CPSH - Earnings call transcript Q2 2019 | CPS Technologies Corporation

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Operator

Good afternoon. My name is Leah, and I will be your conference operator today. At this time, I would like to welcome everyone to the CPS Technologies Second Quarter Conference Call. [Operator Instructions] Thank you.

Mr. is floor the Griffith, yours. Chuck

Charles Griffith

and Thank today everyone. joined afternoon, Grant you, Bennett, operator, by our I'm CEO. good President and

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

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

Grant Bennett

to and you Thank thanks joining you, each the call. of Chuck, for

Chuck as Chuck as our Financial and by again, me in a very to from last Chuck smooth participates you, welcome we now And participated He thorough transition call Griffith. Ralph quarterly our There's observer. been Norwood Let welcoming Griffith. Officer. begin Chuck. Chief an

to turn unusually quarter and quarter plan. our revenues results. our We good revenue million $XXX,XXX. had operating operating of an $X.X Both of exceeded income second with income the me the Let and

yield impacts was our one one was results: When we and with reported that were on our first - quarter on factors had product results, we hermetic highlighted negative two one packages. mix, issues

have have of in were up topics, our percent as improved. products our margins generating hermetic Products hermetic had on revenue, packaging products two are greater And the results. as the revenue. new have packaging, In And some in second margins higher positive these product yields those we total mix yields improved. same scaled and quarter, with impacts a

hermetic products The in increase packages. almost was and due equal revenue AlSiC in to increases

increased amount a Within defense a electronics the generated the new a products, of customer revenue. AlSiC meaningful product for

U.S. industries. and impact stationed a Los in quarterly our more electronics defense release calls, on press our in the positive the Angeles we a objective several that have salesmen of And very objective penetrating strategic mentioned As having last is in deeply

Although new QX - I'll in so and call defense not mean be increased it many what of as to the project by product objectives. there periodic are generating to the I and projects in will a is these that, amount but meet project-based, revenue continuous meaningful I refer individual of programs do, is buys production, not

revenue quarter, in generate instance, every So particular this program will quarters forward. going but meaningful revenue it this in not generate certain will particular

We are that seeking new to concentration, reduce that this objective. quarter making was from progress indicates and the the that revenue in we're on primarily our customer fact increase customers

Let second of financials. Chuck more me back thorough review quarter for turn the the a time to

Charles Griffith

Grant. you, Thank

factor affecting amounted businesses. second products largest mix than increase the a percentage, $X.X AlSiC favorable last - compared for due, revenues XX% this XX% to was mentioned, sales So for the XX% the in a million, hermetic as year. in quarter quarter representing the was increase was quarter Gross two year. versus margin to of last customers. totaled equal increases other quarter volume, this almost to sales packaging and The and of Brent And in

totaled year's costs general $XXX,XXX, bit Selling, and administrative little below last $XXX,XXX. a

lesser quarter, case categories. increases reduction commissions was in a in As the sales other first in some the expense offset

wonderful are which income QX of the operating to $XXX,XXX with higher in thing. Higher compared loss margins quarter for a The incurred of revenue combined company $XXX,XXX. experienced XXXX a

end a equals loss the due XXX% for before This that note we the the Finally, result, loss to for you record of not that $X-plus after tax credits. a net the fact did is million at of will and loss XXXX tax tax a tax credit in established we as quarter, the - valuation the reserve tax.

fact quarters are we the it's for expire. several the that tax next be realized profitability or will credit and likely continue that to they no that showing have clear credits tax a before until provision it's This return to

the with about borrowings $XXX,XXX cash line the cash We quarter $XXX,XXX which net to existed of reduction over net credit. due substantial $XX,XXX was of of $XXX,XXX of ended that sheet. in of balance the and minus a Turning primarily reflects cash This of This our cash accounts from against the result last the end our decrease of increased net revenue. cash receivable at in increase were the a to quarter. in

to million XX, at June at compared receivable XX, totaled accounts March XXXX, XXXX. million Our $X.X $X.X

XX the of sales days end totaled Our outstanding quarter. days at the

this doesn't reflect XX of ratio generated that quarter rather, aging of our an the billings from it's at increase days any towards end just X, we end terms, was While the in significant or the quarter. change the

most the of quarters million at turnover Inventories for the at $X.X June XX March X.Xx March recent XXXX. end with compared was quarters the totaled X Inventory $X.X X.Xx for compared XX, XX, XXXX. X ended with million

quarter, capital from that we fact Finally, our down for the depreciation had which expenditures equipment plant and than you'll note that spent net we quarter. the last reflects was property slightly less in

to million Turning credit. drawn see down XX, accruals were total at million and that $X.X of March the from XXXX. had side, on of $X.XX we Payables our million $X.X you'll liability $XXX,XXX in line

our of the X.Xx, was ratio end debt-to-equity quarter, our the and current X.Xx. ratio was at Finally,

the to comments. a additional this At turn point, for few call I'd to back Grant like

Grant Bennett

Thank you.

of kind margins. touched on We

about make a comment Let me just margins.

margins by we're the due custom vary significantly product by business, is to As margins This and product. many somewhat reasons, in always vary product. will

margins I we we're and cost move by involved on our attention and either we're picture margins and if forward. continuous strengthened they line, that to in have unacceptable, to focusing unacceptable significant a greater an cases, an cost but producing very wanted a ongoing difference. as where raise or comment reduction is the task, are basis margins have we rare with process, to order price we that in product-by-product manufacturing improve it's a margins product to a product our and This clearer of product just efforts accounting, some make as But ongoing, stop paying

like to at this open think point, I to call questions. the we'd

Operator

Your Dunn Instructions] Mutual the comes first [Operator line Lenny from Trust Company. of question from

open. Your line is

Lenny Dunn

And balance would follow-up have sheet. improved Dunn, to I that would that's you you the our believe profitability. We, you okay. decent, question, I my address obviously, that a but then cash to stay focused looked And I'd pleased see too, certainly love to see What one I'm doing to that. Anyhow, cash are return to very pretty be and questions. but first. of you we Lenny flows on The like flows? answer

Grant Bennett

the mean you address cash by do flow? What

Lenny Dunn

continue flows. to words, having nice other cash positive In

Grant Bennett

can cash hand I look communicate company - or the And greater seeking at the let consumed to I In focusing move management, have cash ability, greater growth believe, borrowings, on sufficient the ensuring Well, cash we that improved generated. we the that guess be that a mode, is obviously, the me I'm in margins, guess as growth - and the cash forward. we're either through seeking but have the margins. the capital. working cash we But - managing company we

Lenny Dunn

that an Am losses two don't one aberration. want actually more I quarters being have aberration. I is realistic? as see as see - we the have quarter this I to guess an that want I to I questions. And

Grant Bennett

Well, an the about was remain We this unusually very future. good the positive quarter. quarter was above it plan. I word used

in hand to the while programs, quarter-to-quarter We in defense continue alluded new is the significant results, sector, excited impact about to have And see order on very on volatility. booked, and not where the that another program fact we one the this upcoming distant. had particularly have one quarter new U.S. we're a meaningful an too I quarter impact the it program should a in

any that above doesn't future one if hiccups in customer And concentration, fairly on our a believe customers let we relatively part plan. we customer, press account small number And again, there release base we it a of quarter I'd seek customer our But in meaning me so this mentioned high say an impact also for diversify was looks the particular results. to such simply revenue. significant that have But the of our have bright. are

I guess in the from uncertainty exports. in power more we the fundamentals EV do the our fundamentals for mentioned revenues of just friction. automotive, due customers I that I majority do sense - though, a in business, want the comment, And example, strong. are existing the press business, come release to But module trade in our the as than very to

to to and we candid, vigilant deal real the simply there appears be that feel be Japanese with to need to we but preference a with And to a the a And need it's from recognizing U.S. acknowledge to in that, like we tilt to suppliers. Chinese there. be deal preference

Lenny Dunn

you been but understand, good the over years. have relationships Well, that I have

them. sustain to You should be able

Grant Bennett

No doubt no about Yes, Absolutely. about it. it. doubt

Lenny Dunn

But... It's like cold with not in a walking call. you're

Grant Bennett

Oh, no.

some I'm "Well, in imposed all, are I we that's supply." want the that think in to at we're alone without dimension reason, have - to want for but some of the sure add not ensure we And European being relationship of customers other case sources positive, is they're I are seeing. just specific tariffs saying, not a that

Lenny Dunn

else No, but And dependable, you're - it. you're to would which, course, that very hard abilities replicate. of for to be adds unique someone you have

seems salable. like pretty it's it So

Grant Bennett

Yes, that's absolutely absolutely. right. Yes,

Lenny Dunn

expected And on mentioned last is secret question, don't which the we still that had Sidoti - I the to My a you Is want time remain ask quarterly, to basis table? regular a that think in next to on was company. it that I continue public you September.

Grant Bennett

is have anxious fully up he which any for yet certainly signed to becomes Chuck up speed, doing. We that not I'm conferences.

that. last attended conferences. not So to any want to at conference Again, but we one looking announce, let year, just we say have me we - don't to have we're we're and attend - investor investor continue we

Lenny Dunn

let's you we're long-term - the years we're shares, And of attention. to would lot people want a And already $X.XX - said do for you're you but But have going is for people that one shares other We a a have you. last have stock involved. my anxious about but to now, September. and don't need in couple say time lift, Sidoti shareholders to doesn't concern to you the that our knowing to sell other of around, attract

just to go You go out like customers. there orders have from have to to out you get

act of microcap kind I asking get this exposure. you and to expose stock. buy don't not to to some actually You yourself to we before the get institutions and wait done out in of have think year another something I'm line And

Grant Bennett

you. Thank

hear Let me just we say you.

Lenny Dunn

have I Because you a mean can good people. show you it's quarter time,

story improving. to You have balance good very is sheet tell. a The

You have of scale front out people. the blue chips it so there go in

Operator

question next the line Jefferies. from Hyde comes Your of Instructions] from [Operator Mike

Your line is open.

Mike Hyde

of such the AlSiC on better both in products such that, Can we're give you huge packaging, idea electronics, defense a broad kinds too, about? side a related? area. if that's talking On that's is - defense and What a us hermetic

Grant Bennett

aircraft. The Sure. an a AlSiC reflect military specific the quarter. base to primarily alluded on Revenue the a if that in revenue, plate is that large in plays ships. is - of alluded shipping used products, be I when have important we'll have it what - last to we I on shipped relates that package we in that case, just a the order a the was in a quarter, booked that's a I program to cockpit application the program in that role hermetic generating future That radar very

let's spacer substrate used that refer are, or applications is it, Other essentially call a satellites. can that interposer an communication to in double-sided or I

applications. are that be used complex into that components would go application some laser Another - components in some some AlSiC

those So the all kinds these very of are - are custom.

the the project-based. so we've Again, used booking, term business I been far,

we order For or area, back X- a ship of actual, come for to examples the order similar the applications satellite a those those number will end X-month not and hiatus, parts of have typical, shipping. x example, those But - an of there'll then are in that and satellite. get been parts, are the you'll are but then next be for the typical number actual

Mike Hyde

I the assume electronics stuff ships good. all, again? like decks Those are pop also, stuff navy, you structural of gone that's course, Well, that have to any quarter that. too And from up time could applications. and on of do And time to

Grant Bennett

formal yet to can think, that although into sea, to a I completely And we I our And relating congressional it. is further program individually specifically at the this in funding. been we've of understanding trial actually. a any referred successful. referring, dipped that, in has before, been dependent wish case, to which you're And we've could upon armor, Yes, example. we've timing that's toe But accelerate we simply - progress another involved

Mike Hyde

even in not kinks pretty to And and there logistics the though the happening? bottlenecks relationship normal you're with lastly, is you that Infineon European that as as and back and can what experienced supply we are customers, far expecting Europe concerned, tensions are assume you're much trade

Grant Bennett

Yes.

past has a in specifically And component fiscal many operate We're our Europe just large supply needed referred was year have their by companies a fact, most of - constrained been of in that fully shortage in on in customers a to resolved. different and our largest seem revenue customers We of October. that. the one to assembly, Europe shortage is do beginning in had for that

And just we're negotiations. on them. comment And for so their And year, early They end concluded now before which those make we're fiscal just begin October be quarter, obviously. we're contracts new will of beginning any would negotiations the for to this just X. too starting

Operator

continue. Instructions] are this further at please Presenters, no [Operator There questions time.

Grant Bennett

if are time. as appreciate and that you what see we We you the of we Again, between we'll say these in usual, Boston for products by you you make. located stop Providence, love to invite much. and and very actually goodnight. and your to we'd you visit. your We're any time, are have Thank area Boston We, thank

Operator

This joining. today's conference all Thank for concludes you call.

great Have day, disconnect. now may a You everyone.

CPS Technologies (CPSH) 3 Aug 192019 Q2 Earnings call transcript