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CPS Technologies Corporation (CPSH) reported record revenue of $27.6 million for the fiscal year 2023, with a 10% growth in the fourth quarter. The company faced quality issues with a major customer impacting gross margin and operating profit. Despite short-term challenges, CPS remains optimistic about future growth opportunities.
The recent financial results from CPS Technologies reveal a mixed performance. While the company achieved a record annual revenue of $27.6 million, the gross margin contraction from 26.6% to 17.0% year-over-year is a point of concern. This margin pressure is indicative of cost challenges or quality issues, which can affect profitability. Despite this, the company managed to maintain a positive operating profit, although reduced from the previous year. Investors would need to weigh the company’s revenue growth against the margin decline to assess the sustainability of its earnings.
The quality issues referenced by the CEO are critical, as they can lead to reputational damage and impact customer retention. However, the assertion that these issues have been largely mitigated could signal recovery in margins if no further issues arise. The mention of the U.S. Navy contract for HybridTech Armor® panels suggests potential volatility in revenue streams, dependent on the timing and completion of government contracts.
Looking ahead, the CEO’s optimism regarding the resolution of quality issues and the company’s diverse end markets could suggest that CPS is positioned to capitalize on new opportunities. However, the Continuing Resolution in Washington is an external factor that could delay certain business developments, introducing an element of uncertainty for future performance.
CPS Technologies’ presence in fast-growing industrial and technological applications is noteworthy as it indicates the company’s alignment with emerging market trends. The focus on diversification across various end markets could be a strategic move to buffer against sector-specific downturns. However, the market will be looking for evidence of how the company’s investment in the future translates into tangible order flow and revenue growth.
The CEO’s confidence in improved order flow throughout the year suggests an anticipation of increased demand, which could be a positive signal for investors. It will be important to monitor the company’s ability to secure new contracts, particularly in the context of the mentioned government-related delays. The completion of the U.S. Navy contract will be a test of the company’s ability to manage and transition between large projects without significant revenue disruption.
The financial performance of CPS Technologies must be contextualized within the broader economic environment. The impact of the Continuing Resolution suggests a degree of dependency on government spending, which can be unpredictable and subject to political processes. This dependency highlights the importance of fiscal policy on the company’s operations.
Moreover, the company’s ability to address quality issues and improve gross margins will be critical in an environment where input costs may be rising due to inflationary pressures. The margin compression experienced by CPS Technologies is a common concern for many businesses during periods of economic uncertainty. The company’s long-term success will hinge on its ability to navigate these macroeconomic challenges while executing its growth strategy.
Finished Year with Record Top Line Results; Large Pipeline of Opportunities for 2024 & Beyond
NORTON, Mass., March 06, 2024 (GLOBE NEWSWIRE) — CPS Technologies Corporation (NASDAQ:CPSH) (“CPS” or the “Company”) today announced financial results for the fiscal fourth quarter ended December 30, 2023.
Fourth Quarter Highlights
- Revenue of $6.7 million for the fourth quarter of 2023 versus $6.1 million in the prior-year period, primarily due to growth in shipments
- Gross margin of 17.0 percent versus 26.6 percent in the fourth quarter of 2022, reflecting certain quality issues with a major customer
- Operating profit of $0.1 million for the quarter ended December 30, 2023 compared to $0.3 million in the prior-year period
“We finished the year with the highest annual revenue in the Company’s history – $27.6 million – driven by 10 percent growth in the fourth quarter versus the prior-year period,” said Brian Mackey, President and CEO. “We are cautiously optimistic that the quality issues previously disclosed have been largely mitigated and should not have a material impact on 2024 results. While the Continuing Resolution in Washington has hampered certain decision making, impacting some of our new business development initiatives, we believe our strong position across the Company’s diverse end markets provides plenty of opportunity for further top line expansion. That said, the U.S. Navy contract for HybridTech Armor® panels is, as previously discussed, expected to be completed during the second quarter of this year. We remain steadfast in our mission to pursue other fast-growing industrial and technological applications that can accelerate demand and drive CPS to new levels of performance. We continue to invest for the future, and I am confident that order flow will improve as the year plays out. Even as short-term headwinds exist, the future is bright for CPS.”
Results of Operations
CPS reported revenue of $6.7 million in the fourth quarter of fiscal 2023 versus $6.1 million in the prior-year period, reflecting overall growth in product shipments. Gross profit was $1.1 million, or 17.0 percent of revenue, versus $1.6 million, or 26.6 percent of revenue, in the fiscal 2022 fourth quarter, with the lower gross margin year-over-year largely due to quality issues with one of the Company’s major customers.
Operating profit was $0.1 million in the fiscal 2023 fourth quarter compared with $0.3 million in the prior-year period. Reported net income was also $0.2 million, or $0.01 per diluted share, versus $0.3 million, or $0.02 per diluted share, in the quarter ended December 31, 2022.
Conference Call
The Company will be hosting its fourth quarter 2023 earnings call at 9:00 am on March 7, 2024. Those interested in participating in the conference call should dial the following:
Call in Number: 1-844-943-2942
Participant Passcode: 531915
The Company encourages those who wish to participate to call in 10 minutes before the scheduled start time to ensure the operator can connect all participants.
About CPS
CPS is a technology and manufacturing leader in producing high-performance materials solutions for its customers. The company’s products and intellectual property address critical needs in a variety of applications, including electric trains and subway cars, wind turbines, hybrid vehicles, electric vehicles, Navy ships, the smart electric grid, 5G infrastructure and others. CPS hermetic packages can be found in many Aerospace and Satellite applications. CPS’ armor products provide exceptional ballistic protection and environmental durability at very light weight. CPS is committed to innovation and to supporting our customers in building solutions for the transition to clean energy.
Safe Harbor
Statements made in this document that are not historical facts or which apply prospectively, including those relating to 2024 financial results, are forward-looking statements that involve risks and uncertainties. These forward-looking statements are identified by the use of terms and phrases such as “will,” “intends,” “believes,” “expects,” “plans,” “anticipates” and similar expressions. Investors should not rely on forward looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the company’s expectation. Additional information concerning risk factors is contained from time to time in the company’s SEC filings, including its Annual Report on Form 10-K and other periodic reports filed with the SEC. Forward-looking statements contained in this press release speak only as of the date of this release. Subsequent events or circumstances occurring after such date may render these statements incomplete or out of date. The company expressly disclaims any obligation to update the information contained in this release.
CPS Technologies Corporation
111 South Worcester Street
Norton, MA 02766
www.cpstechnologysolutions.com
Investor Relations:
Chris Witty
646-438-9385
cwitty@darrowir.com
| CPS TECHNOLOGIES CORPORATION | ||||||||||||
| Statements of Operations (Unaudited) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| December 30, | December 31, | December 30, | December 31, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Revenues: | ||||||||||||
| Product sales | $ | 6,747,199 | $ | 6,115,352 | $ | 27,550,646 | $ | 26,586,926 | ||||
| Total revenues | $ | 6,747,199 | $ | 6,115,352 | $ | 27,550,646 | $ | 26,586,926 | ||||
| Cost of product sales | 5,598,616 | 4,489,640 | 20,725,237 | 19,285,846 | ||||||||
| Gross Margin | 1,148,583 | 1,625,712 | 6,825,409 | 7,301,080 | ||||||||
| Selling, general, and | ||||||||||||
| administrative expense | 1,004,948 | 1,316,530 | 5,126,046 | 5,066,660 | ||||||||
| Income from operations | 143,635 | 309,182 | 1,699,363 | 2,234,420 | ||||||||
| Interest/Other income (expense) | 80,823 | 9,866 | 253,018 | 635,248 | ||||||||
| Net income before | ||||||||||||
| income tax | 224,458 | 319,048 | 1,952,381 | 2,887,668 | ||||||||
| Income tax provision (benefit) | 84,948 | 50,057 | 582,085 | 756,268 | ||||||||
| Net income | $ | 139,510 | $ | 268,991 | $ | 1,370,296 | $ | 2,131,400 | ||||
| Wtd. Avg. basic common shares outstanding – diluted | 14,617,473 | 14,649,719 | 14,628,811 | 14,675,646 | ||||||||
| Net income per | ||||||||||||
| basic common share | $ | 0.01 | $ | 0.02 | $ | 0.09 | $ | 0.15 | ||||
| CPS TECHNOLOGIES CORP. | |||||||
| Balance Sheets (Unaudited) | |||||||
| December 31, | December 31, | ||||||
| 2022 | 2022 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 8,813,626 | $ | 8,266,753 | |||
| Accounts receivable-trade, net | 4,389,155 | 3,777,975 | |||||
| Accounts Receivable – other | 83,191 | 685,668 | |||||
| Inventories, net | 4,581,930 | 4,875,901 | |||||
| Prepaid expenses and other current assets | 276,349 | 211,242 | |||||
| Total current assets | 18,144,251 | 17,817,539 | |||||
| Net property and equipment | 1,556,139 | 1,326,968 | |||||
| Right-of-use lease asset | 332,000 | 466,000 | |||||
| Deferred taxes, net | 1,269,726 | 2,069,436 | |||||
| Total Assets | $ | 21,602,116 | $ | 21,679,943 | |||
| LIABILITIES AND STOCKHOLDERS’ | |||||||
| EQUITY | |||||||
| Current liabilities: | |||||||
| Note payable, current portion | 46,797 | 43,711 | |||||
| Accounts payable | 2,535,086 | 1,836,865 | |||||
| Accrued expenses | 1,075,137 | 820,856 | |||||
| Deferred revenue | 251,755 | 2,521,128 | |||||
| Lease liability, current portion | 160,000 | 157,000 | |||||
| Total current liabilities | 4,068,775 | 5,379,560 | |||||
| Note payable less current portion | 8,090 | 54,847 | |||||
| Deferred revenue – long term | 31,277 | 231,020 | |||||
| Long term lease liability | 172,000 | 309,000 | |||||
| Total liabilities | 4,280,142 | 5,974,427 | |||||
| Total stockholders’ equity | 17,321,974 | 15,705,516 | |||||
| Total liabilities and stockholders’ | |||||||
| equity | $ | 21,602,116 | $ | 21,679,943 | |||
CPS Technologies Corporation reported a record revenue of $27.6 million for the fiscal year 2023.
CPS Technologies Corporation experienced a 10% growth in revenue in the fourth quarter of 2023.
Quality issues with a major customer impacted CPS Technologies Corporation’s gross margin in the fourth quarter of 2023.
The U.S. Navy contract for HybridTech Armor® panels is expected to be completed during the second quarter of 2024.
CPS Technologies Corporation reported a net income of $0.2 million, or $0.01 per diluted share, in the fourth quarter of 2023.
NASDAQ:CPSH
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Other Electronic Component Manufacturing
Manufacturing
Producer Manufacturing, Miscellaneous Manufacturing, Manufacturing, Other Electronic Component Manufacturing
About CPSH
cps technologies corporation has been the leading supplier of alsic metal matrix components for thermal management of electronics for more than 20 years. our al-mmc tool box also includes ceramic hollow shell reinforcements creating syntactic mmc with a density nearly half that of aluminum. such syntactic structures may be combined with fiber reinforced layers to create unique lightweight, stiff al-mmc structures. cps also produces hybridtech armor® – aluminum metal matrix composite (al-mmc) encapsulated ceramic tiles – as well as structural components primarily using fiber reinforcements. current maximum size for al-mmc’s is approximately 1m x 2m x 20cm.
