CPI Aero's new CEO flies through turbulence, sees clear skies
In March, Dorith Hakim parachuted into the chief executive's seat of CPI Aerostructures Inc., a defense-industry supplier flying on a wing and a prayer.
Regulators were on the prowl because of accounting deficiencies and delayed financial filings, the stock was about to be delisted from the NYSE American Exchange and investors had driven the share price down to about a quarter of its five-year high hit in 2018.
"She had a lot on her plate," said another Long Island aerospace CEO, Teresa Ferraro of East/West Industries Inc. "CPI Aero had its own financial issues. She jumped on at a time of supply-chain issues. She came in at a turbulent time in the market and the economy."
After decades as an aerospace executive, Hakim knew that she was coming into a turnaround situation at the Edgewood-based maker of pods that house airborne electronic warfare gear and structural assemblies for the F-35 and F-16 fighters, the A-10 Thunderbolt II attack jet, the E-2D command and control aircraft and the UH-60 Black Hawk helicopter.
WHAT TO KNOW
- New CEO Dorith Hakim faced challenges when she took over CPI Aerostructures.
- The SEC was investigating and the stock was tanking.
- Up-to-date financials and expected new contracts are putting prospects for growth back on track.
"We were behind in our financial filings," she said. "We were staring at a decline in sales versus the prior year."
At the same time, she saw possibilities.
"It was a great opportunity," she said of the company, whose stock ticker symbol, CVU, is an abbreviated version of CAVU, pilot shorthand for "ceiling and visibility unlimited."
Hakim said her first priority was to straighten out long-standing accounting issues. Those problems had led to restatements of quarterly and annual results, a revolving-door succession of chief financial officers and an investigation by the Securities and Exchange Commission, which ultimately declined to file charges.
By September, the company regained compliance with the SEC by filing updated financial reports. The following month, its stock was restored to the NYSE American Exchange after a stint trading on the OTC Markets.
John Spiezio, chairman of the Garden City-based Aerospace & Defense Diversification Alliance in Peacetime Transition trade organization, said Hakim's track record and the installation of Andrew L. Davis as chief financial officer in October 2021 give comfort to CPI Aero's top-tier customers like Raytheon Technologies, Lockheed Martin, Boeing and Northrop Grumman.
"They're looking at CPI as a leader on the new programs they're launching," Spiezio said. "The new CFO has done a fantastic job cleaning up the issues of the previous regime."
'A customer perspective'
Hakim, a native of Casablanca, Morocco, emigrated as a child with her parents to Canada, where she studied business at the University of Montreal. She also earned a midcareer master's degree in business administration from Texas Christian University.
Her first job after college was with Bell Helicopter, followed by stints at Vought Aircraft Inc., Sikorsky Global Helicopters, Triumph Group and Parker Hannifin Aerospace, where she directed global supply chain for 11 divisions and oversaw a $1.9 billion budget.
Spiezio said that background is helping Hakim to shift CPI Aero from an "entrepreneurial" culture to a more "mature" company able to cope with highly complex contracts and orders. "Dorith is the cornerstone of it all."
Hakim said that her experience with larger aerospace manufacturers supplied by companies like CPI Aero allows her to see projects from their point of view.
"I've sat at our current customers' seat," she said. "I try to bring forward a customer perspective."
Hakim — who joins Ferraro and Anne Shybunko-Moore, CEO of GSE Dynamics Inc. as Long Island's highest-profile female aerospace executives — said that further change is in store at CPI Aero now that the most immediate issues have been addressed.
"Business development" is at the top of her to-do list, she said of the company where 98% of revenue flows from defense contractors.
New projects on tap
At least four new production programs will be announced over the next 12 months as aerospace customers give the green light to make the information public, Hakim said.
"Our factory will look very different," she said. "New tools, new suppliers. When I walked in in 2022, there wasn't a whole lot of investment in the company to automate. That's definitely an opportunity."
The company also plans to add about 15% to 20% to the workforce, which now stands at about 220.
CPI Aero, East/West and other Long Island defense companies have stepped up recruiting at high schools and colleges. But Ferraro pointed to one hurdle: "Everyone wants to [work] remotely. We can't built helicopters remotely."
In January, CPI Aero hosted a group from West Islip High School to expose the students to the opportunities in manufacturing.
"If we can win just two or three from that class, it would be a big win," Hakim said.
For the quarter ended Sept. 30, the company posted revenue of $20.2 million, down $3.7 million from the 2021 period, but gross margins of 26.4% versus 15.3% that the company attributed to new efficiencies and the product mix sold.
The company's stock has started to perk up as well. Since March 9, 2022, when her hiring was announced, to Monday, shares have climbed 37% to $3.69.
"We've made some progress," Hakim said.