CPI Aerostructures (NYSE:CVU), Inc. (NYSE American:CVU), a manufacturer of aircraft parts, has entered into a Fourteenth Amendment to its existing credit agreement, extending the maturity date and adjusting financial terms, as per a recent SEC filing.
On Wednesday, CPI Aerostructures announced the modification of its credit agreement with BankUnited (NYSE:BKU), N.A. and other lenders. The amendment extends the revolving credit line's maturity to August 31, 2026. Additionally, the amendment reduces the Base Rate Margin from 3.50% to 2.0%.
The amendment also stipulates a new schedule for the maximum principal amounts available under the revolving credit facility, starting at $16,890,000 for the period from January 1, 2025, to March 31, 2025, and gradually decreasing to $12,390,000 from July 1, 2026, onwards. The company is required to comply with these new limits at the start of each respective period.
Furthermore, CPI Aerostructures must provide a commitment letter by December 31, 2025, for refinancing the obligations under the credit agreement with terms acceptable to the lenders. Failing to do so will result in the company making a payment equal to 2% of the outstanding principal amount of the revolving credit loans as of December 31, 2025. This payment will be due by January 31, 2026, with half applied to reducing the principal and the remainder serving as an amendment fee.
In other recent news, CPI Aerostructures has made significant changes to its executive team. The company announced the appointment of Philip Passarello as its new Chief Financial Officer and Secretary, replacing the previous CFO, Andrew Davis. Passarello brings extensive financial management experience, having previously served as the Vice President of Finance at TTM Technologies (NASDAQ:TTMI).
In addition to this, CPI Aerostructures has entered into a Long Term Agreement with MST Manufacturing for component supply that extends through 2027. In addition to this supply agreement, the company secured a follow-on order worth approximately $1.3 million for welded structural assemblies from a U.S. military helicopter customer, with fulfillment anticipated by mid-2025.
Changes in executive compensation were also reported, with CEO Dorith Hakim's annual base salary increased by 4.8% to $385,000. Shareholders of CPI Aerostructures recently elected Pamela Levesque and Richard C. Rosenjack, Jr. as Class II directors. Furthermore, the company transitioned to a new independent accounting firm, Marcum LLP, replacing RSM US LLP. These developments highlight CPI Aerostructures' strategic moves in its executive team, supply agreements, and financial operations.
InvestingPro Insights
CPI Aerostructures' recent credit agreement amendment aligns with its current financial position, as revealed by InvestingPro data. The company's market cap stands at $44.06 million, with a notably low P/E ratio of 2.26, suggesting the stock may be undervalued relative to its earnings. This low valuation is further emphasized by an InvestingPro Tip indicating that CVU is "trading at a low earnings multiple."
The extension of the credit facility's maturity to 2026 provides CPI Aerostructures with additional financial flexibility, which is crucial given its current financial metrics. The company's revenue for the last twelve months as of Q2 2024 was $83.79 million, with a gross profit of $16.47 million and an operating income margin of 7.04%. These figures suggest a stable operational foundation, supporting the InvestingPro Tip that CVU has been "profitable over the last twelve months."
Investors should note that while CPI Aerostructures has shown strong recent performance, with a 45.69% price return over the last three months, the stock's movements are described as "quite volatile" according to another InvestingPro Tip. This volatility, combined with the company's financial restructuring, underscores the importance of careful analysis for potential investors.
For those seeking a deeper understanding of CPI Aerostructures' financial health and market position, InvestingPro offers 7 additional tips, providing a more comprehensive view of the company's prospects.
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