CPI Aerostructures Reports Fourth Quarter and Full Year

Fourth Quarter 2022 vs. Fourth Quarter 2021

Revenue of $24.1 million compared to $26.4 million;Gross profit of $3.9 million compared to $2.8 million;Gross margin of 16.1% compared to 10.8%;Net income of $6.8 million ($0.3 million excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $6.5 million) compared to net loss of $(0.5) million;Earnings per share of $0.55 ($0.03 excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $0.52) compared to loss per share of $(0.04);Cash flow from operations of $0.1 million compared to $4.1 million.

Full Year 2022 vs. Full Year 2021

Revenue of $83.3 million compared to $103.4 million;Gross profit of $16.3 million compared to $15.0 million;Gross margin of 19.6% compared to 14.5%;Net income of $9.2 million ($3.5 million excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $6.5 million and the first quarter 2022 severance accrual of $0.8 million) compared to $6.8 million ($2.0 million excluding the third quarter 2021 $4.8 million in PPP loan forgiveness);Earnings per share of $0.74 ($0.28 excluding the fourth quarter 2022 deferred tax asset valuation allowance reduction of $0.52 and the first quarter 2022 severance accrual of $0.06) compared to $0.56 ($0.17 excluding the third quarter 2021 $0.39 in PPP loan forgiveness);Cash flow from operations of $0.9 million compared to $2.8 million;Debt as of December 31, 2022 of $22.8 million compared to $26.2 million as of December 31, 2021.

EDGEWOOD, N.Y., April 14, 2023 (GLOBE NEWSWIRE) — CPI Aerostructures, Inc. (“CPI Aero” or the “Company”) (NYSE American: CVU) today announced financial results for the three and twelve month periods ended December 31, 2022.

“We closed the year with results from operations and EPS exceeding our 2021 performance,” said Dorith Hakim, President and CEO. “The combination of the reduction in non-profitable programs and operational performance improvements resulted in a 5.1 percentage point increase in gross margin delivering $9.2 million in bottom line profitability, including our deferred tax asset valuation allowance reduction of $6.5 million described below. We achieved a $2.4 million improvement in net income compared to 2021 on lower revenues with higher margins, while reducing our debt by $3.4 million and increasing working capital by 5.9%. In addition, total backlog as of December 31, 2022 increased to $514.5 million compared to $501.7 million as of December 31, 2021,” said Dorith Hakim, President and CEO.

Added Ms. Hakim, “After reevaluating our net operating loss carryforwards (“NOLs”), and based on our performance outlook, we determined that the valuation allowance we maintain on our deferred tax asset should be reduced by $6.5 million, and we realized a tax benefit in the fourth quarter of 2022 of the same amount upon recording this reduction.”

Ms. Hakim noted that “the Company’s financial performance has resulted in the Company regaining compliance with the continued listing standards of Section 1003(a)(i) and 1003(a)(ii) of the NYSE American Company Guide. At December 31, 2022, the Company had income from continuing operations for its last two fiscal years, shareholders’ equity of $4.2 million and total assets and annual revenue in excess of $50 million. As of March 20, 2023, the “BC” compliance indicator was no longer disseminated by NYSE American and the Company was removed from the list of noncompliant issuers on NYSE American’s website.”

Concluded Ms. Hakim, “We have completed a number of programs during 2022 and started ramping up our manufacturing capacity in support of newer programs. As a result, we expect slightly higher revenue in 2023 while sustaining profitability and positive operating cash flow for the year. We remain confident in CPI Aero’s long-term outlook and are looking forward to the opportunities ahead as we build on our reputation for high quality and reliable performance for our customers.”

About CPI Aero
CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance pod systems in both the commercial aerospace and national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services.

Forward-looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included or incorporated in this press release are forward-looking statements. The words “expect,” ”outlook,” “opportunities ahead,” and similar expressions are intended to identify these forward-looking statements. These forward-looking statements include the Company’s expected financial results for the year ending December 31, 2023. The Company does not guarantee that it will actually achieve the plans, intentions or expectations disclosed in its forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements.

Forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by its forward-looking statements, including those important factors set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2022 filed with the Securities and Exchange Commission. Although the Company may elect to do so at some point in the future, the Company does not assume any obligation to update any forward-looking statements and it disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.

Contacts:                                                  Investor Relations Counsel
LHA Investor Relations
Jody Burfening
(212) 838-3777
cpiaero@lhai.com
 CPI Aerostructures, Inc.
Andrew L. Davis
Chief Financial Officer
(631) 586-5200
adavis@cpiaero.com
www.cpiaero.com   

CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS

  December 31,
2022  December 31,
2021 ASSETS        Current Assets:        Cash $3,847,225  $6,308,866 Accounts receivable, net  4,857,772   4,967,714 Insurance recovery receivable  3,600,000   2,850,000 Contract assets  27,384,540   24,459,339 Inventory  2,493,069   4,028,925 Refundable income taxes  40,000   40,000 Prepaid expenses and other current assets  975,830   625,075 Total Current Assets  43,198,436   43,279,919          Operating lease right-of-use assets  6,526,627   7,796,768 Property and equipment, net  1,124,556   1,646,863 Deferred tax asset  6,574,463   — Intangibles, net  —   125,000 Goodwill  1,784,254   1,784,254 Other assets  238,744   372,741 Total Assets $59,447,080  $55,005,545          LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)        Current Liabilities:        Accounts payable $8,029,996  $10,429,018 Accrued expenses  7,344,590   6,102,587 Litigation settlement obligation  3,600,000   3,003,259 Contract liabilities  6,001,726   5,122,766 Loss reserve  576,549   1,495,714 Current portion of line of credit  1,200,000   — Current portion of long-term debt  1,719,766   3,365,181 Operating lease liabilities  1,817,811   1,580,453 Income taxes payable  11,396   5,165 Total Current Liabilities  30,301,834   31,104,143          Line of credit, net of current portion  19,800,000   21,250,000 Long-term operating lease liabilities  5,077,235   6,445,728 Long-term debt, net of current portion  70,981   1,540,747 Total Liabilities  55,250,050   60,340,618          Shareholders’ Equity (Deficit):        Common stock – $.001 par value; authorized 50,000,000 shares, 12,506,795 and 12,335,683 shares, respectively, issued and outstanding  12,507   12,336 Additional paid-in capital  73,189,449   72,833,742 Accumulated deficit  (69,004,926)  (78,181,151)Total Shareholders’ Equity (Deficit)  4,197,030   (5,335,073)Total Liabilities and Shareholders’ Equity (Deficit) $59,447,080  $55,005,545          

CPI AEROSTRUCTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

  2022  2021        Revenue $83,335,764  $103,369,544          Cost of sales  67,031,502   88,364,452          Gross profit  16,304,262   15,005,092          Selling, general and administrative expenses  11,410,067   11,823,921 Income from operations  4,894,195   3,181,171          Other income (expense):        Other income  —   4,795,000 Interest expense  (2,271,101)  (1,141,189)Total other income (expense), net  (2,271,101)  3,653,811 Income before provision for income taxes  2,623,094   6,834,982          Provision for (benefit from) income taxes  (6,553,131)  14,609 Net income $9,176,225  $6,820,373          Income per common share-unrestricted shares $0.74  $0.56 Income per common share-restricted shares $0.74  $0.56          Shares used in computing income per common share:        Unrestricted shares  12,286,781   11,960,134 Restricted shares  103,109   233,692 Total shares  12,389,890   12,193,826