CPI AEROSTRUCTURES INC (CVU)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was a mixed quarter: reported revenue fell to $15.4M and GAAP gross margin compressed to 10.7% due to a one-time pre-tax loss of $2.1M on the legacy A-10 program; excluding A-10, gross margin would have been 21.6% and pre-tax income $0.5M, demonstrating underlying operational progress .
• GAAP EPS was -$0.10, with adjusted EBITDA at -$0.8M; cash used in operations was $2.7M, reversing strong Q4 cash generation .
• Backlog increased to $516M (from $510M in Q4 and $506M in Q3), and total debt declined to an all-time low of $16.7M; Debt-to-Adjusted EBITDA ratio was 2.9 (still sub-3 for the ninth consecutive quarter-end) .
• No formal forward guidance was provided; near-term narrative hinges on mitigation of A-10 losses, continued backlog conversion, and new program awards (e.g., L3Harris NGJ-LB, Sikorsky repair orders) as potential stock catalysts .

What Went Well and What Went Wrong

What Went Well

• Backlog and customer diversification strengthened: backlog reached $516M, with new awards from L3Harris, Raytheon, Lockheed, and Embraer; “We remain committed to driving operational improvements…transitioning from legacy programs to programs of the future” — CEO Dorith Hakim .
• Balance sheet improved: total debt down to $16.7M, marking an all-time low since 2011; Debt-to-Adjusted EBITDA ratio at 2.9 (ninth consecutive quarter below 3.0) .
• Underlying margin quality: excluding the A-10 program impact, gross margin was 21.6% vs. 18.6% YoY and pre-tax income would have been $0.5M vs. $0.2M YoY, indicating operational progress .

What Went Wrong

• Legacy program charge: recognition of a $2.1M pre-tax loss on A-10 under a 2019 fixed-price contract drove GAAP margin compression (10.7%) and a -$1.3M net loss, with EPS at -$0.10 .
• Topline contraction and profitability reversal: revenue declined to $15.4M (from $21.8M in Q4 and $19.4M in Q3) and adjusted EBITDA fell to -$0.8M (from $2.3M in Q4 and $1.7M in Q3) .
• Operating cash flow headwind: cash used in operations of $2.7M vs. +$4.4M in Q4 and +$0.7M in Q3, reflecting working capital timing alongside the program loss .

Financial Results

GAAP Performance vs Prior Quarters

Year-over-Year (Q1 2025 vs Q1 2024)

Key Operating Metrics (Trajectory)

Guidance Changes

Note: The Q1 2025 press release and 8-K did not include quantitative forward guidance ranges for revenue, margins, EPS, or other items .

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was available; themes reflect management commentary in press releases.

Management Commentary

• “Our first quarter 2025 results were significantly impacted by the recognition of a pre-tax loss of $2.1 million on our A-10 Program…we have now taken the necessary steps to mitigate this Program’s further potential degradation to the Company’s financial performance. Our first quarter 2025 gross profit without the A-10 Program impact was 21.6%…income before provision for income taxes…$0.5 million…” — Dorith Hakim, President & CEO .
• “We continued to improve our balance sheet during the first quarter, bringing our total debt down to an all-time low of $16.7 million and our Debt-to-Adjusted EBITDA Ratio to 2.9 marking our ninth consecutive quarter-end below 3.0.” — Dorith Hakim .
• “We remain committed to…optimizing our portfolio, transitioning from legacy programs to programs of the future. We ended the quarter with a strong backlog of $516 million…” — Dorith Hakim .
• “CPI Aero has delivered 28 ALMDS Pod structures…This program is further demonstration of CPI Aero’s expertise in manufacturing airborne pods…” — Dorith Hakim .
• “Repair and overhaul services are a core capability at CPI Aero…To date, we have delivered over 1,000 stabilators back into service for the Seahawk Helicopter fleet.” — Dorith Hakim .

Q&A Highlights

• An earnings call transcript for Q1 2025 was not found in our document set or external searches; no Q&A themes or clarifications are available to report [ListDocuments result with 0 transcripts; InternetSearch did not return a transcript].

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable; no consensus mean or number of estimates returned for CVU in Q1 2025 via S&P Global. This limits beat/miss analysis versus Street [GetEstimates returned no data for EPS/revenue consensus for Q1 2025].
• Implication: With limited coverage, price reactions may hinge more on management narrative (A-10 mitigation, backlog growth, debt reduction) and subsequent quarter execution rather than headline beats/misses .

Key Takeaways for Investors

• Underlying operations appear healthier than GAAP results suggest: ex-A-10, margin and pre-tax income improved YoY; focus is on executing the transition away from legacy programs to higher-quality work .
• Backlog momentum continues and customer base broadens (L3Harris, Raytheon, Lockheed, Embraer), supporting multi-quarter visibility; watch conversion pace and mix impacts on margins .
• Balance sheet discipline persists with debt at $16.7M and leverage sub-3x; financing flexibility should improve if margins stabilize and cash generation normalizes .
• Near-term risk: residual A-10 impacts and working capital swings (Q1 operating cash outflow); monitor program exit timing and cash collections cadence .
• Strategic growth vectors in R&O and pod systems (ALMDS and ISR/EW) can diversify away from legacy exposure; follow-on orders (e.g., ALMDS ~$3M potential) could provide incremental upside .
• With no formal guidance or consensus coverage, stock moves may be driven by updates on A-10 mitigation, award flow, and quarterly margin/cash trajectories rather than “beats”; track company news cadence and next results dates on the corporate site .
• Positioning: Tactical traders can watch for headlines on award wins/backlog conversion; medium-term investors should focus on evidence of sustained 20%+ gross margins and consistent positive operating cash flow as proof points of the margin narrative .