Cpi Aerostructures, Inc. · AMEX:CVU
Cpi Aerostructures — Roth Capital 26th Annual Growth Stock Conference (March 2014)
31 slides from Cpi Aerostructures's conference presentation, Mar 11, 2014
Slide 1: A Premier Supplier of Aircraft Structure
A Premier Supplier of Aircraft Structure NYSE MKT: CVU Roth Capital: 26th Annual Growth Stock Conference Investor Presentation: March 11, 2014
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: Investment Summary
Investment Summary 3 Unique Competitive Position: • Tier 1 contractor to a growing list of international OEMs • Skills of large organization with cost structure and responsiveness of small business 2014 expected to be a year of growth : • Performance expected to be better than 2013 • Higher product
Slide 4: About CPI Aero: Products and Services
About CPI Aero: Products and Services Manufacturer of aerospace structural assemblies for commercial and military markets • Skin panels, leading edges, flight control surfaces, wing tips, cowl doors, engine nacelle and inlet assemblies, airborne pod structures • Value - added services include progra
Slide 5: 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: • Over 30 years of highly evolved assembly, supply chain and program management sk
Slide 6: Seasoned Management Team
Seasoned Management Team 6 Douglas McCrosson President & CEO Robert Muller Vice President Business Development Ken Hauser Vice President Global Supply Chain Dan Brown Director, Business Development Nazz Palmerini Director, Program Management Clint Allnach Director, Manufacturing Operations Vincent P
Slide 7: CPI Aero's 171,000 Sq. Ft. Facility
CPI Aero’s 171,000 Sq. Ft. Facility 7
Slide 8: Expanding Capabilities
Expanding Capabilities 1980s 1990s Early 2000s Late 2000s Currently Going Forward Core Business: Prime Contractor for the U.S. Dept. of Defense Growth of Core Business: Increased Technical Capabilities Large - Scale Manufacturing + Start Pursuing Subcontracting Work (Tier 1 and 2) Expansion into New
Slide 9: Unique Position within Aerospace Supply Chain
Unique Position within Aerospace Supply Chain Activities Performed Representative Companies ▪ Design & development of aircraft platforms ▪ Integration & final assembly of completed aircraft ▪ Marketing & supply ▪ Program management ▪ Final assembly of complex & critical flight structures ▪ External
Slide 10: Subcontractor Role
Subcontractor Role Primes are Outsourcing Lower Level Structural Assemblies CPI Aero is…. 10 Tier 3 Tier 1 Tier 2 OEM Components or detailed parts Manufacture subassemblies Manufacture aircraft sections Final assembly, finish and delivery Tier 1 Supplier to: Tier 2 Supplier to:
Slide 11: Programs (as of 2/28/14): Military
Programs (as of 2/28/14): Military Aerospace A - 10 Thunderbolt Wing $92M contract Leading edges, wing tips, trailing edges, main landing gear pods Firm requirements for 173 ship sets $65.3M in orders E - 2D Advanced Hawkeye & C - 2A Greyhound $195M program Structural kits for the wing $76.3M in pur
Slide 12: Programs (as of 2/28/14): Commercial
Programs (as of 2/28/14): Commercial Gulfstream G650 Business Jet Wing leading edge assemblies Contract recently extended through 2019 Funded backlog through Q3 2014 S - 92 Civil Helicopter $28.8M contract Structural assembly kits, search and rescue door provision & completion kits, trailing edge an
Slide 13: Large Order Backlog
Large Order Backlog Funded / Unfunded $110.4M $ 321.0M Funded Unfunded Unfunded backlog represents remaining potential value of long term agreements * Defense / Commercial Consolidated Backlog at 12/31/2013 $431.4 Million (increased by $39.5M as compared to 12/31/12) $248.3M $183.1M Military Aerospa
Slide 14: Backlog Breakdown (at 12/31/13)
Backlog Breakdown (at 12/31/13) Military Aerospace Commercial $59.3M $18.7M $ 0.3M $4.5M $ 134.8M $26.9M $3.9M Fixed Wings Rotary Wings MRO Pod Systems $5.6M $20.3M $ 1.7M $4.1M $ 151.3M Rotary Wings Business Jet Foreign Commercial 14 Funded: $82.8 Million Unfunded: $ 165.6 Million Funded: $27.6 Mil
Slide 15: Contracts (as of 12/31/13) - Size and Duration
Contracts (as of 12/31/13) - Size and Duration Firm, Funded Contracts Provide Long - Term Revenue Visibility and Operating Leverage ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 NORTHROP GRUMMAN – 25 ALMDS units NORTHROP GRUMMAN - $195 M for the E - 2D and C - 2A aircrafts SPIRIT - for the
Slide 16: Bid Pipeline (2/28/14)
Bid Pipeline (2/28/14) 16 Military / Commercial * Military bid pipeline percentage shown here does not include a large proposal for USAF T - X trainer as this opportunity is far in the future . 56% * 44% Military Commercial
Slide 17: Military Bid Pipeline: Breakdown (2/28/14)
Military Bid Pipeline: Breakdown (2/28/14) 17 Fixed Wing 62% Rotary Wing 26% Pod Systems 7% MRO 5% Fixed Wing Rotary Wing Pod Systems MRO Commercial Light Bizjet 28% Rotary 14% Large Business 31% LCA 27% Light Bizjet Rotary Large Business LCA
Slide 18: Additional Growth Opportunities
Pursue Subcontracts on Large Commercial Aircraft Expand Relationship with Existing Customers (new program opportunities) Additional Growth Opportunities Embraer Boeing Airbus Pursue Subcontracts on Future Defense Programs 18 Future Light Helicopter New USAF Trainer New Presidential Helicopter
Slide 19: Manufacturing Operations - Then
Manufacturing Operations - Then 19 CPI Aero - A Look Back - 2007 Very small company, with little industry recognition or presence outside of the DOD Air Logistics Centers and Depots 95% defense contracts Shop structured and operated to supply the business base mentioned above Minimal customer oversi
Slide 20: Manufacturing Operations - Then: Big Three Contracts
In 2008 CPI Aero awarded initial “Big Three” contracts: • Boeing A - 10 Enhanced Wing Replacement program • Spirit/Gulfstream G650 LE package • E2D Outer Wing Panel (OWP) Kits Manufacturing Operations - Then 20 Challenged our resources • Infrastructure • Workforce
Slide 21: Manufacturing Operations - Today
21 Expanded into Military MRO Growing Commercial Business Complex Structural Assemblies Manufacturing Operations - Today Today 1. Engineering Capabilities 2. Tooling Department 3. Manufacturing and Integration
Slide 22: Manufacturing Workforce and Apprentice Program
0 20 40 60 80 100 120 2007 2008 2009 2010 2011 2012 2013 During rapid growth of workforce, median manufacturing age went down and hourly labor rate held steady In addition to our highly skilled manufacturing employees, our Apprentice program also provides steady stream of manpower to cover attrition
Slide 23: Financial Highlights
Financial Highlights 23 Highlights Revenue Gross margin Pre - tax income Net Income EPS* 2013 $83.0 million 22.2% $11.2 million $7.7 million $ 0.91 2012 $89.3 million 27.1% $16.5 million $11.0 million $ 1.40 * Diluted earnings per share for 2013 period were calculated on 8% more shares outstanding,
Slide 24: Revenue Breakdown
Revenue Breakdown 24 2012 commercial aerospace revenue increased 2.6x from 2011 and 3.5x from 2010 Nearly all of 2013 revenue decline was due to a significant decline in military revenue, specifically in the fixed wing segment 86% 70% 68% 65% 60% 14% 30% 32% 35% 40% 0% 20% 40% 60% 80% 100% 2011 2012
Slide 25: Revenue Breakdown: Military
Revenue Breakdown: Military 25 81% 76% 66% 67% 55% 5% 13% 18% 21% 22% 1% 2% 4% 14% 11% 15% 9% 19% 0% 20% 40% 60% 80% 100% 2011 2012 2013 2014E 2015E Pod Systems MRO Rotary Wing Fixed Wing $63.9 M $62.7 M $56.2 M
Slide 26: Revenue Breakdown: Commercial
Revenue Breakdown: Commercial 26 79% 61% 81% 69% 55% 16% 22% 4% 6% 10% 5% 17% 15% 16% 21% 6% 11% 3% 3% 0% 20% 40% 60% 80% 100% 2011 2012 2013 2014E 2015E Gov. Commercial LCA Light Business Rotary Large Business $10.2 M $26.6 M $26.8 M
Slide 27: Business Outlook
Business Outlook 27 2014 2015 Expected to grow over 2013 - possibly reaching 2012 revenues Newer commercial programs expected to generate a higher % of total revenue Revenues Highest revenue in CPI Aero’s history is expected Product deliveries and customer billings expected to surpass those of 2013
Slide 28: Favorable long-term market outlook
Favorable long - term market outlook Long - Term Industry/Company Outlook 2014 and Beyond Military Programs • Well positioned on E - 2D, Black Hawk military platforms that are expected to survive the deep cuts to overall military spending • Heritage in providing spares support for out - of - product
Slide 29: Contract Awards
Contract Awards 29 Value of Contract Awards (in $ millions) CPI Aero’s future revenue mix should continue to reflect a larger proportion of work as a subcontractor to major prime contractors 0% 20% 40% 60% 80% 100% $0 $25 $50 $75 $100 $125 2007 2008 2009 2010 2011 2012 2013 Military Commercial % of
Slide 30: Investment Conclusion
Investment Conclusion 30 2014: expected to be a year of growth • Performance expected to be better than 2013 • Higher product shipments planned • Expected cash flow from operations of $1M to $1.25M 2015: continued growth is e xpected • Highest revenue in CPI Aero’s history is expected • Gross margin
Slide 31: Contact us
Contact us CPI Aerostructures Vincent Palazzolo, CFO (631) 586 - 5200 www.cpiaero.com Investor Relations Counsel Lena Cati (212) 836 - 961 www.theequitygroup.com lcati@equityny.com 31
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