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CPS Technologies(CPSH) - 2024 Q4 - Earnings Call Transcript
CPSHCPS Technologies(CPSH)2025-03-13 18:36
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Financial Data and Key Metrics Changes - The company's revenue for Q4 2024 was 5.9million,downfrom5.9 million, down from 6.7 million in the same quarter last year, primarily due to the fulfillment of a U.S. Navy armor contract [10][11] - The operating loss for Q4 was approximately 1.3million,comparedtoanoperatingincomeofabout1.3 million, compared to an operating income of about 0.1 million in Q4 2023 [16] - A net loss of 1millionor1 million or 0.07 per share was reported, contrasting with a net income of 0.2millionor0.2 million or 0.01 per diluted share in Q4 of fiscal 2023 [17] - The gross loss in Q4 was 0.3million,representingapproximatelynegative4.60.3 million, representing approximately negative 4.6% of sales, compared to a gross profit of 1.1 million or 17% of sales last year [14] Business Line Data and Key Metrics Changes - Sales declined year-over-year due to the completion of the armor contract, but there was a significant sequential increase of 40% in revenue from Q3 2024 due to increased customer shipments [6][21] - The company is fulfilling a 13.3millioncontractwithasemiconductormanufacturerforpowermodulecomponents,whichisexpectedtocontinuethroughSeptember2025[23]−Continuedstrongdemandforpowermodulecomponentsandrelatedsolutionsfrombothnewandexistingcustomerswasnoted[12]MarketDataandKeyMetricsChanges−Thecompanyisexperiencingstrongdemandforitsmetalmatrixcompositesandhermeticpackagingapplications,particularlyinhigh−speedrail,windturbines,andelectricvehicleapplications[24][39]−Thecompanyisactivelyseekingnewcustomersintheaerospaceindustryforitsfiberreinforcedaluminum(FRA)products[39]CompanyStrategyandDevelopmentDirection−Thecompanyaimstoexpanditsproductofferingsandtargetnewapplicationsinkeymarketswithdemandingtechnicalrequirements[25]−Planstoaddnewproductlinesleveragingproprietarytechnology,includingaluminuminfiltratedproducts,werediscussed[27]−ThecompanyisoptimisticaboutsecuringadditionalarmorordersforNavyvesselsinfiscal2025,despitecurrentbudgetchallenges[40]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedoptimismaboutaturnaroundfromQ3results,withexpectationsforimprovedfinancialperformanceandoperationalexecutionin2025[21][38]−Thecompanyanticipatesimprovinggrossmarginsandbottom−lineresultsasproductionvolumesincreaseandone−timeexpensesarebehindthem[38]−Managementhighlightedtheimportanceofongoingstrongcustomerdemandandexpandedmanufacturingcapabilitiesforfuturegrowth[41]OtherImportantInformation−Thecompanyhastransitionedtoanewauditingfirm,PKFO′ConnorDavies,forits2024audit[9][19]−Thecompanyreportedasignificantincreaseincashandmarketablesecurities,endingtheyearwith13.3 million contract with a semiconductor manufacturer for power module components, which is expected to continue through September 2025 [23] - Continued strong demand for power module components and related solutions from both new and existing customers was noted [12] Market Data and Key Metrics Changes - The company is experiencing strong demand for its metal matrix composites and hermetic packaging applications, particularly in high-speed rail, wind turbines, and electric vehicle applications [24][39] - The company is actively seeking new customers in the aerospace industry for its fiber reinforced aluminum (FRA) products [39] Company Strategy and Development Direction - The company aims to expand its product offerings and target new applications in key markets with demanding technical requirements [25] - Plans to add new product lines leveraging proprietary technology, including aluminum infiltrated products, were discussed [27] - The company is optimistic about securing additional armor orders for Navy vessels in fiscal 2025, despite current budget challenges [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a turnaround from Q3 results, with expectations for improved financial performance and operational execution in 2025 [21][38] - The company anticipates improving gross margins and bottom-line results as production volumes increase and one-time expenses are behind them [38] - Management highlighted the importance of ongoing strong customer demand and expanded manufacturing capabilities for future growth [41] Other Important Information - The company has transitioned to a new auditing firm, PKF O'Connor Davies, for its 2024 audit [9][19] - The company reported a significant increase in cash and marketable securities, ending the year with 3.3 million in cash and 1millioninmarketablesecurities,comparedto1 million in marketable securities, compared to 8.8 million in cash at the start of 2024 [17] Q&A Session Summary Question: What is the market size for radiation shielding in the trucking business? - Management indicated that the market is still in development, with early interest from various applications beyond trucking, including facility management and aerospace [44][48] Question: What kind of revenues might be expected in the next year or two for those applications? - Management stated it is difficult to quantify revenues at this stage due to the diverse markets and the need for certification as a supplier [49][50] Question: Will the company manufacture munitions rounds if accepted by the army? - Management explained that the SBIR funding allows for potential sole source provision if the company can meet the army's needs through the development process [53][56] Question: What is the timeline for the munitions development process? - The SBIR program has a 6-month Phase-1, followed by a potential 24-month Phase-2, depending on the progress made [58][60] Question: What is the status of the Southeast Asian Armor contract? - Management confirmed that development work is ongoing to restore potential for the armor contract, but a timeline for further testing is not currently available [104][106]