Shares of CPS Technologies Corporation CPSH have been unchanged since reporting results for the fourth quarter of 2024. This compares to the S&P 500 index’s 0.7% growth over the same time frame. In the past month, the stock has lost 11.6% compared with the S&P 500’s 8.3% decline.

Financial Performance

CPS Technologies reported a fourth-quarter 2024 loss per diluted share of 7 cents, falling 800% from earnings of 1 cent per diluted share in the prior-year quarter.

The company reported total quarterly revenues of $5.9 million, a 12.2% decline from $6.7 million in the prior-year quarter. The revenue decrease was primarily attributed to the completion of the company’s HybridTech Armor contract with Kinetic Protection for the U.S. Navy.

However, revenues showed a strong sequential improvement, rising 40% from the third quarter, supported by increased customer shipments and the company’s expanded production capacity.

Gross loss plummeted to$0.3 million, representing a negative gross margin of 4.6%, against a gross profit of $1.1 million and a gross margin of 17% in Q4 2023. The year-over-year decline was primarily due to lower production volumes, reduced economies of scale, and costs associated with hiring and training employees for a third production shift.

The company posted an operating loss of $1.3 million in the quarter, reversing from the operating profit of $0.1 million a year ago.

CPS Technologies Corp. Price, Consensus and EPS Surprise

CPS Technologies Corp. price-consensus-eps-surprise-chart | CPS Technologies Corp. Quote

Key Business Metrics

CPS Technologies ended 2024 with cash and marketable securities totaling $4.3 million, down from $8.8 million in cash at the beginning of the year. Accounts receivable stood at $4.9 million, up from $4.4 million a year earlier. Inventory levels declined to $4.3 million from $4.6 million at the start of the year, reflecting a shift in product mix.

Despite the financial losses, management highlighted that fourth-quarter revenues slightly exceeded the first-quarter 2024 level, indicating the successful replacement of lost revenues from the completed armor contract. Additionally, the company noted a higher backlog at year-end, positioning CPS for stronger results, going forward.

Management Commentary

CEO Brian Mackey acknowledged the financial difficulties in the fourth quarter but emphasized that the company is on a path to improved profitability. He cited the successful execution of CPS’s $13.3 million power module contract as a key revenue growth driver. The company also expects the gross margin to improve as the newly hired production staff gains experience and the temporary training-related inefficiencies subside.

CFO Chuck Griffith pointed out that non-recurring costs of approximately $600,000 weighed on profitability in the quarter. These expenses were tied to the production ramp-up, including additional labor, training and materials costs. With these one-time costs behind them, CPS anticipates improved operational efficiency in fiscal 2025.

Factors Influencing Performance

The year-over-year declines in revenues and profitability were largely tied to the fulfillment of the Navy armor contract, which created a gap in the company's revenue stream. While new orders in power module components helped offset some of the lost sales, the transition period resulted in underutilized manufacturing capacity and lower overall efficiency.

CPS also faced higher labor and material costs as it expanded production capacity to meet increased customer demand. The company added a third production shift, which led to elevated training costs and lower initial productivity. Management expects these inefficiencies to diminish over the next few quarters, improving the gross margin.

Guidance & Outlook

Looking ahead, CPS Technologies remains optimistic about its growth trajectory. The company expects continued strong demand for its core products, particularly power module components used in high-speed rail, wind turbines and electric vehicles. Management also highlighted business opportunities in aerospace, defense and industrial applications, which could drive revenue expansion in fiscal 2025.

In addition to organic growth, CPS is leveraging government-funded research contracts to develop product offerings. The company secured three Phase I Small Business Innovation Research contracts in early 2025, each valued at $250,000. Two of these contracts focus on advanced artillery applications, while the third supports the development of Fiber Reinforced Aluminum for lightweight military vehicles.

Other Developments

CPS Technologies reached a milestone with its first commercial sale of radiation shielding, marking the first successful expansion of its product portfolio in several years. The product, which originated from a Department of Energy-funded initiative, has potential applications in the defense, aerospace and industrial markets. Management sees radiation shielding as a promising new revenue stream, with further commercialization efforts planned for 2025.

The company remains engaged in discussions regarding potential armor contracts. While no firm orders have been announced, CPS is optimistic that its ballistic protection solutions will find continued support within the U.S. Navy and Congress.

Conclusion

CPS Technologies faced a challenging fourth quarter, with revenue declines and a swing to losses due to the completion of a major defense contract. However, the company’s sequential growth, higher backlog and ongoing expansion efforts indicate a path toward improved financial performance.

Management’s focus on operational efficiencies, contract wins and product diversification positions CPS for a stronger fiscal 2025. Investors will closely watch the company’s ability to execute its growth initiatives and restore profitability in the coming quarters.

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