CPI Aerostructures Inc (NYSE MKT:CVU) Q1 2020 Earnings Conference Call - Final Transcript

Oct 01, 2020 • 08:30 am ET


CPI Aerostructures Inc (NYSE MKT:CVU) Q1 2020 Earnings Conference Call - Final Transcript


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Douglas McCrosson

2019, as our product mix for the remainder of 2020 returns to a more favorable mix between commercial and defense programs. Despite the reported GAAP net loss, our continued focus on working capital management resulted in an improvement in cash flow from operations of approximately $900,000.

Moving to the second bullet on that page. Since the beginning of the year, we have announced $77.4 million in new firm orders, reflecting our consistently strong performance on high quality, multi-year defense programs. On the E-2D program with Northrop Grumman, we received $48.1 million in new firm orders for wing kits and $4 million in firm orders for welded assemblies.

We have received $1.2 million follow-on order from Lockheed Martin for F-16 Structural Assemblies, $14 million in new purchase orders under our A-10 re-winging contract with Boeing, and we received $10.1 million in purchase orders from the US Air Force for T-38 modification kits. By leveraging our established and long-standing relationships with the largest aerospace OEMs, we ended the first quarter with a record total backlog of $556.3 million and a record $499 million in defense backlog.

As a result of strong bookings during the quarter, book-to-bill for the quarter was 4.7:1 and is 2.2:1 for the trailing 12-month period. We ended the quarter with a funded defense backlog of $206.4 million, up $69.4 million since December 31, 2019. The largest programs in this funded backlog are the E-2D wing panel kits we supply to Northrop Grumman, the A-10 assemblies we built for Boeing, and our Next Generation Jammer Mid-Band pod program we performed for Raytheon.

Turning to Slide 5. As you can see from the line chart on the right side of the slide, we are reaping the reward of successful execution of our strategy started around three years ago to concentrate on building our backlog of long-term defense programs. We have seen a $165 million spike in our backlog of long term defense contracts over just the past four quarters. As a result, 90% of our backlog, as of March 31, consists of multi-year defense contracts.

However, our commercial business has been facing headwinds from the global COVID-19 pandemic and from order cancellations and deferred deliveries. Our backlog of commercial contracts decreased $7.9 million to $57 million as of March 31, with the funded portion decreasing $6 million to $4.7 million, due to reductions in order quantities on the HondaJet and Gulfstream programs.

After the end of the first quarter, Triumph Group canceled nearly all open orders with us, decreasing the G650 leading edge backlog by an additional $3.6 million. In May, Triumph Group announced it had reached an agreement in principle to sell the G650 Wing program to Gulfstream Aerospace. We have begun to receive communications from Gulfstream that are expected to lead to purchase orders for G650 Wing components. However, the company is unable to predict at this time when Gulfstream will begin purchasing G650 Wing components from us, if at all or how many.

Most of what remains