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LMI Aerospace Inc. Reports Operating Results (10-Q)

August 10, 2009 | About:
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LMI Aerospace Inc. (LMIA) filed Quarterly Report for the period ended 2009-06-30.

LMI Aerospace Inc. is a leading fabricator finisher and integrator offormed close tolerance aluminum and specialty alloy components for use by the aerospace industry. For approximately 50 years the Company has been engaged in manufacturing components for a wide variety of aerospace applications. Components manufactured by the Company include leading edge wing slats flaps and lens assemblies; cockpit window frame assemblies; fuselage skins and supports; and passenger and cargo door frames and supports. LMI Aerospace Inc. has a market cap of $107.46 million; its shares were traded at around $9.25 with a P/E ratio of 6.21 and P/S ratio of 0.45.

Highlight of Business Operations:

Net sales of components for corporate and regional aircraft were $11.8 million for the second quarter of 2009 compared to $14.1 million for the second quarter of 2008, a decrease of $2.3 million, or 16.3%. This decrease was primarily attributable to a decrease in sales of large cabin components for Gulfstream due to production rate cuts announced by Gulfstream in March 2009 and the resulting inventory adjustments implemented in connection with these production cuts. The decline in production was offset by $1.6 million in tooling sales.

Net sales of products used in large commercial aircraft were $18.2 million for the second quarter of 2009 compared to $12.4 million for the second quarter of 2008, an increase of $5.8 million, or 46.8%. The increase in net sales to this market was driven by support for the 767 wing modification and winglet program, which generated $7.6 million of sales. This increase was partially offset by a $1.0 million decrease in sales for the Boeing 737 from $7.1 million in the second quarter of 2008 to $6.1 million in the second quarter of 2009 due to inventory adjustments at a Tier 1 customer, and a $0.8 million decrease in sales for the 787 program primarily resulting from continued delay in the program.

Military products generated $8.7 million of net sales in the second quarter of 2009 compared to $11.7 million in the second quarter of 2008, a decrease of $3.0 million, or 25.6%. This decrease resulted from net sales for the Sikorsky Blackhawk program, which generated $6.2 million of net sales in the second quarter of 2009 compared to $9.0 million in the second quarter of 2008, primarily due to changes made in the customer s inventory management process.

Net sales for the Engineering Services segment were $22.6 million for the second quarter of 2009 compared to $24.0 million for the second quarter of 2008, a decrease of $1.4 million, or 5.8%. This decrease resulted from lower client overtime requirements in 2009 compared to 2008. Approximately $22.0 million, or 97.3% of the segment s revenues, were recorded under reimbursement type contracts for engineering services compared to $23.4 million, or 97.5% of the segment s revenues, for the second quarter of 2008, a decrease of $1.4 million or 6.0%. These revenues are generated from labor hours incurred at varying, pre-negotiated rates and other direct costs plus an administrative fee. Net sales under these reimbursement contracts are primarily for commercial, corporate and military markets.

Net sales for services supporting corporate and regional aircraft, the majority of which relate to the development of new and redesigned aircraft, were $4.6 million in the second quarter of 2009 compared to $8.4 million for the second quarter of 2008, a decrease of $3.8 million, or 45.2%. The majority of the 2008 revenue was due to the development of the Gulfstream G650. In 2009, the decrease in services required on the Gulfstream G650 was partially offset by our support on Bombardier s Learjet 85.

Net sales for services for large commercial aircraft were $10.2 million in the second quarter of 2009, down $1.0 million, or 8.9%, from $11.2 million in the second quarter of 2008. These revenues are primarily from design programs supporting Boeing s 747-8, 777-Freighter and 787 platforms. In addition to decreases in overtime requirements, large commercial aircraft revenue declined due to the completion of some of the related engineering tasks.

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