CPSH - Earnings call 3 2023 | CPS Technologies Corporation

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

Operator

Good day, everyone, and welcome to the CPS Technologies Third Quarter 2023 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Chuck Griffith, Chief Financial Officer of CPS Technologies.

Charles Griffith

Thank you, operator, and good morning, everyone. Today, I'm joined by Brian Mackey, our President and CEO, and we look forward to discussing our quarterly results with you.

But first, Chris [ Witty ], our Investor Relations adviser, will provide a brief Safe Harbor statement. Chris?

Unknown Executive

morning, good and Chuck, everyone. Thanks,

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

Additional SEC. the filings information in be can our with found

the third detail. on I Afterwards, Chuck the his Now, turn will review perspective results over to offer quarter results. to financial Brian in the call will Brian? greater

Brian Mackey

Thanks, ]. [ Chris

Today, of operating $X.X September we're XXXX. for $XXX,XXX million quarter period XX, the revenue third of approximately an profit and to announce pleased ending

the with discussed was negatively timing, the on call, being XXXX. certain months X quarter deliveries our pushed shipment by As of impacted previous into last earnings

terms Our further in this track of XXXX The moment. review revenue for underlying original unchanged. well Chuck best as a on will ever expectations as for company XXXX its remains a are year year to results. in be as

X During noteworthy for quarter, the wins third we the announced company.

its represents primarily rail, the systems the important manufacturer turbines quarters, that components overseas and for the serve. major has other to X markets modules approximately our for a million contract a pleased again module customer which to award with be long-standing for at valued based we semiconductor is This applications. multinational for many unique energy rely capabilities requirements, to prior power high-speed client employed once cutting-edge and customer provide XX% increase on wind come an in $X.X This a received we're First, and over green solutions. from they

entitled company from X at announced Also, grant of United first the our DOE. such the for of Matthew approximately penetration we Energy, This States that customer received award for led scientist Karnick, Transportation recently study, Shielding potential the Radiation will further at SBIR CPS. Department Modular be Use a talented $XXX,XXX valued company, Microreactors, and a had from opening by our material Phase avenues

and X in the SBIR/STTR years. It's Notably, from this past win the different last the member an the of team our our Department of is the fifth Energy years. of X award award couple third of these first within SBIR to

accelerating on R&D external portfolio, funds property line. growth of our focus and renewed top Our support our vision the to our intellectual help goal strategic of bolster long-term trajectory validate provide to continues our

Aside company the industrial from armor military actively to opportunities for wins, remains transportation and outlook these XX pursuing from electronics The the overall is applications. markets, across bright. products, company all

panels new delay are the that across testing HybridTech We're for as ground testing that by The system of the potential armor those coverage to be well address but fleet. tests, armor further and integrated rest protection issues and armor with on our anticipated. not to country's our continue for vehicle will provide will any had an iterations a as this other during related this Navy's to the contractor, from of We it previously working go as potential order of the did Unfortunately, customer. Kinetic best-in-class opportunities opportunity. aircraft protection pursuing shields Protection, Armor discussed panels Navy, component the we're ballistic U.S. advanced carriers. the prime upgrades we

phase demand along for growth design solving and The and innovative aerospace, power problems, We CPS of further vehicles, beginning well can aerospace electronic Matrix also to array industrial technology electronics Whether customers Metal next for going defense continued the expanding it's clients' the growth. place in complex our positions increasing provide advancing government in development use approach with our or Composites of unique for trains, growth approach the initiatives. of us believe forward, hermetic and and defense commercial electric to our solutions. applications, packaging our our as new of product space, CPS best at

increasing and strong our applications. our will pursuing the near that strong to top backlog a with finish growth convert of the anticipate the being leverage line capabilities to innovative and term, to and invest provide ability about balance current I and us financial bids sheet opportunities remain will upbeat company's across ever. performance to into it product fiscal a industry results. year improve backlog we can best our we as Our set the revenue accelerate flexibility continue new markets on very continue into solutions track to growing and be for In development and operating in

now to after the turn I'll to additional results, Chuck? I'll some about financial details temporarily our over provide comments. Chuck more provide call which

Charles Griffith

Thanks, Brian.

company's $X.X with million decline slight year-over-year a fourth the last quarter in due to million certain deliveries into earlier, the revenue quarter. the third totaled of timing year, mentioned $X.X was delay shipment the As compared and to

very anticipate exceed $XX.X this million. of to XXXX finish Given time, posting fiscal we solid the At significantly strong total to revenue our expect we overall fully backlog, XXXX. a

line usual gross million million Gross and quarter. both to to gross higher second year. the lower than be in fourth margins approximately more well quarter. as profit of third with XX% as last decrease year-over-year sales XX% in level of quarter quarter margin sales write-offs in the the or compared sales reflects the roughly profit We The anticipate $X.X of with inventory totaled or $X.X some during due scrap

earnings million $XXX,XXX a This Selling, from diluted in third represents per $X.XX year third XXXX. in general amount share of and administrative SG&A $X.X the fiscal the and last expenses decrease in the operating totaled in quarter of compared income posted $X.XX $XXX,XXX $X.X approximately versus share company generated in per this half prior year. with first The of the diluted period. numbers net year, quarter SG&A notable versus our million

balance the sheet. in the at revenue. working million $X decline reflecting $X.X as from quarter XXXX, million $X.X of of with XX, million to capital of December impact cash, $X.X XXXX, and the changes up accounts of XXXX. receivable Turning totaled the end Trade million deferred XX, ended the We September as versus of

year, of the fiscal $XX,XXX the in September $X.X to the as to XX account receivable tax at reflecting of April. the of $X.X primarily other of was end the million receipt last employee Our compared year. credit retention compared totaled balance Inventories start million at $XXX,XXX

XX, the of $X.X quarter Deferred of from XXXX. at at payables versus totaled accruals September Turning as side, at the liability and -- million million to $X.X end the decreased million of of XX, December $X.X million end revenue as XXXX end $X.X the XXXX. the to third

prepayments of deferred help thus, of orders. As in represents for orders revenue. predominantly deferred were these large XXXX, deprave on a purchases large impact for in resulting [ A revenue ] those the a and revenue, reminder, in of recognition shipped decrease number to inventory cash the

XX will thank he So now, for sees Brian? Brian and CPS what And discuss future. days his first in the you.

Brian Mackey

Thanks, Chuck.

the at CPS joined beginning ago. of X I recall, may everyone August, months about As

technically-oriented I've come opportunity the to focus doing leadership CPS, I providing of our spent when positions my years of including growth, highly science accepted on to companies, advanced in what is background to solutions greatest challenges. goal many relevant material to the achieve expected a I here. As we're to with customers'

that the today I'm opportunities CPS in a have we have of place number excited and at by things by we before us. that

customers stable Composites that have objectives support high-quality of their We long particularly meet domestically and products a Metal abroad, We'll close relationships of history large, needs. in both packaging. continue a to by with and hermetic customers' growth providing number our Matrix

motivated on have at XXXX We and as looks record motivated to own our to CPS and team a a momentum. well. capable build highly year, we're be here

to take on development. to just X strategy, growth of I'd aspect like our which product externally-funded focus moment is a

help the As this area successes portfolio of our a product recent in we've mentioned, we've build seen to number future. for

thermal asked Phase a proposal, Navy. is pursued continue SBIR management to review, [ then phase a us we currently asked us [ for Phase XI ] with a As which the ] They evaluation. regarding quick under and option submit X an to

Phase in Phase accomplished a the the Phase Army. regarding we of a use what materials be on STTR for will tungsten completed we submitting build X. Again, X X We proposal to

also We helicopter X SBIR Phase regarding flooring Army completed States United a for Army. the

has Phase X helicopter elected not its X colors. OEMs, designate Army We flying the of this potential opportunity. this know with While and to is study, in a that we're funds flooring for pursuing our Phase interest testing to passed any

SBIR. on currently working with new discussed from this Phase we're previously another the X As morning, DOE funding

materials leverage our team. opportunities future. the internally-funded space. our a efforts, expertise of to These path our related of within I'm to portfolio These efforts our within expect to conjunction the know-how development can product part see take products about at also with You CPS. work, technical our excited current future and talented for build relevant the continue add advantage in here the us are advanced growth key plan our to externally-funded

if Operator, please you could for line open the Q&A. up

Operator

from [Operator Instructions] coming Dawson from question James. [indiscernible] is Your first

Unknown Analyst

and with share the the the quarter? you bookings backlog us Can for

Charles Griffith

don't but point. -- give We for any our solid think the to next -- certainly very don't at next out certainly, this want our really that for normally is information I the quarters. forward going out, numbers give backlog I several

Unknown Analyst

you Can bookings if tell revenue? were us than Okay. greater

Charles Griffith

months, trailing XX X:X. XXX% exactly It's actually the In it's even. or

Unknown Analyst

Okay. Great.

development Brian, sorry. would what try but large revenue that if to wanted let's of like that And externally-developed And what XX be I get of revenue were of about funding philosophy for a out generating, understand you portion understand external I'm it those benefits say, as you what it, XX how the or the months the talked projects, -- behind of months now? currently? is research. source from to would you percent and be understand I -- And a I'd to

Brian Mackey

Yes.

Could million Phase That's funding amount DoD typical be Whereas fund period X So that the but an X be. of over SBIR the research are question, in funding. the the say, the over Phase to it relatively months. and would typically your Phase million Those $XXX,XXX, a would Phase $X.X parts the around revenue more from X-month it's of, $XXX,XXX of could X of from might $X.X a for normally of XX or period, a typically most X range what's DOE. is of be $XXX,XXX, be range, be small. typically $XXX,XXX X

from of nice that And success the depend the a you're those going Phase products, is And effort X about is and application on thing be needs. funding considered purchase literally to and DoD mostly side, course, have interest. to would if revenue, a the on -- it's that future to that they're timing growth. meet those the on. be can get ready So the technically, you that it's what that, we're outcome is translate the that's of that revenue is to the but scaling us to real customers value nice depend buying funding up volume a X Phase they're line, fund working The typically The or with need. on to commercial the because into research to going to and is ideal the finish technology to what they the of going

it but also again, that to property Department developed comes it's they intellectual remains thing nice DoD eliminates that's the funded under it with SBIR and though is, have that company's also but difficult program, future competition. a need the Defense, project the need of even it's which with by about the for the So the revenue, property the was that it

singular ] to So pricing, bids typically, the and competitive competitive need original make we was offer And in for intellectual bid its after that DoD that. property response many, SBIR of during to that going is to the development ownership the contracting sure is is business [ competitive the many X. that we're the Phase years getting the small for say reward technical of a proposal succeeding

Unknown Analyst

Got it. Understood. Right.

Okay.

rebound like going nice from be QX then is to so And a it -- QX. sounds

Brian Mackey

right. That's

Unknown Analyst

working that requiring of expect Because will You a can you we a was capital that in your mentioned of that, working be source capital? of QX? cash so in in QX, commentary additional reversal

Charles Griffith

it the as it Probably. cash be we've fund think banks. end line credit quarter. that if of as plenty That's But need working know, an of got capital. with We're won't order million for of And issue to of our us. almost I you $X in the certainly, guys our $X we million with

I it mean, will I at we don't So if on been due while, but it be. have think there's that necessary. for But this It point. nothing it's -- a extra hasn't source do so

working the quarter, to shape with for -- even the higher in a very we'll -- increase good we have the have still be still capital that need that we'll standpoint. cash may think we'll I still sales from we -- generate

Brian Mackey

QX But from what a this respects QX have QX in expect of more we do with be and versus in experienced in line QX. to we currently year variety

Operator

Instructions] [Operator next Richards. Ron from Your question is coming

Unknown Analyst

it conference was that could call, in packaging revenues will $XX $XX [indiscernible] I The hermetic in projection November those for wondering mentioned was million, the XXXX still you're million that XXXX? be and XXXX. double by packaging for if revenues revenues in about hermetic

Charles Griffith

not extremely ago, and already would at year, -- in million. And ] some to I this well [ $X customers least If were mean, say year other they're we in this then were over got out, reductions that least in nonmaterial I year We've -- to -- that -- and was packaging that you be coming will well virtually we as XXXX. hermetic expect that at take a regarding double of are -- customer over is customers. well piece But that going they business can't. our significantly. growing well, will X not. about they hope anyway, particular if the had X from We've take package major we hermetic

terms to don't that's in grow of total But of I to continuing going of it's spite the hermetic But happen. in customer. the major even certainly, packaging. doubling think

Brian Mackey

see grow, continue forward. I of us. that and see those an to you'll for focus up, opportunities continuing drive going certainly It's Yes. and it's for area us think numbers there to to We

Unknown Analyst

X and Okay, other question. then

aircraft on those On the for the guess about you Do ships were have when expanding any Navy ships? line into besides ships, carriers. might you time talking you some other a orders get

Brian Mackey

we're got and with but It's it's there we've an aircraft predict, to solution our is vessels. a actively pursuing know partner translating timing. of predict the that difficult that The actively other technology working to carriers where timing area from hard we but we're good that, to

Operator

coming [Operator ] [ Instructions] is ]. question Capital Weaver Your from [ Greg from next Invicta

Unknown Analyst

Brian. We're forward, look going

unexploited you've changes So I for you focus opportunities now best want been guess And what would of maybe on? the while? kind a any company or to you consider at improvements the that

Brian Mackey

a we number of Well, I have opportunities. think

have As -- opportunities I we just mentioned, I growth clearly packaging. with have think hermetic

we have think we're Metal some considering things I interesting that within Matrix Composites.

solution on, things interesting kind along. that's actively which you is they timing minute something, come validation think armor knowing of have et the excited category, this have solutions on for when which interested aircraft the the lightweight, We a that ago, is mean, to ongoing yield we're is results. and and mentioned their needs working that also of think ballistic program have sometimes there. I need wait we've we to something, I installations I going And But right DoD I got process by exciting as to what carriers, cetera. protection, a these I the Army that fourth new in, And consider our opportunities

I this a of team. that to to so over that. we're We've years the comes number our improve. to of strong that mean, customers our We've it like continuing organization I last to see drive growth, things quality And continuing few and will seen as product got a when a think implement changes we're company,

about what excited I'm we're So doing.

Unknown Analyst

that's mean, things much [indiscernible] heat -- Okay. kind focus? ] and I things a that, the And front, on specifically as not like like [ that's of

Brian Mackey

basis how the of move a interest as what we our products would be as to of make the on in improvements we next There's those we're ongoing that. generation providing discussions both product and address there with can what well how better and those customers can and day-to-day

relationships can long-term what we where discussions. that's of these collaborative the have So advantage these

we're area can that is another in think results future. the pursuing I that yield that

Unknown Analyst

Okay. That's helpful.

scrap gross gross there didn't revenue so. inventory And And versus But either, Chuck, incremental inventory on over right? a burn the was saying mean the the I sequentially? drop is drop write-offs margin, helped to flow-through you your in, you bit little quarter. dollar I due the like, mean, profit XXX%, in

Charles Griffith

No.

on biggest costs. potential some our and a our fixed -- factor, was the X of to look the So so at of we and revenue with inventory significant that had up returns, of go also we the -- so our We number secondary ended we those that for for had through quality up reduction reserves we and But was set quality a to we had it the major individual impact issue in parts of basically, issues, scrapping. had course, the customers. in X

Now really why there we which in are so reserve in and working quality to revenue our something think that's we we're is on And reserve. look -- it a it put that that go at should we and when fix. liability, but the root that issue soon, that large for fairly reduced our have but we away to close we -- cause increased

Unknown Analyst

Reserves.

So that [indiscernible]? was top line and

Charles Griffith

Yes.

Unknown Analyst

makes sense. That Yes.

Okay.

area product issue this what And control was quality in?

Charles Griffith

its MMC, it the the want just area. analysis. not Yes. because odd get oddity. an to kind in of don't -- It's I science into of It's my

Brian Mackey

of a of as made to Chuck was a the progress on number turn indicated, together. implementation. came that we've It up we'll that and finish Yes. And root lot cause, events that and

it. been reserve to that we'll the we're satisfy make road see not sure end to that, that -- of the quite So reflected, take at it's the but you bottom of we're

Unknown Analyst

All right.

for quarter cover reserve the yield to that there's the So absorbed going current you've and QX? in, still is we're that but some issues, in

Brian Mackey

yes. so, believe We

Unknown Analyst

Right.

Okay.

to you things over It's earnings excited the the great the going. last that mean, most the -- one back about, margins few give I we're quarters. can I'm had So you of

margin So wasn't fluke? not That unrealistic XX%-ish area is a this then?

Charles Griffith

Correct.

Brian Mackey

of certainly think this quarter, including up, first the direction representative forward, to QX. you cleaned see half. what going that we what think that's gets strongly this that, we'll Yes. in in We We we as saw more think return

Operator

[Operator Q&A Executive now concludes Instructions] and I'll President Thank hand That remarks. back go closing Please the Officer, you. Brian session. conference ahead. our for Chief Mackey, to

Brian Mackey

today, for to fiscal ongoing you us your doing year. after with what here joining for of at the you again we're look Thank our Okay. speaking forward interest CPS Technologies. in We end

you any have adviser. interim, If questions reach Investor the please Relations in to out

questions. further no There's

I think the call. Thank you. that concludes

Operator

everyone. Thank event. today's you, concludes This

a time, you Thank disconnect for may wonderful have your this at and participation. You day.

CPS Technologies (CPSH) 2 Nov 232023 Q3 Earnings call transcript