CPS Technologies Corporation Q1 FY2025 earnings call

• Revenue set a new record at $7.5 million, replacing lost Armor revenue with growth in other products.
• Generated an operating profit of approximately $130,000 for the quarter, up from an operating loss last year.
• Demand remains strong for AlSiC and hermetic packaging products, with order fulfillment accelerated.
• Have six active externally-funded research programs, including SBIRs and a contract from NAVAIR.
• Fiber reinforced aluminum has potential in aerospace, and there's interest in AlSiC for wind farms and high-voltage DC transmission.
• Conducted a box drop test for military helicopter flooring and had successful ballistic results.

The company's revenue for the first quarter reached a record $7.5 million, up from $5.9 million in the first quarter of fiscal 2024. The gross profit was $1.2 million, or approximately 16.4% of sales. There was no revenue from HybridTech Armor this quarter, but other products saw growth. Year-over-year sales rose due to strong customer demand, order backlog, and increased manufacturing throughput from a third shift.

• Anticipate continued strong top-line performance in future quarters.
• Expect margins to continue expanding as production climbs and efficiencies increase throughout the year.
• Believe the company is on track for a record year in revenue with a strong backlog, increased manufacturing capabilities, and improving efficiencies.

• Uncertainties from ongoing conflicts in Ukraine and Israel, other geopolitical events, economic conditions, market demands, and competitive factors.
• A commercial purchase order for HybridTech radiation shielding was canceled due to reasons unrelated to CPS, but market interest in their radiation shielding solution remains.

Q: Any potential to bring in other partners to help market unique technologies?

A: Have existing partners in hermetic packaging and sales reps, and will continue to explore opportunities as they emerge, especially for fiber reinforced aluminum in aerospace.

Q: About radioactive shielding, with one contract canceled, any other opportunities?

A: Market shows interest in their radiation shielding solution, with potential in facilities for modular walls instead of thicker concrete/lead walls.

Q: Potential Armor opportunities besides Navy contract?

A: Pursuing other opportunities like flooring for military helicopters with successful box drop and ballistic test results, sharing with helicopter OEMs.

Q: Tariff environment impact?

A: Materials cost a small percentage of finished products, but monitoring supply chain and sales internationally, with no current impact seen. Constantly reviewing supply chain for cost savings.

Q: Profit margin question?

A: Third shift had a learning curve, product yields hit trough last year but are improving; goal is to increase gross margins towards 20-25%.

Q: Goal for gross margins?

A: Aim to get gross margins to 20-25% as they work on margin improvement initiatives; current margin is ~16.5%.

Q: Strength of revenue growth attributed to?

A: Mix of picking up market share, new customers, additional products from existing customers, and riding growth of markets like hermetic packaging and AlSiC for wind farms and high-voltage DC transmission