CPSH - Earnings call transcript Q1 2019 | CPS Technologies Corporation

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Operator

Good afternoon. My name is Heather, and I'll be your conference operator today. At this time, I would like to welcome everyone to the CPS Technologies First Quarter 2019 Conference Call. [Operator instructions] Thank you.

Now it's my pleasure to turn today's call over to our host, Mr. Officer. Financial Chief Norwood, Ralph

You may begin.

Ralph Norwood

Sales and Thank by our I'm for today afternoon. Bennett, you, Senior our President Breen, operator, Grant Tom President joined and good and Marketing. and Vice CEO;

to conference the the statements business within are Act you the would all Before we Private are Reform point in not of portion to this begin out statements forward-looking of Securities that call, Litigation the of I meaning like call that as historical of considered in results be Such should to environment. the uncertainties in exist and XXXX cause conditions, to factors. that uncertainties subject from those and any CPS' These actual many materially factors could competitive and forward-looking operations differ market statement. include economic demands strictly

to over Grant results. call the to first his on turn will I perspectives quarter's the offer Now

Grant Bennett

an Thank myself. welcome, and today and Tom Breen, joining Ralph of with Senior that Also Marketing us is are indicated Sales you, Ralph, President as Chuck Vice Griffith. observer our and the call everyone. today

previously retiring. X As Monday, Chuck. who over his last become Norwood, contributions Officer by Financial and afternoon Ralph succeeding this Chief is May tremendous our X, begin thanking on Ralph coming this the by for Chuck welcoming years I announced, will

May Although Ralph overlap be between smooth officially to is X, Chuck ensure the Chuck reins a takes complete. on and and will there period of the transition

$X.X with revenues quarter's compared results, increased first to quarter XX% the year first in the onto Now same million period ago. XXXX by the a of

suppliers. for quarter largest demand XXXX of below in our publish QX and of below And The decreased sequentially, other below issues constrained although XX% XXXX our quarter first is we unexpectedly by revenues from don't of revenues that plan. was annual plan, by revenues supply by plan caused reasons our XXXX. our one customers came in from fourth the came operating However, the

their schedule. customer to in order was meet components source able other to production Our not enough

in and or simply allocation into has This constraint aggressively QX is by disappeared. is on demand customers, quarter shortfall represented customers but and demand future shortfall as in of an demand has not customer first and on essentially operating has Other -- demand package customers, constraint. the addressing less up moved was quarters. growing. and from large $XXX,XXX shortfall strong Our this than their placed hermetic been the in remains same We from this slightly particular, other demand of customer, incurred a The the QX XXXX. loss XXXX, the

didn't same. QX reasons revenue. been The reasons importantly, because some reasons inefficiencies. and resolved. operating and have and most lower of include technical most XXXX labor in of are somewhat call Our gross several There margins additional the the reasons of constellation this some storm. flow-through could most training. yields with One essentially nonrecurring were But margin why of more hiring because product QX XXXX typical million expected and costs introductions also $X productivity primarily of perfect in of we new generate and on a of the challenges were are these The than

In was plant QX. repair addition, higher and maintenance in than also

generate And are is the by will vary higher where challenges remain experience the of will quarters. that product. by incurred at we cycle, product Shortages to costs many additional introductions resolved growing. but components But mix constraint quarter families, life plating with than reason, it's our some the They is mix. as a that technical customer. quarters. our there come the case new production. product in be shifted QX, X short-term labor customers will somewhat products these In more second does and is and for underlying generate some issue Demand towards is vary products. were move didn't flow-through they revenues Margins the as an and normally mentioned, by and material, was newer product products The into on we where products product do market margin in strong, product vary the typical our these of revenue these usually go, X in

QX forecast for internal same even though XXXX remains the Our revenue plan came as in below the revenue explained.

and first slightly have two a and on Both -- volumes Japan into in a I schedule deeper the I defense weeks to in penetration baseplates progress we Japan. space with into where of increasing a thrusts: qualification and we of Moving continue entered program a in excellent to Tom production particularly elevation, at Asia, sales our and for quarter returned strategic key China higher defined make of recently in industries U.S. ago from baseplates Japan. sales customer just X and the

revenue. We Ralph With to it some and shipments, defense detail that, on turn industries the new also me made the volume small some meaningful space generate initial let for shipments time results. QX, but in on programs programs that over critical additional will in

Ralph Norwood

Thank you, to of of been quickly margin. XX%, variety reasons we believe and which that are great margin did largely a revenues for explaining will addressed. but job nonrecurring gross are a Grant. up gross have I move Grant is flat

year, general offset last costs marketing flat spending increased the also and we from commissions. gross line, against areas, have go Moving sales which margin administrative lower I'll although did general selling, by in to were

we tax credits. the is the our when in of And the result, $XXX,XXX. tax a either $X these a no net money or fact million-plus a case was as due losses money provision there's loss reserve note, in will So to make XXX% credit And for of the -- provision, days, as case for or we loss that valuation that you lose a established our operating profits. of

them no of expire most long-term have In we fact, tax we situation there'll tax be until profitable several demonstrate that XXXX. utilize probably that in those next the quarters, we for year, and credits no a provisions By and will this credits. the way,

use I'm we frankly, quite will So confident them.

with year quarter of the offset we Turning our $XXX,XXX $XXX,XXX cash now line ended just or credit. borrowing -- balance of of by over on the to the sheet,

that from over was receivable of operations $XXX,XXX ranges the quarter. turnover from $X.X Accounts quarters XX inventory for loss Inventory $X.X represents to last of the of that the beginning end $X.X million offset the beginning The not million million working So days million the the sales million due or the decrease which substantial does quarter. was a against by cash cash was of existed the partially the is at year. net with in compared with a capital. is totaled $XX,XXX at at And and our with reduction the the any beginning for consistent $X.X change decrease $X.X which represent X the at historical March in day at over terms. of aging outstanding flat all XXXX. totaled also And million; of the quarter compares $X.X

balance accounting Essentially, year. companies note seen points. a greater X on item this time called make pronouncement payments asset. subscribe asset the incorporate. since to our companies, with has companies that new this, that represents present a all lease X You'll line This and need to a you've In lease even also value private of the first is as case, public than life like the of as an I'd the that to sheet $XXX,XXX arisen right-of-use of new result GAAP,

future by -- of The lease payments first and $XXX,XXX present XXX% current by in which between are of is value is long-term. offset the liabilities the split

a is Second is expenses simply most the new haven't point pronouncement of important future on This Lease accounting the no statement. and changed. profit recognition lease capitalizing perhaps balance loss the effect has payments. and sheet

quarter. property plant, from and than slightly note the year-end, that Finally, less we equipment in our capital you'll expenditures spent was the also fact reflecting that down in depreciation

year-end. $XXX,XXX on credit, you'll asset our and totaled to the $X.X that and Turning on have the new we is And you'll see lease and the also flat $X.X side. drawn with to long-term million the payables portions, million of down that same liability, liability the which equal $XXX,XXX current accruals side, see line at

this times, to our over point, the equity to at the ratio the was end of like take At we'd the operator, our current to debt turn you over from participants. was Finally, X.X to questions quarter, call X.X times. and

Operator

Asthem first of Your the Instructions] shareholder. [Operator from Michael question line comes [ph],

Unidentified Analyst

get there, we annual review get attend able a what to meeting. we time? the a any I review? information occurred that Could gentlemen. that Hello, wasn't was of Could little at disseminated

Ralph Norwood

This is Ralph.

unable we achieve quorum. say, me to were a Let

one of We voted know number XX% as answers. have in took as for somewhere we of proceeded extended X of the questions the given issues that weeks. a the there XX% hour and and an -- the had in Grant Nonetheless, we for controversial We and percentage. A date, the were group, presentation we as no directors voting had favor And then north had in in January, compensation he you proxy. well to a similar And we so. gave a all voted or Florida to and had small

not tell at May X-K forward. really electors time. a The we'll happening, convene the a time, will meeting but And At So we we'll put be reelected, lot on will a an XX. quorum. truth, final will the and we -- that the have -- filing to that out directors move

Grant Bennett

could trace statements, was shareholders some case. ask get for down on we're to didn't that if wonder I simply why help proxy I believe trying item. everyone's We their and the X

a and call proxy the ballot, a shoot or us are we you appreciate an get us if if you would So shareholder it. statement give and e-mail, would didn't proxy

Operator

[Operator Doan of the [ph]. comes Instructions] Lennie question Your next line from

Unidentified Analyst

afternoon. Good

Grant Bennett

afternoon, Good Lenny.

Ralph Norwood

Lenny. Hi,

Unidentified Analyst

was deal sure I current will resolved it I'm will a it But lot this the you disappointing of have have of in -- work was to and how great quarter? out. this was you, what but a as do we it faith in

Grant Bennett

are one annual resolved We answer The below it's in we internally. don't -- issues And and plan, entirely due our the factor, many your of on we reason in yes to very -- our plan. us again, in And but no disappointing every the plan of this came we short we to publish the are helpful -- element results current change to QX current see the question. quarter. a is annual and guide

really what believe So quarter a of is guess half the that this see second I'm in we'll the we recovery in and I saying year.

Operator

comes next from line of Asthem, Your shareholder. question the Michael

Unidentified Analyst

accepted let rapid we get We product think another of spent more a I and a at annual be that it's contracts Raytheon, and money like have had What mean XXs I ago, didn't profitable. Japan -- not contest. we prototypes. of to some the out in would advance a a question. They of Navy can't that that see is A the -- We've patents lot knowledge for more of my had able None Gentlemen, company company not things orders as the some to threshold. along, faster transpired. maybe number to China. Raytheon years we're have marketplace. faster had to by of Okay. into as look number getting thought had million proxy on these low of We development we grow acquisitions I revenue trucking we faster. $XXX get doing far big to growth. a the status We won. this management which time, me a some usually possibility and a minimum any or We're I would And I make and point? believe as that

Grant Bennett

-- shipping of and marketing order. old-fashioned purchase disappointments the the as win. sales a of cycle. key purchase is had and element the the order Nonetheless, getting me path and on word, the you growth design wins purchase have use certainly And getting from order an And the design path a some is frustrations that describe. -- We come let

the the path and begin And this to component time grow families than growth markets The you big, armor done to hope that that segments. business some slower want at lumpiness. we be an accelerating what and in move where always -- we within are and and compared other in have certainly we're we've And grow some the is take, to X some what depending end, category. are forward some would programs for broad is some a we so clear But period accelerating current to in are programs see rate there'll And product company historically. moving small.

really module is mode So the at moment. the control for growth motor a in example,

Operator

comes of question next [ph]. the Your from Warren Silber line

Unidentified Analyst

Grant. afternoon, Good

Grant Bennett

Warren afternoon, Good [ph].

Unidentified Analyst

everything. of here the it? everything. only gave and a cap but then believe Markets because are with That's and our And presented you. opinion. severe Capital speech, gap was the is one to for investment of after to electrical are next XX to talking When market, about meeting very that it guy about Nice growth XX a in the the assets went doing well said, these my credibility But have sudden guys the years, there's credibility We committee, the I you day, doing talking and he's talking $XX the the analyst gap they're years, expanding market -- automobiles the what books. million. all a we on And boss, Noble

We facility quick have process. clear all of molding injection the

and billion-dollar of million big XXX appreciate the I we're $X in We and inserts, our your I spoke also a here. have done stacks billion Ralph suffering everything. thermal of $XX that like into to The automotive Journal that of they definitely and areas Wall get car capital active capital what concerning about materials. months, to business the says answer class, pointed conductivity the that letter and control other electric everything. you used of or a -- the thinks -- are metals generate I $XXX mention What you but or that we eight We're to their is movement into I'd this pyrotechnic could Street last could be doing methodology the being component four- advanced billion and these dedication, on company I business And that have it? Gentlemen, And question. increase into said, out company crack here club and our information a a the of behind and lack returns. tectonic -- in that to expects in where say that expansion And recently base? And they sent graphic in ball metals couple called electronics, they increase the out roughly electronics, expended specifically we to there's research want and investments the in biggest heat company are here. and everyone a fivefold.

Grant Bennett

there of But let that the better understand be the be to opportunity question we need capital and are the realistic race certainly indeed capital, The those. question. opportunities here. and which, believe timing, Tough seek we after there as raise to me may completely

right If that you -- of to the they're the years silicon is would X front working aggressively have with working another market. players of look compared carbide EVs well dye. what number said now think don't right yet that actual the growth players participating small but ago, me, trend less they the I be at a in -- still everyone car a than of X% of again, I the And in And market. and we And in we're are with very use the that's of percent production.

and question order capture invests one business. -- market and what be growth you you at invests it out right successful, you're -- get very level the when to of one get may the in wrong you So that of

some the capital, need off our associated we to some So clearly with we're to those of let of right those that agree if working timing products. with first And be me they clearer, as that just generate players -- going say is take we real the some priority off. take like right could future on the to becomes

Operator

question the Michael next Asthem, shareholder. comes of from Your line

Unidentified Analyst

Gentlemen, here. not? make our just I'm an looking that if for we line some questions growth? why acquisitions we tuck-in few purchases -- investment accelerate can not, or Do a more And have some to product banker

Ralph Norwood

suspect, them that and calls -- dozen of get tell we'll banks, each we some, same might calls you We we kind as investment half like them thing. and a to maybe all we dozen -- come If probably happen from see invite the a lot, us quarter a good know. within indicated -- in might us a anytime happened the the but we've year. times be fit, a couple of doesn't have yes, that, many which That see it's something last let done. you And

they for -- a transaction XXX% So there's fees. can there's where the work I in going mean none without none meaningful part-time, to with they spend seeing earn that's many ways, suddenly us time of but us

the quite It's it to we said, our and we have we sense and needed right Grant we company do not think prime we a could if clearly pretty that as move value interest. had the fit have to shelf financing, we of registration, made focus. and a quickly. add And So felt we bit

Our the open focus well, eye prime organic an areas we're keeping Michael. in But as growth. is other

Operator

line [ph]. Your next Doan question comes from Lennie of the

Unidentified Analyst

Lennie I This is meant. Don. who hope that's she

have to of you Okay. portfolio sure or But reasonable it deals, great being these half would you think can Yes. rail am level. done I expand I And car particularly seeing patents. I really you some I shares of I the because of And in sense. thought with start of a makes I'm this take sales, think hope the of deal overly a they last you getting get couple not in not things. you you number present of going to interested now in have your portfolio? don't do expanding a of but what already. I it's all in and second I optimistic for in feel defense I'm done done, what year guys am

Grant Bennett

clearly on not we path time We to a And a see the down the path framework company double we're see to within of to -- execute the publish -- we have. going path. a not the but We're to offerings marching a the frame, it. current of size product that we're clearly going give that

X% of -- every a and customer to -- talking of reduction improvement or or what for underestimate, we X% performance the composite, but the of for advantage very very, it's size of X% or take find whatever is an the really another the maybe to very into, case, we're a an the the to do direct in new really a is the of rarely material material. design to take the our cycle, easy substitution think sales only reliability, what -- properties use whole in allowing we're I it advantage that the In is almost -- going term increase it's or is a time about in properties system.

new again think began vehicles but went shipping And so that over longer for X a a program we case that revenue production. of into is going back what key and make today, tomorrow. out and generate significant we've the year you operating are the And a today find, and at for sale point began continental and or with years that's another revenues years we win and year making And required it product. those I accelerate. may working that record, take I the it a as may putting a a of customers together than to introduce in sale -- automotive What take look that part hybrid a isn't little example, will is talked a they design before look it, on we typical, to is and then prototypes I X is

is obviously, design I number, the than that think think it find I selling material, million and let when Now four that a three years. you was shorter million, cycle at when the revenue, pick me and $X.X the -- that win we're me in looked $X.X generated or years reached revenue with -- you'd a But generates occurred looked product familiar can that say if at the be. you let our just that customer more every at more

see life is The many So you're the for that in for of from in that once comes you're that and life another rest of already cases, demand the system. increased ago, But occurred news from general, that growth you're good advanced in in that's in that or products are of the comes component years in, way, business. design systems. it succeeding X wins the And the production. material of the years year said nature you'll this X of the

Operator

Warren Your line next question of comes from the Silber.

Unidentified Analyst

a take could the up Grant, risk company you that blow has previous because it a risk. question, want in my response Every to said whole doesn't the business company. to

for harness On the had with that and it premium on out. other age oil a business group, all that storage, everything, we apparent the the -- work risk and we didn't to that took balls the business

is you Now the being you electronics And bigger that armor mentioned our than when you business, at about the business. thought potential to at asked had you profit spring yet, very only the our funded end electronics Capital this be business. that Noble it by the from that someone thought the business

conductivity, that And it was As now. the chances. I'm and is head raise Ralph because to And is out, when we're And expense there's you a the electronics a think going the The and the Do higher everything believe here, on speeds spending the -- at venture exists you is us about it combined spoke automobiles. coming have are has expansion, that smaller pointed R&D we capital to and I opportunity the armor. someone that that here, I sales should operating involved money here with that size, that? afraid revolution pass company really smaller thermal to electronics a the by. take to response

Grant Bennett

the pursuing markets that I need identify the new that. you're let another. looking not some path as then more or and Well, that aggressive one we're and just may again, But markets. to team about that view. do that if in areas. -- military significant. we're simply indeed the much very very we I down. we but mean need recognize that's in want just really those a need And example, as to and means as market is we To armor what's and in to that isn't That And the achieve to being at what to do. focused to level and be that we appreciate spending very, -- going targeting a we we're opportunity some of those next-generation the And what programs carefully. the fund Directors, the again, the -- so identifying in to spending your to on. you're management me what let I just much looking that and saying, The talking say you you're it, of I and hear from any listening you And hear expertise encourage identify and certainly path team, a exactly I I focus the both that one time the where involve only need look And and simply at we're taking disagree. devil hear areas, don't is we the It whole comment And happening your be of sales -- and number Board real team, vehicles. say doesn't those at, and we their -- a is -- on outside. insights effort what And very marketing is candid, on of for are collective welcome insights very get me insight I effort

Operator

the of shareholder. question comes from Your Asthem, line Michael next

Unidentified Analyst

and well. great I answers admit want question the service points on, he the calls have are and the takes to very for to thank he's always company. his direct, Ralph to I I find his

we can grow stock growing. to anybody broker not in don't don't we're the because faster. looking of to how is you So visiting call. be I your for market losing successor expanding shareholders. that say I I presenting be the quality thank ideas conference company to of the last interest another buy on to I want I'm or your making company hear is your we this are hear the interested Also, call, same have the performed I -- in you, I point Ralph. assume one train you or hope -- hear

the going a think But same I to It's the should my have votes wayside. this and think for the in we be to be And because growth I know has being hands. you're because the the follow would be the plan. major aware the the and and fall results. being the in discussion. This you it's to the the quarters, there wake the better going management in to opinion two benefit be balls company, or in that, many a opinion. a proxies will half rate risk plan. I It of profitable. almost that the seems company it's not assume that to by team to in see my future addressed of we are I in long-term It's faster grow team, get is of market in have sales engineering the like not much then up company,

Grant Bennett

Thank you.

Ralph Norwood

Michael. Thank you,

Operator

Lennie Your line next [ph]. question of Doan comes from the

Unidentified Analyst

in couple things. been he's previous echo retiree caller A and the very I always CFO thanking the of honest. feeling

So that. we be the or folly. wants do, to appreciate betting that would the area other expertise your But something which on your in expertise, of of farm, not primary you is area caller

minimum of just and you I shares you quarter. And price You particularly this people in a my next that we thing is you be quarter shares four -- good to good the get this but have But that's was and X to have three-cents tell, and I buy know Nobel, the start, think rise, the to but more to or those. not a out introduce the and should need besides the been don't Noble, we double I own it if you've has sales you but been that it's have share to us we people do lot end, guess, have we shares, you stick there a other the three involved. And think to to want more with and your to you name of so stating, it a some luck, improve. in best. people you And what year but visibility. new to pick more because And a Noble takes believe anyhow, should now or Conference worth. And difficult have we'll year. And I the we need maybe to you maybe do bad sales the have would as story pretty potential conferences that lost look you X need a -- up what aggressive force, or

Ralph Norwood

Thank you, Lennie.

Sidoti As frankly. travel we've on September York, in for then, looking out quarter variety And look didn't significant one. next quarter, New the work in did possibly at that at said but conference reasons, We're a we probably this very in one as of before, well. XX fourth the a now as

Operator

of question Silber. line next from comes Your the Warren

Unidentified Analyst

Helsinki the Grant, at that mentioned been all major there made world, XXXX. up thing companies have has a last in because these and Noble this or that? temperature expanding. over buildings are a anything buildings, America, Electric, contacted? Thyssen, in to time also being on of Are this should was other Schneider the Kone that done in read hundred I and seems business Is thought there XXXX anyone area? I mean is a being like the it Otis there sales Capital we you any these high And high-rise

Grant Bennett

So into where the market the into the coming fit the the control and stand electric between or elevator. motor runs the we the module, that the that motor is building in -- power electronics again that -- module

customers. don't buys Otis we say from, but modules So have those Thyssen or any they on our modules are from who buying

motor we we we're turbines why that is the customers for that And of -- module market as to going that level Very the based to a the going we interaction various matter, or own knowledge XXX% even removed a me growing our be that's so we sources our the And market the don't the those is of growth. bit certain, turbine growing, similar certainly market -- the wind little applications. talk applications. with -- a what's number about market, and that and when used modules wind let a -- module component believe referred one power again, power that's stronger, are and our that of years, of manufacturer capture the X again, control with the elevator. we're ongoing to that be architect and from we're in review designer in on really growing are do building for research But influencing the or of

Operator

are questions from no There phones. further the

Ralph Norwood

Operator, would everyone's the opportunity just you to had more to one be time speak? an poll sure participants

Operator

your Weaver from question And line of [Operator instructions] Greg comes [ph]. the next

Unidentified Analyst

QX? second first release is implies half quarter the -- press your reading to flat stronger versus you current here, Just me compared comment QX looking is to That half. that pretty about

Grant Bennett

that week more But getting bit we're little frankly, QX. making better than in But issue better be To better updates will will they're specific, first second from short, primary definitely is we're will a fully -- than resolved, than of QX this the that and isn't QX single half issue every progress. -- our QX, half. customer No. yet be but be good being the be customer. supply-constrained,

Operator

are questions no more there And the from phones.

Grant Bennett

please only you joining And keep Thank you to not your listening insights, and the we that encouragement work your your those input indicate for your anxious but you challenges, -- and And and thank wisdom. your I'm for me you for your greatly very thank let do appreciated. that -- we are very much. call, is

And on be And projecting quarter-to-quarter spite will QX volatility, but year. We here are the term, some very term. last term. long in We're believe meaningful short this look that are significant to in in that path. very intermediate year bullish bullish bullish growth We're we we're we're the we calendar compared in the forward. very of challenges we there as in indicate bullish we and very

Let and love we you Goodbye. we'd come the again we you thank invite Boston give and always tour, if to sign a of that take you what a making any me area, you off. that, we're to in do. -- understanding and are With let products the we show of first-hand you of do, me some you as on

Operator

call. conference today's concludes This

now You may disconnect.

CPS Technologies (CPSH) 5 May 192019 Q1 Earnings call transcript