Q2 2025 CPS Technologies Corp Earnings Call
Technologies second quarter earnings call.
At this time, all participants have been placed on a listen only mode.
And the floor for questions. Following the presentation. It is now my pleasure to turn the floor over to you.
Sure.
Oh geez.
So that's real issues.
Thank you Jimmy and good morning, everyone.
Joined by Brian Mackey.
President and CEO.
To discussing our second quarter results with you.
Chris witty our investment relations adviser will provide a brief safe Harbor statement Chris.
Yes.
Thanks, Chuck and good morning, everyone before we begin the business portion of today's call I would like to point out that statements. In this conference call that are not strictly historical are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist.
PPS is operations and environment.
Certainties include but are not limited to the ongoing conflicts in Ukraine, and Israel other geopolitical events economic conditions market demand and competitive factors such factors could cause actual results to differ materially from those in any forward looking statements.
Additional information can be found in our filings with the SEC.
Now I will turn the call over to Brian to offerings perspective on the quarter average.
Chuck will review the financial results in greater detail Brian.
Thanks, Chris and good morning, everyone.
Okay.
For the second consecutive quarter, we have established a new quarterly revenue record for the company.
Eight.
For Q2.
Not all.
Significantly year over year, but it represents 8% growth sequentially from the first quarter of this year.
We continue to execute across our various products and our focus on the following strong demand for the remainder of this year and beyond.
We're on track for our best revenue year ever.
Further in a moment.
Our dedicated but also improve our overall bottom line results.
We're excited about it.
The aspect of our operating environment, including ongoing strong demand increased defense spending a growing portfolio of marketable technologies often created with external funding.
And highly capable team with a demonstrated ability to address our customers' material science challenges.
I'll now turn the call over to Chuck to provide further details about our financial results after which I will provide some additional perspective.
Yes.
Thanks, Brian.
We're very pleased with our second quarter.
Second consecutive strong quarter of 2025, which is further evidence of our active approach to grow in Cps.
For the quarter totaled a record $8 1 million compared with $501 million in.
In Q2 of fiscal 2024, an increase of 61%.
And a year over year comparison, most of the variance was driven by strong customer to.
Customer demand combined with our improved ability to increase manufacturing output, including the addition of a third production.
Continue to broaden the company's core product offerings with new and existing customers and we anticipate continued strong revenue results.
Accordingly, gross profit in the second quarter of $1 3 million or approximately 16, 5% of sales compared with a gross loss of $2 million last year.
Increase was due to the higher revenue and greater manufacturing efficiencies.
While pleased with the much improved margins year over year, we remain focused on growing our profitability going forward.
We believe the coming quarters will show the results of our efforts to further improve manufacturing efficiencies increased capacity utilization and bolster our return on assets.
Selling general and administrative expenses totaled $1 2 million.
Second quarter versus $1 1 million in the prior year period.
We need to manage our cost even while ramping our production output and investing for growth.
The company.
Operating profit of about $137000 in the second quarter compared with an operating loss of approximately $3 billion last year, and we reported net income of just over $100 one per share versus a net loss.
$9 million of our seven pence per share in Q2 of fiscal 2024.
Turning to the balance sheet, we ended the quarter with $2 $4 million of cash and $1 million.
Marketable securities versus $3 3 million in cash and 1.0 and marketable securities at the end of 'twenty four or more.
Our cash and marketable securities increased by almost half a million dollars from the end of Q1 2025 through the end of Q2 2025.
Trade accounts receivable totaled $5 6 million as of June 28, 2025 versus $4 9 million as of June.
Number 28, 24 inventories rose to $5 2 million at the end of the second quarter.
Produce more to meet our customers' growing demand compared with $4 3 million.
Our fiscal year.
Turning to the liability side payables and accruals totaled $4 3 million at the end of the second quarter versus four zero.
At the end of December 28, 2024.
Brian will provide a more in depth discussion of the period.
Thank you.
Ccs is best revenue year ever we also know that even better days lie ahead.
Battery capacity has increased dramatically over the last several quarters in response to increased demand.
These are being brought to the market and we continue to land new development contracts as we develop innovative solutions to real world problems.
As previously announced we recently won our fourth new SPRI contact of the year.
Our partnership with the U S Navy to support next generation Defense solutions.
This particular phase one FTIR with funding from the U S Navy.
Still reducing the weight of the amphibious combat vehicle or HCV of oil transport platform for the European core operations.
Six months award was $140000 with an optional six month extension at the end of the period of performance with a loss of $100000.
Given our expertise in advanced composites and engineering, we will be evaluating various vehicle components, such as patches armour suspension et cetera.
Densify opportunities for redesign with lightweight alternatives to improve fuel efficiency.
And operational range this evaluation applicable to all variable.
Since designs have significant overlap of their concern.
With parts.
It's a great contract that can lead to additional work going forward given the military interest in making vehicles lighter more durable and fuel efficient.
That will be led by Matthew one of our material scientists in our Tucson.
Our award recipients, who has a strong background in composite innovation is structural optimization.
I'd like to publicly thank you Matthew for his great work at Ccs over the last three years.
Additionally, we also recently announced the receipt of our first purchase order for alloy materials.
Last year, we became the exclusive global license fee of fiber reinforced composites originally developed and patented ultra systems. We're now making headway commercializing this technology under the IMAX brand and are excited to announce this initial contracts.
Relative to aluminum almanacs offer superior performance, including exceptional wherewith, Mrs and greater strength at both groups at mature as well as elevated temperatures. Indeed, we are seeing expanded interest across multiple large addressable markets for the unique performance advantages that amex provides.
Our feedback has been highly encouraging.
This first order from a domestic manufacturer of signal processing commercial traction and an important milestone as we pursue a variety of intriguing opportunities for commercialization.
Additionally, we are now executing two distinct phase one SPR programs one caused by the army funded by the Navy targeting HCV, where debottleneck materials may offer key advantages for improving the operability of military vehicles.
Together, the USPI, our contracts and Almac. This group's commercial order other score.
Innovation and material science.
Mission to deliver practical mission ready solutions for government and industrial customers.
Second we'll work on our other funded effort continues.
I'll go into detail on each of those here I will note that we recently filed a provisional patent application for our radiation shielding materials.
Less than halfway through the two year development effort for radiation shielding that is funded by the department of energy.
Pursue relative commercial opportunities as development work continues in parallel.
This recent patent filings provides necessary protection for the intellectual property developed by CBS.
These development activities built very positive growth outlook.
At the same time, we are committed to expanding our gross margins and improving bottom line results were dedicated to increasing manufacturing efficiencies, which ultimately generate stronger profitability and better returns for our shareholders. This is a key area of focus are covered.
We had a number of initiatives underway that we expect will have a positive impact on margins. These ratios smaller cost down initiatives to larger modernization programs each with its own timeline for execution.
Patients and their impact on the income statement will be realized as Easter is incorporated into our daily operational activities.
<unk> faced some headwinds in our ability to improve margins in the near term including tariffs.
We source many of our raw materials domestically Harrison.
Some impact on domestic pricing.
Domestic producers in some cases can raise prices if they're competitors, who is workloads are compelled to do so due to tariffs although the impact of these tariffs on severe threat.
It does work against our efforts to improve margins.
The opportunity for future armor orders grew as possible given the strong track record that has been built with a U S Navy by Ccs and our key partner protection or Casey.
The federal budget for fiscal 2026, prioritizes defense spending and our holistic solutions address a large market across various types of shifts as well as other military applications.
The discussions are ongoing between Cps Casey and relevant number for the department of defense.
We remain optimistic about the opportunity for additional orders in the quarters to come.
With regard to our FTIR portfolio, including the New program I spoke of earlier, we now have four active phase ones two active phase.
As well as non <unk> funding from the U S Naval Air Command that channel.
Now with seven active programs. This provides another significant milestone for CBS in terms of the number of externally funded projects underway.
101 program for radiation shielding all of these are funded by the department of defense.
Priorities.
Congress these represent real opportunities for further military R&D and commercialization of pumps success successful outcomes funded research.
Although we continue to pursue additional FTIR contracts, where we believe we can provide unique technical solution, but also offers commercialization potential for Ccs.
Italy is strong for our core products, which includes both metal matrix composite and food packaging, including our newly added capability at five axis machining.
We have a solid backlog and we will continue to execute throughout the year and beyond to meet the robust demand we are experiencing from both existing and new customers.
In closing we're excited by the accomplishments we have consistently demonstrated thus far in 2025 and look forward to even better days ahead.
Months ago, our armor shipments ended as we fulfill that contract.
It more than made up for the loss of revenue from the growth of our other products and with additional revenue from externally funded development contracts.
Actively Brazilian digital arm rewards, we are leveraging our unique capabilities and radiation shielding hermetic packaging.
And a host of FTIR awards to accelerate growth going forward.
I mentioned earlier, we are committed to expanding margins and improving the company's underlying fluids.
Greater profitability and cash flow in the quarters to come.
We're proud of everything our team has done to put us in position for our best revenue year. However, we are confident that our growth through innovation.
Virtually all of our technologies and ongoing operational improvements will provide enhanced returns to our investors.
At this point, we can open up the call for questions.
Yeah.
Thank you very much.
I think the floor for questions. If you have any questions.
No.
Keith.
We often win.
Okay.
Thank you.
Can you provide options.
So the question then it must be pumps.
<unk>.
Thank you.
Thanks, Michael.
Michael.
Thanks.
Thanks, Good morning, congratulations on the quarter could you talk a little bit about your visibility into future revenues what type of pipeline. You may have been just kind of get into the sales cycle and how it all develops thanks.
I think I'll start thanks, Michael.
Thank you.
One of the aspects of it.
The cycle of ordering chartered with customers executing on.
Some of them.
Just a couple of months out so in the near term is very clear to US others are sort of in the four to six month timeframe with us.
Adding to our order book at that window.
On a less frequent basis, we will have an order up to <unk>.
Months in advance collectively our windows.
Six months.
Average.
We've continued to see strong demand as we've seen throughout this year so far in ethanol.
Okay.
Yes.
Okay, great. Thank you very much.
Thank you very much Andrew.
Your next question is coming from.
Ron mentioned.
Friday.
Your line is open.
Good morning, guys.
Congratulations on the.
Revenues.
I'm wondering.
As far as the build out and data centers.
Yeah.
So expect to OLED.
And that area is kind of a benefit somewhere down the line.
Yes, thanks for the question good morning.
Certainly.
Great interest to us, which has significant opportunity for us.
These high voltage AC or DC.
D C.
There's a number of projects that are cropping up around the world.
Yes.
Europe, there's a number of things that are active.
Our very relative to Cvs in the past when we've been asked about data centers.
Our answer has been that they are not particularly relevant to Cps.
Our adding RV place, where our customers high power electronics.
Typically it is necessary because those electronics are switching.
Generally high frequency, so you're taking the subway car or train is starting and stopping our midterm target topic.
Yeah.
In the electronics through that starting and stopping and that requires our base plate to help dissipate.
But stay in contact with those electronics through matching of the coefficient of thermal dispatch.
Those data centers are typically.
24 hours a day.
These are typically not relevant.
Solution. However.
Products, which are.
Actively underway.
Include one of the sources of this growing demand for electricity to satisfy that demand being new service partners, whether they are overweight or obese.
Water.
You're generating electricity with those types of solutions.
So those with ours.
These places like ours to address that issue.
And therefore that sheet. So this is an additive opportunity related to each BDC.
That is completely separate from our core markets such as.
Traction in our transportation trains subway cars et cetera, while we've always had sales into the wind turbine market.
New opportunity that we expect to play out over the next couple of years.
Okay. Thank you.
<unk>.
Thank you very much.
The remaining question.
Okay.
Okay.
Our next question is coming from.
Steven.
Your line is.
Hi, good morning.
Good morning, Greg.
No.
Yes.
Alright.
Yes.
As I recall.
Radiation shielding contract.
Right.
Thank you.
Okay.
Okay great.
The reconstituted.
Different way.
Yes.
Regarding that specific contract.
We were in the middle of X or we have started executing on a contract.
Very high level of program.
Aw.
We were uncertain for a while whether that would be reinstituted.
Become clear that it will not.
So that particular.
Tailed off but.
Other opportunities that we're pursuing.
Our under active discussion.
An area where we.
We're very optimistic about our future with radiation shielding for that particular apio has been cancelled.
Yeah.
Paid for the work done on the priority list.
Yeah sure Okay. Thank you.
Thank you very much.
Any remaining question.
Keith a question Star one.
Hi.
Okay.
Thank you.
Hopefully you have another question.
Got it.
Your line is.
Okay.
Hi.
So you guys added a third shift.
See any capacity constraints in the near future.
The higher run rate.
Yes.
It was added roughly late last year.
On the metal matrix composite side.
There's a number of things underway that are.
And just sort of address the growing demand that we're seeing from our customers.
No.
It is a challenge for us, but theres also plans underway to address that.
Just wait.
Capacity quickly.
Demand does remain robust going forward.
Your color.
Significant opportunity. So it is a key point of discussion strategically.
Strategically the best way for us.
Dress those growing problem.
These product and we're seeing strong demand going forward, but.
There are things other way to address that need because.
It is an area of growth that we anticipate for sometime to come.
Thank you.
If I could follow up on.
One last it about the <unk>.
Bruce.
It reinforces aluminum.
Yeah.
So the lessons that you bring.
Proprietary technology to the materials to doing that.
But what's your licensing.
Yes, two elements to that.
We are.
Exclusive global licensee.
The technologies the material reinforce alone to develop both rating systems.
We'll stay at patented.
So with our low matrix composite.
Hi.
Where the right place for us to take that forward. That's why we were able to work out that agreement.
So what we bring to that is all the other things that we were able to do so.
<unk> material.
Developed by then was one thing that we are making.
<unk> today over the past year.
Validated the ability to make the same product.
Thanks to the issues that they made so that when we're talking to customers they know that.
This is Rick.
Yes.
The added layer on top of that potential combinations or.
Overlap for example, if you need a multilayer material to satisfy a particular need whether it's.
Hi, thermal challenges oriented.
Ballistic solution or something related to these vehicles for the military we now have.
Oreo or products that could potentially be.
Combined with our improved upon.
That will play out going forward, so it fits very well in our portfolio and we may well see things.
Or improve upon fundamental.
<unk> itself is generating significant interest.
Great. Thank you.
Thank you very much.
No.
I will now hand, you back to Brian for closing remarks.
Okay. Thanks to everyone for joining us today and your ongoing interest in Cvs, We look forward to speaking with you again after that.
The third quarter.
Right.
Please reach out to our investment Investor Relations adviser.
Right.
Thank you very much everyone. This does conclude today's conference call.
Connect timelines at this time.
Thanks Keith.
Neil.
Yeah.