Welcome to today’s CPI Aero's 2015 Third Quarter Results Conference Call. With us today are Douglas McCrosson, President and Chief Executive Officer; and Vincent Palazzolo, Chief Financial Officer. After management’s prepared remarks, there will be a Q&A session. As a reminder, this conference call will contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. Included in these risks are the government's ability to terminate their contracts with the company at any time; the government's ability to reduce or modify its contracts if its requirements or budgetary constraints change; the government's right to suspend or bar the company from doing business with them, as well as competition in the bidding process for both government and subcontracting contracts. Subcontracting customers also have the ability to terminate their contracts with the company if it fails to meet the requirements of those contracts or if their customer reduces or modifies its contracts to them due to budgetary constraints. Given these uncertainties, listeners are cautioned not to place undue reliance on any forward-looking statements contained in this conference call. Additional information concerning these and other risks can be found in the filings with the SEC. Now, I will transfer the call to Douglas McCrosson, CPI Aero's President and Chief Executive Officer. Please begin.

Good morning and thank you all for joining us for our 2015 third quarter and nine months results conference call. Our results for the third quarter and nine months were issued yesterday after the close of the market. Before I turn the call over to Vince to discuss our financial results, I would like to provide a summary of our achievements. Third quarter revenue and net income increased as we began to recognize revenue from the multi-year defense contracts we were in awarded in late 2014 and earlier this year. For the third quarter of 2015, as, compared to the same quarter of 2014, we reported 25% increase in revenue, 44% increase in net income, and 40% increase in fully diluted earnings per share. Also, our backlog at September 30 was $421.7 million, approximately $18 million higher than backlog at 2014 year end. We expect the fourth quarter of 2015 will be a record revenue quarter and as full year 2015 revenue will exceed our historical high set in 2012. I’m also very excited to announce this morning that last evening CPI Aero received Aviation Week’s Program Excellence Award. We were recognized for the Phenom 300 engine inlet program we performed for Embraer, the manufacturer of the Phenom 300 executive jet. I want to take a moment to congratulate the talented men and women that worked on the Embraer program for this amazing accomplishment. This award recognizes the years of investment we had made in creating world class manufacturing, program management, and supply chain management capabilities, and it is especially gratifying to be considered the best of the best in this regard. The award was accepted by our Embraer Program Manager, Derick Martin last night in Scottsdale, Arizona during the annual Aerospace/Defense Supply Chain conference sponsored by the Aviation Week Network and SpeedNews. Derick was accompanied by Bobby Muller, Vice President of Business Development and Nazz Palmerini, our Director of Program Management. This award would not have been possible without Embraer’s commitment to its supply chain partners, so I would like to thank Embraer for its culture of co-operation and team work that puts CPI Aero in the best position to succeed on this assembly program. I will now hand the call over to Vince Palazzolo, our CFO to discuss our recent financial results and expectations for 2015. Then I will comment on the current business environment, backlog and contract awards and new growth opportunities going forward. I will then open the call to questions. Vince?

Thank you, Doug. Our financial performance for the third quarter and nine-months of 2015 was in line with our expectations. We reported increases in revenue and net income for both reporting periods as we began to recognize revenue from the multi-year defense contracts we were awarded in 2014 and earlier this year, and also from increased build rates of our business jet production contracts, particularly our programs with Honda and Embraer. As shown on slide 6, for the third quarter of 2015, as, compared to the third quarter of 2014, revenue was $26.8 million, compared to $21.5 million, an increase of 24.7%. Gross profit was $5.6 million, compared to $4.5 million, an increase of 25.2%. Income from operations was $3.7 million, compared to $2.7 million, an increase of 38.5%. Net income was $2.5 million, compared to $1.7 million, an increase of 44.1%, and earnings per diluted share was $0.28, compared to $0.20, an increase of 40%. For the nine months 2015 versus nine months 2014, revenue was $68.6 million, compared to $19.6 million. Gross profit was $13 million, compared to a loss of $34 million. Income from operations was $7.1 million, compared to a loss of $39.4 million. Net income was $4. 4 million, compared to a loss of $26.9 million and earnings per diluted share was $0.51, compared to a loss per share of $3.18. It should be noted that the nine-month period results for 2014 were impacted by the change in estimate of the A-10 Wing Replacement Program we recorded during the second quarter of 2014. Moving to slide 7, for the third quarter of 2015, approximately 58% of our total revenue or approximately $15.5 million was generated from defense programs of which $15 million was from Tier 1 military subcontracts with OEMs and $0.5 million was from…

Thank you Vince. From the beginning of the current fiscal year through September 30, 2015 we received approximately $48 million of new contract awards, which included approximately $12.7 million of government prime contract awards, $12.3 million of government subcontract awards, and approximately $23 million of commercial subcontract awards, compared to a total of $87.8 million of new contract awards from all types in the same period last year. In September of last year, we received a $65 million multi-year contract modification adding four additional years worth of E2, C2 wing kit. This amount was entirely included in new contract awards for the 2014 period. This means we will no longer receive annual purchase orders for our largest program as has been the case historically, making the comparison to last year less informative. Slide 16 shows at September 30, 2015, our total backlog increased to $421.7 million as compared to $403.7 million at December 31, 2014. Funded backlog was increased to $125.7 million, up $5.1 million as compared to funded backlog of $120.6 million at December 31, 2014 and the value of the unfunded backlog at September 30, 2015 increased to $295.9 million from $283.1 million at December 31, 2014, with 38% related to our long-term commercial Aerospace programs. Slide 17 shows our largest contracts currently in progress, which collectively have the potential to generate revenue of $421.7 million during the remainder of their performance periods. Moving to slide 18, this provides an update of a few of our programs currently in progress. Starting with our contract for the E2D C2A outer wing panel kit, this is our largest program of any type and was a major contributor to our financial performance during the third quarter and we expect it will be an even bigger contributor during the current fourth quarter.…

Thank you. We will now be conducting a question and answer session. [Operator Instructions] Thank you. Our first question comes from the line of Mark Jordan with Noble Financial, please proceed with your question.

Thank you good morning and Doug and Vince.

Hi Mark.

There was details relative to the paragraph you had in your press release relative to new bid opportunities that you expect, you stayed in the release that you believe you will be successful at least one sizable new contract in the coming months, it’s rather definitive statement so does that mean that you got a hand to shake and that the paperwork needs to catch up with that, is that a fair read of that sentence?

That's a fair read of that sentence. And the reason we don't currently know the full extent of what this particular customer wants us to do. So that’s why the contract hasn't been finalized yet, but we expect that we will be able to work through those issues in the coming months.

All right. Also at the end of the paragraph you talked about the government making awards on solicitations that are out in 2015, Vince mentioned in his presentation and expected for military sales pods awards over the very near term, is that included in the business you expect to see from the government or is that in addition to that?

That is in addition to the, the pod business is through government sub contracts with prime and the ones I mentioned where specifically to the U.S. Air Force, directly.

Okay. And then also on your presentation you showed for full year non-A-10 revenue gross margin being between 22% and 23% in the preceding page you had for the nine months non-A-10 gross margin of 23.4%. So, the implied decline in non-A-10 gross margin in the fourth quarter, is that tied to initial production on new, on some of the newer programs that you’re ramping up and that those ramps are a little less efficient than what you should do over the longer term?

Exactly right, Mark. We are in flow now with the beginning of the T-38 program and the F-16, while that’s not generating revenue quite yet, but there are others as well that are in fairly low, particularly Honda is coming up to pace, but not quite there yet.

Final question from me, are two questions, one on page 19 when you talk about your bid pipeline in that pie-chart when do you expect to see decisions on that, are there definitive times that all of that, all of those bids should be adjudicated in the next 6 months to 12 months.

I would say that’s a fair timeline for the current cycle. We periodically go through, I will say stale bids, bids that maybe have been with the customer for a while and which they have not been either able to tell us when they are going to place the award or tell us that it’s got to be on hold for a little while. So, the ones that are in there are active and the customers are - and we are engaged in some kind of give and take. So we know that it is actively being worked by the customer. Some could be as early as three months and some could probably, the outside would be a year, but probably nothing in their much more than that.

Okay. Final question. A-10, you are still performing on that, what happens if that program runs in or continues to be in operation into 2016, what would be the P&L impact for an extension of production beyond what you would have originally thought?

The original change in estimate we did during this, after the second quarter, during the second quarter results last year, we anticipated a certain quantity of aircraft and that quantity will be finally delivered in accordance with our current build plan, somewhere into the first quarter of 2016. So, it’s not necessarily a time-based estimate, so much as it was a quantity-based estimate. So, it is very likely that we will continue production for this fourth quarter and into some period in the first quarter. If it goes beyond that and this is what we’ve talked about in the past, if it goes to the full conclusion then at that time we would re-estimate the job and look at what the cost would be and the income would be to complete the program, which would take it then basically for the full period of 2016 at what would be the anticipated rate. So, there really will, it is really too early to say what will happen because we’re still probably five months away from having to make that kind of decision.

Okay, thank you.

Our quest next question comes from the line of Ken Herbert with Canaccord Genuity, please proceed with your question.

Hi good morning, Doug and Vince and congratulations on the aviation week award.

Thank you very much.

Thanks Ken.

Where you there last night?

Yes I was in fact, so that was a pretty impressive, a pretty good audience.

Great, thank you.

I just want to follow-up on the bid pipeline commentary if I could, I mean it seems pretty impressive, would you say the sign seems to be that maybe things are loosening up a little bit on the government side in particular on the military side with some contracts and maybe some of your customers or the government directly looking to make some decisions and put some things in place even with still obviously some of the uncertainty around the budget, would you say that’s a fair statement or how would you characterize sort of bid activity proposal activity now with the government, or with government contractors?

When we bid directly to the government, it is almost always a spares activity or a repair activity and directly with the depots and clearly we see that breaking free a little bit and we've been actually very successful as indicated by our recent T-38 and F-16, Vince, would say within the last 12 months. And so we are actually, we're seeing larger opportunities from the government and we’re seeing opportunities again for aircraft that we’ve had a history with. Some of the ones includes the C-5 aircraft, which was one of our most important aircraft programs going back to the early days of CPI. So, yes we definitely clearly see that as a trend. We see things like the F-16 service life extension program that the Air Force is showing interest in and I think we will continue to see a trend of repair and overhaul activities that may have been performed by the U.S. government that will now be transitioned to private sector. And I think that we, that our experience in some of these aircrafts will bode well for us getting good opportunities directly from there. On the other militaries new business pipeline, particularly in our Aerosystems Group, which consist of all of the pod programs that we do for companies like United Technologies and Northrop Grumman. We see two or three new opportunities in that space this year that we’re working and developing with customers and I would say the caution to that is these programs are long in nature, the design time is quite long and while these are relationships that will bring some revenue in 2016, we’re really - on some of the newer pursuits in the electronic pod business, these are 2017, 2018 type revenues, but the exacting thing is that we are considered among the very first names when it comes to building these types of structure for these airborne pod systems.

Okay that's very helpful. And if I could Vince on the free cash flow tax benefit this year can you provide an update of where you think free cash flow ends for 2015?

The fourth quarter cash flow actually would be, our expectation is that it will be quite good, significantly better than we've had up to this point and that takes into account the fact that we got that big tax refund in the first nine months or the first six months of the year. We have some arrangements with our customers on progress payments that should bolster our cash flow nicely in the fourth quarter. So, I would expect that we would be, I mean we don't give exact guidance, but I would expect that we would be as positive cash flow in the three-month period as we've been at least through the nine-month period up to now. Is that close enough and vague enough at the same time, Ken.

Yes, no that’s helpful, that's good.

Yeah.

And then just finally, I mean I know you’ve had a heart of, with the Triumph folks and re-wrok this year, but it sounds like that program is pretty much back on track and maybe ramping a little next year, can you just provide any more color on specifics, as you’ve taken that program on and where it stands today and maybe some of the opportunities to see some cost savings into 2016 there?

You're talking about Gulfstream G650 line?

Exactly.

They get, our customer and Gulfstream get nervous when I talk about build rates, so I can't really talk about the build rates there, or if they’re up or down. We are very, very pleased with the build rate currently and the amount of product that we will be delivering continuing from now and through what looks like well into 2017 at a fairly, very fairly robust rate. So, we’re extremely pleased with that program. When I mentioned the Kaizen event and the annualized direct cost reductions that were achievable, this was a very - that exercise is representative of what we could expect to pull out of that program as we have a highly visible backlog on that program and so we are continually finding ways to pull cost and efficiency out of that program because it’s one of the longest, sometimes it’s hard to continue to drive cost out of the program that's been running a long time, but through these types of events, we can take a step function down and breakthrough that curve if you will and achieve even better performance and that’s what we’re doing and a similar exercise we will be doing on that program, again with the goal of in the 2017, 2018, 2019 that we achieved those types of annual savings in direct cost.

Okay, great, thank you very much. That's helpful. Thank you.

Thanks Ken.

[Operator Instructions]. Our next question comes from the line of Mike Crawford with B. Riley, please proceed with your question.

Thank you, your fourth quarter guidance implies, I believe $27 million to $29 million revenue, yet you also might begin F-16 deliveries before year end where the revenue is recognized upon delivery of structural linked products, so is that, if the F-16 comes in, does that just get you towards the high end of would that be outside of the model?

That would get us to the high end. When we say we are going to have a record revenue quarter, my guess is, it’s going to be closer to what it was now, a little higher than what it was in the third quarter. So, our record was something like I have a number here somewhere, but it was around $28 million versus the fourth quarter 2012. So, we are looking to be on the high end of that range. With the revenue recognition being percentage of completion and some of it is function of material receipts from our subcontractors, we always kind of put a little bit of hedge in there in case the subcontractors don't deliver perfectly, so there is some of that built into that range as well.

Okay. And then further regarding your MRO business, you are seeking new sales channels to find a better balance Doug can you just elaborate on that a little bit police?

Right now probably 95% or more of our revenue is depended on new aircraft production and not aircraft flying hours and the repair business and the aftermarket spares business is largely not hours right now. We feel that particularly on the military side both commercial flying hours, as well are going to increase over the coming years and right now we have very limited offerings for people in that market. So, one of the things that we can do is on the military side where we don't need an FAA repair license as we can go after these major overhaul and repair bids that are coming out from the government. To that I mentioned that are in bid right now and examples of which are to that we won, the F-16 and the T-38, and then on the commercial side, particularly the business jet world we want it to become an FAA repair station so that we can actually repair leading edges of Gulfstream product, or Honda or Embraer inlets. Currently without that repair license, we can sell new, but we can’t repair. So, we're looking to be able to gain access to that market as well.

Okay. Great and then regarding the A-10, are there any productive conversations with your customer about what retribution you might get down the road for discontinued production in the early curtailment of the program?

I’m sorry. I just didn't hear that fully, could you repeat that?

Right, so given the early termination of the program that should - there is a chance for you to get some kind of recovery payment at the end, correct?

You're talking the A-10?

Yes.

Okay, I missed the program you were talking about. Okay, yes certainly if the government terminates its program with Boeing who in-turn will terminate its contract with us, we would be entitled to the customary things that contractors are entitled to when the government terminates for convenience. If that number frankly gets smaller every month, after we ship product and liquidate more of that contract, but yes there would be, we would have legitimate claims for inventory on amortized tolling and actually even to the extent that there will be any wind down expenses like removing the tooling from the floor and winding the contract down. So, yes.

Okay, great. And then you’ve also been fairly confident, you lay in the first kind of large commercial aircraft program, does that sentiment remains the same, as it has been?

I’m more confident in our business jet market than I am in the large commercial, the Boeing/Airbus type market. Honestly, in the last few months we've been unable to I guess to obtain some work from as an alternate source to our customer, an off load work because we just simply can't reach some of the aggressive targets that our Tier 1 customers have accepted with Boeing and Airbus. So, we’re getting increasingly, I would say disillusioned as to, is at the right entry point for a CPI in the large commercial airline market. It’s a huge financial risk to undertake when there’s a lot of tooling and it’s a lot of upfront investment and I’m looking around the industry seeing some margin problems with some of these other, I’d say the Boeing partner for success Tier 1 people that make me a little nervous about that market. So, I’m not overly optimistic in the near-term on a Boeing type program, but on the regional jet market and the business jet market where we have established performance, particularly with Embraer and Honda and Cessna and Gulfstream to some extent, I feel good about those, but I’m very cautious about some of the bids that we have in for the large commercial and our ability to close them given the - what I would view as unrealistic pricing expectations from our customers.

Okay great, thanks and then last question just relates to the new two-year budget that just passed, I know a lot of your defense work is funded for a long time, but do you see any opportunities breaking open from that or any other benefit from that most certain longer-term budget?

You know, I’d to answer really no, because as you mentioned all of our programs have really have been funded and pretty strongly supported in the budgets. I think what it does though Mike, is it kind of lifts this cloud over the whole segment, I guess and the perception of is the defense market a good market to invest in. And so I think, while our business had been kind of secured either way, I think it’s a good thing for all of us who make the majority of our living selling product to the military.

Okay, great. Thank you.

Thank you, Mike.

[Operator Instructions] Mr. McCrosson it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Thank you. And I like to thank all of you for participating in this call. Look forward to speaking to you again in early March when we announce our 2015 full year results. Thank you.

Ladies and gentlemen, this does conclude today's teleconference; you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.