Cpi Aerostructures, Inc. · AMEX:CVU
Cpi Aerostructures — FY2014 Earnings Presentation
33 slides from Cpi Aerostructures's earnings presentation, Mar 4, 2015
Slide 1: 2014 Full-Year Results Presentation
A Premier Supplier of Aircraft Structures and Systems NYSE MKT: CVU 2014 Full - Year Results Presentation March 5, 2015 Speakers: Douglas McCrosson , President & Chief Executive Officer Vincent Palazzolo, Chief Financial Officer
Slide 2: Forward Looking Statements
Forward Looking Statements 2 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,
Slide 3: Recent Highlights
Speaker Recent Highlights Douglas McCrosson President & Chief Executive Officer 3
Slide 4: Recent Business Highlights
Recent Business Highlights • 2014 – Ended with funded backlog of $120.6 million, up $10.2 million for the year – Received $92.9 million in new contract awards for commercial and defense programs – Commercial revenue of $36.9 million, up 37.6% as compared to 2013 commercial revenue – Year - end resul
Slide 5: Financial Highlights
Speaker Financial Highlights Vincent Palazzolo Chief Financial Officer 5
Slide 6: Fourth Quarter 2014 vs. Fourth Quarter 2013
Fourth Quarter 2014 vs. Fourth Quarter 2013 3 - months ended December 31 , 2014 2013 Revenue $20,067,439 $21,285,992 Gross profit 4,276,019 5,280,303 Gross margin 21.3% 24.8% Income from operations 2,113,259 3,376,242 Net income 1,717,259 2,370,242 Income per common share - diluted $0.20 $ 0.28 Shar
Slide 7: Fourth Quarter 2014 vs. Fourth Quarter 2013 Adjusted
Fourth Quarter 2014 vs. Fourth Quarter 2013 Adjusted Revenue, Adjusted Gross Profit and A djusted Gross Margin excluding the A - 10 WRP from both reporting periods * 3 - months ended December 31 , 2014 2013 Adjusted Revenue $17,446,054 $16,868,592 Adjusted Gross P rofit 4,276,019 4,114,109 Adjusted
Slide 8: Full Year 2014 vs. Full Year 2013
Full Year 2014 vs. Full Year 2013 Years ended December 31 , 2014 2013 Revenue $39,687,010 $82,988,522 Gross profit (loss) (29,724,699) 18,433,247 Gross margin (74.9)% 22.2% Income (loss) from operations (37,032,919) 11,728,723 Net income (loss) (25,209,275) 7,736,894 Income (loss) per common share -
Slide 9: A-10 Program: Effects of Shorter Life
A - 10 Program: Effects of Shorter Life Change in estimate of the A - 10 WRP was recorded in Q2’14 resulted in: • One - time, non - cash charge of approx. $47.3 million • $44.7 million adjustment to revenue and $2.6 million adjustment to cost of sales GAAP loss recorded in Q2’14 will allow CPI Aero
Slide 10: 2015 Guidance
2015 Guidance 2015 revenue projected to be highest in our history Revenue * $92.0M - $102.0M Gross Margin 19% - 21% Net Income $7.2M to $8.0M 10 * Performance for the second half of the year expected to be much stronger than the first half due to the timing of delivery orders associated with the sev
Slide 11: Revenue Breakdown: by Market
Revenue Breakdown: by Market Commercial 35% Military 65% 2015 Revenue (Guidance) $92.0M - $102.0M Military/commercial split effected by recent military contract wins 11 Military Over 25% growth due to recent wins Commercial To decline as majority of new business wins in 2014 were for military progra
Slide 12: Revenue Breakdown: by Subcontractor Role
Revenue Breakdown: by Subcontractor Role Tier 1 81% Tier 2 14% Prime 5% 2015 Revenue (Guidance) $92.0M - $102.0M 12 Prime More than double due to recent wins Tier 1 Double digit growth Tier 2 Slight decline due to G650
Slide 13: Revenue Breakdown: by Segment
Revenue Breakdown: by Segment Aerostructures 52% Kitting & SCM 37% Aerosystems 11% 2015 Revenue (Guidance) $92.0M - $102.0M Non - Aerostructures business to increase to 48% of total revenue 13 Kitting & SCM Over 75% growth Aerosystems Over 25% growth Aerostructures Decline due to A - 10 and G650
Slide 14: 2015 Financial Initiatives
2015 Financial Initiatives Strengthen Financial Position Invest in Automation & Robotics Continue to Generate Positive Cash Flow from Operations Further Reduce Overhead & SG&A Expenses Expect to continue to pay down debt and reduce interest expense Investments anticipated to favorably impact operati
Slide 15: Investments
Investments Capital • Refund / loss carry forwards related to the change in estimate of the A - 10 WRP recorded 2Q14 • $35 M Revolving Credit Facility (expandable to $50M) • $4.5 M Term Loan Investments • Facility improvements • Cap - Ex • New programs • Marketing 15
Slide 16: Backlog, Recent Programs, Bids and Market Update
Speaker Backlog, Recent Programs, Bids and Market Update Douglas McCrosson President & Chief Executive Officer 16
Slide 17: Large Order Backlog
Large Order Backlog Funded / Unfunded $120.6M $283.1M Funded Unfunded Unfunded backlog represents remaining potential value of long term agreements Defense / Commercial Consolidated Backlog at 12/31/2014 – $403.7 Million $254.8M $148.9M Military Aerospace Commercial 31% Funded / 69% Unfunded 63 % De
Slide 18: Long-Term Visibility - Contracts
Long - Term Visibility - Contracts (as of 2/28/15) Firm, Funded Contracts Provide Long - Term Revenue Visibility and Operating Leverage NORTHROP GRUMMAN - for the E - 2D and C - 2A aircraft TRIUMPH GROUP - for the Gulfstream G650 business jet SIKORSKY - for the S - 92® helicopter HONDA AIRCRAFT - fo
Slide 19: 2014 Major Program Highlights
2014 Major Program Highlights Customer Milestones o Extended E2/C2 OWP Kits requirements through 2019 o Concluded an order for additional 10 s/s of E2D seats o Added new funded backlog of $63.6 million during 4Q14 o Fuel Panel contract finalized – 2015 will be first full year of production o Achieve
Slide 20: 2014 Major Program Highlights
2014 Major Program Highlights Customer Milestones o Gulfstream G650 Fixed Leading Edge: Smoothly transitioned to new customer, when Spirit AeroSystems sold program to Triumph Group o Master agreement assigned to new customer (through 2019) o Ramped up delivery of the Phenom 300 engine inlets from 2
Slide 21: Defense Business Coming Back
Defense Business Coming Back E - 2D Advanced Hawkeye and the C - 2A Greyhound aircraft F - 16 Fighter Jet T - 38C Aircraft $86.1 million $53.5 million $49 million Contract Period 2013 - 2021 Contract Period 2014 - 2022 Contract Period 2013 - 2021 Recent wins added over $188 million in backlog until
Slide 22: Recent Contract Wins
Recent Contract Wins • Multi - year contract worth approx. $86.1 million • To supply Outer Wing Panel (OWP) kits used to manufacture complete wings for the E - 2D Advanced Hawkeye and the C - 2A Greyhound aircraft. • Includes approx. $63.6 million in new funded backlog and approx. $22.5 million in r
Slide 23: Recent Contract Wins
Recent Contract Wins 23 Program Info: • Single supplier of 439 structural wing parts used for MRO efforts for both U.S. and worldwide fleet of the F - 16 aircraft • Forecasting, acquisition, inventory management and distribution F - 16 Fighter Jet • Contract value, including options, to be approxima
Slide 24: Recent Contract Wins
Recent Contract Wins • $49 million m ulti - year ID / IQ contract from the United States Air Force • CPI Aero to support the T - 38C Pacer Classic III (PC III) aircraft structural modification program during Phase II for up to 74 aircrafts. • CPI Aero will provide the necessary integration of kits,
Slide 25: T-38C Program Overview
T-38C Program Overview —— 100% Parts Note: ‘ ——= Select Structural Numerous PCIIl skins not labeled for clarity 4 Components Upper Cockpit UpperCenter. F325 Dorsal/Shim Upper _—_ Dorsal Longerons Longerons Bulkhead + Longerons—_Nacelle_ Attach Angles CFS 505.075 FS 508.316 CFS 487.223 FS 486 FS 479.
Slide 26: Bid Pipeline
Bid Pipeline (2/28/15) Military vs Commercial 30% 70% Commercial Military By Position Within the Supply Chain Defense opportunities increasing Expect near - term acceleration of Tier 2 opportunities for large c ommercial 71% 29% Tier 1 Tier 2 26
Slide 27: Bid Landscape
Bid Landscape Boeing 787 Dreamliner Bombardier C - series Lockheed Martin F - 35 Embraer E2 27
Slide 28: 2015 Focus Areas
2015 Focus Areas EXECUTE Maintain and grow Tier 1 status Continuously improve delivery , quality and performance Capture returns on initial automation GROW Continued investment in automation and productivity Replace A - 10 program revenues with additional new long - term programs Focus on organic gr
Slide 29: Conclusion
Conclusion CPI is well positioned to continue to grow its business due to: • Our large and diversified b acklog • Our effort to continuously expand & improve capabilities • Vast growth opportunities arising from developments in both commercial aerospace and military/defense sector • Significant bid
Slide 30: Q&A
Q&A Q&A Session Douglas McCrosson President & Chief Executive Officer Vincent Palazzolo Chief Financial Officer 30
Slide 31: Contact us
Contact us CPI Aerostructures Vincent Palazzolo, CFO (631) 586 - 5200 www.cpiaero.com Investor Relations Lena Cati (212) 836 - 9611 www.theequitygroup.com lcati@equityny.com 31
Slide 32: Appendix I
Appendix I 32 We use in this presentation the terms “Adjusted Revenue,” “Adjusted Gross Profit” and “Adjusted Gross Margin” for the quarters ending December 31 , 2013 and 2014 . Such measures (arrived at by eliminating the Company's A - 10 Program with Boeing from revenue and in calculating gross pr
Slide 33: Appendix I: Reconciliation of Non-GAAP Financial Measures
Appendix I 33 Quarter ended Quarter ended Quarter ended December 31, 2014 December 31, 2014 December 31, 2014 GAAP A - 10 WRP as adjusted w/o A - 10 Revenue and Adjusted Revenue $ 20,067,439 $ 2,621,384 $ 17,446,055 Gross Profit and Adjusted Gross Profit 4,276,019 0 4,276,019 Gross Margin and Adjust