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

goal is to use the increased cash flow to accelerate debt repayment to further deleverage the company and provide a solid foundation for 2022 and beyond.

On Slide 14, using 2018 revenue as a baseline, we are providing our growth outlook for the three-year period 2018 to 2021 in each of our business areas. In Aerostructures, we started $35.1 million in revenue in fiscal '18. On the strength of new contracts with Lockheed for F-16 assemblies and Boeing for the A-10, we believe this business will grow in the range of 12% to 14% through 2021. The bulk of our commercial revenue are in this Aerostructures business area and as such this growth rate projection has no contribution from potential future orders by Gulfstream for G650 leading edges and it does include the impact of COVID-19 to our other business jet programs.

Aerosystems remains our fastest-growing area driven by our electronic warfare pods and electronic systems programs. This is a great niche for us, one that we believe can generate growth across the programs indicated at a three-year compound annual growth rate in the range of 22% to 26%. This is largely driven off of expected increased production of the various electronic warfare and intelligence reconnaissance and surveillance pods, we built for Raytheon and Northrop Grumman, as well as increased orders for certain BLACK HAWK systems from Sikorsky. In our kitting and supply chain management area at bottom, we started a revenue base of $17.7 million for fiscal '18. We believe that the funded orders we received for the E-2D program and the T-38 program, among others, should produce a compound annual growth rate in the range of 8% to 10%.

Before opening the call to questions, I'd like to say in closing that we are now reaping the rewards of our efforts to foster durable relationships with the premier aerospace and defense OEMs and win long-term contracts. Thanks to our high-quality backlog and record funded defense backlog, we are well positioned with the stable business near term. And because we have earned a reputation as an exceptional, reliable supply chain partner, we plan to leverage these relationships to bid on and win new awards, giving us attractive long-term growth opportunities.

In fact, our business defense -- our defense business is at the starting block of what could be decades long programs. Finally, I want to recognize the dedication of our employees, who have risen to the occasion in these past several months to continue their work in service of our country's national security. They have done an outstanding job under difficult circumstances and they have my heartfelt thanks.

Elisa, you can open the line for questions, please.