CPS Technologies Corporation Announces Third Quarter 2020 Results

CPS Technologies Corp.
·7-min read

NORTON, Mass., Oct. 28, 2020 (GLOBE NEWSWIRE) -- CPS Technologies Corporation (NASDAQ: CPSH) today announced revenues of $4.5 million and an operating profit of $253 thousand for the quarter ended September 26, 2020. This compares with revenues of $4.4 million and an operating loss of $479 thousand for the quarter ended September 28, 2019.

For the nine months ending September 26, 2020, revenues are $16.7 million with an operating profit of $1.2 million. This compares with revenue of $16.0 million and an operating loss of $966 thousand for the nine months ended September 28, 2019.

Grant Bennett, President and CEO, said: “While generally pleased with our bottom lines for quarter and nine-month periods just ended, in the third quarter our top line was increasingly negatively affected by the coronavirus pandemic. In particular, our two largest customers are experiencing reduced demand from their customers, resulting in a significant reduction in purchases from CPS. Additionally, one of our suppliers experienced a fire in May which shut down their operations for almost the entire third quarter; they did not reopen until the final week of September. This had the effect of pushing expected third quarter shipments into the fourth quarter.

Gross margins and operating profits were considerably higher in the three-month and nine-month periods just ended than they were in the corresponding periods a year ago. This significant positive swing in performance reflects the pricing, product mix and operational improvements discussed in previous quarters. This is clearly seen by the $100 thousand increase in revenues resulting in a $732 thousand improvement in operating profit and $700 thousand increase in revenues resulting in a $2.2 million improvement in operating profit for the three and nine month periods ending September 26, 2020, respectively.

CPS continues to be open and operating during the pandemic. To date most of our customers remain open and operational. In Q3 we saw significant increased volatility on the part of some of our customers, while for others it has been business as usual. We expect that this volatility will continue for at least the next several quarters.

As previously stated, CPS continues to follow CDC and OSHA guidance in our workplace. Employees’ temperatures are taken at the beginning of each shift, shifts have been staggered to reduce employee overlap, workstations have been rearranged to ensure social distancing, all employees are using facemasks, etc.

Any forward-looking comments must begin with the clear caveat that the pandemic is injecting considerable uncertainty at customers and suppliers so conditions can and may change quickly. While we must tone down our optimism for the fourth quarter of 2020 and the first quarter of 2021, we continue to be very optimistic about the future. We have several new projects which could add materially to our revenue stream in 2021 including in the hermetic package and armor product lines, in addition to our core AlSiC component product line. The pipeline of new design wins remains very robust.

Recent in-depth analyses of pricing and costs have enabled us to generate operating efficiencies which should help us to grow hermetic package profitability in the coming quarters and years. Armor is an area that has been on the table for several years. Recent developments suggest this product may start to generate material revenues as soon as next year.”

The Company will be hosting its third quarter conference call with investors at 4:45pm on Wednesday, October 28. Those interested in participating in the conference call should dial:

Call in Number: 1-833-953-1394

Conference ID: 6798808

About CPS
CPS Technologies Corporation is a global leader in producing metal-matrix composite components used to improve the reliability and performance of various electrical systems. CPS products are used in motor controllers for hybrid and electric vehicles, high-speed trains, subway cars and wind turbines. They are also used as heatspreaders in internet switches, routers and high-performance microprocessors. CPS also develops and produces metal-matrix composite armor.

Safe Harbor
Statements made in this document that are not historical facts or which apply prospectively, including those relating to 2020 financial results, are forward-looking statements that involve risks and uncertainties. These forward-looking statements are identified by the use of terms and phrases such as "will," "intends," "believes," "expects," "plans," "anticipates" and similar expressions. Investors should not rely on forward looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the company's expectation. Additional information concerning risk factors is contained from time to time in the company's SEC filings, including its Annual Report on Form 10-K and other periodic reports filed with the SEC. Forward-looking statements contained in this press release speak only as of the date of this release. Subsequent events or circumstances occurring after such date may render these statements incomplete or out of date. The company expressly disclaims any obligation to update the information contained in this release.

CPS TECHNOLOGIES CORPORATION

Statements of Operations (Unaudited)

Fiscal Quarters Ended

Nine Months Ended

September 26,

September 28,

September 26,

September 28,

2020

2019

2020

2019

------------

------------

------------

------------

Revenues:

Product sales

$4,452,387

$4,387,125

$16,721,973

$16,023,615

------------

------------

------------

------------

Total Revenues

4,452,387

4,387,125

16,721,973

16,023,615

Cost of product sales

3,514,813

4,164,187

13,050,860

14,466,266

------------

------------

------------

------------

Gross Margin

937,574

222,938

3,671,113

1,557,349

Selling, general and

administrative expense

684,836

702,413

2,466,196

2,523,178

------------

------------

------------

------------

Operating income (loss)

252,738

(479,475)

1,204,915

(965,829)

Interest income (expense), net

(21,263)

(16,495)

(87,004)

(23,757)

Other income

(3)

--

14,446

--

------------

------------

------------

------------

Net income (loss) before income

tax expense

231,472

(495,970)

1,132,357

(989,586)

------------

------------

------------

------------

Provision for income tax

456

--

456

--

Net income (loss)

$231,016

$(495,970)

$1,131,901

$(989,586)

=========

=========

=========

=========

Net income (loss) per

basic common share

$0.02

$(0.04)

$0.09

$(0.07)

------------

------------

------------

------------

CPS TECHNOLOGIES CORPORATION
Balance Sheets (Unaudited)

September 26,

December 28,

2020

2019

ASSETS

-------------

-------------

Current assets:

Cash and cash equivalents

$112,575

$133,965

Accounts receivable-trade, net

3,961,606

4,086,945

Inventories, net

4,187,272

3,099,824

Prepaid expenses and other current assets

139,963

147,786

-------------

-------------

Total current assets

8,401,416

7,468,520

-------------

-------------

Property and equipment:

Production equipment

10,282,980

9,649,169

Furniture and office equipment

508,423

508,423

Leasehold improvements

934,195

934,195

-------------

-------------

Total cost

11,725,598

11,091,787

Accumulated depreciation and amortization

(10,478,053)

(10,110,663)

Construction in progress

127,408

255,754

-------------

-------------

Net property and equipment

1,374,952

1,236,878

-------------

-------------

Right-of-use lease asset

63,000

171,000

Deferred taxes, net

147,873

147,873

-------------

-------------

Total assets

$9,987,241

$9,024,271

=========

=========

(continued)

CPS TECHNOLOGIES CORPORATION
Balance Sheets (Unaudited)
(concluded)

LIABILITIES AND STOCKHOLDERS`

September 26,

December 28,

EQUITY

2020

2019

-------------

-------------

Current liabilities:

Borrowings against line of credit

835,123

1,249,588

Note payable, current portion

37,917

--

Accounts payable

1,221,642

1,436,417

Accrued expenses

720,182

815,166

Deferred revenue

358,000

21,110

Lease liability, current portion

80,878

148,000

-------------

-------------

Total current liabilities

3,253,742

3,670,281

-------------

-------------

Note payable less current portion

149,652

--

Long term lease liability

19,736

23,000

-------------

-------------

Total liabilities

3,423,130

3,693,281

Commitments (note 4)

Stockholders` equity:

Common stock, $0.01 par value,

authorized 20,000,000 shares;

issued 13,716,242 and 13,427,492, respectively;

outstanding 13,296,168 and 13,207,436, respectively;

at September 26, 2020 and December 28, 2019;

137,162

134,275

Additional paid-in capital

36,633,553

36,094,201

Accumulated deficit

(29,248,532)

(30,380,433)

Less cost of 420,074 and 220,056 common shares

repurchased, respectively;

at September 26, 2020 and December 28, 2019

(958,072)

(517,053)

-------------

-------------

Total stockholders` equity

6,564,111

5,330,990

-------------

-------------

Total liabilities and stockholders`

equity

$9,987,241

$9,024,271

==========

==========

See accompanying notes to financial statements.

CPS Technologies Corporation
Chuck Griffith, Chief Financial Officer
111 South Worcester Street
Norton, MA 02766
Telephone: (508) 222-0614
Web Site: www.alsic.com