Executive Summary

Q2 2025 results were negatively impacted by the termination of the A-10 Program, driving a $2.3M write-off, compressing gross margin to 4.4% (17.1% ex-A10), and resulting in a net loss of $1.3M and diluted EPS of ($0.10) .
Revenue declined to $15.2M from $20.8M in Q2 2024 as legacy programs wind down and transition to newer awards continues; Adjusted EBITDA was ($1.7M), or $0.6M excluding the A-10 impact .
Balance sheet and backlog remained supportive: debt fell to $16.2M (an all-time low), Debt-to-Adjusted EBITDA ratio at 2.7x ex-A10, and backlog of $506M; management also disclosed a material weakness in ICFR related to debt classification, with remediation underway .
No quantitative guidance was issued; incremental contract wins during the quarter (e.g., T‑38 PCIII/TRIM orders, helicopter assembly follow-ons) underscore demand durability into 2026–2028 and support the pivot toward growth programs .

What Went Well and What Went Wrong

What Went Well
- Portfolio transition progressed: first Advanced Tactical Flight Pod delivered to Raytheon, signaling execution on new programs and future-state portfolio positioning .
- Backlog visibility and customer diversification remain strong: $506M backlog, with multiple awards from Raytheon, Sikorsky, Lockheed, USAF and Embraer .
- Balance sheet improved: total debt reduced to $16.2M; Debt-to-Adjusted EBITDA ratio 2.7x excluding A‑10 impact; additional awards included $2.5M in T‑38 PCIII/TRIM orders and $2.4M of helicopter assembly follow-ons .
What Went Wrong
- A‑10 Program termination drove a $2.3M Q2 write-off ($4.5M 1H impact), compressing gross margin to 4.4% and swinging the quarter to a net loss of $1.3M .
- Revenue fell to $15.2M vs. $20.8M in Q2 2024; Adjusted EBITDA declined to ($1.7M) in Q2 .
- Internal controls: management identified a material weakness in ICFR related to debt classification pending a covenant amendment; management is implementing remediation .

Financial Results

Headline metrics (USD)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$21.8	$15.4	$15.2
Gross Profit ($M)	$4.3	$1.6	$0.7
Gross Margin (%)	20.0%	10.7%	4.4% (17.1% ex‑A10)
Net (Loss) Income ($M)	$1.0	($1.3)	($1.3)
Diluted EPS ($)	$0.08	($0.10)	($0.10)
Adjusted EBITDA ($M)	$2.3	($0.8)	($1.7) ($0.6 ex‑A10)

Ex‑A10 snapshot

Metric	Q1 2025	Q2 2025
Gross Margin ex‑A10 (%)	21.6%	17.1%

Key KPIs and balance sheet (period-end)

KPI	Q4 2024	Q1 2025	Q2 2025
Backlog ($M)	$510	$516	$506
Total Debt ($M)	$17.4	$16.7	$16.2
Debt / Adjusted EBITDA (x)	2.2 (year-end)	2.9	2.7 (ex‑A10)
Cash From Operations ($M)	$4.4 (Q4)	($2.7) (Q1)	N/A (not disclosed)

Other Q2 2025 press releases

Date	Item	Detail/Value
2025-08-04	USAF T‑38 PCIII/TRIM orders	$2.5M in purchase orders; funded value now $50.8M; performance into 2028
2025-07-30	Follow‑on orders (helicopter assemblies)	$2.4M; deliveries through mid‑2026
2025-07-01	Leadership addition	Paula Castellano appointed SVP, Operations

Guidance Changes

No formal quantitative guidance was issued in the Q2 2025 materials reviewed.

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY 2025	—	No formal guidance provided in Q2 materials	—
Gross Margin	FY 2025	—	No formal guidance provided in Q2 materials	—
Adjusted EBITDA	FY 2025	—	No formal guidance provided in Q2 materials	—

Reference: Q2 earnings release and 8‑K did not include numerical guidance; management discussed backlog and portfolio transition but did not publish ranges .

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not located in our dataset; themes below reflect company releases over Q4 2024–Q2 2025.

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
A‑10 Program / legacy portfolio	Q1: $2.1M pre‑tax loss recognized on A‑10; steps taken to mitigate further degradation	Q2: $2.3M write‑off; six‑month $4.5M impact; ex‑A10 GM 17.1%	Wind‑down progressing; drag declining over time
New program execution (Raytheon pod, Sikorsky, Lockheed, Embraer)	Q4: Backlog $510M with new awards cited ; Q1: Backlog $516M with L3Harris, Raytheon, Lockheed, Embraer	First Advanced Tactical Flight Pod delivered to Raytheon; backlog $506M with multiple awards	Positive execution; strong demand
Backlog / visibility	$510M at YE 2024	$506M at Q2; supports multi‑year growth	Stable, high visibility
Balance sheet / leverage	YE 2024 Debt/Adj EBITDA 2.2x; debt $17.4M	Debt $16.2M; Debt/Adj EBITDA 2.7x ex‑A10	Deleveraging continues
Internal controls	—	Material weakness in ICFR: debt classification pending covenant amendment; remediation underway	One‑time governance focus

Management Commentary

“During the second quarter we took a $2.3 million write-off on the A‑10 Program as a result of the termination of the Program by The Boeing Company and the pending retirement of the A‑10 fleet. Our six‑month ended June 30, 2025 impact related to the A‑10 Program was $4.5 million.”
“Without the impact of the terminated A‑10 Program, we performed well as we continued the transition to our new programs and achieved key development milestones such as the first Advanced Tactical Flight Pod delivery to Raytheon.”
“We also continued to improve our balance sheet during the second quarter, bringing our total debt down to an all‑time low of $16.2 million and our Debt‑to‑Adjusted EBITDA Ratio to 2.7 excluding the impact of the A‑10 Program.”
“We remain committed to optimizing our portfolio and transitioning from legacy programs to programs of the future… we ended the quarter with a strong backlog of $506 million…”
“Management identified a material weakness in internal control over financial reporting related to the classification of debt pending an amendment to a debt covenant… implementing the necessary steps to remediate.”

Q&A Highlights

We did not locate a Q2 2025 earnings call transcript in the document catalog; no Q&A highlights to report for this quarter based on available primary sources.

Estimates Context

Wall Street consensus from S&P Global was not available for EPS or revenue for Q2 2025; thus, no beat/miss analysis vs. consensus can be provided. Actuals: Revenue $15.2M; Diluted EPS ($0.10) .
Implication: In absence of formal coverage, investor models likely pivot to company-reported backlog cadence, ex‑A10 margin normalization, and delivery milestones to gauge trajectory .

Estimates vs. Actuals (USD)

Metric	Q2 2025 Consensus (S&P Global)*	Q2 2025 Actual
Revenue ($M)	N/A*	$15.2
Diluted EPS ($)	N/A*	($0.10)

*Consensus values unavailable; values are from S&P Global.

Key Takeaways for Investors

The A‑10 program wind‑down is the principal earnings headwind; excluding A‑10, Q2 gross margin was 17.1% and Adjusted EBITDA would have been positive ($0.6M), reinforcing that core programs are healthy .
Backlog of $506M and new order flow (T‑38 PCIII/TRIM purchase orders; helicopter assembly follow‑ons) support multi‑year revenue visibility into 2026–2028, a constructive setup for re‑acceleration as legacy drag fades .
Deleveraging progress continued (debt down to $16.2M); focus now on sustaining cash conversion as program mix tilts to higher‑margin work .
Near‑term stock narrative hinges on evidence of ex‑A10 margin normalization and milestone deliveries (e.g., Raytheon pod), which can improve confidence in H2 trajectory despite lack of formal guidance .
Governance/controls: material weakness on debt classification should be monitored; timely remediation would reduce perceived financial reporting risk .
Trend analysis from Q4’24 → Q1’25 → Q2’25 indicates stable backlog and improving portfolio quality despite temporary revenue/margin pressure from A‑10 termination .

Supporting Detail: Consolidated Statements and Adjusted EBITDA reconciliation included in the Q2 2025 8‑K Exhibit 99.1 provide the reported revenue ($15.18M), net (loss) income ($(1.325)M), diluted EPS ($(0.10)), and Adjusted EBITDA ($(1.733)M), along with ex‑A10 adjustments; Q1 2025 and Q4 2024 releases provide comparable series for trend analysis .

CPI AEROSTRUCTURES INC (CVU)·Q2 2025 Earnings Summary