CPI Aero Plunges to Nine-Month Loss Amid Program Terminations

TL;DR

**CVU is bleeding cash and profits, with major contract issues signaling deeper operational woes.**

AI Summary

CPI Aerostructures Inc. reported a net loss of $1,535,191 for the nine months ended September 30, 2025, a significant decline from a net income of $2,327,861 in the same period of 2024. Revenue decreased by 16% to $49,848,818 for the nine months ended September 30, 2025, down from $59,311,356 in the prior year. This revenue decline was primarily driven by a decrease in government subcontracts, which fell from $48,951,748 to $39,115,821. The company experienced a substantial unfavorable net EAC adjustment of $8,109,975 for the nine months ended September 30, 2025, largely due to the termination of the Boeing A-10 program and increased labor and material costs on other programs like NGJ Mid-Band Pod and Embraer Phenom-300 Engine Inlets Assembly. Cash decreased significantly, with cash at the end of the period falling from $5,490,963 at the beginning of 2025 to $546,591 by September 30, 2025. Total assets increased to $74,056,022 from $67,982,002, mainly due to a substantial increase in operating lease right-of-use assets from $2,856,200 to $9,871,784.

Why It Matters

This filing reveals a concerning financial downturn for CPI Aerostructures, with a shift from profitability to a significant net loss and a substantial revenue drop. For investors, the unfavorable EAC adjustments and program terminations, particularly the Boeing A-10 program, signal operational inefficiencies and potential contract risks, impacting future earnings visibility. Employees might face job insecurity if these trends continue, especially given the reliance on government contracts. Customers, particularly government agencies and prime contractors, may scrutinize CPI Aero's ability to deliver on complex projects amidst rising costs and program changes. In a competitive aerospace and defense market, these challenges could weaken CPI Aero's position against larger, more diversified competitors, potentially leading to further market share erosion.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,535,191 for the nine months ended September 30, 2025, a stark contrast to a net income of $2,327,861 in the prior year. This is compounded by a significant net decrease in cash of $4,944,372, leaving only $546,591 in cash, and an unfavorable EAC adjustment of $8,109,975, driven by program termination and increased costs.

Analyst Insight

Investors should consider reducing exposure to CVU given the significant net loss, declining revenue, and substantial unfavorable EAC adjustments. The rapid depletion of cash reserves and reliance on a line of credit suggest liquidity concerns. Await clear evidence of improved contract profitability and cash flow generation before reconsidering an investment.

Financial Highlights

debt To Equity

Not Disclosed

revenue

$49,848,818

operating Margin

Not Disclosed

total Assets

$74,056,022

total Debt

Not Disclosed

net Income

-$1,535,191

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

$546,591

revenue Growth

-16%

Revenue Breakdown

Key Numbers

• $1,535,191 — Net Loss (for the nine months ended September 30, 2025, compared to $2,327,861 net income in 2024)
• $49,848,818 — Revenue (for the nine months ended September 30, 2025, down 16% from $59,311,356 in 2024)
• $8,109,975 — Unfavorable EAC Adjustment (for the nine months ended September 30, 2025, primarily due to program termination and increased costs)
• $546,591 — Cash at End of Period (as of September 30, 2025, a decrease from $5,490,963 at December 31, 2024)
• $100.1 million — Remaining Performance Obligations (as of September 30, 2025, representing future expected revenue)
• $14,390,000 — Line of Credit, net of current portion (as of September 30, 2025, indicating significant debt)
• 16% — Revenue Decrease (year-over-year for the nine months ended September 30, 2025)
• $39,115,821 — Government Subcontracts Revenue (for the nine months ended September 30, 2025, down from $48,951,748 in 2024)
• $9,871,784 — Operating Lease Right-of-Use Assets (as of September 30, 2025, a significant increase from $2,856,200 at December 31, 2024)
• $3,105,825 — Net Cash Used in Operating Activities (for the nine months ended September 30, 2025, an increase from $837,077 in 2024)

Key Players & Entities

• CPI Aerostructures, Inc. (company) — registrant
• Boeing A-10 program (company) — terminated program
• NGJ Mid-Band Pod (company) — program with increased costs
• Embraer Phenom-300 Engine Inlets Assembly (company) — program with increased costs
• F-16 Rudder Island program (company) — program with unfavorable adjustment
• Securities and Exchange Commission (regulator) — filing oversight
• NYSE American (regulator) — exchange where common stock is registered
• Federal Deposit Insurance Corporation (regulator) — insures cash balances
• Financial Accounting Standards Board (regulator) — issues accounting standards
• Chief Executive Officer (person) — Chief Operating Decision Maker (CODM)

FAQ

Risk Factors

• Deteriorating Profitability and Cash Position [high — financial]: The company reported a net loss of $1,535,191 for the nine months ended September 30, 2025, a sharp reversal from a net income of $2,327,861 in the prior year. Cash reserves have dwindled to $546,591 from $5,490,963 at the start of the year, and operating activities consumed $3,105,825 in cash.
• Significant Unfavorable EAC Adjustments [high — operational]: An unfavorable net EAC adjustment of $8,109,975 was recorded for the nine months ended September 30, 2025. This was primarily driven by the termination of the Boeing A-10 program and increased labor and material costs on other key programs.
• Declining Revenue from Key Segments [medium — market]: Total revenue decreased by 16% to $49,848,818 for the nine months ended September 30, 2025, compared to $59,311,356 in the prior year. The government subcontracts segment, a major revenue driver, saw a significant drop.
• Increased Indebtedness [medium — financial]: The company has a line of credit of $14,390,000, net of the current portion, as of September 30, 2025, indicating a significant reliance on debt financing.
• Dependence on Specific Programs [medium — operational]: The termination of the Boeing A-10 program highlights the company's vulnerability to the cancellation or changes in major contracts, directly impacting revenue and profitability.
• Lease Obligation Growth [low — financial]: Operating lease right-of-use assets increased substantially from $2,856,200 to $9,871,784, contributing to the overall increase in total assets but also representing significant future lease payment obligations.

Industry Context

CPI Aerostructures operates in the aerospace and defense industry, which is characterized by long-term contracts, complex manufacturing processes, and significant regulatory oversight. The industry is sensitive to government defense spending, technological advancements, and global geopolitical events. Companies like CPI Aero often face intense competition and pressure on margins due to the specialized nature of their products and services.

Regulatory Implications

As a defense contractor, CPI Aerostructures is subject to stringent regulations from government agencies like the Department of Defense and the FAA. Compliance with quality standards, security protocols, and contractual terms is critical. Any failure to meet these requirements can lead to contract disputes, penalties, or debarment, posing significant operational and financial risks.

What Investors Should Do

1. Monitor contract execution and EAC adjustments closely.
2. Assess the company's liquidity and debt management strategies.
3. Evaluate the drivers of revenue decline, particularly in government subcontracts.
4. Analyze the impact of increased operating lease right-of-use assets.

Glossary

EAC Adjustment

Estimate at Completion (EAC) adjustments are revisions to the total estimated cost of a contract. An unfavorable adjustment means the estimated cost has increased, negatively impacting profitability. (A significant unfavorable EAC adjustment of $8,109,975 directly led to the company's net loss and highlights cost overruns on key programs.)

Operating Lease Right-of-Use Assets

Assets recognized under accounting standards for leases, representing the right to use an underlying asset for the lease term. This increases the balance sheet asset base and corresponding lease liabilities. (The substantial increase in these assets from $2,856,200 to $9,871,784 significantly boosted total assets but implies higher future lease payment obligations.)

Remaining Performance Obligations

The total amount of contracted revenue that has not yet been recognized, representing future revenue to be earned from existing contracts. (The $100.1 million in remaining performance obligations indicates future revenue potential, but the company's ability to execute profitably on these contracts is a concern given recent performance.)

Year-Over-Year Comparison

Compared to the prior year period, CPI Aerostructures Inc. has experienced a significant downturn. Revenue has decreased by 16% to $49,848,818, primarily due to a decline in government subcontracts. The company has shifted from a net income of $2,327,861 to a net loss of $1,535,191, heavily impacted by an $8,109,975 unfavorable EAC adjustment. Cash reserves have plummeted from $5,490,963 to $546,591, while operating lease right-of-use assets have surged, indicating a worsening financial and operational performance.

Key Financial Figures

• $0.001 — e on which registered Common stock, $0.001 par value per share CVU NYSE American

Filing Documents

• cpi-10q_093025.htm (10-Q) — 897KB
• ex10-1.htm (EX-10.1) — 53KB
• ex31-1.htm (EX-31.1) — 19KB
• ex31-2.htm (EX-31.2) — 19KB
• ex32-1.htm (EX-32.1) — 14KB
• cpi10q093025001.jpg (GRAPHIC) — 2KB
• 0001999371-25-017728.txt ( ) — 4591KB
• cvu-20250930.xsd (EX-101.SCH) — 34KB
• cvu-20250930_cal.xml (EX-101.CAL) — 53KB
• cvu-20250930_def.xml (EX-101.DEF) — 118KB
• cvu-20250930_lab.xml (EX-101.LAB) — 312KB
• cvu-20250930_pre.xml (EX-101.PRE) — 260KB
• cpi-10q_093025_htm.xml (XML) — 623KB

Signatures

Signatures 23 Part I - Financial Information Item 1 - Consolidated Financial CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 (Unaudited) December 31, 2024 ASSETS Current Assets: Cash $ 546,591 $ 5,490,963 Accounts receivable, net 6,399,594 3,716,378 Contract assets, net 33,695,994 32,832,290 Inventory 593,605 918,288 Prepaid expenses and other current assets 552,585 634,534 Total Current Assets 41,788,369 43,592,453 Operating lease right-of-use assets 9,871,784 2,856,200 Property and equipment, net 565,542 767,904 Deferred tax asset, net 19,918,449 18,837,576 Goodwill 1,784,254 1,784,254 Other assets 127,624 143,615 Total Assets $ 74,056,022 $ 67,982,002 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 16,487,974 $ 11,097,685 Accrued expenses 4,449,051 7,922,316 Contract liabilities 1,992,910 2,430,663 Loss reserve 95,082 22,832 Current portion of line of credit 1,500,000 2,750,000 Current portion of long-term debt 5,449 26,483 Operating lease liabilities, current 1,400,596 2,162,154 Income taxes payable 21,253 58,209 Total Current Liabilities 25,952,315 26,470,342 Line of credit, net of current portion 14,390,000 14,640,000 Long-term operating lease liabilities 8,724,638 938,418 Total Liabilities 49,066,953 42,048,760 Commitments and Contingencies (see note 11) — Shareholders' Equity: Common stock - $ .001 par value; authorized 50,000,000 shares, 12,988,814 and 12,978,741 shares, respectively, issued and outstanding 12,989 12,979 Additional paid-in capital 75,015,659 74,424,651 Accumulated deficit ( 50,039,579 ) ( 48,504,388 ) Total Shareholders' Equity 24,989,069 25,933,242 Total Liabilities and Shareholders' Equity $ 74,056,022 $ 67,982,002 See Notes to Condensed Consolidated Financial Statements 1 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months End

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS Basis of Presentation The Company consists of CPI Aerostructures, Inc. ("CPI Aero"), Welding Metallurgy, Inc. ("WMI"), a wholly owned subsidiary of CPI Aero, and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, the "Company", "we", "us", or "our"). The condensed consolidated interim financial statements of the Company as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet at December 31, 2024 has been derived from audited consolidated financial statements, but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading. All adjustments that, in the opinion of the management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "Form 10-K"). The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the "CODM") to make decisions about resources to be allocated to the segment and assess its perform

View Full Filing

View this 10-Q filing on SEC EDGAR