on uncertainty over whether lawmakers would reach a tax and spending deal to avert the so called “fiscal cliff” and prevent billions in automatic cuts to government military spending.
“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. “We have reported for some time that the looming threat of forced, across-the-board government spending cuts, known as sequestration, had resulted in delayed contract decisions by many prime contractors in the aerospace and defense sector, including our customers.”
Fred’s statement accompanied the release of CPI’s preliminary annual earnings for 2012, which overall was the company’s best year ever. Revenue climbed 21 percent in 2012, $89.6 million. Net income rose 50 percent, to $11.1 million, or $1.42 per share.
The company plans to release its full earnings next month, including its fourth quarter figures.
Washington has until March 1 to reach a deal to prevent the automatic cuts, known as sequestration. CPI plans to release its 2013 guidance once the outcome is clear.
“Regardless of whether sequestration occurs, we believe that its very threat will impact our business in 2013,” Fred said. “We now believe that 2013 revenue and earnings will be lower than 2012 and the results will be similar to those of 2011, which was the second best year in the history of the company.”