News & Events

CPI International Announces Fiscal Year 2014 Financial Results

PALO ALTO, Calif. - December 11, 2014 - CPI International Holding Corp., the parent company of CPI International, Inc. (CPI), today announced financial results for its fiscal year ended October 3, 2014.

"Fiscal 2014 was a singularly successful year for CPI. Our solid operational performance was enhanced by the seamless integration of the Radant Technologies acquisition into our business. Strong growth in sales and adjusted EBITDA results was driven by an exceptional order intake rate in fiscal 2013 and the addition of Radant Technologies to CPI's product portfolio. Due to this acquisition, the timing of certain large programs and generally favorable market conditions, we achieved record total sales, backlog and adjusted EBITDA results, as well as CPI's highest ever defense and communications sales levels," said Joe Caldarelli, chief executive officer of CPI. "In terms of bookings, fiscal 2014 was healthy, representing the second highest annual orders rate in our history, but it did not reach the remarkable levels of the previous year due to the timing of certain large defense and communications programs."

Caldarelli continued, "Other highlights of fiscal 2014 included:

  • very strong sales for some of our key defense programs, particularly the Aegis radar systems and a missile radar system,
  • growth in our x-ray imaging business in Asia,
  • improving business conditions in the industrial market, and
  • notable orders for several exciting programs, such as:
    • the European XFEL superconducting linear accelerator,
    • the Surface Water & Ocean Topography (SWOT) mission for the Canadian Space Agency, and
    • airborne data links for the RQ-4 Global Hawk unmanned aircraft system and the Apache helicopter."

Fiscal 2014 Sales

CPI's sales in fiscal 2014 totaled $475 million, an increase of 13 percent from the $419 million in sales that the company generated in the previous year, due in part to the October 2013 acquisition of Radant Technologies. CPI's Radant Technologies Division contributed more than $40 million in defense and communications sales during fiscal 2014.

In comparison to the previous year, CPI's sales in its three largest markets were as follows:

  • In the defense market, sales increased 16 percent to $182 million due to the inclusion of sales from CPI's Radant Technologies Division and higher sales for certain U.S. radar systems, including Aegis radar systems.
  • In the communications market, sales increased 21 percent to $181 million, primarily due to higher sales to support military communications applications, including sales of radomes and reflectors from CPI's Radant Technologies Division and sales of advanced tactical common data link (TCDL) antennas from CPI's Malibu Division. The majority of these TCDL sales were for an order totaling more than $25 million that was booked in fiscal 2013.
  • In the medical market, sales decreased three percent to $73.0 million, primarily due to lower sales for MRI applications.

Fiscal 2014 Orders

In fiscal 2014, CPI booked orders totaling $421 million, a nine percent decrease from the record $464 million booked in the previous year. Orders in CPI's two largest markets, the defense and communications markets, exceeded all previous years with the exception of fiscal 2013, during which the receipt of unusually large orders for certain defense and communications programs resulted in record orders levels. Due to the cyclical timing of orders for these programs, orders decreased in the defense and communications markets in fiscal 2014.

In particular, CPI Radant Technologies Division's more than $30 million contribution to defense and communications orders was substantially offset by the absence of a fiscal 2014 recurrence of the more than $25 million, multi-year order received by CPI's Malibu Division in the previous year. That order for advanced TCDL antennas to support military communications applications was the largest single order ever booked by CPI, and although it was not expected to, and did not, repeat in fiscal 2014, additional follow-on orders totaling more than $5 million have been placed for these products in the first quarter of fiscal 2015.

As of October 3, 2014, the company's order backlog totaled $308 million, the highest year-end backlog in its history.
In comparison to the previous year, CPI's fiscal 2014 orders in its three largest markets were as follows:

  • In the defense market, orders decreased seven percent to $166 million due to lower orders for certain military radar systems and an electronic warfare system due to the timing of order receipts for those programs.
  • In the communications market, orders decreased 23 percent to $140 million, in large part due to the more than $25 million order for advanced TCDL antennas CPI booked in fiscal 2013 that, as anticipated, did not recur in fiscal 2014. Orders to support certain other military and commercial communications applications also decreased in fiscal 2014 primarily due to the timing of large Ka-band programs for these applications.
  • In the medical market, orders increased two percent to $70.8 million, primarily due to higher orders for x-ray imaging applications, particularly in Asia.

Debt Refinancing

In April 2014, CPI completed a debt refinancing transaction. Borrowings on a new $310 million term loan were used to repay the $139 million outstanding under the company's prior credit agreement and to pay a $175 million dividend to the company's sole stockholder. As a result of this transaction, CPI's aggregate amount of indebtedness increased by $171 million and its cash interest expense for the 12-month period following the transaction will increase by approximately $7.8 million.

Net Income and Adjusted EBITDA

CPI generated $9.1 million in net income in fiscal 2014, as compared to $10.9 million in the previous year. For fiscal 2014, the refinancing transaction resulted in a $7.2 million loss on debt restructuring and a $4.9 million increase in interest expense. The impact of these expenses largely offset the positive impact that the company's higher sales, including sales from the Radant Technologies Division, and more profitable mix of products sold in fiscal 2014 had on CPI's net income for the year.

CPI's adjusted EBITDA in fiscal 2014 totaled $89.8 million, or 18.9 percent of sales, an increase from the $72.8 million, or 17.4 percent of sales, in adjusted EBITDA generated in the previous year. Adjusted EBITDA excludes expenses related to the debt refinancing transaction and certain other items. CPI's adjusted EBITDA in fiscal 2014 benefited from, among other items, a higher sales level and more profitable mix of products sold in comparison to the previous year.

Cash Flow

CPI's cash and cash equivalents as of October 3, 2014 totaled $50.6 million. For fiscal 2014, CPI's cash flow from operating activities equaled $53.6 million. Free cash flow totaled $46.0 million. Adjusted free cash flow totaled $50.2 million.

Fiscal 2015 Outlook

"Following an unusually strong fiscal 2014, we enter fiscal 2015 with a significant opening backlog, stable market conditions and ongoing solid customer demand for both defense and commercial products. We expect CPI's topline performance in fiscal 2015 to return to more typical levels, with sales and adjusted EBITDA results that significantly exceed previous years' results but do not quite match the exceptional performance of fiscal 2014," said Caldarelli.

Financial Community Conference Call

In conjunction with this announcement, CPI will hold a conference call on Friday, December 12, 2014, at 11:00 a.m. (EST) that simultaneously will be broadcast live over the Internet on the company's Web site. To participate in this conference call, please dial (800) 649-5127, or (253) 237-1144 for international callers, enter conference ID 38650063 and ask for the CPI International Fiscal 2014 Financial Results Conference Call. To access the call via the Internet, please visit and click "Events."

About CPI International Holding Corp.

CPI International Holding Corp., headquartered in Palo Alto, California, is the parent company of CPI International, Inc., which is the parent company of Communications & Power Industries LLC and Communications & Power Industries Canada Inc. Together, Communications & Power Industries LLC and Communications & Power Industries Canada Inc. develop, manufacture and globally distribute components and subsystems used in the generation, amplification, transmission and reception of microwave signals for a wide variety of systems including radar, electronic warfare and communications (satellite and point-to-point) systems for military and commercial applications, specialty products for medical diagnostic imaging and the treatment of cancer, as well as microwave and RF energy generating products for various industrial and scientific pursuits.

Non-GAAP Supplemental Information

EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow presented here are non-generally accepted accounting principles (GAAP) financial measures. EBITDA represents earnings before net interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to exclude certain non-recurring, non-cash, unusual or other items. EBITDA margin represents EBITDA divided by sales. Adjusted EBITDA margin represents adjusted EBITDA divided by sales. Free cash flow represents net cash provided by operating activities minus capital expenditures and patent application fees. Adjusted free cash flow represents free cash flow further adjusted to exclude certain non-recurring, unusual or other items.

CPI believes that GAAP-based financial information for leveraged businesses, such as the company's business, should be supplemented by EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow so that investors better understand the company's operating performance in connection with their analysis of the company's business. In addition, CPI's management team uses EBITDA and adjusted EBITDA to evaluate the company's operating performance, to monitor compliance with its senior credit facility, to make day-to-day operating decisions and as a component in the calculation of management bonuses. Other companies may define EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow differently and, as a result, the company's measures may not be directly comparable to EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow of other companies. Because EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow do not include certain material costs, such as interest and taxes in the case of EBITDA-based measures, necessary to operate the company's business, when analyzing the company's business, these non-GAAP measures should be considered in addition to, and not as a substitute for, net income (loss), net cash provided by (used in) operating activities, net income margin or other statements of income or statements of cash flows data prepared in accordance with GAAP.


Certain statements included above constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations, beliefs or forecasts of future events. Forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual events or results to differ materially from the results projected, expected or implied by these forward-looking statements. These factors include, but are not limited to, competition in our end markets; our significant amount of debt; changes or reductions in the U.S. defense budget; currency fluctuations; goodwill impairment considerations; customer cancellations of sales contracts; U.S. Government contracts; export restrictions and other laws and regulations; international laws; changes in technology; the impact of unexpected costs; the impact of a general slowdown in the global economy; the impact of environmental or zoning laws and regulations; and inability to obtain raw materials and components. These and other risks are described in more detail in our periodic filings with the Securities and Exchange Commission. As a result of these uncertainties, you should not place undue reliance on these forward-looking statements. All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We undertake no duty or obligation to publicly revise any forward-looking statement to reflect circumstances or events occurring after the date hereof or to reflect the occurrence of unanticipated events or changes in our expectations.


Amanda Mogin, Communications & Power Industries, investor relations, 650.846.3998,