CPI AEROSTRUCTURES, INC.
200A Executive Drive - Edgewood , New York 11717
(631) 586-5200 - FAX (631) 586-5814
FOR IMMEDIATE RELEASE
CPI AEROSTRUCTURES ANNOUNCES STRONG SECOND QUARTER RESULTS
Q2 Revenue Increases 11%;
First Half Revenue and Pretax Profits Up 18% and 16%, Respectively
Edgewood, NY - July 31, 2003 -- CPI Aerostructures, Inc. ("CPI") (AMEX: CVU)
today announced strong operating results for the second quarter ended June 30,
2003.
Second Quarter 2003 versus 2002:
o Revenue rose 11% to $6,894,217 compared with $6,208,350;
o Gross margin remained level at 29%;
o Pretax income was $1,269,138, or 18% of revenue, compared with $1,144,259,
or 18% of revenue; however, pretax income included a $166,667 gain on the
sale of "assets held for sale - discontinued operations." Excluding the
gain, pretax income was $1,102,471, which represents 16% of revenue;
o Net income was $1,269,138 or $0.25 per share and $0.22 per diluted share,
compared with $987,259, or $0.36 per share and $0.31 per diluted share.
Excluding the gain discussed above, net income was $1,102,471 or $0.22 per
share and $0.19 per diluted share. Net income, excluding the non-recurring
gain, if taxed at a 40% effective tax rate, would have been $661,483, or
$0.13 per share and $0.11 on a diluted basis.
Six Months 2003 versus 2002:
o Revenue increased 18% to $12,901,664, compared with $10,900,134;
o Gross margin was 32% compared with 30%;
o Pretax income was $5,259,673, or 41% of revenue, compared with $2,075,692,
or 19% of revenue; however, pretax income included a $419,999 gain on the
"sale of properties held for sale - disposition of assets" and a $2,431,233
gain on the early extinguishment of debt. Excluding these gains, pretax
income rose 16% to $2,408,441, or 19% of revenue;
o Net income was $5,259,673, or $1.17 per share and $1.05 per diluted share,
compared with $1,545,692, or $0.58 per share and $0.51 per diluted share.
Excluding the gains discussed above, net income was $2,408,441. Net income,
excluding the non-recurring gains, if taxed at a 40% effective tax rate,
would have been $1,445,065, or $0.32 per share and $0.29 per diluted share.
(more)
CPI Aerostructures, Inc. News Release Page 2
July 31, 2003
Non-Recurring Items for the Second Quarter and First Half 2003:
o During the first and second quarters, CPI sold the remaining assets of
Kolar, Inc. (discontinued operation as of 12/31/01), specifically two
buildings, which resulted in a $166,667 gain in the second quarter and a
$253,332 gain in the first quarter. Both of these transactions were
recorded as disposition of "assets held for sale - discontinued
operations";
o $2.7 million of the $7.8 million in net proceeds of CPI's February 19, 2003
secondary public offering was used to repurchase a $4.0 million note and
the related accrued interest at a substantial discount, which resulted in a
$2.4 million gain from the early extinguishment of debt in the first
quarter;
o CPI utilized a portion of its NOL in both the first and second quarters, so
there was no provision for income taxes. Last year, the company benefited
from a tax valuation adjustment resulting in an effective tax rate of 14%
in the second quarter and 25% for the six month period. The NOL being
utilized in 2003 is expected to be fully utilized by the end of 2003, so
the Company should be subject to the normal tax rate of 40% in 2004.
Edward J. Fred, CPI's CEO & President, stated, "CPI continued to experience
strong revenue gains during the second quarter as well as a high rate of new
contract wins. On a sequential basis, revenue was up 15% from this year's first
quarter. For the first six months of the year, new contract awards of $19.4
million were 46% ahead of last year's $13.3 million, which indicates that we
have a strong foundation for continued growth well into next year."
Anthony M. D'Agostino, CPI's CFO added, "This momentum has allowed us to enter
our third quarter with $25.7 million of funded backlog, which is greater than
our revenue in all of 2002. We mentioned in the first quarter, and still remain
confident, that our gross profit margin expectation for the year is between 30%
and 32% based on the composite margin of our current programs. We remain
comfortable with our 2003 revenue forecast of $30 million, a 25% increase over
the prior year, and net income (on an if taxed basis) of approximately $4.0
million, excluding the aforementioned non-recurring gains."
Beyond this year, Mr. Fred indicated, "We are extremely confident in our
longer-term outlook. CPI has carved an attractive niche within the aerospace
marketplace and is well positioned to benefit from the Air Force's programs
designed to lengthen the service of existing aircraft, particularly the C-5A
Galaxy, and upgrade and modify others, such as the T-38 Trainer, for which we
supply various parts. We are working on a number of larger, multi-year contract
proposals for programs where we have the advantages of experience, an excellent
reputation for quality and on-time delivery, a strong balance sheet and an
infrastructure in place that would enable us to complete and deliver on these
programs."
(more)
CPI Aerostructures, Inc. News Release Page 3
July 31, 2003
CONFERENCE CALL
Edward Fred and Anthony D'Agostino will host a conference call today, July 31,
2003 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 (973) 582-2866. 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 90 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, 2002 and Form 10-QSB
for the quarter ended March 31, 2003.
Contact: Anthony D'Agostino Investor Relations Counsel
Chief Financial Officer The Equity Group Inc.
CPI Aerostructures, Inc. Linda Latman (212) 836-9609
(631) 586-5200 Sarah Torres (212)836-9611
www.cpiaero.com www.theequitygroup.com
(See Accompanying Tables)
CPI Aerostructures, Inc. News Release Page 4
July 31, 2003
CPI AEROSTRUCTURES, INC.
CONDENSED STATEMENTS OF INCOME
For the Three Months For Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
Revenue $ 6,894,217 $6,208,350 $ 12,901,664 $ 10,900,134
Income from operations 1,099,029 1,221,890 2,542,011 2,204,400
Other income (expense):
Interest expense/other income 3,442 (77,631) (133,570) (128,708)
Gain on sale of assets held for sale 166,667 ----- 419,999 -----
- discontinued operations
Gain on extinguishment of debt ----- ----- 2,431,233 -----
Income before provision for income taxes 1,269,138 1,144,259 5,259,673 2,075,692
Provision for income taxes ----- (157,000) ----- (530,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 1,269,138 $ 987,259 $ 5,259,673 $ 1,545,692
====================================================================================================================================
Earnings per common share - basic $ 0.25 $ 0.36 $ 1.17 $ 0.58
====================================================================================================================================
Earnings per common share - diluted $ 0.22 $ 0.31 $ 1.05 $ 0.51
====================================================================================================================================
Shares used in computing earnings per common share:
Basic 5,110,852 2,709,556 4,483,302 2,683,446
Diluted 5,763,975 3,214,339 5,029,016 3,004,859
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Pro Forma removing certain benefits from the comparison
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
Income before provision for income taxes $ 1,269,138 $ 1,444,259 $ 5,259,673 $ 2,075,692
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 $ 1,102,471 $1,144,259 $ 2,408,441 $ 2,075,692
Tax provision ----- 157,000 ----- 530,000
Adjustments to provision to make 40% 440,988 300,704 963,376 300,277
Adjusted Net Income $ 661,483 $ 686,555 $ 1,445,065 $ 1,245,415
Basic EPS $ 0.13 $ 0.25 $ 0.32 $ 0.46
Diluted EPS $ 0.11 $ 0.21 $ 0.29 $ 0.41
CPI Aerostructures, Inc. News Release Page 5
July 31, 2003
Unaudited Audited
Balance Sheet Highlights 6/30/03 12/31/02
Cash $ 2,981,271 $ 91,537
Total current assets 19,397,004 15,202,592
Total assets 19,830,832 15,604,746
Total current liabilities 4,341,769 13,227,018
Working capital 15,055,235 1,975,574
Short-term debt 50,172 8,024,160
Long-term debt 35,050 40,192
Shareholders' equity 15,454,013 2,337,536
Total Liabilities and Shareholders' Equity 19,830,832 15,604,746
#### ####