• Revenue: $5.9 million in Q4 2024, down from $6.7 million in Q4 2023.
• Operating Loss: $1.3 million in Q4 2024, compared to operating income of $0.1 million in Q4 2023.
• Net Loss: $1 million or $0.07 per share in Q4 2024, versus net income of $0.2 million or $0.01 per diluted share in Q4 2023.
• Gross Loss: $0.3 million or approximately 4.6% of sales in Q4 2024, compared to a gross profit of $1.1 million or 17% of sales in Q4 2023.
• SG&A Expenses: $1.0 million in Q4 2024, consistent with Q4 2023.
• Cash and Marketable Securities: $3.3 million in cash and $1 million in marketable securities at the end of 2024, compared to $8.8 million in cash and no marketable securities at the start of 2024.
• Accounts Receivable: $4.9 million as of December 28, 2024, up from $4.4 million as of December 31, 2023.
• Inventories: $4.3 million at the end of Q4 2024, compared to $4.6 million at the start of the fiscal year.
• Payables and Accruals: $4.0 million at the end of Q4 2024, up from $3.6 million as of December 30, 2023.

• Warning! GuruFocus has detected 3 Warning Signs with CPSH.

Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CPS Technologies Corp (NASDAQ:CPSH) experienced a 40% sequential increase in revenue from Q3 to Q4 2024 due to ramped-up production capacity.
• The company is actively fulfilling a $13.3 million contract with a semiconductor manufacturer, indicating strong demand for its power module components.
• CPS Technologies Corp (NASDAQ:CPSH) has secured several SBIR awards, which are expected to expand its product portfolio and enhance its technological capabilities.
• The company has introduced a new commercial product, radiation shielding, marking its first new commercial product in many years.
• CPS Technologies Corp (NASDAQ:CPSH) is experiencing strong demand for its metal matrix composites and hermetic packaging solutions, with expectations for continued growth in these areas.

Negative Points

• CPS Technologies Corp (NASDAQ:CPSH) reported a gross loss of $0.3 million in Q4 2024, compared to a gross profit of $1.1 million in the previous year, due to lower revenue and reduced manufacturing efficiencies.
• The company incurred nearly $600,000 in non-recurring costs in Q4 2024 related to ramping up production volumes, including excess material costs and additional labor expenses.
• CPS Technologies Corp (NASDAQ:CPSH) posted an operating loss of $1.3 million in Q4 2024, compared to an operating income of $0.1 million in the previous year.
• The transition to a third production shift resulted in significant initial turnover and training costs, impacting productivity and efficiency.
• The end of the US Navy armor contract led to a decline in year-over-year sales, affecting overall revenue performance.

Q & A Highlights

Q: Can you provide insights into the market size for radiation shielding, particularly in the trucking business? A: Brian Mackey, President and CEO, explained that while the DOE funding was related to trucking, the application is still in development. The focus is on secondary containment for microreactors, with potential applications in facility management and aerospace. However, specific revenue projections are difficult to quantify at this stage due to diverse market opportunities.

Q: Regarding the munitions rounds, if the Army accepts your development, will CPS be manufacturing those warheads? A: Brian Mackey stated that the SBIR funding is for solving specific technical challenges posed by the Army. If CPS can prove the concept and develop a prototype, they could potentially become a commercial provider. The SBIR program allows for sole-source provider status, which is a powerful tool for future contracts.

Q: What is the timeline for the munitions development process? A: Brian Mackey outlined that the SBIR phase one is a six-month program for proof of concept, followed by a potential phase two over 24 months for prototype development. The timeline from concept to demonstrable solution typically spans about two and a half years.

Q: Can you discuss the fixed cost elements and why costs didn't change materially despite the end of the armor program? A: Charles Griffith, CFO, explained that the margins on traditional products are lower than on armor. The ramp-up for increased production involved significant non-recurring costs, including training and turnover expenses, which impacted the fourth quarter. These costs are expected to diminish as production stabilizes.

Q: How does the SBIR funding impact your financials? Is it a revenue item or a cost offset? A: Charles Griffith clarified that SBIR funding is both a revenue item and a cost offset. The budget includes profit and overhead absorption, contributing to the bottom line while supporting ongoing projects and staffing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.