CPI Aerostructures Inc (NYSE American: CVU) registered a 5.8% gain in its share price on Tuesday after announcing new production orders from Lockheed Martin Aeronautics worth $9 million. The purchase requests were issued against a Long Term Agreement that the companies have already disclosed.
The additional work covers the manufacture of Rudder Island Drag Chute Canister assemblies - identified as RI/DCC assemblies - for the F-16 Block 70/72 fighter jet. According to the company, deliveries associated with these orders will extend through 2028.
Company materials say the award supplements funding for additional quantities under an Indefinite Delivery, Indefinite Quantity contract that was established in 2023 as a second follow-on multi-year agreement. CPI Aerostructures previously delivered its first RI/DCC assembly for the F-16 Block 70/72 in June 2021.
The F-16 Fighting Falcon is operated by more than 29 countries globally. CPI Aerostructures produces structural assemblies for Lockheed Martin’s F-16 production line, a role underscored by the newly announced orders.
Summary
CPI Aerostructures received $9 million in additional orders from Lockheed Martin Aeronautics, booked against an existing Long Term Agreement and adding funding under a 2023 Indefinite Delivery, Indefinite Quantity contract. The work covers RI/DCC assemblies for F-16 Block 70/72 jets, with deliveries slated to continue through 2028. The disclosure corresponded with a 5.8% increase in CPI Aerostructures' stock on Tuesday.
Key points
- CPI Aerostructures (NYSE American: CVU) reported additional orders from Lockheed Martin totaling $9 million.
- The orders are for Rudder Island Drag Chute Canister assemblies for F-16 Block 70/72 jets, with shipments through 2028.
- The award adds quantities under an Indefinite Delivery, Indefinite Quantity contract established in 2023 and highlights CPI Aero's supplier role on Lockheed Martin’s F-16 production line.
Risks and uncertainties
- Quantities under the Indefinite Delivery, Indefinite Quantity contract are variable - the announcement adds funding for additional quantities but does not specify exact unit counts, creating uncertainty about the full scope of future work.
- The delivery timeline runs through 2028, which leaves the schedule exposed to potential changes in production pacing or program needs over multiple years.
- CPI Aerostructures' business is linked to work on Lockheed Martin’s F-16 production line, indicating program dependence on a single prime contractor for the assemblies described.
Impacted sectors
- Aerospace and defense manufacturing - direct supplier activity for military aircraft assemblies.
- Small-cap defense equities - market reaction to contract awards can affect specialist suppliers' share prices.