In the earnings release for the second quarter of 2008, Edward Fred, President and CEO of CPI Aerostructures (NYSEMKT:CVU), provided revenue and net income guidance for 2008 as well as a long-term outlook for 2009 through 2011 (see conference call transcript). The company has just announced its earnings for the third quarter, and so we can look to see if it is on track toward achieving its projected results.
Revenue in 2006 was 17.9M and this grew to 28M in 2007. The first half of 2008 produced revenue of 16.9M and, in the second quarter conference call, Fred projected 2008 revenue of 35M. The latest earnings release shows that revenue for the third quarter came in at 9.4M, a 30% increase over the year-ago quarter, and that, for the first nine months of 2008, revenue was 26.4M, a 30% increase over the corresponding period in 2007. Fred reaffirmed his revenue guidance of 35M for 2008 noting that this represents a 25% increase over 2007.
Net income (loss) in 2006 was (1.3M) and grew to 1.9M in 2007. The first half of 2008 produced net income of .8M and, in the second quarter conference call, Fred projected 2008 net income of 2.6M. The earnings release for the third quarter shows that net income for the third quarter came in at .9M, a 67% increase over the year-ago quarter, and that, for the first nine months of 2008, net income was 1.7M, a 22% increase over the corresponding period in 2007. Fred reaffirmed his net income guidance of 2.6M for 2008 noting that this represents a 37% increase over 2007.
Fred noted that the company has added a number of new prime contractors to its customer list and that, as a result, total year-to-date awards amount to 51.5M compared to 18.9M for the same period last year. He also noted that the amount of total bids outstanding continues to rise and that as of October 31, 2008 the company had approximately 290M in formalized bids outstanding.
As a result of these factors, Fred reaffirmed the long-term outlook he had previously provided. This outlook projects 2009 revenue to be in the range 42M-45M with net income in the range 3.9M-4.3M. Furthermore, using 2008 as the baseline, and for the three-year period ending in 2011, the company expects to achieve an annualized growth rate for revenue in the range 30%-35%, and an annualized growth rate for net income in the range 50%-60%.
The stock is currently priced 14% below where it was when I last valued the company. The price at that time was quite attractive and so, in light of the continued strong performance as indicated by the results of the third quarter, the current price represents an excellent buying opportunity.
Disclosure: Author holds a long position in CVU