Cpi Aerostructures, Inc. · AMEX:CVU
Cpi Aerostructures — 17th Annual B. Riley Investor Conference (May 2016)
30 slides from Cpi Aerostructures's conference presentation, May 26, 2016
Slide 1: A Premier Supplier of Aircraft Structures and Systems
A Premier Supplier of Aircraft Structures and Systems NYSE MKT: CVU 17 th Annual B. Riley Investor Conference May 26, 2016 Vincent Palazzolo, Chief Financial Officer
Slide 2: Disclosure Statement
Disclosure Statement 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, fu
Slide 3: About CPI Aero: Overview
About CPI Aero: Overview 3 Aircraft photos are for illustrative purposes only Manufacturer of aerospace structural assemblies and integrated systems for commercial and defense markets Wing Spar Assys Fuselage Skin Panels Engine Cowl Doors ISR Pod Systems Engine Inlets Kits & supply chain services Fu
Slide 4: Product and Services Portfolio
Product and Services Portfolio 4 Wings Inlets / Nacelles Pods MRO Special Products Triumph G650 Cessna Citation X+ HondaJet Embraer Phenom 300 HondaJet Bell AH - 1Z Aerostructures Sikorsky H - 60 Window Assemblies Spirit CH - 53K Step and Rack Assemblies Aerosystems UTAS DB - 110 NGC ALMDS NGC AN/AS
Slide 5: Investment Considerations
Investment Considerations 5 Additional growth opportunities 26% Funded 74% Defense $ 407.4M Large and diversified backlog Growing bid pipeline Improving Defense Outlook 51% Defense 31% Aerosystems In both Defense and Commercial At 03/31/16 Defense opportunities are increasing CRH CH - 53K ISR Pods C
Slide 6: A Return To Growth
2014 2015 2016+ A Return To Growth 6 • Macro - environment shows signs of improving • $575B FY 16 defense bill signed • Focus on defense opportunities paying dividends • Strong sequential revenue growth • Improved gross profit margins (1) • 4Q15 and 2015 are highest revenue quarter and year in histo
Slide 7: Driven By Renewed Strength in Defense Business
Driven By Renewed Strength in Defense Business 7 Recent wins added approx. $225 million in backlog until 2022 $ 86.1M $25 - 30M $49M Contract Period 2013 - 2021 Contract Period 2016 - 2019 Contract Period 2015 - 2021 E - 2D Advanced Hawkeye/C - 2A Greyhound T - 38C Talon Trainer $ 53.5M Contract Per
Slide 8: Backlog
Backlog 8 Funded 26% / Unfunded 76% Defense 74% / Commercial 26% Consolidated Backlog at 03/31/2016 – $407.4 Million, up 5% from end of 2015 $ 104.0M $ 303.4M Funded Unfunded Unfunded backlog represents remaining potential value of long term agreements $300.9M $ 106.5M Defense Commercial Funded back
Slide 9: Current Market Trends Driving Opportunity
Current Market Trends Driving Opportunity 9 • U.S. DoD budget back in growth mode » U.S. fiscal and geo - political situations key drivers of defense spending 1 • After 5% growth in the approved FY16 budget, FY17 could see at least another 2% 2 • Intelligence, Surveillance and Reconnaissance (ISR) t
Slide 10: CPI Aero's Advantages
CPI Aero’s Advantages 10 Since inception: - Focused on assembly and integration - Use suppliers to manufacture 100% of components Provides a competitive advantage over vertically integrated competitors due to: • 35+ years of highly evolved assembly, supply chain and program management skills • We ar
Slide 11: CPI Aero's Role Within Supply Chain
CPI Aero’s Role Within Supply Chain 11 CPI Aero is…. Tier 3 Tier 1 Tier 2 OEM Components or detailed parts Manufacture subassemblies Manufacture aircraft sections Final assembly, finish and delivery Tier 1 to : Tier 2 to : Goal: Maintain and Expand our Tier 1 Status Prime to :
Slide 12: Programs: Defense Aerospace
Programs: Defense Aerospace 12 E - 2D Advanced Hawkeye $25M - $30M contract Japan Defense Programs
Slide 13: A-10 Program: Overhang Removed
A - 10 Program: Overhang Removed 13 Completion of the program under the current terms will result in a net positive inflow of cash over the balance of the contract as remaining billings exceed estimated future cash expenses by approximately $1.5 million We anticipate that Congress will continue to p
Slide 14: Programs: Commercial
Programs: Commercial 14 Commercial Programs Gulfstream G650 Business Jet HondaJet© Business Jet $70M potential Embraer Phenom 300 business jets $50M potential S - 92 Civil Helicopter $28.8M contract Cessna Citation X+ Civilian Jet $23M potential
Slide 15: Long-Term Visibility - Contracts
Long - Term Visibility - Contracts 15 Firm, Funded Contracts Provide Long - Term Revenue Visibility and Operating Leverage U.S. GOVERNMENT – F - 16 TRIUMPH GROUP - Gulfstream G650 SIKORSKY – UH - 60 Black Hawk U.S. GOVERNMENT – T - 38C Talon Trainer TEXTRON - Cessna Citation X+ SIKORSKY – S - 92 EMB
Slide 16: Illustrative Long-Term Contract
Illustrative Long - Term Contract 16 Heavy investment up - front with returns generated over the life of the contract - Cumulative cash grows Costs decline over time through productivity gains - Resulting in increasing gross margin CEE (unbilled receivables declines over time as contract is complete
Slide 17: Bid Pipeline (5/06/16)
Bid Pipeline (5/06/16) 17 Continued Diversification Across Product Categories Defense opportunities are increasing 51% 49% Defense Commercial 12% 4% 53% 31% Kitting MRO Aerostructures Aerosystems
Slide 18: Program Opportunities
Program Opportunities 18 Aerostructures ― Military Helos : H - 92, AH - 1Z, CH - 53K, V - 280 ― Various regional commercial aircraft (Tier 1 and Tier 2 opportunities) ― Military Fixed Wing: A - 10 thick skin urgent spares kitting (TUSK), F - 35 ― MRO: F - 16 SLEP, BLACK HAWK Aerosystems ― ISR and EW
Slide 19: Future Opportunities: 12+ months
Future Opportunities: 12+ months 19 T - X Trainer Foreign sales – F - 16 Northrop Grumman B - 21 Lockheed Martin F - 35
Slide 20: Growth Strategy
Growth Strategy 20 EXECUTE Maintain and grow Tier 1 status Continuously improve delivery , quality and performance Improve margins Improve cash flow GROW Continued investment in automation and productivity Win additional new long - term programs Organic growth May consider acquisitions to gain scale
Slide 21: Recent Financial Highlights
21 Recent Financial Highlights
Slide 22: Consolidated Financial Highlights
Consolidated Financial Highlights 22 ($ in Millions, except per share data) 2016 2015 2016 2015 Revenue $12.7 $19.9 $19.5 15.7 Cost of sales 24.3 16.3 15.8 12.0 Gross profit (loss) (11.6) 3.6 3.7 3.6 Selling, general and administrative expenses 2.7 2 2.7 2.0 Income (loss) from operations (14.4) 1.6
Slide 23: Balance Sheet Highlights
Balance Sheet Highlights 23 Total Debt Total Debt Credit Facility Shareholders’ Equity Book Value Debt - to - Capital As of March 31, 2016 CEE (unbilled receivables, $/M) $ 92.9 Total Debt ($/M) 31.2 Shareholders’ Equity ($/M) 61.6 Book Value, per diluted share ($/shares) 7.16 Debt - to - Capital 0.
Slide 24: 2016 Financial Initiatives
2016 Financial Initiatives 24 Strengthen Balance Sheet Continue Investment In Automation Improve Debt Coverage Ratios Further Reduce Overhead & SG&A Expenses Lower inventory levels and reduce unbilled receivables (CEE) Investments made in 2015 expected to favorably impact margins G&A rate reduced by
Slide 25: Updated 2016 Financial Guidance
Updated 2016 Financial Guidance 1 25 R e ve n ue Pre - tax Income Net Income Effective Tax Rate • $ 82.5M – $ 88.5M • Reduces all projected A - 10 program revenue from forecast Adjusted Revenue • $9.8M - $10.5M • Adds back the $15.3 million charge recorded in 1Q16 related to A - 10 program Adjusted
Slide 26: Conclusion
Conclusion 26 CPI Aero is well positioned to continue to grow its business due to: • Large, diversified and growing backlog • Growing bid pipeline – new opportunities for both the defense and commercial markets • Ability to perform on larger and more complex programs due to investments in advanced t
Slide 27: Contact Us
Contact Us 27 CPI Aerostructures Vincent Palazzolo, CFO (631) 586 - 5200 www.cpiaero.com Investor Relations Jody Burfening & Sanjay M. Hurry (212) 838 - 3777 cpiaero@lhai.com www.lhai.com
Slide 28: Financial Appendix
Financial Appendix
Slide 29: Adjusted Statement of Earnings
Adjusted Statement of Earnings Adjusted Earnings (arrived at by eliminating the Company's A - 10 Program with Boeing from reported results) is not derived in acc ordance with generally accepted accounting principles (“GAAP”). Adjusted earnings is a key metric CPI Aero has used in evaluating its fina
Slide 30: Adjusted Statement of Earnings
Adjusted Statement of Earnings GAAP Adjusted as Reported Adjustments Earnings Revenues $19,876,566 ($4,225,533) $15,651,033 Cost of sales 16,274,495 (4,238,510) 12,035,985 Gross profit 3,602,071 12,977 3,615,048 2,019,365 2,019,365 Income from operations 1,582,706 12,977 1,595,683 Interest expense 2
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