CPI Aerostructures Announces 2011 Third Quarter Results

CPI Aerostructures, Inc. (“CPI Aero®”) (NYSE Amex: CVU) today announced results for the 2011 third quarter and nine months ended September 30, 2011.

Third Quarter 2011 vs. 2010

• Revenue increased 28% to $16,607,638 from $12,976,084;
• Gross margin was 25.1% as compared to 26.1%;
• Pre-tax income increased 17% to $2,531,042, compared to $2,171,363; and,
• Net income increased 26% to $1,805,042, or $0.25 per diluted share, compared to $1,429,363, or $0.21 per diluted share.

Nine Months 2011 vs. 2010

• Revenue increased 37% to $50,043,470 from $36,526,238;
• Gross margin was 24.5% as compared to 26%;
• Pre-tax income increased 25% to $6,637,907, compared to $5,301,431;
• Net income increased 36% to $4,743,907 or $0.66 per diluted share, compared to $3,495,431 or $0.53 per diluted share; and,
• Unawarded solicitations remain at a high level with open solicitations totaling a maximum realizable value of approximately $399 million.

Edward J. Fred, CPI Aero’s President & CEO, stated, “The increase in revenue for the three and nine month periods was primarily the result of work performed for the Boeing Company on the A-10 attack jet and Northrop Grumman Corporation on the E-2D surveillance airplane. As expected, 2011 third quarter revenue increased by only 28% with the big surge in revenue to come in the fourth quarter. As we are now well into the fourth quarter, we can say with added confidence that the fourth quarter of 2011 will be the highest revenue quarter in CPI Aero’s history by a significant margin.

“As compared to last year, for the first nine months of this year, revenue generated from government subcontracts and commercial subcontracts increased by 69.2% and 19.5%, respectively, offset by a 39% revenue decrease from prime government contracts. This was an anticipated shift resulting from our marketing focus on subcontracting work over the last several years.”

Mr. Fred added, “As has been the case in the first half of the year, our gross margin for the three and nine month periods was affected by travel and labor required for supplier surveillance on the early stage of production for our three major programs: the A-10 attack jet, the E-2D surveillance airplane and the Gulfstream G650 aircraft. We expect these costs to remain in effect through year-end, resulting in a gross margin range of 24%-25% for 2011 as a whole.

“Our selling, general and administrative expenses for the three and nine months ended September 30, 2011, increased by 29.1% and 33.5%, respectively, primarily due to an increase in public fees, higher salaries and payroll taxes associated with a larger number of employees to handle higher work volume and meet customer delivery schedules, as well as office expenses and accrued bonuses.”

Mr. Fred added, “We continue to receive new orders and as of November 5, 2011, we received approximately $81.5 million of new contract awards, compared to $57.7 million in the same period last year, and well above the $61.7 million for all of 2010. New contract awards included approximately $11.7 million of government prime contract awards, approximately $24.2 million of government subcontract awards and approximately $45.6 million of commercial subcontract awards.”

Mr. Fred added, “We look forward to additional orders from existing customers, the two new customers we added this year, Honda Aircraft and Bell Helicopter, as well as from the unawarded solicitations of approximately $399 million on which we have bid.”

Mr. Fred went on to say, “We are confident that we are on track to reach our 2011 guidance which calls for revenue of approximately $74 million, with a resulting net income in the range of $7.4 million to $7.5 million. For 2012, we expect revenue to be in the range of $95 million to $98 million, with a resulting net income in the range of $12 million to $13 million.”

Mr. Fred concluded, “Finally, we expect to complete our relocation to the 171,000 sq. ft. facility by the end of the year. This new facility, which is nearly three times the size of our current location, will provide us with the needed capacity to support our expected growth in new orders, customers, programs and of course, revenue and profits over the coming years.”

Conference Call

CPI Aero’s President and CEO, Edward J. Fred, and CFO, Vincent Palazzolo, will host a conference call today, Tuesday, November 8, 2011 at 10:00 am ET to discuss third quarter results as well as recent corporate developments. After opening remarks, there will be a question and answer period. Interested parties may participate in the call by dialing (201) 493-6739. Please call in 10 minutes before the scheduled time and ask for the CPI Aero call. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to www.cpiaero.com and click on the “Investor Relations” section, then click on “Event Calendar”. Please access the website 15 minutes prior to the call to download and install any necessary audio software. The conference call will be archived and can be accessed for approximately 90 days. We suggest listeners use Microsoft Explorer as their browser.

About CPI Aero

CPI Aero is engaged in the contract production of structural and other aircraft parts for leading prime defense contractors, the U.S. Air Force, and other branches of the armed forces. CPI Aero also acts as a subcontractor to prime aircraft manufacturers in the production of commercial aircraft parts. In conjunction with its assembly operations, CPI Aero provides engineering, technical and program management services. Among the key programs that CPI Aero supplies are the E-2D Advanced Hawkeye surveillance aircraft, MH-53 and CH-53 variant helicopters, the UH-60 BLACK HAWK helicopter, the S-92® helicopter, the MH-60S mine countermeasure helicopter, the Gulfstream G650, C-5A Galaxy cargo jet, the A-10 Thunderbolt attack jet, and the E-3 Sentry AWACS jet. CPI Aero is included in the Russell Microcap® Index.

The above statements include forward looking statements that involve risks and uncertainties, which are described from time to time in CPI Aero’s SEC reports, including CPI Aero’s Form 10-K for the year ended December 31, 2010 and Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011.

CPI Aero® is a registered trademark of CPI Aerostructures, Inc.

(See Accompanying Tables)