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CPS Technologies(CPSH) - 2023 Q2 - Earnings Call Transcript
CPSHCPS Technologies(CPSH)2023-08-05 09:05

Financial Data and Key Metrics Changes - Gross profit for Q2 2023 totaled 2.2million,representing302.2 million, representing 30% of sales, compared to 1.8 million or 26% of sales in the previous year, indicating improved factory efficiencies and higher sales [4] - Revenue for Q2 2023 was 7.4million,a47.4 million, a 4% increase from 7.1 million in Q2 2022, marking the best quarter in company history [31] - Operating income increased to 731,000inQ22023from731,000 in Q2 2023 from 669,000 in the prior year, reflecting a 9% growth driven by higher gross profit [10] Business Line Data and Key Metrics Changes - The company reported a balanced mix of business across its product lines, approximately one-third each for armor hermetic packages and AISiC, with a small percentage for R&D projects [21] - A major contract win valued at 1.4millionforhybridtecharmorpanelswasannounced,aimedatenhancingballisticprotectionforU.S.Navyships[33]MarketDataandKeyMetricsChanges−Thecompanycontinuestoseeanactivebidenvironmentacrossallendmarkets,includingopportunitieswithintheDepartmentofDefense[12]−DemandforAISiCremainsstrongandistrendingupward,indicatingapositiveoutlookforthecompany′smarketposition[13]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonleveraginginnovativetechnologyanduniqueapplicationstoacceleratetoplinegrowth[8]−Thereisanongoingefforttoexpandreachacrossmilitaryplatformsandnegotiatelong−termagreementswithTier1aerospaceOEMs[35]−Thecompanyisexploringopportunitiesintheelectricvehiclemarket,particularlyinrelationtoAISiCbaseplates,althoughthissegmentisstilldeveloping[46][58]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinachievingthebestperformancein2023,despitepotentialrevenuefluctuationsinQ3duetocontractandshippingtiming[12]−Theoutlookfor2023remainsstrong,withexpectationsforarobustendtothefiscalyeardrivenbyactivebusinessdevelopmentefforts[14]OtherImportantInformation−Thecompanyhasincreasedits401(k)matchingformulain2023,contributingtohigherpayrollcosts[10]−ThecompanyendedQ22023with1.4 million for hybrid tech armor panels was announced, aimed at enhancing ballistic protection for U.S. Navy ships [33] Market Data and Key Metrics Changes - The company continues to see an active bid environment across all end markets, including opportunities within the Department of Defense [12] - Demand for AISiC remains strong and is trending upward, indicating a positive outlook for the company's market position [13] Company Strategy and Development Direction - The company is focused on leveraging innovative technology and unique applications to accelerate topline growth [8] - There is an ongoing effort to expand reach across military platforms and negotiate long-term agreements with Tier 1 aerospace OEMs [35] - The company is exploring opportunities in the electric vehicle market, particularly in relation to AISiC baseplates, although this segment is still developing [46][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the best performance in 2023, despite potential revenue fluctuations in Q3 due to contract and shipping timing [12] - The outlook for 2023 remains strong, with expectations for a robust end to the fiscal year driven by active business development efforts [14] Other Important Information - The company has increased its 401(k) matching formula in 2023, contributing to higher payroll costs [10] - The company ended Q2 2023 with 8.7 million in cash, up from $8.3 million at the end of 2022, primarily due to higher net profit [32] Q&A Session Summary Question: Will SG&A expenses decrease in the next quarter? - Yes, SG&A expenses are expected to decrease as some unique costs from Q2, such as severance payments, are not anticipated to recur [20] Question: Can you provide details on the current mix of business? - The business mix is approximately one-third for each of the main product lines, with a small percentage allocated to R&D projects [21] Question: Any updates on the delayed armor contract with a Southeast Asia customer? - The contract remains active, with expectations for a production qualification shoot tentatively scheduled for mid-September [55] Question: Can you comment on the defense business and electric vehicle involvement? - The defense business is currently more active than the electric vehicle side, with multiple development projects ongoing in aerospace and defense [57]