CPI Aerostructures Inc. 10-Q Summary
Business Context and Reporting Period
Company: CPI Aerostructures, Inc. (CVU)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: The Company operates as a single segment, supplying structural aircraft assemblies, aerosystems, and MRO services for fixed-wing aircraft and helicopters in commercial and defense markets. It serves as a Tier 1 supplier to OEMs and a Tier 2 subcontractor, with significant exposure to U.S. Department of Defense contracts.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 |
Six Months Ended June 30, 2026 |
|---|---|---|
| Revenue | $17,581,532 | $34,941,472 |
| Gross Profit | $3,871,737 (22.0%) | $8,351,628 (23.9%) |
| Net Income | $685,615 | $1,922,333 |
| Diluted EPS | $0.05 | $0.15 |
| Cash and Equivalents | $835,875 (as of June 30, 2026) | |
| Working Capital | $23,488,549 (as of June 30, 2026) | |
| Total Debt Outstanding | $19,111,172 (Revolving: $9.17M; Term: $9.94M) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 15.8% ($2.4M) for the quarter and 14.3% ($4.4M) for the six months compared to the same periods in 2025. Growth was driven by the RTX MPBD Missile Wing, NGJ Mid-Band Pods, and NGJ Low-Band Pods programs.
- Profitability Improvement: The Company returned to profitability, reporting net income of $685,615 for the quarter compared to a net loss of $1.3M in the prior year quarter. Gross margin expanded significantly to 22.0% (from 4.4% last year) and 23.9% (from 7.6% last year) for the six-month period.
- Margin Drivers: The improvement in gross margin is primarily attributable to the absence of significant unfavorable adjustments in the current period, contrasting with the prior year which included a $2.3M unfavorable adjustment related to the termination of the A-10 program.
- Cost of Sales: Total cost of sales decreased 5.6% for the quarter and 5.9% for the six months, driven by lower labor costs (due to A-10 termination) and reduced material receipts for specific commercial programs.
Guidance, Outlook, and Risks
- Backlog: Total backlog stands at $533.1 million as of June 30, 2026, with $100.0 million funded and $433.1 million unfunded. Approximately 95% of the backlog is attributable to government and military contractor contracts.
- Liquidity: Management believes existing resources are sufficient to meet working capital needs for the next 12 months. The Company maintains a $10M revolving line of credit and a $10M term loan, both maturing in December 2030.
- Contract Adjustments: Unfavorable adjustments of $0.7M (quarter) and $1.4M (six months) were recorded, primarily related to the Embraer Phenom-300 Engine Inlet Assemblies and Sikorsky UH60 Gunner Windows programs.
- Risks:
- Customer Concentration: The top three customers accounted for 70% of revenue in the six months ended June 30, 2026.
- Legal/Contingencies: The Company is disputing a claim for damages from Boeing regarding the terminated A-10 program. No accrual has been made as the loss is not yet probable or estimable.
- Supply Chain: Potential impacts from tariffs and inflation on raw material costs for Firm Fixed Price contracts.
Investor Verification Checklist
- Backlog Realization: Verify the timing of revenue recognition for the $433M unfunded backlog, noting that substantially all backlog is subject to termination at will.
- Debt Covenants: Confirm compliance with the Loan and Security Agreement covenants, specifically the minimum Consolidated Fixed Charge Coverage Ratio of 1.25:1.00 and the maximum Funded Leverage Ratio (3.75:1.00 through Dec 2026).
- Contract Adjustments: Monitor future EAC (Estimates at Completion) adjustments for the Embraer Phenom-300 and Sikorsky UH60 programs, which drove recent unfavorable variances.
- Boeing Dispute: Track the status of the Boeing A-10 program dispute and potential future contingent losses.
- Cash Flow vs. Earnings: Note the disparity between reported net income and negative operating cash flow ($425,705 used in operations for the six months), driven by increases in accounts receivable and contract assets.