CPSH - Earnings call transcript Q3 2020 | CPS Technologies Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to CPS Technologies Corp.

Third Quarter Investor Conference. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. now today, hand Chuck would to conference I speaker your Griffith. Instructions] like the to over [Operator Thank you. Please go ahead, sir.

Chuck Griffith

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

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

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

Grant Bennett

Thank you, Chuck, and welcome.

with for Today, of ago. of occasionally. $XXX,XXX loss an compares ended of operating XX, me understand $X.X Again, for September it able has issuing it and I but table operating we access – the profit is million quarter an $XXX,XXX just in stymies the Evidently, joining Before we you professionals even should it revenues the so appreciate $X.X one you mention, formatting press This service us. currently. a let XXXX. there delay of been our release we to revenues begin, and release, announced press million and the by quarter year be ended was released,

a with of XX, million. ago. of $XXX,XXX and September operating $XX This the loss period nine million compares months For XXXX profit revenues ended revenues nine-month ending $X.X same were for an year of million with operating the an $XX.X

the operating nine was revenues quarter slightly, and months significantly. income up both very the ended, were just up For

ended, periods in and each We third and two top XX% our the ship In the of the affected the historically line revenues. lines year While for negatively third accounted was pandemic. just customers with nine approximately we're generally coronavirus the customers our XX% both increasingly to quarter three quarter, to quarter bottom pleased the have for by largest our of two us reducing the the between revenue of in month one our in first than XXX% reduction that and notified the this these in began three significantly. reduction large the year. of customers for quarters account In were immediate. case, in purchases reductions more customers they from quarter. was these the third difference case, demand These other And the last XX

you know, turn is we electrical and cars, rail and very power U.S. delaying operators of who air these As in replacement modules COVID, wind customers, sharply to well produce power due including sell as expansion public for and use in grid; the particular in and trains, large for use of both as modules the down subway are transportation sets. transportation, to train turbines, in and baseplates Europe

us. that as railway effect returned long-term month from A last modest study recent travel York our saw demand that postponing It's is forecast, lining in customers' UBS the near-term delays one XX% challenge, the year turn subway of and just one I air silver effect, of some example, the New the programs, to compared ridership in For down yesterday the in pandemic maybe investment a affected has spite be these bank a to and COVID normal. which City ago. of there of things acute to to the a affected modest near-term somewhat of Europe, In may shift issue.

importantly, due rail for demand baseplates in modules travel to and increased turbines, the grid. of the continue levels previous to confident, grow to underlying due and use growth electrical will are We in to and these return the wind

reduced the several next expect to do quarters. through baseplate we continue However, demand

improved these two our bottom to in despite slightly, a in results, significantly, our give customers the some After short-term down us the improving manufacturing make XX describe stopped In demand positive Chuck While improved customers revenues among other despite operations. the like our pricing is progress products. financial importantly, the to we from and excellent optimistic producing many the and pandemic. outlook, some third very on unprofitable I'd that customers quarter, XX pandemic. summarizes from continue these other We've to of developments were operating up We've we've efficiencies approximately our products, line.

ended, For period period million. a a profit year swing is ago same in compared $X.X operating improvement the just nine-month the to the of

Chuck review Let to detail. to financial the me time more in results the over turn

Chuck Griffith

Grant. Thanks,

Selling, So primarily of last XX% revenues percentage The quarter of to of $XXX,XXX. factor did represented third was compared quarter to total for $X.X affecting year's to sales $X.X costs the increases. quarter a year. three discussed past. as in new largest this to increase X% administrative and in This was due X% $XXX,XXX is due which over the year. totaled quarter three commissions. last our This general the million Gross to with the contracts margin sales we've largest lower customers increase the sales compared for amounted million, last in price

The of compared for that's was customers, what which and While QX was in that in down $XXX,XXX, an XXXX of up, quarter generated the to the overall SG&A. an operating with decrease it of loss operating higher company $XXX,XXX. revenue commission caused slightly profit

the $X.X sheet, when $X.X XX, credit. the of million, our is was cash cash an end we position Accounts from and $XXX,XXX to improvement cash as with net of receivable QX, $XXX,XXX. XXXX. Turning million cash the minus minus borrowings of of our September September of compared against the ended to of This balance about quarter of $XXX,XXX line XX, $XXX,XXX totaled

also We XXXX. The XX, the four million at the as most elimination the quarter is sales at times Our customer has increased four see quarters recent times inventory in XXXX at particular by September days as to major level The the in directly decrease the September of over X.X don't $X.X our The increase payment purchases several was in XXXX. a X.X decrease outstanding inventory and that ended largest days to earlier. the Grant we've discussed it turns $X.X customers XXXX. XX, to end million which issue. for the XX, related quarters to in to work the compared the XX down quarter and totaled September of Inventories sales XX expect months this to past end the to extended terms. at turnover next compared days do compared in is due the discount, third totaled a pay prompt discussed of

to Turning the side. liability

accruals Payables credit. XXXX, You'll drawn on see September up the $X.X million, from XX, totaled line at million our XXXX. $X.X $XXX,XXX September slightly of and XX,

year's to discussion, also of And this payable, the is back not You'll new last will I financing call in liabilities. the quarters due the This Grant. note over a of for equipment third of in both the year. turn further inclusion see first and to

Grant Bennett

you, Thank Chuck.

pipeline we and the the We've underlie penetrating Let positive deeply developments me comment commented sectors. future outlook aerospace some have electronics, the our the optimistic on quarters for and pandemic. and that that projects U.S. defense in several on despite space for focused of more our

terms new We of design wins. continue to make areas these excellent in progress in

of on GPS all Mars supplied made instrument you this launched. We Mars the a made international As that we the us We've for Rover customers components by the by an our Laboratory. generation that heat current and the key We August Propulsion Jet product incorporating that AlSiC recently announced one on are was space learned component CPS AlSiC for produced the station Perseverance hermetic on AlSiC power scientific supply satellites. to an supplied for the package know, Rover. in SHERLOC also directly spreader since

January, in XXXX, the instruments benefits, at mentioned So applications a from the gas worldwide. in and of We in we launch measure main space larger program surface contractor hopefully, and on each weight of individually Mars. components that reduced the will least have scientific be will shipped and scientific Rover of on Ball Zealand The for of will emissions fact remarkable satellite to on highlight methane scheduled Aerospace. case, oil recently much the reliability CPS U.S.-New Perseverance the scientific aerospace them instruments this the the which AlSiC I each in applications. increased key for is in These demonstrate that joint primarily AlSiC fields parts content components, be methane two prime which several sat, increasing. program the sometime is

who is growth OEMs As are and teams the rate carbide also modules. the A in is aware engineering any at those more of power area, follow design silicon the in you given power the of AlSiC projected use with become semiconductor of and second our program of increasing, wins the power design major of increasing. world AlSiC, familiar semiconductors

over focusing baseplates and power are these order for likely We produced shipping in and modules the several one these armor into or and thoroughly record largely we're volume likely. of expect not examples an we well from are last Defense. development several U.S. that provided which carbide time growth. in COVID-XX we pitcher, not that we're the customers. indications most programs were half technical order the going on of profits. ballistically Europe. revenues have forecasts some yet, future The product are in segment, prototype seeing we customer terms A received we did baseplates customers, of We years tested armor, five last believe positive finished RFQs, and the But our the activities. mentioned but that based and suggest of by a this phases U.S. would area, sales for mention by pipeline sampling of it's and on We we a based received positive tested We Where These to very exciting has Department field evaluated, at been into both indications don't development year. in we that and second for and armor believe our still an receive we have XXXX market future more module CPS, silicon the year with the recently have silicon the customer were programs, we both next products positioned that been very as soon of production third in as production indicated in quarters. market carbide we

clear pandemic XXXX, is may must customers and at we begin the forward-looking As change conditions can, so suppliers, that uncertainty consider and considerable with comments any the injecting caveat quickly.

must quarter this tone third our year pipeline quarter product XXXX, the the growth. of and will generate quarters for very second optimism the will and the of year, optimistic and about realistically, at down future the of importantly, we and we perhaps first that be optimistic next fourth least While end that pandemic effects eventually continue our future more exciting to optimistic of the

Let me for the open stop questions. there floor and

Operator

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

Your now open. line is

Lenny Dunn

Good congratulations. afternoon and

Grant Bennett

Hi, Lenny.

Lenny Dunn

just Yes, you Hi. well. navigated through was difficult a it situation very very

we're been if is, have So to not that I'm world pessimistic also this the we pleased. on, pandemic certainly didn't looking as as And as what going different. you as but opposed understand would is this I'm that. it it at have in

calendar next second of see the that in normalized we by quarter business think more the a type we're could situation. year, in I

that its good business a own, a it's on get certainly have anything other enough for things you enough your space think excuse certainly but I up thing else are pick products it's good nice is a you not for. that and portfolio products be the almost what is, is space, something think you for use huge rail could if necessary. certainly lots I me, And it because with can things, going of So of to is

in see So in I positive. live a is armor very I something we high business, that strong to it's going be being the think world do demand. the And

said, could future good. calendar very to you but you I'd in think pretty as year, on quickly into I profits second of it. anything want be I as circumstances, quarter could And can these appreciate long as operate the So get comment just if next grow the profitably adverse you

Grant Bennett

a you very from we give current away thank Lenny, giving and shy guidance. we bit guidance, certainly even more. the much. But of me environment said shy away having Sure. that We – little under let

our us Our two one-year I typically And demand of large declined. customers rolling, customers largest provide mentioned a forecast. rolling has forward three with

other manufacturing that two quarter, recently uncertainty. end much up down they're operations and year. going next notified whole shutting demand at one in a out And the of case, we'd were give to to But forecast at quarters be rolling because least incidentally so the the as their look for the is weeks for in third fourth only we us simply they forecasting a The are continue there year. two is the three

the we some so try were a we But some hope things out we of is driving what's absolutely – drive up short-term the we that are two proceeding. the I if real uncertainty pandemic. to going revenues customers of there these we in we our next pandemic. is some pandemic. are believe second clearly these pull of reasonable two in year do customers And the And year. obviously but stated best especially up, to that could is that customer year in that also And for due think of underlying the hope the in diversify individual spite to on, have base next equation, spite down, also we the demand. improve understand And the could – really and half large customers and I

Lenny Dunn

Okay. And not would profoundly they're selling it's near-term affected think because travel your bars would or just – just restaurants seem you're customers, like… I to not be in industry, that to or be it even stating you, why the as to

Grant Bennett

a in second. jump for me Let

delay So they put who customer new during shipments delayed their not – customer pretty that way railroad basically one their or company, purchases is is in their on which sure cause equipment those pandemic. that orders particular a is because And us temporarily orders, we're from ridership customer buying down the us. notified our

good our that's right is why example probably so industry. this happening in And I even really now, think one of

Lenny Dunn

it think will I people a in have the they confidence industry. industry the have quite bit railroad before in But aero Okay.

would So like… seem it

Grant Bennett

I called agree. I why. to this Yes, just customer agree. is But happens our that's and be, us said,

Chuck Griffith

question, have has to wants anxious back we everyone have anyone to else We're – come and could with the let one. a who someone to maybe you floor good. if you another Very encourage question. ask enter Lenny,

Lenny Dunn

you. No. Please go calls whatever and ahead take available are to

Chuck Griffith

Thank you. good. Very

Grant Bennett

you. Thank

Operator

Sam comes question line Rebotsky from of Next the [ph].

Your now open. line is

Unidentified Analyst

when a It's in American investment Hi. invested an I renewal first into of invested they of back and way revisiting Yes. development. equipment. research digital ARD

you all could for what CPSH for their investments. hopefully So did do other they

Chuck Griffith

Well, remain thank are They shareholder. our they larger you. –

Unidentified Analyst

good. That's Okay.

that the to I we a don't what Now on a be shipped? did me, is are? you, there the tell follow what backlog shipments of the And expect know, backlog you numbers mention that are

Chuck Griffith

Okay.

enter me world's with The exactly. have define Let dates. is course a into product, customers a that explain. clearly me backlog range comment with or shipments with while what we We two and for then so firm price to just and releases basis. upon or orders weekly increasingly the I the of on defined volume ship a a of is customer agreed backlog a contract year that. changed difficult with Bear with individual purchase do on years and typically monthly of commitments But an

weeks volume me months confusing only customers importantly, have in that the primarily it large railway, that only these into forecast wind really that turbines And actually or But forward-looking where becomes two the we communicate. just the been go say or these known backlog the the put but to reduced. that there into what into estimated is released? backlog Or so as That's do is put traction – grids, in modules two let it's significantly do we one year? have been for that also in case the industry,

of year-to-date we're is And year, I our financial about described revenue go as XX% of two having the year of these indications that all in Typically, our we plan the a customers think just we describe, under contracts. negotiations results. with said of these in demand kind for we either from strong now we exception have yearlong But customers. the in You large are reasonably our have backlog. of is or that, next that the into be short, involved should that some for contract rest with

Unidentified Analyst

addition? one you he And Vice shift Okay. say, Da Did your recently of work Charles Or And do Rosa, replace operations. shifts? further somebody? on question, he hired President is backlog say would is increasing? you an Would you or two you

Grant Bennett

day, five shifts operating days a a We’re three week.

so the shifts. to the we effectively is indicate is shift so third smaller The shift have that first capacity turn in available, nature it's the of most that than second which than but operations operate manufacturing smaller the shift, considerable much cost three

date a You something it. bad is an XX with must he's Da indeed think on I been And have Charlie here Rosa employee. years.

Unidentified Analyst

I'm a sorry. made I mistake.

You your added addition engineering key team. to

Grant Bennett

Right.

Unidentified Analyst

sorry. Bill Holmes. I'm

Grant Bennett

one year-end is Bill joined to product Bill this brought years assist that he's in board our But delighted. to him. area, have was referring but board hermetic you’re Holmes and that us is Yes, and a we're growing, to recently line our also packaging on on Holmes. Bill happy we'll in Yes, more results. of component talk many primarily area about We're but and brings growing, area, experience.

Chuck Griffith

not he a replace does new And it's somebody. – He's position.

Unidentified Analyst

Yes. Wonderful. Wonderful.

good this your as Looking goes to improving and forward away results. luck. COVID Good getting

Chuck Griffith

Thanks very much.

Grant Bennett

you. Thank

Operator

question from Carter of [ph]. Next the comes line Steven

open. open. your is now now line is Steven [ph], Carter line Your

Grant Bennett

Hello? Hello?

Unidentified Analyst

Hello. a Hi. had I question. Yes, just quick

about armor You like, about about have hear of the any kind like what all you mentioned about earlier something Defense. might all with like might and when you contract? bring loss, Do the that of timing idea revenue contract Department that

Chuck Griffith

We the say let And why of me the say the hope year. a and impact by is simply don’t have materiality contract end X%? on, we to count

Grant Bennett

If it's it's X%, material.

Chuck Griffith

our a Let have just positive revenues impact believe. me we would on materially say it

Unidentified Analyst

think Okay. did And it you I all overall.

to down. good keep I you all managed you revenue all job. job. think line even I all is And profitable, I doing the think fantastic done a a bottom you mean, still the all though

going. up contract get and keep the good keep work I'll So that and hopefully

Grant Bennett

Thanks.

Unidentified Analyst

have. I all That's

Chuck Griffith

you. Thank

Unidentified Analyst

thank you. right, All

Operator

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

Grant Bennett

very you Thank much. Okay.

or other elements. two me Let one comment just on

element be. our go of of health employees. a pleased of most pandemic all us all And together, health is really important our family CPS through healthy this we the members, that the we're is to the for place As

We pandemic. throughout have the been operating

following guidance. we've rearranged and an beginning we'll of We each are feel And to workstations, sure. we point healthy reduce But our et when view. we'd OSHA shift, we've in and you as with operational pandemic traveling does that stay you the to employee's is free and employee shifts to feel sign a we're normal, pass, or We rigorously in like sustainable meantime, CDC please to And we which of take you Chuck staggered before, And are I'm contact of from None new mentioned at come the thank do. temperature we myself you we'll like overlap, see wish you so well, in have. and any the what invite might simply with that off. cetera. questions

Chuck Griffith

everyone, Thanks

Operator

today's Ladies you this for and conference concludes participating. gentlemen, call. Thank

now may You disconnect.

CPS Technologies (CPSH) 28 Oct 202020 Q3 Earnings call transcript