CPS Technologies(US:CPSH)2021-02-25 03:45Financial Data and Key Metrics Changes - For the year ended December 26, 2020, revenues were $20.9 million, a 2.8% decline from $21.5 million in 2019, while operating profit increased to $914,000 from an operating loss of $597,000 in the previous year [7][17] - In Q4 2020, revenues were $4.2 million, a 22% decrease compared to $5.4 million in Q4 2019, with an operating loss of $291,000 compared to an operating profit of $367,000 in the same period last year [7][16] - Gross margin for Q4 2020 was 12%, down from 18% in Q4 2019, while the annual gross margin improved to 20% from 12% in 2019 [16][17] Business Line Data and Key Metrics Changes - Demand for larger volume products, particularly baseplates for traction applications, declined due to COVID-19, affecting revenues significantly [8][10] - Conversely, demand for aerospace applications increased, and new products continued to progress through the pipeline [11][12] Market Data and Key Metrics Changes - Approximately 50% of revenues come from Europe, which was heavily impacted by COVID-19 lockdowns, leading to decreased train ridership and delayed delivery schedules [8][9] - The company noted a significant opportunity in the U.S. aerospace and defense electronics industries, with approximately 70% of revenues being exports [14] Company Strategy and Development Direction - The company is focusing on strengthening its sales and marketing efforts in the U.S. aerospace and defense sectors, with a concerted effort to secure new design wins and bookings [14][22] - CPS Technologies is excited about its product pipeline, particularly in high-voltage power modules and aerospace applications, which are expected to drive future growth [22][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing disruptions caused by COVID-19 but expressed optimism that the fourth quarter represented the bottom in terms of demand [12] - The company is actively exploring opportunities for capital investment and potential equity raises to support growth initiatives [42][44] Other Important Information - The company ended the quarter with $195,000 in cash and no borrowing against its line of credit, a significant improvement from previous quarters [18][21] - CPS Technologies is involved in notable projects, including participation in NASA's Mars Rover program, which highlights its capabilities in high-reliability applications [13] Q&A Session Summary Question: Capacity of the facility - Management indicated that the facility could handle a volume of 2X to 3X current revenues without significant capital investment [40][41] Question: Equity raise considerations - Management acknowledged the potential for an equity raise to capitalize on the current stock performance and enhance the balance sheet [42][44] Question: Aerospace revenue percentage - Aerospace revenues have increased from approximately 20% to 35% in recent quarters [46] Question: Design wins communication strategy - Management expressed intent to communicate future design wins similarly to the HybridTech armor contract announcement [49] Question: Armor order revenue impact - Each order to Kinetic Protection translates to about half of the total order amount coming to CPS Technologies [60] Question: Q4 gross margins and price increases - Q4 gross margins reflected all price increases discussed previously, with a focus on top-line growth to improve margins [62][64]