Cpi Aerostructures, Inc. · AMEX:CVU
Cpi Aerostructures — Investor Presentation (January 2015)
36 slides from Cpi Aerostructures's investor presentation, Jan 20, 2015
Slide 1: A Premier Supplier of Aircraft Structures and Systems
Investor Presentation January 2015 A Premier Supplier of Aircraft Structures and Systems NYSE: MKT: CVU
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. All statements, other than statements of historical fact, included in this presentation, including without limitation, statements regarding projections, future financing needs, and
Slide 3: Our Mission, Vision and Values
Our Mission, Vision and Values Our Vision is... To be the most trusted manufacturer of aerostructure in our customers’ supply chains. Our Mission is... To exceed the expectations of our customers by manufacturing the highest quality aerospace structural products while providing a low risk, collabora
Slide 4: About CPI Aero: Products and Services
About CPI Aero: Products and Services Manufacturer of aerospace structural assemblies and integrated systems for commercial and military markets ircraft structural assembly Engine Inlets Inlets pe Engine Cowl Doors a its & supply chain services v Program management Y Global supply chain management v
Slide 5: Product Portfolio
Product Portfolio Aerostructures Kitting & SCM Aerosystems wings | een ener | Pods Spirit G650 Embraer Phenom 300 NGC E-2/C-2 OWP eee e Cessna Citation X+ HondaJet F-16 MRO HondaJet Bell AH-1Z NGC ANIASQ-236 Seconda i a ecial Products Structures H-60 Stabilators Siro ks C0 window, Sikorsky S-92 Kits
Slide 6: CPI Aero's Role Within Supply Chain
CPI Aero’s Role Within Supply Chain Goal: Maintain and Expand our Tier1 Status © Components or Manufacture Manufacture Finalassembly, detailedparts subassemblies aircraft sections finish and delivery CPI Aero is.... \ = rage K a RG TC Aerospace Systems NORTHROP GnuMMaN so <P | | | meneaee TEXTRON AV
Slide 7: Large Commercial OEM Sourcing Strategy
Large Commercial OEM Sourcing Strategy .... Increased supplier responsipilties Past > Today > New ode! zx Platform assembly _ Large scale integration Value added parts and assemblies | il il Make - to ~ print parts _andassembly ii Il and assembly + Many direct supplies) / Fewer, but still * Fewer la
Slide 8: CPI Aero's Unique Business Model
CPI Aero’s Unique Business Model Since inception: - Focused on assembly and integration - Use suppliers to manufacture 100% of components Provides a competitive advantage over vertically integrated competitors due to: a $$ + 30+ years ofhighly evolved assembly, supply chain and program management sk
Slide 9: CPI Aero's Business Strategy
CPI Aero’s Business Strategy Business Development Initiatives + Expand our capabilities and skills to provide technically superior, competitively priced solution for current and potential customers, focusing on high value, critical structures for wings, engine inlets, and nacelles + Further expand p
Slide 10: Revenue Breakdown
Revenue Breakdown $83.5M- $92.0M- $83.0M $85.0M (1) $102.0M 2) 100% 7] 7 90% - 0, + High single digit cox | Hee re 37% growth 70% ~ 50% 2015 + Maintain strong 40% | revenue ty 30% | S8%e 57% 63% 20% - E g ive. ograms +> 85% of forecast bd T : t comes from 2013 Revenue 2014Revenue (E) 2015 Revenue (E
Slide 11: Revenue Breakdown: By Segment
Revenue Breakdown: By Segment a 100% ox a 80% 17% 25% + Flat 1% 28% 60% — Kitting & SCM 2015 : 40% Al 30% growth 30% A0% + Doubling 0% 2013 Revenue 2014 Revenue (E) 2015 Revenue (E) wAerostructure uKitting& SCM wAerosystem (1), 2014 Revenue (E) isan estimate and is Adjusted. See reconciliation of no
Slide 12: Revenue Breakdown: Subcontractor Role
Revenue Breakdown: Subcontractor Role 2014 Revenue (E) 2015 Revenue (E) $83.5M - $85.0M «, $92.0M - $102.0M ~ (1) 2014 Res relevant GAAF 12
Slide 13: Large Order Backlog
rge Order Backlog Consolidated Estimated Backlog at 12/31/2014 — $410.4 Million Estimated funded backlog of $125.6M Funded / Unfunded Defense / Commercial Unfunded backlogrepresents remaining potential value of long term agreements $125.6M $284.8M $263.4M Funded = Unfunded uMilitary Aerospace = Comm
Slide 14: Programs (as of 12/31/14): Military Aerospace
Programs (as of 12/31/14): Military Aerospace ‘ ee %% i 4 AG ure Aerospace Systems E-2D Advanced UH-60 BLACK F-16 Fighter Jet AH-1Z ZULU Military aircraft ry Hawkeye&C-2A HAWK helicopter Helicopter Greyhound $195Mprogram $84.3Mcontracts $54M potential $34M potential $10.7M contract Structural kits f
Slide 15: Programs (as of 12/31/14): Commercial
Programs (as of 12/31/14): Commercial YF ren cro, Hondafet < EMBRAER x% N TEXTRON AVIATION Gulfstream G650 HondaJetO Embraer Phenom $-92 CessnaCitation Business Jet Business Jet 300 business jets Helicopter X+ Civilian Jet _$70M potential $50M potential $28.8M contract $23M potential Wing leading ed
Slide 16: Program Management 2014 Milestones
Program Management 2014 Milestones stomer Milestones NORTHROP GRUMMAN oe ° Sikorsky 5 Extended E2/C2 OWP Kits requirements through 2019 Concluded an order for additional 10 s/s of E2D seats Fuel Panel contract finalized and delivered with CPI procured components Achieved full rate deliveries on Gunn
Slide 17: Long-Term Visibility - Contracts (as of 12/31/14)
Long-Term Visibility - Contracts (as of 12/31/14) Firm, Funded Contracts Provide Long-Term Revenue Visi 0s 09 10 11 #12 13 «14 «15 “16 ity and Operating Leverage 20 ‘21 47 18 «19 ‘22 23 ‘24 ‘25 NORTHROP GRUMMAN- forthe E-2D and C- ONSIBANE HONDA AIRCRAFT - for the HondaJet businessjet, SIKORSKY - fo
Slide 18: Market Place Analysis
Market Place Analysis Aerospace is still in growth cycle, dominated by commercial sector Rate increases on large commercial aircraft On-shoring/near-shoring present new opportunities for CPI Aero OEMs focused on reducing total procurement costs See Notes 2 through $ in Appendix 1 for source data
Slide 19: Marketing Overview (1-3 year outlook)
Marketing Overview (1-3 year outlook) Tier1s Integrated Aerospace Systems Based on our previous | contracts, our growth areas are: —— US Defense MRO & Higher level of integration aftermarket support for existing programs
Slide 20: Leveraging client relationships - Case Study
Leveraging client relationships - Case Stu Sikorsky: 2006 to 2014 Opportunities = Combat A small initial contract resulted in LTAs worth - Rese pewantee approximately $100 million ~ Turkish ity elicopter MROLTA for SIME the Black Hawk ~s LTA for S-92 $6.3M ia mits Future LTA for S-92 $17.5M mmr kits
Slide 21: Bid Pipeline (12/31/14)
Bid Pipeline (12/31/14) Military vs Commercial | By Position Within the Supply Chain Commercial = Military = Prime =Tier1 = Tier2 CPLA at
Slide 22: Well Positioned for Growth
Well Positioned for Growth Military Programs Well positioned on E-2D and Black Hawk Heritage in providing spares support for out-of-production aircraft is aligned with DOD modification and life extension programs Military MRO capability is hedging against declining number of new aircraft Aerospace S
Slide 23: Growth Opportunities
Growth Opportunities Products / Programs Aircraft structural 7 * Tier 1 Business Jets + ISR Systems + E-2D + Boeing legacy spares + Electronicracks + Replicate for commercial market + Outsource production + Tip to Tailll + Expand MRO to business jet 23 CPLz-
Slide 24: 2015 Business Outlook
2015 Business Outlook 2015 revenue projected to be highest in our history Revenue Net Income $92.0M - $102.0M $7.2M to $8.0M Gross Margin Cash Flow -21% $13M - $15M from income tax CPL 2
Slide 25: 2015 Business Outlook
2015 Business Outlook Over 85% of top line forecast comes from existing programs currently in backlog Military/commercial split remains at approximately 60/40 | Aerosystems and kitting/supply chain management services expected to combine to account for nearly 70% of total military business, compared
Slide 26: 2015 Financial Initiatives
2015 Financial Initiatives Expect to continue to pay down debt and reduce interest expense Strengthen Financial Position Further Reduce Overhead & SG&A Expenses Currently at historical low rates Invest in Automation & Robotics Continue to Generate Positive Cash Flow from Operations Investments antic
Slide 27: Investment
Investmen + Cash flow from operations Facility improvements Cap-Ex « Refund / tax credit related to the change in estimate of the A-10 WRP recorded 2Q14 New programs Marketing + $35 M Revolving Credit Facility (expandable to $50M) + $4.5 M Term Loan 27
Slide 28: Pursuing many near term opportunities for technology insertion
Pursuing many near term opportunities for technology insertion to support future revenue growth Pursuing technology solutions that aim to open up and expand marketing and business opportunities to our customers Technology implementation approach designed to minimize risk and maximize results Technol
Slide 29: 2015 Focus Areas
2015 Focus Areas EXECUTE [GROW _| - Continued investment + Maintain and grow Tier in automation and create shareholder 41 status productivity value * Continuously improve + Replace retiring A-10 + Expand global supply delivery, quality and program revenues with chain services performance new long-te
Slide 30: Investment Thesis
Investment Thesis Backlog Large and Diversified Backlog + Several long-term contracts provide long-term revenue visibility and operating leverage * $410 million in total backlog estimated at 2014 year end Capabilities Expanding & Improving Capabilities + Ahigher value-added enterprise capable of man
Slide 31: Market Share Gains
Market Share Gains 7 5 Percent of 2015 revenue forecast derived from long term contracts we WON as a result of our customer changing suppliers after the initial term Number of long term contracts that were LOST since 2008 to competitors after the initial term concluded 31
Slide 32: CPI Aerostructures
CPI Aerostructures Vincent Palazzolo, CFO (634) 586-5200 Investor Relations FLL & THE Lena Cati ie ea GROUP (212) 836-9614 32
Slide 33: Appendix I: Non-GAAP Reconciliations
Appendix | Appendix | Non-GAAP Reconciliations CPLA] x
Slide 34: Appendix I
Appendix | Adjusted Revenue is arrived at by eliminating the affect of the change in estimate on the Company's A-10 Program with Boeing, and is not derived in accordance with generally accepted accounting principles (‘GAAP”). CPI Aero is using Adjusted Revenue in evaluating its 2014 financial perfor
Slide 35: Estimated Adjusted Revenue for the Year Ending December 31, 2014
Appendix 1 Estimated Adjusted Revenue for the Year Ending December 31, 2014 Estimated Revenue Range - GAAP $38,800,000 $40,300,000 Adjustment for Change in Estimate to $44,700,000 $44,700,000 the A-10 Program Estimated Revenue Range - Adjusted $83,500,000 $85,000,000 35
Slide 36: Source notes
(1) (2) (3) (4) 6) Airbus - EADS procurement strategy presentation to Ontario Aerospace Council, David Williams, November 2012 "Boeing to Increase 737 Production Rate to 52 per Month in 2018." Boeing, October 2, 2014 "Boeing's Key Mission: Cut Dreamliner Cost”. Jon Ostrower, Wall Street Journal. P.
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