8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 6, 2010

LMI AEROSPACE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Missouri
(State or Other Jurisdiction of Incorporation)

0-24293
(Commission File Number) 43-1309065
(IRS Employer Identification No.)

411 Fountain Lakes Blvd.
St. Charles, MO
(Address of Principal Executive Offices)  
63301
(Zip Code)

(636) 946-6525
(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, If Changed Since Last Report.)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 — Financial Information

Item 2.02. Results of Operations and Financial Condition.

     On August 6, 2010, LMI Aerospace, Inc. (the “Company”) issued a press release (the “Press Release”) announcing, among other things, its financial performance for the three- and six-month period ended June 30, 2010. The full text of the Press Release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

     A conference call to discuss the financial results will be held on Friday, August 6, 2010 at 9:00 a.m. CDT, which will be hosted by Ronald S. Saks, Chief Executive Officer, and Lawrence E. Dickinson, Vice President, Chief Financial Officer and Secretary.

Section 7 — Regulation FD

Item 7.01. Regulation FD Disclosure.

     The Company also announced in the Press Release its revised guidance for fiscal year 2010 and provided initial sales guidance for fiscal year 2011.

     The information in Items 2.02 and 7.01 above shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Text of press release issued by the Company dated August 6, 2010.

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 6, 2010
	LMI AEROSPACE, INC.
	By:	/s/ Lawrence E. Dickinson
		Lawrence E. Dickinson
		Vice President, Chief Financial Officer and Secretary

EXHIBIT INDEX

Exhibit
Number		Description
	99.1	Text of press release issued by the Company dated August 6, 2010.

EX-99.1

Exhibit 99.1

	Contact:
	Ed Dickinson
	Chief Financial Officer, 636.916.2150

LMI AEROSPACE ANNOUNCES SECOND QUARTER 2010 RESULTS

Guidance Updated for 2010; 2011 Revenue Outlook Provided

     ST. LOUIS, August 6, 2010 — LMI Aerospace, Inc. (NASDAQ: LMIA), a leading provider of design engineering services, structural components, assemblies and kits to the aerospace, defense and technology industries, today announced financial results for the second quarter of 2010.

Highlights

• Free cash flow of $7.8 million, reducing revolving credit debt to $4.2 million

• Revenues of $55.9 million, down from $62.8 million the prior year

• Higher gross margins contributed to earnings per diluted share of $0.29, up from $0.28 the prior year

Second Quarter Results

      LMI generated net sales of $55.9 million for the second quarter of 2010 compared to $62.8 million in the second quarter of 2009. Net sales were down in both the Aerostructures and Engineering Services segments. Declines in demand for 767 winglets reduced net sales at Aerostructures while Engineering Services net sales fell because of declining demand for services for Boeing commercial aircraft platforms and the Sikorsky CH-53 helicopter. Earnings per diluted share were $0.29 in the second quarter of 2010, up slightly from $0.28 the prior year.

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 2

     “Aerostructures revenue for the second quarter of 2010 was below expectations, primarily because of lower pulls of military product, delays in new product awards from a military customer, and delays in transfer of work statement from a new customer,” said Ronald S. Saks, Chief Executive Officer of LMI. “Revenue from in-production large commercial aircraft and business jets improved in the quarter and is expected to grow at a faster pace through 2011. Despite our reduction in revenue guidance for the balance of 2010, we are optimistic that organic growth and new work statement awards will benefit 2011 and 2012 significantly. We are pleased that the gross margins at our Aerostructures plants continue to improve and we expect even better results as production rates of Boeing and Gulfstream products increase.”

     “Revenue at our Engineering Services segment met expectations and their business activity foreshadows modest growth in 2010. In the second half of 2010, Engineering Services plans to expand its current role on the Airbus A350 and will commence new projects, including tooling design of large shipping fixtures used to transport Boeing 787 assemblies as well as potential weight improvement studies on small business jets in development,” Saks added.

     Net sales for the second quarter of 2010 and 2009 for the Aerostructures segment were as follows:

	Three Months Ended June 30,
Category	2010		% of Total			2009		% of Total
	($ in millions)
Corporate and regional aircraft	$	12.3		32.2	%	$	11.8		29.4	%
Large commercial aircraft		15.2		39.8	%		18.2		45.3	%
Military		8.1		21.2	%		8.7		21.6	%
Other		2.6		6.8	%		1.5		3.7	%
Total	$	38.2		100.0	%	$	40.2		100.0	%

     Corporate and regional sales were up $0.5 million due to increased deliveries of product for large cabin aircraft for Gulfstream. Large commercial aircraft revenue fell as demand weakened for our 767 winglet program as airlines slowed these retrofit

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 3

installations. Net sales for this product were $2.7 million in the second quarter of 2010, down $4.9 million from the prior year. Excluding this program, large commercial sales in the second quarter of 2010 actually increased $1.9 million from the year ago quarter. Military programs sales were down $0.6 million due to light deliveries for the Apache program. The increase in other sales was primarily driven by the early stages of a recovery in demand for technology products.

     Net sales for the second quarter of 2010 and 2009 for the Engineering Services segment were as follows:

	Three Months Ended June 30,
	2010		% of Total			2009		% of Total
Category	($ in millions)
Corporate and regional aircraft	$	5.7		31.7	%	$	4.6		20.4	%
Large commercial aircraft		7.7		42.8	%		10.2		45.1	%
Military		3.9		21.6	%		7.1		31.4	%
Other		0.7		3.9	%		0.7		3.1	%
Total	$	18.0		100.0	%	$	22.6		100.0	%

     Net sales of Corporate and Regional Aircraft services grew by $1.1 million, driven by growth in support for the Mitsubishi Regional Jet and Bombardier. Net sales declined for large commercial aircraft as the design matured for the 747-8. These declines were partially offset by increases on the A350 and 787. Military sales were down $3.2 million, primarily due to reduced staffing on the Sikorsky CH-53 and the winding down of certain Lockheed programs.

     Gross profit for the second quarter of 2010 was $13.2 million or 23.6 percent, compared to $13.4 million or 21.3 percent in the second quarter of 2009. The Aerostructures segment generated gross profit of $10.2 million or 26.7 percent of sales in the second quarter of 2010, up from $9.0 million or 22.3 percent of sales in the second quarter of 2009. This improvement in gross profit was primarily attributable to increased efficiency at our fabrication facilities. During the second quarter of 2009, production

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 4

levels had dropped as the segment reduced inventory levels, resulting in shorter work weeks and inefficient production processes. The Engineering Services segment generated a gross profit of $3.1 million or 17.2 percent of sales in the quarter ended June 30, 2010, versus $4.4 million or 19.5 percent of net sales for the second quarter of 2009. This decline was attributable to the lower revenue levels providing less coverage of fixed costs and the establishment of a reserve for potential billing rate reductions on a recently completed contract.

     Selling, general and administrative expenses (SG&A) were $7.8 million for the second quarter of 2010, down from $7.9 million for the year ago quarter. Aerostructures segment SG&A for the second quarter of 2010 was $5.9 million, down from $6.1 million in the second quarter of 2009. Engineering Services segment SG&A was $1.9 million in the second quarter of 2010, unchanged from the prior year.

     Net interest expense was $167,000 in the second quarter of 2010 compared to $413,000 the prior year due to lower debt levels and the continued favorable interest rate environment. The effective income tax rate for the second quarter of 2010 and 2009 was 36.5 percent and 36.4 percent, respectively.

     During the second quarter of 2010, LMI generated $7.8 million in free cash flow, up from $7.1 million the prior year. LMI ended the second quarter of 2010 with $4.2 million of revolving debt. Subsequent to the end of the quarter, the revolving line of credit was completely repaid.

     “Our operating performance at Aerostructures, measured by on-time delivery and quality performance, continues to improve,” Saks added, “with some of the benefit being better control of inventory, resulting in generation of free cash flow. Engineering Services continues to manage margins and cash flow effectively at current volume levels, which are reduced from 2009. The result is that free cash flow has continued to be strong in the second quarter and effective the first week of July 2010, we repaid our revolving

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 5

line of credit and are now investing $3 million to $5 million daily. We expect to use our strong financial position to invest in new programs, primarily design-build, and to make strategic acquisitions in the coming months. Our acquisitions due diligence has increased in the last few months, with several interesting properties becoming available.”

     LMI also announced that backlog at June 30, 2010, was $226 million compared to $238 million at June 30, 2009.

Outlook for 2010 and 2011

     The company also revised guidance for 2010. On a consolidated basis, the company now expects revenue to range between $233 million and $242 million. Gross profit should be between 23.1 percent and 24.3 percent with SG&A ranging from $31.3 million to $32.2 million. Net interest expense is expected to be between $650,000 and $700,000 for the year and the effective tax rate is expected to continue at 36.5 percent. Capital expenditures are planned to be approximately $8 million. Depreciation, amortization and non-cash stock compensation expense are expected to be between $9.2 million and $9.4 million. The expectations for each segment are as follows:

     Aerostructures

• Net sales of between $159 million and $164 million

• Gross profit of between 26.0 percent and 27.0 percent

• SG&A ranging from $24.5 million to $25.0 million

     Engineering Services

• Net sales of between $74 million and $78 million

• Gross profit of between 17.0 percent and 18.5 percent

• SG&A ranging between $6.8 million and $7.2 million

     Aerostructures revenue expectations were revised downward, primarily due to lower expectations for military helicopter sales and purchase order awards and delays in the transfer of work statement on certain military projects. Aerostructures gross margin

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 6

guidance was improved slightly reflecting actual performance for the first six months of 2010. Selling, general and administrative expenses for the segment were lowered by reducing the high end of the range at Aerostructures. Engineering Services sales were revised upward to reflect certain new awards that are expected to contribute to the second half of the year.

     LMI also announced initial revenue guidance for 2011. Overall, LMI expects revenue of between $248 million and $265 million. The Aerostructures segment expects to benefit from planned production rate increases on several programs, including the 737, 747, 777 and 787 at Boeing and the G650 at Gulfstream. Production rates are expected to be flat on Blackhawk programs but certain recent wins should augment volumes in 2011. Based upon these developments, LMI expects revenue for the Aerostructures segment to be between $168 million and $178 million. Engineering Services is expected to improve to between $80 million and $88 million.

     LMI Aerospace, Inc. is a leading provider of design engineering services, structural components, assemblies and kits to the aerospace, defense and technology industries. Through its Aerostructures segment, the company primarily fabricates machines, finishes and integrates formed, close-tolerance aluminum and specialty alloy components and sheet-metal products, for large commercial, corporate and military aircraft. It manufactures more than 30,000 products for integration into a variety of aircraft platforms manufactured by leading original equipment manufacturers and Tier 1 aerospace suppliers. Through its Engineering Services segment, operated by its D3 Technologies, Inc subsidiary, the company provides a complete range of design, engineering and program management services, supporting aircraft lifecycles from conceptual design, analysis and certification through production support, fleet support and service-life extensions.

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 7

     This news release includes forward-looking statements related to LMI Aerospace, Inc.’s, outlook for 2010 and 2011, which are based on current management expectations. Such forward-looking statements are subject to various risks and uncertainties, many of which are beyond the control of LMI Aerospace, Inc. Actual results could differ materially from the forward-looking statements as a result of, among other things, the factors detailed from time to time in LMI Aerospace, Inc.’s filings with the Securities and Exchange Commission. Please refer to the Risk Factors contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2009, and any risk factors set forth in our other subsequent filings with the Securities and Exchange Commission.

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LMI Aerospace Announces
Second Quarter 2010 Results
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LMI Aerospace, Inc.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Sales and service revenue
Product sales	$	36,657		$	39,843		$	76,901		$	82,577
Service revenues		19,288			22,986			39,459			44,254
Net sales		55,945			62,829			116,360			126,831
Cost of sales and service revenue
Cost of product sales		25,021			30,935			52,797			62,501
Cost of service revenues		17,699			18,511			35,932			36,361
Cost of sales		42,720			49,446			88,729			98,862
Gross profit		13,225			13,383			27,631			27,969
Selling, general and administrative expenses		7,763			7,939			15,803			16,412
Severance and restructuring		—			—			—			362
Income from operations		5,462			5,444			11,828			11,195
Other income (expense):
Interest expense, net		(167	)		(413	)		(394	)		(835	)
Other, net		(41	)		17			(45	)		(24	)
Total other income (expense)		(208	)		(396	)		(439	)		(859	)
Income before income taxes		5,254			5,048			11,389			10,336
Provision for income taxes		1,918			1,839			4,157			3,773
Net income	$	3,336		$	3,209		$	7,232		$	6,563
Amounts per common share:
Net income per common share	$	0.29		$	0.28		$	0.63		$	0.58
Net income per common share assuming dilution	$	0.29		$	0.28		$	0.62		$	0.58
Weighted average common shares outstanding		11,416,021			11,291,492			11,393,022			11,284,678
Weighted average dilutive common shares outstanding outstanding		11,640,826			11,319,521			11,603,850			11,313,004

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 9

LMI Aerospace, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(Unaudited)

	June 30, 2010			December 31, 2009
Assets
Current assets:
Cash and cash equivalents	$	329		$	31
Trade accounts receivable, net of allowance of $197 at June 30, 2010 and $279 at December 31, 2009		34,321			35,469
Inventories, net		44,304			45,703
Prepaid expenses and other current assets		3,185			2,849
Deferred income taxes		3,730			3,799
Total current assets		85,869			87,851
Property, plant and equipment, net		21,141			19,322
Goodwill		49,102			49,102
Intangible assets, net		21,892			22,965
Other assets		852			977
Total assets	$	178,856		$	180,217
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	8,799		$	7,778
Accrued expenses		11,182			8,089
Short-term deferred gain on sale of real estate		233			233
Current installments of long-term debt and capital lease obligations		250			326
Total current liabilities		20,464			16,426
Long-term deferred gain on sale of real estate		3,190			3,307
Long-term debt and capital lease obligations, less current installments		4,307			17,210
Deferred income taxes		7,546			7,546
Other long-term liabilities		—			1,235
Total long-term liabilities		15,043			29,298
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 12,084,713 shares and 11,996,389 shares at June 30, 2010 and December 31, 2009, respectively		242			240
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date		—			—
Additional paid-in capital		72,725			71,375
Treasury stock, at cost, 301,772 shares at June 30, 2010 and 359,188 shares at December 31, 2009		(1,432	)		(1,704	)
Retained earnings		71,814			64,582
Total shareholders’ equity		143,349			134,493
Total liabilities and shareholders’ equity	$	178,856		$	180,217

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LMI Aerospace Announces
Second Quarter 2010 Results
Page 10

LMI Aerospace, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

	Six Months Ended
	June 30,
	2010			2009
Operating activities:
Net income	$	7,232		$	6,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,715			3,790
Restricted stock compensation		917			923
Deferred tax provision		57			146
Other noncash items		322			909
Changes in operating assets and liabilities, net of acquired businesses:
Trade accounts receivable		1,228			(10,833	)
Inventories		885			3,649
Prepaid expenses and other assets		121			(90	)
Accounts payable		540			(5,562	)
Accrued expenses		2,182			138
Net cash provided (used) by operating activities		17,199			(367	)
Investing activities:
Additions to property, plant and equipment		(4,465	)		(1,213	)
Acquisitions, net of cash acquired		—			(10,047	)
Other, net		11			(29	)
Net cash used by investing activities		(4,454	)		(11,289	)
Financing activities:
Principal payments on long-term debt and notes payable		(193	)		(259	)
Advances on revolving line of credit		13,177			41,464
Payments on revolving line of credit		(25,963	)		(29,464	)
Changes in outstanding checks in excess of bank deposits		481			—
Other, net		51			14
Net cash (used) provided by financing activities		(12,447	)		11,755
Net increase in cash and cash equivalents		298			99
Cash and cash equivalents, beginning of year		31			29
Cash and cash equivalents, end of quarter	$	329		$	128

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LMI Aerospace Announces
Second Quarter 2010 Results
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LMI Aerospace, Inc.
Selected Non-GAAP Disclosures
(Amounts in thousands)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2010			2009			2010			2009
Non-GAAP Financial Information
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)(1):
Net Income	$	3,336		$	3,209		$	7,232		$	6,563
Income tax expense		1,918			1,839			4,157			3,773
Interest expense, net		167			413			394			835
Depreciation and amortization		1,773			1,835			3,715			3,790
Stock based compensation		450			397			917			923
Severance and restructuring costs		—			—			—			362
Acquisition costs		—			—			—			239
TCA wind-up costs		—			—			—			249
Other, net		41			(17	)		45			24
Adjusted EBITDA	$	7,685		$	7,676		$	16,460		$	16,758
Free Cash Flow (2):
Net cash provided by operating activities	$	10,749		$	7,439		$	17,199		$	(367	)
Less:
Capital expenditures		(2,914	)		(338	)		(4,465	)		(1,213	)
Free cash flow	$	7,835		$	7,101		$	12,734		$	(1,580	)

1. We believe Adjusted EBITDA is a measure important to many investors as an indication of operating performance by the business. We feel this measure provides additional transparency to investors that augments, but does not replace the GAAP reporting of net income and provides a good comparative measure. Adjusted EBITDA is not a measure of performance defined by GAAP and should not be used in isolation or as a substitute for the related GAAP measure of net income.

2. We believe Free Cash Flow is a measure of the operating cash flow of the Company that is useful to investors. Free Cash Flow is a measure of cash generated by the Company for such purposes as repaying debt or funding acquisitions. Free Cash Flow is not a measure of performance defined by GAAP and should not be used in isolation or as a substitute for the related GAAP measure of cash generated (used) by operating activities.

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