EXHIBIT 99.1
[AEROSTRUCTURES LOGO]
AEROSTRUCTURES, INC.
200A EXECUTIVE DRIVE o EDGEWOOD, NEW YORK 11717
(631)586-5200 o FAX (631)586-5814
FOR IMMEDIATE RELEASE
CPI AEROSTRUCTURES REPORTS SOLID SECOND QUARTER OPERATING RESULTS
EDGEWOOD, NY - AUGUST 16, 2004 - CPI Aerostructures, Inc. ("CPI") (AMEX: CVU)
today announced results for the second quarter and six months ended June 30,
2004.
SECOND QUARTER 2004 VS. 2003
o Revenue increased 4% to $7,192,324 from $6,894,217;
o Income from operations increased 41% to $1,547,904 from $1,099,029;
o Gross margin was 33% compared to 29%, slightly ahead of the Company's
gross margin target of 30%-32% for the full year of 2004; and
o Net income was $963,199, up 46% from pro forma net income of $661,483,
while diluted earnings per share rose 45% to $0.16 from $0.11.*
FIRST HALF 2004 VS. 2003
o Revenue increased 4% to $13,420,432 from $12,901,664;
o Income from operations rose 4% to $2,635,921 from $2,542,011;
o Gross margin for both the current and prior year periods was 32%;
o Net income was $1,615,011 or $0.27 per diluted share, compared to pro
forma net income of $1,445,065 or $0.29 per diluted share.*
*Actual 2003 second quarter and six-month net income include the following
non-recurring gains and tax adjustments:
o Non-recurring gains of $166,667 in Q2 and $419,999 for the six months
on the sale of certain assets of a discontinued operation;
o Non-recurring gains of $2.4 million from the early extinguishment of
debt in Q1 related to the repurchase of a $4.0 million note and the
corresponding accrued interest at a substantial discount; and
o No income taxes were recorded because the Company utilized a portion
of its net operating loss carryforward, which has since been exhausted
for financial accounting purposes.
Edward J. Fred, CPI's CEO & President, stated, "While revenue for the quarter
was only up slightly, operating income rose 41%. This was due to the confluence
of a favorable product mix, which pushed our gross margin beyond our target
range, and the decline in SG&A as a percentage of sales to 11.7% from last
year's 13.3%. Furthermore, what is more indicative of our growth and future
prospects than comparative quarterly revenue is the more than $3 million
increase in `costs and estimated earnings in excess of billings on uncompleted
contracts' since year-end, which indicates that profits should rise in future
quarters."
(more)
CPI Aerostructures, Inc. News Release Page 2
August 16, 2004
Mr. Fred went on to say, "At the end of July, our funded backlog approximated
$33 million, down about $2 million from April 30th levels and year-to-date new
contract awards approximated $22 million, only slightly off this time last year.
While we have received several major multi-year contracts, particularly for
critical parts for the U.S. military's fleet of C-5 Galaxy cargo jets, the
government's pace of contract awards remains slow as compared to prior years.
From our discussions with customers and related market intelligence, we believe
that normalized award patterns will resume later this year. One of the most
significant accomplishments of the summer was being selected by Vought Aircraft
Industries as a critical subcontractor to supply a variety of parts for the C-5
Galaxy aircraft, under a U.S. Air Force contract award. Beyond the dollar value
to CPI, we believe that our association with an organization such as Vought
represents an important adjunct to CPI's primary business of solo bidding on
appropriate contracts."
Mr. Fred continued, "In addition to our people and our know-how, one of our
greatest strengths is our balance sheet, which is a distinct competitive
advantage as we bid on larger contracts. At mid-year CPI had $1.3 million in
cash, nominal long-term debt, shareholders' equity of $21.9 million or over
$4.00 per share, and $21.3 million in working capital for a current ratio of
7.5:1."
Mr. Fred stated, "We are reaffirming $30.0 million to $31.5 million for our 2004
revenue guidance, which would be a 10% to 15% increase over 2003. We are also
looking for net income of between $3.7 million and $4.0 million, producing an
8.8% to 17.7% bottom line improvement versus 2003 (after adjustment for the
non-recurring items and tax provision stated earlier)."
Mr. Fred concluded that, "Although our results through the first six months of
2004, and our guidance for the remainder of 2004 indicate strong current
performance, we are even more optimistic about our prospects for 2005, as we
begin to realize the benefits from our C-5 TOPS contract award and our new
relationship with Vought."
CONFERENCE CALL
Edward Fred will host a conference call today, Monday, August 16, 2004 at 11 am
EDT to discuss second quarter results as well as recent corporate developments.
After opening remarks, there will be a question and answer period. Interested
parties may participate in the call by dialing (913) 905-3160. Please call in 10
minutes before the scheduled time and ask for the CPI Aerostructures call. The
conference call will also be broadcast live over the Internet. To listen to the
live call, please go to www.cpiaero.com and click on the "Investor Relations"
section, then click on "Events". Please access the website 15 minutes prior to
the call to download and install any necessary audio software. The conference
call will be archived and can be accessed for approximately 60 days.
FOUNDED IN 1980, CPI AEROSTRUCTURES IS ENGAGED IN THE CONTRACT PRODUCTION OF
STRUCTURAL AIRCRAFT PARTS PRINCIPALLY FOR THE U.S. AIR FORCE AND OTHER BRANCHES
OF THE ARMED FORCES. IN CONJUNCTION WITH ITS ASSEMBLY OPERATIONS, CPI PROVIDES
ENGINEERING, TECHNICAL AND PROGRAM MANAGEMENT SERVICES. AMONG THE KEY PROGRAMS
THAT CPI SUPPLIES ARE THE C-5A GALAXY CARGO JET, THE T-38 TALON JET TRAINER AND
THE E-3 SENTRY AWACS JET.
THE ABOVE STATEMENTS INCLUDE FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, WHICH ARE DESCRIBED FROM TIME TO TIME IN CPI'S SEC REPORTS,
INCLUDING CPI'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2003 AND FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2004.
CONTACT: Vince Palazzolo Investor Relations Counsel
Chief Financial Officer The Equity Group Inc.
CPI Aerostructures, Inc. Linda Latman (212) 836-9609
(631) 586-5200 Sarah Svindland (212) 836-9611
www.cpiaero.com www.theequitygroup.com
(See Accompanying Tables)
CPI Aerostructures, Inc. News Release Page 3
August 16, 2004
CPI AEROSTRUCTURES, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2004 2003 2004 2003
(UNAUDITED) (UNAUDITED)
Revenue $ 7,192,324 $ 6,894,217 $ 13,420,432 $12,901,664
Income from operations 1,547,904 1,099,029 2,635,921 2,542,011
Other income (expense):
Interest expense/other income 1,295 3,442 90 (133,570)
Gain on sale of assets held for sale - discontinued ------ 166,667 ----- 419,999
operations
Gain on extinguishment of debt ------ ----- ----- 2,431,233
Income before provision for income taxes 1,549,199 1,269,138 2,636,011 5,259,673
Provision for income taxes 586,000 ----- 1,021,000 -----
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Net income $ 963,199 $ 1,269,138 $ 1,615,011 $ 5,259,673
====================================================================================================================================
Earnings per common share - basic $ 0.18 $ 0.25 $ 0.30 $ 1.17
====================================================================================================================================
Earnings per common share - diluted $ 0.16 $ 0.22 $ 0.27 $ 1.05
====================================================================================================================================
Shares used in computing earnings per common share:
Basic 5,365,542 5,110,852 5,333,832 4,483,302
Diluted 6,119,278 5,763,975 6,076,255 5,029,016
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTED PRO FORMA REMOVING CERTAIN BENEFITS FROM THE COMPARISON
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2004 2003 2004 2003
(UNAUDITED) (UNAUDITED)
Income before provision for income taxes $ 1,549,199 $ 1,269,138 $ 2,636,011 $ 5,259,673
Adjustments to remove non recurring gains:
Gain on sale of assets held for sale - discontinued operations ----- (166,667) ----- (419,999)
Gain on extinguishment of debt ----- ----- ----- (2,431,233)
- ------------------------------------------------------------------------------------------------------------------------------------
Pretax Income excluding non-recurring gains $ 1,549,199 $ 1,102,471 2,636,011 $ 2,408,441
Tax provision 586,000 ----- 1,021,000 -----
Adjustments to provision to make 40% 440,988 963,376
Adjusted Net Income $ 963,199 $ 661,483 $ 1,615,011 $ 1,445,065
Basic EPS $ 0.18 $ 0.13 $ 0.30 $ 0.32
Diluted EPS $ 0.16 $ 0.11 $ 0.27 $ 0.29
CPI Aerostructures, Inc. News Release Page 4
August 16, 2004
Unaudited Audited
Balance Sheet Highlights 6/30/04 12/31/03
CASH $ 1,318,143 $ 2,794,310
TOTAL CURRENT ASSETS 24,615,347 23,399,350
TOTAL ASSETS 25,163,565 23,939,090
TOTAL CURRENT LIABILITIES 3,268,926 4,079,976
WORKING CAPITAL 21,346,421 19,319,374
SHORT-TERM DEBT 7,298 7,303
LONG-TERM DEBT 22,200 26,311
SHAREHOLDERS' EQUITY 21,872,439 19,832,803
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 25,163,565 23,939,090
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