CPI Posts Record Orders, Sales and Year-end Backlog in 2013
Palo Alto, Calif., Dec. 11, 2013 — CPI International Holding Corp., the parent company of CPI International, Inc. (CPI), has reported increased orders, sales, backlog, net income and adjusted EBITDA in fiscal 2013. CPI said it booked orders totalling US$ 464 million, an increase of 21 percent from theUS $383 million booked in the previous year, with orders for defense and communications products increasing by double digits.
CPI's book-to-bill ratio for the year was 1.11 as of September 27, 2013, the end of fiscal 2013. CPI said the order backlog equalled $293 million, representing the company's highest year-end backlog ever.
“Despite challenging global economic conditions and the difficult budgetary environment, demand for CPI's products has remained robust, enabling CPI to achieve strong operational and financial results during fiscal 2013. In fact, our fiscal 2013 orders and sales were the strongest in our history, and our backlog continues to be very healthy,” said chief executive officer Joe Caldarelli.
He explained that the company’s acquisition of the Codan Satcom business toward the end of fiscal 2012 and of the MCL business this summer has been well received by customers. “The Codan Satcom and MCL businesses have been integrated smoothly into our existing communications business. Our more recent acquisition of Radant Technologies in early October is also progressing well and is expected to make a meaningful contribution to our fiscal 2014 financial results,” he said.
Better than expected results for 2013 has prompted CPI to upgrade its outlook for fiscal 2014. CPI now expects total sales of between US$ 475 million and US$ 500 million, Adjusted EBITDA of between US$ 80 million and US$ 85 million, and Adjusted free cash flow of more thanUS$ 21 million for 2014.
“We expect no significant changes to market conditions in fiscal 2014. We will continue to be mindful of fluctuations and unpredictability in government funding, and will react accordingly, but we do not expect these fluctuations to have a meaningful impact on our results in the coming year,” said Caldarelli.
“Typically, more than half of our defense sales are for spare and repair products for numerous already fielded programs, protecting our defense business from large cuts to new programs," he said. He added the fiscal 2014 results will benefit from the inclusion of the Radant business for the entire fiscal year.
In fiscal 2013, CPI's net income totaled US$ 10.9 million, an increase from the US$ 3.7 million recorded in the previous fiscal year, due to higher total sales and sales of products with higher margins in fiscal 2013. CPI's net income also benefited from a decrease in intangible asset amortization related to the acquisition of CPI by The Veritas Capital Fund IV, L.P. in February 2011.
Adjusted EBITDA for fiscal 2013 was US$ 72.8 million, or 17.4 percent of sales, an increase from the $64.4 million, or 16.5 percent of sales, generated in the previous year. This increase in adjusted EBITDA was attributed to higher total sales and sales of products with higher margins in fiscal 2013.
CPI said that as of September 27, 2013, the company had cash and cash equivalents totaling $67.1 million. For fiscal 2013, CPI's cash flow from operating activities was US$38.2 million, its free cash flow was US$ 33.2 million and its adjusted free cash flow was US$ 35.1 million.
CPI generated total sales of US$ 419 million in fiscal 2013, an increase of seven percent from the US$ 391 million generated in the prior year. In the defense market, CPI reported that orders increased 20 percent in fiscal 2013 to US$ 179 million due to higher demand for products to support military radar systems globally and U.S. electronic warfare systems. Orders of radar products to support the Aegis radar system remained strong as a result of new ship builds and the replenishment of spare and repair stocking levels. CPI expects shipments for some of these orders to continue through fiscal 2015.
In the communications market, CPI’s orders increased 41 percent to US$ 182 million, largely due to a sizeable multi-year order for advanced tactical common data link (TCDL) antenna products to support intelligence, surveillance and reconnaissance (ISR) communications applications. Orders to support other military and commercial communications applications, including broadband data communications programs also increased.
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