CPI Aerostructures enters the second half of 2026 having cleared a year-long overhang from the A-10 termination. Second-quarter results show the cleanest mix the business has produced in recent memory. Revenue of $17.6M rose 15.8% year over year. Gross margin expanded to 22.0%, up from 4.4% in the year-ago quarter. Net income flipped positive at $0.7M, against a $1.3M loss a year earlier. The story is not simply recovery from a one-time charge. It is a structural mix-up into Next Generation Jammer pods, the Raytheon missile wing program, and other funded defense platforms where unit economics are visibly cleaner than on the legacy work the company has been running off.
Three operating variables carry the case. First, the program mix tilt toward pods and missile structures raised revenue per dollar of procurement. The drag on factory overhead that defined 2025 results receded as procurement-heavy legacy programs rolled off, exposing the fixed-cost leverage in the Edgewood footprint. Second, the A-10 termination hangover has now passed through the income statement. The unfavorable estimate-at-completion adjustments booked in the first half of 2025 totaled $4.5M. They do not recur in 2026. Third, the December 2025 refinancing with Western Alliance Bank added a $10M term loan. Combined, these three variables describe a business that has reset its operating posture after a punishing 2025. The recovery in the second quarter shows the mix tailwind is operating, not just narrative.
Backlog of $533M provides multi-year revenue visibility. The split is $100M funded and $433M unfunded. Roughly $411M of the unfunded total is government and contingent on appropriations cycles. The price-to-book ratio on equity of $28.1M is 2.43x. The ratio sits against a $68M market cap. The question is whether unfunded conversion plus the NGJ ramp converts into the operating leverage the recent quarter implies. EAC volatility and customer concentration are the factors that could cap the upside before the conversion story fully plays out. The mix and the backlog together describe both the opportunity and the constraint of the current setup, and the structural operating thesis is anchored to the funded backlog growth, the gross margin path, and the receivable cadence through the working-capital build. The thesis holds if those three observable data points trend in the right direction; it breaks if any of them inflects the wrong way over the next two quarterly reports.