CPS Technologies Corp (CPSH, Financial) released its 8-K filing on November 1, 2024, detailing the financial results for the third quarter ending September 28, 2024. The company, known for providing material solutions across various industries, including transportation, automotive, and defense, faced a challenging quarter with a notable decline in revenue and profitability.
Company Overview
CPS Technologies Corp specializes in metal matrix composites (MMCs), offering custom components that enhance the performance and reliability of systems in diverse markets. The company also produces baseplates and housings for radar and satellite applications, as well as lids and heat spreaders for integrated circuits in Internet infrastructure.
Third Quarter Financial Performance
The company reported a revenue of $4.2 million for the third quarter of 2024, a significant decrease from $6.3 million in the same period last year. This decline was primarily due to the completion of the HybridTech Armor® contract with Kinetic Protection and reduced purchases from a major customer managing excess inventory.
The gross loss for the quarter was $0.5 million, translating to a negative 12% gross margin, compared to a gross profit of $1.2 million or a 20% margin in the previous year. This downturn was attributed to lower revenue and increased costs from staffing and training a third operating shift.
Operational and Net Losses
CPS Technologies Corp reported an operating loss of $1.5 million, contrasting with an operating profit of $0.1 million in the prior year. The net loss for the quarter was $1.0 million, or $(0.07) per diluted share, compared to a net income of $0.2 million, or $0.01 per diluted share, in the third quarter of 2023.
Balance Sheet and Cash Flow
The company's balance sheet showed total assets of $19.2 million as of September 28, 2024, down from $21.6 million at the end of 2023. Current assets decreased to $14.7 million from $18.1 million, with cash and cash equivalents dropping to $4.7 million from $8.8 million. Total liabilities were reduced to $3.8 million from $4.3 million, while stockholders' equity decreased to $15.4 million from $17.3 million.
Strategic Outlook and Challenges
Despite the current challenges, CPS Technologies Corp remains optimistic about future performance. The company has secured a Phase II award from the U.S. Department of Energy and a $12 million contract with a global semiconductor manufacturer. The third operating shift, which began production in the third quarter, is expected to positively impact revenue in the fourth quarter.
While this quarter was negatively impacted by the costs related to staffing and training a third operating shift, we are optimistic about significantly improved performance in the fourth quarter and beyond," said Brian Mackey, President and CEO.
Conclusion
CPS Technologies Corp's third quarter results reflect the challenges of transitioning operations and managing contract completions. However, the company's strategic initiatives and new contracts provide a foundation for potential recovery and growth in the upcoming quarters. Investors and stakeholders will be keenly observing the company's ability to navigate these challenges and capitalize on new opportunities.
Explore the complete 8-K earnings release (here) from CPS Technologies Corp for further details.
