CPSH - Earnings call transcript Q3 2021 | CPS Technologies Corporation

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

Operator

Good day and thank you for standing by. Welcome to the CPS Technologies Corporation Third Quarter Investor Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chuck Griffith. sir. ahead, go Please

Chuck Griffith

He Good Unfortunately, and and Michael able granddaughter. this not operator. daughter his joining brand and CEO, you our be new afternoon. us join call. McCormack, to currently afternoon you, with thank wife, everyone for will is Thank our President

I for So, be the Michael to congratulate me has you, McCormack I with take Dan giving call Senior am on family his any to Dan Director like moment to questions. oriented for and able provided will I their those would comments Barton. of a regarding the those are answering be items, later joined there new you. to also addition. by in is help Dan will Operations. our And questions out operationally if

the historical the to portion operating like earnings the the meaning statements that the in September should to statements loss of income a that COVID-XX, quarter call, million is uncertainties demands hat statements. conditions, given quarter in I were I same to begin many to revenues results will competitive of These Michael and and beginning unexpected XXXX subject out for we of all from that cause XX% we announced be call are now, the in This Litigation Private strictly of conference costs differ and in in And year operating revenues $X.X considered you The Securities the business are not compared and am third will XX, We could financial contribution of $X.X Such as actual economic restructuring year factors. would factors to ending quarter of fiscal market not forward-looking $XXX,XXX in compares put you I Reform to my point impact some on the materially CPS' Act positive and uncertainties immediately these demonstrate begin XXXX. include extremely to forward-looking give to the that environment. the Before those of early Today, exist of $XX,XXX over results The within operations quarter any this costs. a ending for non-recurring XXXX. included his one-time an with long-term million XXXX. quarter of the growth significant and September as positive. XX, $XXX,XXX believe comments. restructuring revenue in going ago

our substantially year is growing data. fiscal directly larger book-to-bill to X.X plan. our our Reaffirming in XXXX. revenue increasing to begin exceed continues in addition fiscal year-to-date growth sustainable of sales will increased sales to sample In X, into and This of to it translate a with

to detail about non-recurring viability armor more dollars increase was XXXX. been increase later the are this, gross years compares and QX XX%. supply are to This ago, restructuring throughout The XXXX in plans financial in and with XXXX $X.X costs primarily Obviously, of in compared margin didn't and of give million costs the the of the the an due in with $XXX,XXX Chuck XXXX, in generated company's to due QX I'm million order, other until to This but million to Revenues Chuck, going the compared the QX general results. QX you $X.X now SG&A its start XXXX which first correlates a directly increase hat, has totaled in streamline customers The and markets. of $X.X since production control have We in increases was sales. ensuring increased goods issues under in of chain. XXXX expenses one-time multiple raw I'll $X.X our on operations remain and the million chain control. margin we of totaled our incurred $XXX,XXX. confident also outbreak aerospace we administrative plan QX QX place expenses pandemic This severance challenged defense entire continuing availability to in to with in vigilant can speak Selling, of of more other nearly or two company QX executed sales. revenue. primarily as totaled million QX in to in well XX% sales as XX% $X.X increase Gross the margin XXXX plan. we

with an QX not is compared This the up utilize commission in against to be increase previously revenue. operating $XX,XXX cost, determined profitability operating its asset. and set management XXXX, used. higher XXXX, future it XXXX from QX QX discussed. and In company to a reevaluated than tax the losses, company valuation loss expense determined in was deferred has that the that addition The following period expense SG&A experienced of to time, would to the of due XXXX. $XXX,XXX December that than asset Management more XXXX the be will tax in operating not light tax restructuring recent more profit decrease to asset. increased income a sustained of in reserve QX in expected of able decision this due primarily fully In an this is company that this profitability not At likely was has the likely

been $X.X such XX, benefit September statement recorded As million has of a income the as on of XXXX. tax

As year. compared the a net the of result income, in income XXXX, recorded $XXX,XXX of to last of million quarter net in above, same $X.X QX CPS

net Turning to of cash third our $XXX,XXX our we $X.X May, the filing we funds to the raised have balance began as and the quarter, we In end completed to the daily ended quarter approximately with cash the of enabled XXXX. that of million is aftermarket of under under the fluctuates. offering. of line Through funds million completely raising ATM under These borrowing program. end cease our credit This us sheet, $X.X at our cash. improvement balance position an

accounts develop our in we as absorb we've line. grow been armor able receivable in addition, and our In the inventory increases sales to as

under and which selective $X.X XXXX. days additional million market offering our as we at managed will receivable raise at sell been XX, $X.X this Our such the needs, compared with XX, totaled become covered at December shares. September million XXXX regarding prices cash we've has that short-term Accounts more we

those of to days orders reflected to inventory purchase orders. due outstanding end at end sales Improved XXXX totaled at small XX, XX The totaled was quarter, in DSO. order in materials in management become recent compared to to days increase X.X customers to an in require million the $X.X billings increased times other at the in are the most $X.X hence product whose offset December with has times CPS million receivable, better XXXX. advanced These area the due the quarters Our Inventories inventory not raw turnover the but inventory four XX, inventory September increase of XXXX. of fulfill ended accounts is currently are XX, XX special compared in quarters by materials now This revenue, December for of for is increase billings focus management at the compared in us. with lines. DSO our X.X days The in armor XXXX. to

to up payables at side, XXXX, talked a I going liability due to sales from XX, restructuring $X.X levels, XX, $X.X accrued XXXX. as at Turning higher my charges expenditures, about December take accruals is and to million million September due we put to as the then water This back totaled of earlier. And now am Michael on. which well sip hat the greater and

a sizable to This has and quarter, just happened? make medium continued sustained So, past progress to business. we and grow near-term our goals sized what current operations on long-term

launch. of at in are bottom in to focused beyond. year here end content. what and all completed final line to performance We and both the phase increases the and add We fiscal our We're rebranding XXXX have our anticipate this will improve be by will times and and on execute of and our substantially to are and improved begin our product equal completely representation top strategy show capacity These will CPS. increasing exciting sales transformational ability lines year digital

that representative performance solutions. a of we a We as using new logo material a going selected have high where company, is technology provider solutions are

Technologies unveiled CPS customers, about as employees. In be well new to perspective addition, investors makes to as website we have a accessible more that

directly our current on future, take to opportunity like I'd near-term progress progress encouraging. an is emerging current speak the of The programs the to to and extremely For Armor lines. HybridTech our

As of currently HybridTech year you in aircraft with are of of aware, order into orders U.S. partner additional we carriers have deliveries with just are one worth equivalent completed worth currently executing We We XXXX. production Navy on the the cycle fiscal carrier's Armor. Protection. armor Kinetic four the our

platform this of additional for Navy be In the addition, may occur are future, we're ships end our expansion by and applications on long-term this that command potential and also We're progress on and signaling and will partner will discussions carrier coming other U.S. the which HybridTech aircraft Armor. cautiously making control optimistic in to orders, beyond the the year. advance. of the In other

performs XXXX. well mentioned ballistic that phenomenal line continuing international We've significantly does specific with into protected viable and for XXXX. also against in test with applications forward using Aircraft a the the intellectual significant also delineate that Army. we were foreseeable is threats a property significant to our program in product partner patents. until Armor with Asia. that our in have The lightweight for under and ultimate recipe the well U.S. or particular, conditions. have now vehicle for As sometime program different energy HybridTech Armor will Southeast armor is demonstration, the threat working FLRAA HybridTech the early scheduled verification the extremely win consumer earlier, product testing is as for the to This harsh armor notified In been proposed move believe will for been strike very armor beyond. Technologies' their with will high our requirement kinetic threats. face a be the for we future and solution Assault We another Long-Range an successful we by We're and design production partner ballistic recently years selected CPS confirmation Future environmental the solution customer and After late

So care today. prepared for of our remarks takes that

expect year-to-year, chain We're always We continually vigilant quarter-to-quarter. incrementally just but forward, our can we that and the improve also performance occur. disruptions not move as and COVID-XX on to supply

upon to of year fiscal internal the be the annual XXXX for see year looks I year. that performance up call to the operate, firmly growing And solid last a fiscal can years. this we're XXXX on and year better growth open feel questions. we several path Our to than compound with next appears footing

Operator

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

open. now is line Your

Chuck Griffith

Lenny. Hi,

Lenny Dunn

hi, Yes. Yes, Chuck.

be would way scrupulously presented what the it to the lot presented wanted were. legitimate this, would in your that's companies honest Just because because have you compromise earnings I'm awful in earnings $X.XX you, being of and

So back you negative down and it of brought first then kind broke it later. in

for on to So I for it's to figure but if just is compliment wanted out me that, it not everybody. sure you easy pretty

Chuck Griffith

I you're our That's Yes, – thought I right to why we be that. tried explanation. very thorough with think about

Lenny Dunn

looks Okay. good. And everything

we're or compliment contract news there, looking to whatever but good. it to naval put And just only can looks all happens so next everything out soon. it the good hopefully obviously wanted So you happens, and very forward that's you I when

Chuck Griffith

Thank far your you. of God's from lips the next And you. ears. Thank orders soonest the as to

Lenny Dunn

Okay. Fine with me.

Chuck Griffith

Lenny. you, Thank

Operator

the of line next [ph]. Patrick comes from Your White question

is open. line now Your

Chuck Griffith

Patrick? Patrick. Hi,

Operator

open. your White, Patrick Mr. is now line

You can question. your state

Unidentified Analyst

base armor a as wanted hybrid such and out Congratulations it's topic apologize. is potential because certainly really the solid has well on on space on One a maybe to a huge growing focus quarter. couple I touching the XXXX. I as areas. to EV

mentioned whether you in And you've changed I with two which – more little, programs were seems was, all and last think, less? last there the indicated today. on three the going quarter the Navy. you of one, things call hybrid the vehicles. if Southeast existing there's Asia armor comparable still program first I'm four four four or programs – think wondering and changed Can for out that I a has size the And to I maybe they if rather So one sizeable to be tech, programs time ship there, dealing you're

Chuck Griffith

necessarily think No, there. three One we of other the I – small of be today, certainly the – far. – – it it's programs – could talked of results that would we right the relatively And potentially made comparable out we that good – grow could the Navy. then are all, we stated about to now test believe of they obviously. very expect that There Southeast that a tested of size this from Asia two we so would – shipment armor that will for but the is one that And program. the I to be additional have first are I have don't that were

Dan, I think that a testing on all No. Do want been good. of comment, you has bit? maybe to our little

Dan Barton

No, everything is well. going

Chuck Griffith

Yes.

Okay, we're pretty I AAR, three was, good it – to And got FLAAR – that that excited that's We ago, very the want program that news good. just about something FLRAA weeks some program, – whatever say. then that's two, sorry, about.

pretty So, that, we're about excited yes. really

Unidentified Analyst

the acronym the that and Is for aircraft is that… assault

Chuck Griffith

yes. Correct,

Unidentified Analyst

and I And is win that Right. prime – getting wins. contractor they assume sales upon indicative wins. necessarily in that In of your not prime design words, name it's contingent other particular a only till till

Chuck Griffith

we but, have very Yes, an right, don't order yes, exactly right, exactly that's yes, but – yet. we're optimistic,

optimistic. just – just say Let's we'll but we're very that,

Unidentified Analyst

lot attention EV to it's in with applications, some AlSiC my space, over OEMs the and gotten designing higher least awful of might some at your that an Flipping in products. great. cost great, Sure, justify associated certainly is understanding the

growth with of $XX out XX including million and in And end large Ford, $XX additional decade. vehicles million million about this GM XX million, coming talking players so, – the – some the on maybe we're suggests rate or that OEMs, towards all

anyone penetrate was to market market? do company size be and what a and what not the market to being has vehicles do to if that quantify I that larger if AlSiC attempted maybe so, how extent might wondering out? you playing the see in And you see even that it's passenger range of the able And vehicle

Chuck Griffith

Sure.

base base the know Audi hybrid I'm of Audi models for luxury produced vehicles. that that got electric even already we've I plates. plates one our and before certainly end think I high here, So sure I was the using –

the I think market, of side it's passenger – opportunity. luxury lot of there's on certainly the a

AlSiC using interest know, more that in the the other I chips, Audi say at hybrid there that more of or where vehicles, is the thing. high it base the are And there run silicon AlSiC going market an Volt, of that think big high with chips positive the greater. is or a used of the which way, that is or much area conducive – doing by it single falls in with it properties and can are silicon chips. only out voltages silicon I know carbide up in going do Chevy more AlSiC line – passenger has electric very in chips. for the plates a the high, hotter, is with carbide you battery with because on kind are your get life that which But or to on And needing I whatever? to so vehicle but charge plate a be couldn't – – carbide an the is those you point of efficient, makes time, more Lincoln terms be base in how this likelihood silicon in that of

when makes comes vehicles. they to would electric that those to So work try with it it sense

we've as had could six specific far but customers now kind too to or on. or away that any or years our customer in some projections for six largest from eight seven is – market, comments As me of from years of make or that some eight be and size they seven thing, far we that

So…

Unidentified Analyst

No, I understand.

Chuck Griffith

Does answer that that. at it leave I'll your question?

Unidentified Analyst

does. It does. It

market suppliers OEMs… you're through So the going opportunity two I to not necessarily you in enough the your directly four the years to I'm OEMs. that taking don't Tier pitch necessarily only and the to of say I'm gathering working see justify assume X a next, to

Chuck Griffith

correct. That's

Unidentified Analyst

I value guess, known. make …to the more widely proposition,

Chuck Griffith

with lot as And but at work said, of – Yes. we folks, originally those work it's real correct. doing a faster point, this I it sales and we than who grows knows. or whether thought real not real and they money, it's That's than are but

Unidentified Analyst

higher gets voltage indication silicon becomes any there to Is AlSiC it I such know but the it voltages, higher that enables that necessity. almost carbide,

Chuck Griffith

to module XXX, don't point, technical with and some know you XXX answer a question, – I power the certainly said to does I at you're that don't again, And copper a take don't I silicon that. bank, I a with volt some because but that at maybe base that – to engineer X,XXX really volt say you – AlSiC would – it want the silicon answer base I XXX, mean, and that as side but whereas to plate. the fine if plate, would. an I'm there's this that I going shifts an with chip I today don't level to then a before, want of be think chips, not know think might

Unidentified Analyst

understand start Sure. volt might XXX you to get least I the base consideration things AlSiC that all plate. where may of for at Yes, be justify interesting

for Chuck, talk Well, look couple in thanks luck next today future. and in pitch to hitting Okay. good – a pinch the to the Thanks. quarters, you and

Chuck Griffith

Thanks Patrick.

Unidentified Analyst

care. Take

Operator

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

Chuck Griffith

I'd – listening right. that your they everybody say like so voice. Well just and us. thank hello to that calling Dan then All case, in if know in for And to

Dan Barton

was very Chuck. everything No, well,

You did job. a great

Chuck Griffith

Thank have to news again joining even we you. and to that. to for with hope thanks much. the I better Thank And next you paid in everybody him the look Anyway, very you quarter. forward future speaking say call.

Operator

for This concludes participating. today's conference everyone call. Thank you

You may now disconnect.

CPS Technologies (CPSH) 28 Oct 212021 Q3 Earnings call transcript