CPI AEROSTRUCTURES INC
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
CVU$4.62+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001999371-25-003528
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001999371-26-007357
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 66 current paragraphs.
29 unchanged; 23 reworded; 12 added; 12 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
On December 12, 2025, the Company entered into the Loan and Security Agreement with Western Alliance Bank (the “Bank”). The Loan and Security Agreement provides for a revolving line of credit in the maximum principal amount of $10.0 million (the “Revolving Line”) and a term loan in the original principal amount of $10.0 million (the “Term Loan” and, together with the Revolving Line, the “Credit Facilities”).
Current report
In connection with entering into the Loan and Security Agreement, the Company used a portion of the proceeds of the Credit Facilities, including the full amount of the Term Loan and borrowings under the Revolving Line in the amount of $6,220,722 to repay in full all outstanding obligations under that certain Amended and Restated Credit Agreement, dated as of March 24, 2016, (as amended), among the Company, the several lenders from time to time parties thereto and BankUnited, N.A., as sole arranger, administrative agent and collateral agent (the “BankUnited Credit Agreement”). Upon such repayment, the BankUnited Credit Agreement and the related loan documents were terminated in accordance with their terms, and all liens and security interests securing the obligations thereunder were released. The Company did not incur any early termination or prepayment penalties in connection with the termination of the BankUnited Credit Agreement.
Current report
Revenue for the year ended December 31, 2025 was $69,262,124 compared to $81,078,864 for the year ended December 31, 2024, representing a decrease of $11,816,740, or 14.6%. The decrease was driven primarily by an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, andlower revenue recognized on the T-38 Pacer Classic program, partially offset by the commencement of the L3Harris NGJ Low-Band Pods program.
Current report
Revenue generated from government subcontracts for the year ended December 31, 2025 was $55,547,679 compared to $64,704,370 for the year ended December 31, 2024, a decrease of $9,156,691, or 14.2%. The decrease was primarily related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program.
Current report
Revenue generated from commercial contracts for the year ended December 31, 2025 was $6,299,011 compared to $4,697,342 for the year ended December 31, 2024, an increase of $1,601,669 or 34.1%. The increase in revenue was primarily driven by the commencement of production on our Embraer Phenom-100 Engine Inlet Assemblies and Collins Compac Enclosures programs.
Current report
Procurement for the year ended December 31, 2025 was $36,588,501 compared to $40,383,090 for the year ended December 31, 2024, a decrease of $3,794,589 or 9.4%. This decrease was driven primarily by the termination of the Boeing A-10 Main Landing Gear Pods program.
Current report
Labor costs for the year ended December 31, 2025 were $5,924,180 compared to $7,303,563 for the year ended December 31, 2024, a decrease of $1,379,383 or 18.9%. The decrease was primarily driven by the termination of the Boeing A-10 Main Landing Gear Pods program and timing of work performed on the F-16 Rudder Island program.
Current report
Interest expense for the year ended December 31, 2025 was $1,567,840, compared to $2,288,834 for the year ended December 31, 2024, a decrease of $720,994 or 31.5%. The decrease was the result of lower average outstanding debt balances, lower interest rates during 2025, and the refinancing of our prior credit facility at a lower interest rate.
Current report
Net (loss) income
Current report
(Loss) earnings per share
Current report
At December 31, 2025, our cash balance was $899,199 compared to $5,490,963 at December 31, 2024, a decrease of $4,591,764 or 83.6%. The decrease was driven by $(5,200,025) in cash used by operations including $1,979,189 increase in accounts receivable and a $1,638,161 increase in prepaid expenses and other current assets, $(65,036) used for the purchase of equipment, partially offset by proceeds from financing activities of $673,297.
Current report
Western Alliance Bank Loan and Security Agreement
Removed paragraphs (12)
Previous report
On November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”). Under the Fourteenth Amendment, the parties amended the Credit Agreement by: (i) extending the maturity date of the Company’s existing revolving line of credit (the “Revolving Credit Loans”) to August 31, 2026; (ii) reducing the Base Rate Margin (as defined in the Credit Agreement) from 3.50% to 2.0%; (iii) resetting the aggregate maximum principal amount of all Revolving Credit Loans to $16,890,000 from January 1, 2025 through March 31, 2025, $16,140,000 from April 1, 2025 through June 30, 2025, $15,390,000 from July 1, 2025 through September 30, 2025, $14,640,000 from October 1, 2025 through December 31, 2025, $13,890,000 from January 1, 2026 through March 31, 2026, $13,140,000 from April 1, 2026 through June 30, 2026, and $12,390,000 from July 1, 2026 onward and for payments to be made by the Company to comply therewith (if any such payments are necessary), on the first day of each such period; and (iv) requiring the Company, if it does not deliver to BankUnited, N.A. by December 31, 2025, a commitment letter with banks and terms and conditions reasonably acceptable to the Lenders for refinancing the obligations under the Credit Agreement, to make a payment by January 31, 2026, equal to 2% of the aggregate outstanding principal amount of the Revolving Credit Loans as of December 31, 2025, with 50% of such payment applied to reduce the aggregate outstanding principal and the remaining 50% retained by the Lenders as an amendment fee with respect to the Fourteenth Amendment.
Previous report
Revenue for the year ended December 31, 2024 was $81,078,864 compared to $86,466,321 for the year ended December 31, 2023, representing a decrease of $5,387,457, or 6.2%. The decrease was primarily related to various programs that neared completion in 2024 including NGC E-2D and Sikorsky HIRRS programs coupled with the timing of work performed on the Lockheed Martin F-16 program. These decreases were partly offset by NGJ Mid Band production and Sikorsky Welded Tubes.
Previous report
Revenue generated from government subcontracts for the year ended December 31, 2024 was $64,704,370 compared to $69,672,602 for the year ended December 31, 2023, a decrease of $4,968,232, or 7.1%. The decrease was primarily related to various programs that neared completion in 2024 including NGC E-2D and Sikorsky HIRRS programs coupled with the timing of work performed on the Lockheed Martin F-16 program. These decreases were partly offset by NGJ Mid Band production and Sikorsky Welded Tubes.
Previous report
Revenue generated from commercial contracts for the year ended December 31, 2024 was $4,697,342 compared to $4,951,574 for the year ended December 31, 2023, a decrease of $254,232 or 5.1%. The decrease in revenue resulted from decreased revenue recognized on the timing of work performed on the Embraer Phenom 300 Inlet program.
Previous report
Procurement for the year ended December 31, 2024 was $40,100,196 compared to $46,020,628 for the year ended December 31, 2023, a decrease of $5,920,432 or 12.9%. This decrease is primarily the result of a decrease in procurement for the NGC E-2D MYP II OWP program, Sikorsky HIRRS program, USAF T-38 Pacer Classic Structural Modification Kits program, offset by an increase in our Raytheon NGJ – Mid Band Pods programand Sikorsky Welded Tubes.
Previous report
Labor costs for the year ended December 31, 2024 were $7,303,563 compared to $7,054,308 for the year ended December 31, 2023, an increase of $249,255 or 3.5%. The increase is primarily the result of work performed on the Boeing A-10 program, offset by decreases on our Raytheon NGJ – Mid Band Pods program due to efficiencies.
Previous report
Other cost of sales relates to items that can increase or decrease cost of sales such as changes in inventory levels, changes in inventory valuation, changes to inventory reserves, changes in loss contract provisions and direct charges to cost of sales. For the year ended December 31, 2024, there were costs in the amount of $282,894 compared to $297,617 for the year ended December 31, 2023, a decrease of $14,723 or 4.9%.
Previous report
Interest expense for the year ended December 31, 2024 was $2,288,834, compared to $2,455,214 for the year ended December 31, 2023, a decrease of $166,380 or 6.8%. The decrease is the result of a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement coupled with a lower year-over-year interest rates charged.
Previous report
Net income
Previous report
Earnings per share
Previous report
At December 31, 2024, our cash balance was $5,490,963 compared to $5,094,794 at December 31, 2023, an increase of $396,169 or 7.8%. The increase was driven by $3,558,935 in cash provided by operations, partly offset by our pay down of outstanding debt during 2024 of $2,694,498 and purchase of equipment of $403,854.
Previous report
BankUnited Facility
Reworded paragraphs (23)
Previous wording
We are engaged in the contract production of structural aircraft assemblies for fixed wing aircraft and helicopters in both the commercial and defense markets. We also have a strong and growing presence in the aerosystems sector of the market, with our production of various reconnaissance pod structures and fuel panel systems. Within the global aerostructure and aerosystem supply chain, we are either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. We also are a prime contractor to the U.S. DOD, primarily the USAF. In conjunction with our assembly operations, we provide engineering, program management, supply chain management and kitting, and MRO services.
Current wording
We are engaged in the contract production of structural aircraft assemblies for fixed wing aircraft and helicopters in both the commercial and defense markets. We also participate in the aerosystems sector through our production of reconnaissance pod structures and fuel panel systems. Within the global aerostructures and aerosystems supply chain, we are either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. We also are a prime contractor to the U.S. DOD, primarily the USAF. In conjunction with our assembly operations, we provide engineering, program management, supply chain management and kitting, and MRO services.
Previous wording
In accordance with ASC 606, the Company recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to be entitled to in exchange for the good or service. The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. Under the over time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on actual costs incurred and an estimate of costs to complete and resulting total estimated costs at completion. See Part II, Item 8, Note 1 “Principal Business Activity and Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in this Form 10-K for additional information regarding the Company’s revenue recognition policy.
Current wording
In accordance with ASC 606, the Company recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to be entitled to in exchange for the good or service. The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. The application of this method requires management to make estimates of total contract costs and progress toward completion.
Previous wording
On a quarterly basis, we assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of such assets will not be realized.
Current wording
On a quarterly basis, we assess the realizability of our deferred tax assets against future sources of taxable income and record a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of the deferred tax assets will not be realized.
Previous wording
Assessing the realizability of deferred tax assets requires the determination of whether it is more likely than not that some portion or all the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as a cumulative loss in recent years, as a significant piece of negative evidence to overcome. For the period ended December 31, 2023, the Company achieved three years of cumulative book and taxable income, along with projections of profitability, for which management determined that there was sufficient positive evidence to conclude that it is more likely than not that a portion of the deferred tax assets will be realized. As such, $14,170,891 of the valuation allowance was released during the fourth quarter of 2023. During 2024 the Company continued to assess its ability to realize its deferred tax asset. The Company continued to be profitable in 2024 and there was no significant change to the Company’s forecast of income or its ability to realize the deferred tax asset at December 31, 2024. The increase of $404,224 is most significantly related to the state valuation allowance.
Current wording
In assessing the need for a valuation allowance, the Company evaluates both positive and negative evidence regarding the realizability of deferred tax assets, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Greater weight is generally given to objectively verifiable evidence, such as cumulative losses in recent years, which may represent significant negative evidence regarding realizability.
Previous wording
Revenue generated from prime government contracts for the year ended December 31, 2024 was $11,677,152 compared to $11,842,145 for the year ended December 31, 2023, a slight decrease of $164,993, or 1.4%. This decrease is the result of decreased revenue recognized on the T-38 Pacer Classic program.
Current wording
Revenue generated from prime government contracts for the year ended December 31, 2025 was $7,415,434 compared to $11,677,152 for the year ended December 31, 2024, a decrease of $4,261,718, or 36.5%. This decrease primarily reflects lower revenue recognized on the T-38 Pacer Classic program.
Previous wording
Cost of sales for the year ended December 31, 2024 was $63,840,803 compared to $69,400,693 for the year ended December 31, 2023, a decrease of $5,559,890 or 8.0%.
Current wording
Cost of sales for the year ended December 31, 2025 was $58,706,055 compared to $63,840,803 for the year ended December 31, 2024, representing a decrease of $5,134,748 or 8.0%.
Previous wording
Factory overhead costs for the year ended December 31, 2024 were $16,154,150 compared to $16,028,140 for the year ended December 31, 2023, an increase of $126,010 or 0.8%.
Current wording
Factory overhead costs for the year ended December 31, 2025 were $16,193,374 compared to $16,154,150 for the year ended December 31, 2024, an increase of $39,224 or 0.2%.
Previous wording
Gross profit for the year ended December 31, 2024 was $17,238,061 compared to $17,065,628 for the year ended December 31, 2023, an increase of $172,433 or 1.0%. Gross profit percentage (“gross margin”) for the year ended December 31, 2024 was 21.3% compared to 19.7% for year ended December 31, 2023.
Current wording
Gross profit for the year ended December 31, 2025 was $10,556,069 compared to $17,238,061 for the year ended December 31, 2024, a decrease of $6,681,992 or 38.8%. Gross profit percentage (“gross margin”) for the year ended December 31, 2025 was 15.2% compared to 21.3% for the year ended December 31, 2024.
Previous wording
During the years ended December 31, 2024 and 2023, we made changes in estimates to various contracts. Such changes in estimates resulted in changes in total gross profit as net unfavorable adjustments totaling $3,750,020 and 1,450,502 for the years ended December 31, 2024 and December 31, 2023.******
Current wording
During the years ended December 31, 2025 and 2024, we made changes in estimates to various contracts. Such changes in estimates resulted in net unfavorable adjustments to gross profit totaling $10,171,038 and $3,750,020 for the years ended December 31, 2025 and December 31, 2024. The decrease was primarily related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program.
Previous wording
Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2024 were $10,506,439 compared to $10,758,624 for the year ended December 31, 2023, a decrease of $252,185 or 2.3%. The decrease was primarily due to a reduction of consulting and legal fee expenses.
Current wording
Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2025 were $10,732,451 compared to $10,506,439 for the year ended December 31, 2024, an increase of $226,012 or 2.2%. The increase was primarily due to higher legal fees partially offset by a decrease in office expenses.
Previous wording
Income before provision for income taxes
Current wording
(Loss) income before provision for income taxes
Previous wording
Income before provision for income taxes for the year ended December 31, 2024 was $4,442,788 compared to $3,851,790 for the year ended December 31, 2023, an increase of $590,998 or 15.3%. The increase was driven by the aforementioned increase in gross profit and decreases in both SG&A and interest expense described above.
Current wording
(Loss) income before provision for income taxes for the year ended December 31, 2025 was $(1,744,222) compared to $4,442,788 for the year ended December 31, 2024, a decrease of $6,187,010 or 139.3%. The decrease was driven by the decrease in gross profit discussed above and the increase in SG&A, partially offset by the decrease in interest expense described above.
Previous wording
The income tax (benefit) for the year ended December 31, 2024 was $1,143,454, which was an effective tax (benefit) rate of 25.7%, as compared to the income tax (benefit) of ($13,349,414) for the year ended December 31, 2023, which was an effective tax (benefit) rate of (346.6%). The income tax recorded in 2024 and income tax benefit realized in 2023 was primarily due to federal and state statutory rates in 2024 and the reduction of the Company’s deferred tax asset valuation allowance recorded by the Company in the fourth quarter of 2023, respectively.
Current wording
The income tax (benefit) for the year ended December 31, 2025 was $(900,861), which was an effective tax (benefit) rate of (51.6%), as compared to income tax expense of $1,143,454 for the year ended December 31, 2024, which was an effective tax rate of 25.7%. The income tax benefit recorded in 2025 was primarily due to the application of federal and state statutory tax rates and an increase in the income tax benefit attributable to the research and development credit. The income tax expense recorded in 2024 was primarily due to the application of federal and state statutory tax rates, partially offset by a decrease in income tax expense attributable to the research and development credit.
Previous wording
Net income for the year ended December 31, 2024 was $3,299,334 compared to $17,201,204 for the year ended December 31, 2023, a decrease of $13,901,870 or 80.8%. The decrease in net income was driven by the 2023 income tax benefit.
Current wording
Net (loss) income for the year ended December 31, 2025 was $(843,361) compared to $3,299,334 for the year ended December 31, 2024, a decrease of $4,142,695 or 125.6%. The decrease in net income was driven primarily by the reduction in gross margin related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, partially offset by lower interest expense and the income tax benefit.
Previous wording
Basic earnings per share was $0.26 for the year ended December 31, 2024 calculating utilizing 12,593,213 weighted average shares outstanding as compared to $1.40 for the year ended December 31, 2023 calculated utilizing 12,311,219 weighted average shares outstanding, an decrease of $1.14 per share, or 81.4%. Diluted earnings per share was $0.26 for the year ended December 31, 2024 calculated utilizing 12,709,237 weighted average shares outstanding as compared to $1.38 for the year ended December 31, 2023 calculated utilizing 12,471,961 weighted average shares outstanding, an decrease of $1.12 per share, or 81.2%. Decrease in the basic and diluted earnings per share are due to the reduction of the Company’s deferred tax asset valuation allowance recorded by the Company in the fourth quarter of 2023 which favorably impacted 2023 by $1.12 per share.
Current wording
Basic (loss) earnings per share was $(0.07) for the year ended December 31, 2025 calculated using 12,788,937 weighted average shares outstanding, compared to $0.26 for the year ended December 31, 2024, calculated using 12,593,213 weighted average shares outstanding, representing a decrease of $0.33 per share, or 126.9%. Diluted earnings (loss) per share was $(0.07) for the year ended December 31, 2025 calculated using 12,788,937 weighted average shares outstanding compared to $0.26 for the year ended December 31, 2024 calculated using 12,709,237 weighted average shares outstanding, representing a decrease of $0.33 per share, or 126.9%. The decrease in basic and diluted earnings per sharewas driven primarily by the unfavorable adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program.
Previous wording
At December 31, 2024, we had working capital of $17,122,111 compared to working capital of $15,402,381 at December 31, 2023, an increase of $1,719,730, or 11.2%. The increase is primarily the result of an increase in net contract assets and a decrease to accrued expenses offset by decreases in accounts receivable and inventory, and an increase in accounts payable.
Current wording
At December 31, 2025, we had working capital of $20,388,755 compared to working capital of $17,122,111 at December 31, 2024, an increase of $3,266,644, or 19.1%. The increase is primarily the result of a decreases in accrued expenses.
Previous wording
A large portion of our cash is used to pay for materials and processing costs associated with contracts that are in process and which do not provide for progress payments. Costs for which we are not able to bill on a progress basis are components of contract assets on our consolidated balance sheet and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms.
Current wording
A large portion of our cash is used to pay for materials and processing costs associated with contracts that are in process and which do not provide for progress payments. Costs for which we are not able to bill on a progress basis are made up of contract assets on our consolidated balance sheet and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms.
Previous wording
Because ASC 606 requires us to use estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash that we receive during any reporting period. Accordingly, it is possible that we may have a shortfall in our cash flow and may need to borrow money or take steps to defer cash outflows until the reported earnings materialize into actual cash receipts.
Current wording
Because ASC 606 requires us to use estimates in determining revenues, costs and profits and in assigning those amounts to accounting periods, there can be a significant disparity between earnings as reported and the actual cash we receive during any reporting period. Accordingly, it is possible that we experience shortfalls in our cash flow and may need to borrow money or take steps to delay certain cash outflows until the reported earnings materialize into actual cash receipts.
Previous wording
This information is set forth in Note 8 to our Consolidated Financial Statements, appearing following Item 15 of this Annual Report on Form 10-K which is hereby incorporated by reference.
Current wording
This information is set forth in Note 8 to the consolidated financial statements, which appears following Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.
Previous wording
This information is set forth in Note 9 to our Consolidated Financial Statements, appearing following Item 15 of this Annual Report on Form 10-K which is hereby incorporated by reference.
Current wording
This information is set forth in Note 9 to the consolidated financial statements, which appears following Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.
Previous wording
Our working capital requirements can vary significantly, depending in part on the timing of the conclusion of mature programs and new program awards and the payment terms with our customers and suppliers. There is currently no availability for borrowings under the BankUnited Facility and the Company finances its operations from internally generated cash flow. Note 8 to our consolidated financial statements included in Part II - Item 8 includes a discussion regarding the BankUnited Facility and recent amendments thereto which provide, among other things, for increases in principal payments and the interest rate on the loans provided for therein. Management has (i) negotiated and executed a further amendment to the Credit Agreement which extended the maturity date of the Credit Agreement to August 31, 2026, (ii) obtained and regularly seeks additional progress payment and advance payment customer contract funding provisions, (iii) maintained procedures to minimize investments in inventory and contract assets, (iv) remained focused on its military customer base and (v) maintained its approximately $85.0 million backlog of funded orders, 97% of which are for military programs. Based upon the aforementioned factors, it is management’s estimation that there will likely not be any individual conditions or combination of events that will occur in the coming year which would cause the Company to be unable to meet its obligations or otherwise continue as a going concern. However, there can be no assurance that such plans will accomplish their intended goals.
Current wording
Our working capital requirements can vary significantly, depending in part on the timing of the conclusion of mature programs and new program awards and the payment terms with our customers and suppliers. There is currently availability for borrowings under the Western Alliance Bank Loan and Security Agreement, and the Company finances its operations primarily from internally generated cash flow. Note 8 to the consolidated financial statements included in Part II – Item 8 contains additional information regarding the Western Alliance Bank Loan and Security Agreement.
Previous wording
The table below summarizes information about our contractual obligations as of December 31, 2024 and the effects these obligations are expected to have on our liquidity and cash flow in the future years.
Current wording
The table below summarizes information about our contractual obligations as of December 31, 2025 and the effects these obligations are expected to have on our liquidity and cash flow in future periods.
Previous wording
Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chain, labor markets and general economic conditions, are factors that the Company actively monitors in an attempt to mitigate and manage potential negative impacts on and risks faced by the Company. The majority of the Company’s long term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply side pricing risk into account in its proposals.
Current wording
Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chains, labor markets and general economic conditions, are factors that the Company actively monitors in an effort to mitigate potential negative impacts and risks to the Company. The majority of the Company’s long-term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply-side pricing risk into account when preparing its proposals.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Under the over-time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on the relationship of actual costs incurred to total estimated costs at completion (the cost-to-cost method). These estimates are reviewed periodically as work progresses and adjustments to estimated costs may affect the timing and amount of revenue and gross profit recognized. See Part II, Item 8, Note 1, “Principal Business Activity and Summary of Significant Accounting Policies,” in the notes to the consolidated financial statements included in this Form 10-K for additional information regarding the Company’s revenue recognition policy.
Current report — wording carried from elsewhere
Management has (i) obtained and regularly seeks additional progress payment and advance payment customer contract funding provisions, (ii) maintained procedures to minimize investments in inventory and contract assets, (iii) remained focused on its military customer base and (iv) maintained its approximately $91.8 million backlog of funded orders, 97% of which are for military programs. Based on these factors, management believe there are no conditions or events currently anticipated in the coming year that would cause the Company to be unable to meet its obligations or otherwise continue as a going concern. However, there can be no assurance that these plans will achieve their intended results.