CPS Technologies (CPSH) 8 May 222022 Q1 Earnings call transcript

Good day. Thank you for standing by and welcome to CPS Technologies Corporation First Quarter Investor Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the call over to your speaker, Mr. Griffith. yours. is floor The

our Good joined and President by who comments Executive operator. joining and you us. Officer, on his offer I'm Michael will quarter afternoon, you, results. thank everyone for Chief first Thank McCormack, our

portion begin and subject and from to this factors the Such I invasion in demands the would the we in be statements of those COVID-XX, many XXXX that CPS' call the Act Securities market are point uncertainties Before that statements. Litigation historical of materially factors. Russian environment. that impact could any within in are meaning to forward-looking exist cause forward-looking out call, as the considered Private Reform of business the operations should conditions, statements conference competitive include like Ukraine, actual not economic strictly of These results uncertainties and differ of the to

over first his the offer to turn to will I quarter. call Now, Michael the on perspectives

Chuck. for Good $X.X million Thank of and of March profit are for of with operating profit This X, announce an XXXX. the ended $XX,XXX compares an revenues afternoon, $XXX,XXX to million XXXX. we you, of revenues ending quarter and the April first everyone. quarter $X.X Today, quarter XX, operating pleased

Even We were place the year. over revenues operating the operating greater programs are we the the for significantly, in history of XX% entire delighted the XXXX we show as showed to the in quarter over first we control increase growth X% to the improvement profit XXXX of in are see beginning of from put XXXX. quarter than cost report first fiscal profit highest first of our company's quarter benefits more Further, XXXX. that a was quarter revenues fourth have and the in revenue the the

sustain initiatives executing. to this The growth and the changes team realize to We and on efficiencies drive growth encouraged are continuing is to operational momentum. returns we are

As first inflation, are into out pandemic as working economic we contracting of In I'll overall later confident overall and in and a are the the the progresses availability, our speak progress actively uncertain with an but I'd recovery challenges, delays material to quarter that more more new and we incredibly moving outlook. global such remain business financial are about force like in our discuss in mitigate. pleased to there impacts logistical economy detail. lasting environment, call results the labor for now, little bit Chuck performance forward

margin QX to to our to the made Basically, compensation were COVID-XX share-based This the and compares of pandemic increase, of margin on XXXX. compared QX subsequent in being $X.X impact XXXX hermetic This little efficiencies. XXXX packages differential. due sales to the to million compared sales up things an revenue additional expenses correlates in totaled improved with XXXX. done you, this QX three XXXX increased increase over sales. our Gross directly was with accruals generated QX in in usual $X.X QX in QX XXXX, to of totaled of fixed made XXXX armor manufacturing $XXX,XXX increased costs sales XXXX of the costs for totaled a Selling, due compensation the in Compensation better as $X.X that in XXXX hired in QX half increase gross with to in $X postponed QX as XX% but results quarter well XX%. increased first XXXX in of Revenues the Thank increase in as in Michael. those of QX million primarily compensation million the QX or in XXXX and for due expenses at and the variable XXXX, particular of million of general XX% dollars sales. also This absorption $XXX,XXX as in margin SG&A QX increase XXXX. of QX to of team three administrative compared and members of up

increase operating The The other significant increase due experienced and income operating commission due increase was gross in of increase primarily in the XXXX. discussed. result as income $XX,XXX to in QX the operating as revenue portion XXXX of margin, in a to incurred in of compared the SG&A of previously sales. This QX expenses company $XXX,XXX is with income

our the is in sheet. the was cash This that position to the of profit. balance to due inventory somewhat from reduction was of accrued expenses net The were million in cash $XXX,XXX in -- reductions those cash. in primarily XXXX. offset of the a end by Turning We and and ended $X.X increase quarter our with decrease

million, at to the Although under program Accounts XXXX, $X.X raised it and remains no ATM open the receivable the million as available X, XXXX. December same QX cash was $X.X totaled us, additional April at in XX, XXXX.

is at and it same end sales in expected million of was $X.X first was XXXX. turnover XXXX. compared the quarters is outstanding Our the XX X.Xx inclusion most of deferred increase growth. revenue The to December most of needed as in due in was recent at of this recent ending support improve the XX the Inventories due which the end This XXXX. quarter in materials receivable $X.X did to raw the in days sales at year the days accounts million inventory XXXX. of collected the million our the four end to April work inventory totaled decrease to or The days compared X, four during increased to at of balance -- year-end quarter at the in to which XXXX, $X.X process DSO was XX,

$X.X December to And due discussion, call Turning for Michael. from down at small XXXX. QX side, million to million back I in and of would certain accruals. turn over year-end totaled at to to The X, the change further the April accruals liability $X.X payables XX, XXXX, is payments like

Thank through definitive into quarter, past by are of tomorrow. This positive plans our wide that encouraging today financial make in we results progress appreciated development continuing the to on and product the you, value can array investors be to translate Chuck. CPS creation

creating Chuck margin. had of to sustainable, line. every increasing his and and cost. are team with to quarter-over-quarter of the a I our quite would provide both or sophisticated to improvement even to an our our improvements we a on focused investment remain believe steadfast, We ability on work positive enduring We and of in opportunity Operations Head improvement encouraged CPS index mentioned, of to across highlight investors see array product continuous Dan like results the our customers value gross the particularly short-term, substantial, at benefits institutional, As attractive a program our will reasonable continue long-term investors, by diverse unique financial products proposition. Barton, appreciate near make entire to fees that implementation year-over-year

also quarter We does year. that acknowledge one a not make

profitable semiconductors However, a vehicle silicon need our the controlled our that opportunities growing becoming The lots serving customers module operate this performance of -- since CPS carbide today power of from semiconductors we for wide-band-gap CEO. movement to the with electrical expansion temperatures provide metal customers of WBG a market. are has mine with been can silicon provide management, matrix format. in for There focus solutions to composite, the we consistency at continue to fixed need dissipation that is thermal with that junction our will higher high new necessitate heat and AlSiC. CPS

fixed and for the power addition, the power metal format conversion this design In WBG applications better growth are improved efficient solutions offer with in continued matrix flexibility. AlSiC suited see we composite implementation as these of to

with the United There We ensure collaborating stages Defense move plan have cycle. have objectives future high-volume where tactical life topic. with and Defense demand them electric to of Department Michigan and are partners/customers over was CPS we a several hybridization States the fleets. strategic opportunities to testing recently this robust are a to and we attended many for Exposition, of maturity initial design big also vehicles meet anticipated their and our that combat within still the wins to in their are production, product

goals and operational and to electrification and size, and value reliability lot military of weight, like of of synergies to and CPS' that weight, importance As SWaP-C ground the there how as added end Anthony Corporate the contributes presence in competencies of I'd cost, highlight to located A the expertise defense core the metro our with out high reasons directly area Detroit created superior Officer. availability. properties this directly has market to located between market you're power one and high in of luxury link is Michigan several of staff vehicle Development aware, Koski, still past but EV who's specifically way and and the success CPS Army the military's reduced we the the in a our aligns proposition a platform

budget the for In to U.S. on evidenced recent known addition, into accelerated potential prohibited competitors significant are U.S. a increased funding as security our most United modernizing vehicles future technologies view many by large of electric worldwide, addition States modernization the laws. proposed infrastructure acceptance defense growth. the the energy Department supplying of the as We and Defense programs transportation and for due catalyst existing regulations of advancement of from R&D emphasis national key and

and product development 'XX, that lines growth new the in initiatives, expand specifically fiscal of our investments, revenues in optimistic collective earnings. we product Beyond remain cautiously current longer-term terms both year will

previously, continue made Innovation STTR, As having I so. the Business Small reengaged programs, we submissions have Business and Research, several to do SBIR mentioned Technology Small with Transfer, and we'll

of initial solutions Army, in the could management within with Defense. the We have award, electronics SBIRs award the recent for be Department recently won that also commercialized. is Navy the to like thermal calling two The military novel

for alloy devices. Our storage nickel matrix an thermal reinforcement for solution is titanium proposed energy aluminum

We -- leader that are can of confidence convert and have thinks can and safety thermal the as defense extremely security thought management our in Defense products that the Department enable CPS more a theory importantly, of of we forces. be into they excited that

feedback the also end second quarter. with in we We by Department of proposal have that Energy the the expect of several solutions

manufacturing. our measured continue to we capacity current increase the Lastly, make investments to of high-volume

our variety on Additive eye that will manufacturability. We performance we're research processing continue processes lines. of not flashy and additive working that's will to printing result development of encouraging implementing Directors improved can in future range of R should even have in progress manufacturing today making material efficiency. replicate quite value it's All little our mine, binder investors quality, the with is are our product and listeners MMC There's that and Modern greater the for seen the new and are refine big processes to repeating XD worth public of and of consistently to techniques we current bit improvements formulation combinations a at a development but allow Board manufacturing material and know D throughout CPS increased technologies. things possibility ceramic to and production and still necessarily forward. from shareholder focus yields creating that These that mature entire the looking are the team. of all powder moving

profit which months. beyond have the I metrics look with We measure I several results and internal day. of overall and metric over at first business is cash XX the to of measurement consistent flow. had the our rolling growth This the is ways statistic best book-to-bill every strategy a find

at to be yearly. For of remain daily, CPS. is ratio monthly, would even. This as to That quarterly, not needs book-to-bill it whether here to it book a business a it business as delivers, be X:X our drive, much goal weekly,

transitioned book-to-bill arduous We ratio finance, a are to operations, result trailing all CPS, sales, mode. of here to work This months Since by XX perseverance are heck, I we basis. the of lot the leadership the in of over X.X X.X and in us. growth averaging is at

there our quarterly Weatherman, pleased by Oliveira in Kevin closing Specifically Anthony engineers entire our Dr. we Levitre, of to addition, as Holmes. recent for larger opportunities even Koski, We're increase even Steve Sales, Kachur, results with the do. team, the build growth be further. Bill look are though, And that will my concludes as any the product Judy Occhionero latest to and We remarks. working Vice initial upon even trend well our and assurances I Sorensen and are available our President still line. my that not performance. opening I most the enabled with Dr. In have and extremely and remarks lots from our satisfied Risa, the Jim Mark actionable questions development, current and afternoon, if Langley business Chuck this folks on profitability believe are improved Tim all Gregg Davis, Cheryl staff and her

line comes of [Operator Instructions] Your the Irwin from Gomberg question [ph]. first

see some to was On XX, announced their nice the Defense of to record Is it XXXX, working company CPS armor for a quarter. a XX, armor Rafael provide with on defense Congratulations some questions. hybrid have providing announced the XXXX, On some models. vehicles. few these new growing its It's April Systems to vehicles? again. for CPS I they of July market

for kind This the for business. compliments Thank you Michael. is the

continuing we my months As application do in with have are of know programs, we of variety various but the I to a Rafael. prior, work XX armor May, specific in about entire Rafael you're here talking working, not and been solutions. with testing

were on continue a going week. provide to have representative can't the on And this at good very very talking -- week. to we I to end continue answer we and we shoot positive We with relationship regrettably, last them But solutions they're what's target and but them. holiday have them Rafael the results.

quite have with them. relationship a good We

venture in on Texas, Institute we doing Southwest have modeling also armor a We are down joint advanced solutions. Research with where some the

with So great are make where. but still a the they're I address yes, And we Yes, we continue progress application specifically partner. yes, working Rafael. cannot to

over show with for protection. They tiles website their the on vehicles all

looking into the going obviously... they're your to use obviously, they're whether because solutions So technology,

if armor saved advances the has of ceramic shown of lives. not Certainly, quite years been combat the performance, it's hardness -- the XX here the provides has the features. lightweight in new, U.S. the But of last initiative has thousands the armor obviously, lots Yes, that ceramic survivability body of hundreds right? not U.S. over

to be ground we it case scale, today, scale or platforms. that I Navy whether vehicles for think our putting so in And provide

can see some the that, savings You weight to are there monolithic a metallic value solution. versus

you're might Could to? comment forward -- you right. you All other on contracts any hybrid-armor-type looking

certainly, we -- haven't them. Well, Yes. been awarded, we're

more platform. the begun And do we Let of and deeply working Ukraine U.S. We me have Obviously, with it has mentioned the invasion Rafael. to Union survivability into become just that in and the with partners have to first. sensitive tell here EU. European the you what and in their add armor are But more armor invest I they do needs could their to agents

So dialogues going we on. those have

have in that platforms focusing the accurate Here so are in on Department in the States, revenues we forecast. have solutions that Defense and next-generation we and been predictable budget

vehicles. varies focus. helicopter So our with from I you that's been to varies. It it can share ground

cost to solutions application continuing fit HybridTech and Armor within has will profile. the ballistic many So profile our are of find we research customers' and that our to

marketing Great. one a And have Wolfspeed that? there module. mean question. heat in volts there. sort that then week to didn't they're last announced the mean of they with make to picture that car I last a obviously. they have X,XXX-volt start comments on trying you do. fits what of going and It Can X,XXX like any the was copper any dissipation I about look module you're

you -- we Yes. were we about I X,XXX -- but high you're the volts, in module? what don't talking encouraged in the said, up go as know specifically that X,XXX-volt

Right.

pronounced. the our composites metal of more Yes. become matrix even Obviously, benefits

point, that exceed we So with that the get your expect properties you to to the solution. can I copper think

Are other besides solutions a X,XXX-volt there yours? for module

I I don't know. you? don't... But do

-- at use that X,XXX volts, efficient, that think where you not want our of think I to area we're I'm kind can in be if gray you more solution. I

with want is get away you I to try can. believe you correct. that If a cheaper to solution,

if something that. see we about tell and tomorrow something and or you more docs two the with get I'll Yes. can post

Yes. That's a better idea.

and away used? popular voltage, Great. future. they volts with... about they can AlSiC moving XXX companies said At They talked in and their that And have would Or volts get more has is be Wolfspeed becoming up. car XXX XXX

some we those them customers are of we don't our know of an with I ranges full details application in though. but talking Absolutely. for the mean

what, 'XX, that's, But you really see. it a... I think 'XX, before becomes

Time frame, are year? you talking years, calendar

right. years, Yes,

to varies I To we're and it, long time. people material me, mentioned put it long you through cycle earlier to but company science number my process And business. it's we know product for hard material remarks from it's a test in by But certainly validate company. stay a right? -- to the get which solution that Yes. a to deliver it, the matrix, in to it's then go on a

would to say years three would on out. So it think I you're be I to five those -- be it's for but me lines; difficult

Right. try studying you and market, as And mean possibility any something I there know Is as this better but can market. mean a you're you copper obviously than to module? I AlSiC AlSiC but good the not get... make not

and accomplishments on -- AlSiC-X the AlSiC, and do of of We not just of work combinations one proud XX of ceramics. different metals reasons AlSiC the right? our all are but always we combinations with We very matrix we're we're remarks Dr. titanium. metal open to new on and earlier, working Dr. And kinds to won think contract we my the of those all using time. solutions. I all composites. I Mark are nickel, And a know And Steve aluminum, Yes.

just not anymore. we're So AlSiC

So...

I see I which smart, is think.

as you're way. in not the As why for a looking market in metal is what the provide better business, long

So congratulations.

wonderful aboard I your done job. that's that's you've come of obviously, done that part The company reason since happened. sure has a you've think fine I'm and

you. Thank

Your comes [ph]. from line Patrick next question of the White

Congratulations Mike on margins. particularly on work there, following and on Chuck, the solid that gross little a quarter up excellent bit. And both and

book margins be maybe delivered to it being armor maintain tough function is X.X that just conceivable level? you'd of going going or of and is at the that of those higher, able to that's in DSO hybrid that keep it's With gross margins X.X, be forward? this to now to the kind a running Or 'XX at kind

costs it to are doing very quarter to, alluded it's lot right? have that's keep a it. certainly, hard We're managing whether But much variety Patrick, Our doesn't not actively, fixed initiatives we one up. on through goal But of say and complementary us. need easy We're the And working the Patrick, made the quarters purchasing total, that department. I make like higher it's our right? this that to many cost. we're think alluded they a operations, some be goal, positively. of margins Chuck been I'll to able sales, to of year, work with is have Well, the of being run a it And with help things. there whether our we more our we've in it. just variables and before we're reduce be staff We couple But volume a we with something. to trending

Okay.

the several working On right working and you Are wins to be vehicles? mentioned that getting on maybe limited individual, EVs, at luxury-type testing those might extend those be wins maturity. limited platform-driven, to beyond design through Or certain those you now going something that more to are vehicles? strictly too,

great, Yes. right? when, we right, high of customers, we're and our Certainly are the talk the calls. high so earlier And extremely latter, numbers to more like, when talking they in to some production

so about there answer dialogue being capacity And to be on asked to them of high production being quoted the to to with we are and that. parts have the demonstrate continue realistic but really us demands volumes

capital require to Okay. Would a handle... raise that

a I don't factory know ways at our facility, this do to in obviously We at to like a time, XX,XXX-square-foot different right? here. site. Right now, We're look continue we planning. optimize

it's It's what's And And the that's been facilities costs competitive for days the us? get to We and keep with low, keep orders difficult here. keep have working when Do best dialogue ability to you CPS. kind through to the flowing that we've of into and contract and you expand us get for them. us expansion. expand always these

answer. question is the is maybe the So --

have, problem not? good That to would be would a it

it We too. way high That's it. rent call we Yes. here, the call problem a

and awards, any add the in of alloy mentioned the business devices. think you one commentary storage color? Can aluminum you Okay. I small

is the market broader This for military. application a course, exploding whether from just Can it and is you storage commercial commercial the Of market elaborate upon standpoint. has application storage?

application what yet. Yes. when what part They don't pursuing do to part Navy Well, we very that's generally in it. Navy on specifically compartmentalize And I think to of it's know technologies. We what they're the yet look with they're they're going of know certainly, kind the program. of much the don't do we it the with going but with

execute XX which we -- for over and and gates, As XX X contract program, to different the phases a There I of Phase in nice months development. is that course it's $XXX,XXX are to more I during performance think gates think towards total, to lend about this us we development. X we the the continue applications get And Phase Phase meet and that that have advance X, information further to will research program.

Okay, I I'm last one work a in have I today cold have struggling. progress. question. so

in attractive power printing down costs mentioned might you printing. XD exploring upon in a module in elaborate You Can enable extremely XD they processes to improvements manufacturing the point the space? your where whether become outfit

being be current to reducing the lowest idea market. proposition there And Yes. But the cost goal processes so that's a additive our at manufacturing, And I can look yet. improved customers end, of competitive manufacturing the to be dream our AlSiC And remain those with of we're the day, to is not mutually they're parts cost, right? copper Well, exclusive, so all we certainly, right? But and value cost at less our competitive, consistency every the not idea production to enabling products of to the than always in lowering continue in our approach, make of our our salespeople the processes. quality -- right? and improving produce good is whether -- of so that clients

we're So open.

[Operator Instructions] of Your Pound next question line Kenneth [ph]. from the comes

talking Also, a in with Is of and updates the lot do other I [ph]. this going things the quarter, guys on about know Yes, you with good on technology any trains military. there market? what's business a EV

-- train segment the to the about Yes. commercial defense, COVID the hangover, market of a you Well, transportation from lag if in continues story market will. EV and both or the main the

customers contact demand been that's and increasing in 'XX. they in We our are but have forecasting with

us. of doing with and continued think lagging segment executing. there these for We're a the folks. we still communication So job still the a still I market have that's but good We're is business

think -- market time. to want be it's through could go We're And we don't their And EV I We've to from but pieces. we've that So all of been long going really of for to a right? hundred, growing. huge, thousand that to here on advanced be working a continuing the they couple advance had to win I testing oversell get couple yes, design design as a wins.

not Pieces, dollars.

dollars, pieces. continues to Not And that advance.

a it's in we're to approved cycle line So long but that in solutions many phases. get our in different and

tens. at are Some

Some are at hundreds.

Some thousands. are in

I just delivering. So like they [ph] us in hopefully, to we And to need feathering be but way CPS. the good could happen keep and for pursuing improvements will things

locating in that at A more things in some is there someone good they're doing passenger of shows go on least stuff EV an for that's lot mentioned of You idea here in West? to the other Michigan presence to California, or out have stuff, to reasons. out kinds there the going

certainly, stationed Well, a have Yes. California we already. in gentleman

would -- Weatherman we So we already stationed Gregg California. have in

I think the show this at week. he's

At event. Space Tech

Beach... Long

guess. I week, Next

Florida. but or we And had I Gregg also think have down in California. in week we week next already Tim this it's

got he's So us a Anthony And be kind of geographically we space coast. kind positioning to of give of in of thought Michigan would the executing triangle nice that commerce. the want kind area where then we

So...

Please further no at this continue. are questions time. There

us Okay. Do did we Chuck, of further -- home? you most to no if want take the Well, have I talking.

Thank so. say thank just yes, have you. news or -- I'll us. everybody, for joining in equally days And you, or we'll better hopefully, I'll XX good

you, you, Thank everybody. Thank Risa.

conference Thank today's you. concludes call. This

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