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CPS Technologies Corporation Announces Third Quarter 2024 Financial Results

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CPS Technologies (NASDAQ:CPSH) reported Q3 2024 financial results with revenue of $4.2 million, down from $6.3 million in Q3 2023. The company posted a gross margin of -12% compared to 20% in the prior year, and an operating loss of $1.5 million versus a $0.1 million profit. The decline was primarily due to the end of the HybridTech Armor® contract and reduced manufacturing efficiencies. However, CPS secured new contracts including a $12 million award from a semiconductor customer and a $1.1 million Phase II contract from the U.S. Department of Energy. The company expects improved performance in Q4 2024 with its new third shift operations and a book-to-bill ratio of 1.22.

CPS Technologies (NASDAQ:CPSH) ha riportato i risultati finanziari del Q3 2024 con un fatturato di 4,2 milioni di dollari, in calo rispetto ai 6,3 milioni di dollari nel Q3 2023. L'azienda ha registrato un margine lordo del -12% rispetto al 20% dell'anno precedente, e una perdita operativa di 1,5 milioni di dollari rispetto a un profitto di 0,1 milioni. Il calo è stato principalmente dovuto alla conclusione del contratto HybridTech Armor® e a minori efficienze produttive. Tuttavia, CPS ha assicurato nuovi contratti, tra cui un assegno di 12 milioni di dollari da un cliente del settore dei semiconduttori e un contratto di Fase II da 1,1 milioni di dollari dal Dipartimento dell'Energia degli Stati Uniti. L'azienda prevede un miglioramento delle prestazioni nel Q4 2024 con l'avvio di un nuovo turno di lavoro e un rapporto book-to-bill di 1,22.

CPS Technologies (NASDAQ:CPSH) reportó los resultados financieros del Q3 2024 con ingresos de 4.2 millones de dólares, una disminución con respecto a los 6.3 millones del Q3 2023. La compañía tuvo un margen bruto del -12% en comparación con el 20% del año anterior, y una pérdida operativa de 1.5 millones de dólares frente a una ganancia de 0.1 millones. La caída se debió principalmente al final del contrato de HybridTech Armor® y a una reducción en las eficiencias de fabricación. Sin embargo, CPS aseguró nuevos contratos incluyendo un premio de 12 millones de dólares de un cliente del sector de semiconductores y un contrato de Fase II de 1.1 millones de dólares del Departamento de Energía de EE. UU. La compañía espera un rendimiento mejorado en el Q4 2024 con sus nuevas operaciones de tercer turno y una relación book-to-bill de 1.22.

CPS Technologies (NASDAQ:CPSH)는 2024년 3분기 재무 결과를 보고하며, 수익은 420만 달러로 2023년 3분기의 630만 달러에서 감소했습니다. 회사는 지난해 20%에 비해 총 마진이 -12%로 나타났고, 10만 달러의 이익에 대해 150만 달러의 운영 손실을 기록했습니다. 감소는 주로 HybridTech Armor® 계약 종료와 제조 효율성 감소로 인한 것이었습니다. 그러나 CPS는 반도체 고객으로부터 1200만 달러의 수주와 미국 에너지부로부터 110만 달러 규모의 2단계 계약을 확보했습니다. 회사는 새로운 3교대 운영으로 2024년 4분기에 개선된 성과를 기대하며, book-to-bill 비율이 1.22에 이를 것으로 예상하고 있습니다.

CPS Technologies (NASDAQ:CPSH) a déclaré ses résultats financiers du T3 2024, avec un chiffre d'affaires de 4,2 millions de dollars, en baisse par rapport à 6,3 millions de dollars au T3 2023. L'entreprise a affiché une marge brute de -12% contre 20% l'année précédente, et une perte opérationnelle de 1,5 million de dollars par rapport à un bénéfice de 0,1 million. Cette baisse est principalement due à la fin du contrat HybridTech Armor® et aux réductions de l'efficacité de la fabrication. Cependant, CPS a sécurisé de nouveaux contrats, incluant un prix de 12 millions de dollars d'un client dans le secteur des semi-conducteurs et un contrat de Phase II de 1,1 million de dollars du Département de l'Énergie des États-Unis. L'entreprise s'attend à une amélioration des performances au T4 2024 avec ses nouvelles opérations de troisième quart de travail et un ratio book-to-bill de 1,22.

CPS Technologies (NASDAQ:CPSH) berichtete über die Finanzergebnisse für das 3. Quartal 2024 mit einem Umsatz von 4,2 Millionen Dollar, im Vergleich zu 6,3 Millionen Dollar im 3. Quartal 2023. Das Unternehmen verzeichnete eine Bruttomarge von -12% im Vergleich zu 20% im Vorjahr und einen Betriebsverlust von 1,5 Millionen Dollar im Gegensatz zu einem Gewinn von 0,1 Millionen Dollar. Der Rückgang war hauptsächlich auf das Ende des HybridTech Armor®-Vertrags und verringerte Fertigungseffizienzen zurückzuführen. Dennoch sicherte sich CPS neue Verträge, darunter einen 12-Millionen-Dollar-Auftrag von einem Halbleiterkunden und einen 1,1 Millionen-Dollar-Vertrag der Phase II vom US-Energieministerium. Das Unternehmen erwartet im 4. Quartal 2024 eine verbesserte Leistung durch den neuen dritten Schichtbetrieb und ein Book-to-Bill-Verhältnis von 1,22.

Positive
  • Secured new $12 million contract for power module components from semiconductor customer
  • Won $1.1 million Phase II contract from U.S. Department of Energy
  • Book-to-bill ratio of 1.22 indicates strong future demand
  • Added third shift to increase production capacity
Negative
  • Revenue declined 33% YoY to $4.2 million from $6.3 million
  • Gross margin turned negative at -12% compared to +20% in Q3 2023
  • Operating loss of $1.5 million versus $0.1 million profit year-over-year
  • Net loss of $0.07 per share compared to $0.01 profit per share in Q3 2023

Insights

The Q3 results reveal significant challenges with $4.2 million revenue, down from $6.3 million year-over-year and a concerning -12% gross margin. Key issues include the end of the HybridTech Armor contract and inefficiencies from third shift training.

However, there are several positive catalysts ahead:

  • A new $12 million semiconductor contract
  • A $1.1 million Department of Energy Phase II contract
  • A book-to-bill ratio of 1.22, indicating strong future demand
  • Expected efficiency improvements as the third shift becomes fully operational

While the $1.5 million operating loss is concerning, the company's diversification strategy and growing order book suggest potential recovery in Q4 and beyond. The balance between near-term operational challenges and future growth opportunities makes this a pivotal transition period.

Set for Improved Financial Performance in Fourth Quarter and Beyond

NORTON, Mass., Oct. 30, 2024 (GLOBE NEWSWIRE) -- CPS Technologies Corporation (NASDAQ:CPSH) (“CPS” or the “Company”) today announced financial results for the fiscal third quarter ended September 28, 2024.

Third Quarter Summary

  • Revenue of $4.2 million for the third quarter of 2024 versus $6.3 million in the prior-year period, reflecting lower overall shipments due to the previously-announced end of the Company’s HybridTech Armor® contract with Kinetic Protection for the U.S. Navy
  • Gross margin of (12) percent versus 20 percent in the third quarter of 2023, largely reflecting lower manufacturing efficiencies as well as start-up costs tied to hiring and training of a third shift, the benefit of which will be seen in the fourth quarter and beyond.
  • Operating loss of $1.5 million for the quarter ended September 28, 2024 compared to an operating profit of $0.1 million in the prior-year period
  • Recently won a Phase II contract from the U.S. Department of Energy, worth $1.1 million over 24 months, to continue development of “Modular Radiation Shielding for Transportation and Use of Microreactors”
  • Secured a new $200K development contract from the U.S. Naval Air Systems Command, or NAVAIR, under which CPS will continue development of metal matrix composite solutions for applications requiring high strength at reduced weight.
  • The Company today announced that it has received an award, valued at approximately $12 million, from a longstanding global semiconductor customer to provide power module components and related solutions. See separate press release for further details.

“While this quarter was negatively impacted by the costs related to staffing and training a third operating shift, we are optimistic about significantly improved performance in the fourth quarter and beyond,” said Brian Mackey, President and CEO. “We recently won another Phase II award from the U.S. government – with the Department of Energy – and just today announced a $12.0 million power module component contract, with a well-known global semiconductor manufacturer. Our third shift began production in the third quarter, though the impact on revenue will not be felt until the fourth quarter. We anticipate higher deliveries going forward. Overall, our book to bill ratio – currently 1.22 – provides confidence that we are weathering the storm of headwinds caused by the end of our HybridTech Armor® contract, supply chain inefficiencies, and a challenging staffing environment. We are now confident that the Company’s long-term strategy of expanding its product portfolio, working with the government to fund innovative R&D initiatives, and growing our core product lines are starting to bear fruit. We appreciate our investors’ continued patience and interest, and we look forward to the quarters to come.”

Results of Operations
CPS reported revenue of $4.2 million in the third quarter of fiscal 2024 versus $6.3 million in the prior-year period, primarily reflecting the previously-announced completion of the Company’s HybridTech Armor® contract with Kinetic Protection, the prime contractor for the U.S. Navy; another major customer has also purchased less, year-over-year, as it works through excess inventory.

Gross loss was $0.5 million, or (12) percent of revenue, versus a gross profit of $1.2 million, or 20 percent of revenue, in the fiscal 2023 third quarter, with the negative variance year-over-year due to lower overall revenue and reduced manufacturing efficiencies, along with costs associated with staffing and training a third shift that began operating the last week of August. During the quarter, this new staff worked alongside other workers for training, impacting overall cost of goods sold without a corresponding top line revenue component in the quarter.

The Company reported an operating loss of $1.5 million in the fiscal 2024 third quarter compared with an operating profit of $0.1 million in the prior-year period. Reported net loss was $1.0 million, or $(0.07) per diluted share, versus net income of $0.2 million, or $0.01 per diluted share, in the quarter ended September 30, 2023.

Conference Call
The Company will be hosting its third quarter 2024 earnings call at 9:00 am tomorrow, October 31, 2024. Those interested in participating in the conference call should dial the following: 
Call in Number: 1-844-943-2942
Participant Passcode: 475242

The Company encourages those who wish to participate to call in 10 minutes before the scheduled start time to ensure the operator can connect all participants.

About CPS
CPS is a technology and manufacturing leader in producing high-performance materials solutions for its customers. The company’s products and intellectual property address critical needs in a variety of applications, including electric trains and subway cars, wind turbines, hybrid vehicles, electric vehicles, Navy ships, the smart electric grid, 5G infrastructure and others. CPS hermetic packages can be found in many Aerospace and Satellite applications. CPS’ armor products provide exceptional ballistic protection and environmental durability at very light weight. CPS is committed to innovation and to supporting our customers in building solutions for the transition to clean energy.

Safe Harbor
Statements made in this document that are not historical facts or which apply prospectively, including those relating to 2024 financial results, are forward-looking statements that involve risks and uncertainties. These forward-looking statements are identified by the use of terms and phrases such as "will," "intends," "believes," "expects," "plans," "anticipates" and similar expressions. Investors should not rely on forward looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the company's expectation. Additional information concerning risk factors is contained from time to time in the company's SEC filings, including its Annual Report on Form 10-K and other periodic reports filed with the SEC. Forward-looking statements contained in this press release speak only as of the date of this release. Subsequent events or circumstances occurring after such date may render these statements incomplete or out of date. The company expressly disclaims any obligation to update the information contained in this release.

CPS Technologies Corporation
111 South Worcester Street
Norton, MA 02766
www.cpstechnologysolutions.com

Investor Relations:
Chris Witty
646-438-9385
cwitty@darrowir.com


CPS TECHNOLOGIES CORPORATION
Statements of Operations (Unaudited)
 
 Three Months Ended  Nine Months Ended 
 September 28,  September 30,  September 28,  September 30, 
 2024  2023  2024  2023 
Revenues:               
Product sales$4,247,116  $6,285,041  $15,190,063  $20,803,447 
                
Total revenues 4,247,116   6,285,041   15,190,063   20,803,447 
                
Cost of product sales 4,770,548   5,049,177   15,037,177   15,126,621 
                
Gross profit (loss) (523,432)  1,235,864   152,886   5,676,826 
                
Selling, general, and administrative expense 963,064   1,105,227   3,214,831   4,121,099 
                
Income (loss) from operations (1,486,496)  130,637   (3,061,945)  1,555,727 
                
Interest income (expense), net 71,650   78,181   241,686   176,325 
Other income (expense), net (676)  (1,228)  159   (4,130)
                
Net income (loss) before income tax (1,415,522)  207,590   (2,820,100)  1,727,922 
Income tax provision (benefit) (372,683)  36,509   (679,803)  497,137 
                
Net income (loss)$(1,042,839) $171,081  $(2,140,297) $1,230,785 
Other comprehensive income               
Net unrealized gains on available for sale securities 8,745   --   17,446   -- 
Total other comprehensive income 8,745   --   17,446   -- 
Total comprehensive income (loss)$(1,034,094) $171,081  $(2,122,851) $1,230,785 
                
Net income (loss) per basic common share$(0.07) $0.01  $(0.15) $0.08 
                
Weighted average number of basic common shares outstanding 14,525,664   14,517,364   14,520,827   14,487,873 
                
Net income (loss) per diluted common share$(0.07) $0.01  $(0.15) $0.08 
                
Weighted average number of diluted common shares outstanding 14,525,664   14,636,241   14,520,827   14,632,591 




CPS TECHNOLOGIES CORP.
Balance Sheets (Unaudited)
 
 September 28,  December 30, 
 2024  2023 
ASSETS       
        
Current assets:       
Cash and cash equivalents$4,689,004  $8,813,626 
Marketable securities, at fair value 1,020,952   -- 
Accounts receivable-trade, net 3,654,549   4,389,155 
Accounts receivable-other 362,312   83,191 
Inventories, net 4,433,412   4,581,930 
Prepaid expenses and other current assets 506,126   276,349 
        
Total current assets 14,666,355   18,144,251 
        
Property and equipment:       
Production equipment 9,953,702   11,271,982 
Furniture and office equipment 891,921   952,883 
Leasehold improvements 988,804   985,649 
        
Total cost 11,834,427   13,210,514 
        
Accumulated depreciation and amortization (10,200,302)  (11,936,004)
Construction in progress 448,184   281,629 
        
Net property and equipment 2,082,309   1,556,139 
        
Right-of-use lease asset 224,000   332,000 
Deferred taxes, net 2,249,985   1,569,726 
        
Total assets$19,222,649  $21,602,116 


(continued)

CPS TECHNOLOGIES CORP.
Balance Sheets (Unaudited)
(concluded)
 
 September 28,  December 30, 
 2024  2023 
LIABILITIES AND STOCKHOLDERS` EQUITY       
        
Current liabilities:       
Note payable, current portion$20,103  $46,797 
Accounts payable 2,497,055   2,535,086 
Accrued expenses 840,757   1,075,137 
Deferred revenue 160,412   251,755 
Lease liability, current portion 160,000   160,000 
        
Total current liabilities 3,678,327   4,068,775 
        
Note payable less current portion    8,090 
Deferred revenue – long term 31,277   31,277 
Long term lease liability 64,000   172,000 
        
Total liabilities 3,773,604   4,280,142 
        
Commitments and contingencies       
        
Stockholders` equity:       
Common stock, $0.01 par value, authorized 20,000,000 shares; issued 14,661,487 shares; outstanding 14,525,960 shares at September 28, 2024 and issued 14,601,487 shares; outstanding 14,519,215 shares at December 30, 2023 146,615   146,015 
Preferred stock, no shares issued or outstanding     
Additional paid-in capital 40,520,215   40,180,893 
Accumulated other comprehensive income 17,446    
Accumulated deficit (24,895,093)  (22,754,796)
Less cost of 135,527 common shares repurchased at September 28, 2024 and 82,272 common shares repurchased at December 30, 2023 (340,138)  (250,138)
        
Total stockholders` equity 15,449,045   17,321,974 
        
Total liabilities and stockholders` equity$19,222,649  $21,602,116 

FAQ

What was CPS Technologies (CPSH) revenue in Q3 2024?

CPS Technologies reported revenue of $4.2 million in Q3 2024, down from $6.3 million in Q3 2023.

What new contracts did CPSH win in Q3 2024?

CPSH won a $12 million contract from a semiconductor customer, a $1.1 million Phase II contract from the Department of Energy, and a $200K development contract from NAVAIR.

Why did CPSH report a loss in Q3 2024?

The loss was due to lower revenue from the end of the HybridTech Armor® contract, reduced manufacturing efficiencies, and costs associated with hiring and training a third shift.

What is CPSH's current book-to-bill ratio?

CPS Technologies' book-to-bill ratio is 1.22, indicating strong future demand for their products.

CPS Technologies Corp.

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