CPS Technologies Corporation
Chuck Griffith, Chief Financial Officer
111 South Worcester Street
Norton, MA 02766
Telephone: (508) 222-0614
Web Site: www.alsic.com
CPS TECHNOLOGIES CORPORATION ANNOUNCES THIRD QUARTER 2020 RESULTS
Norton, Massachusetts, October 28, 2020. 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 CORP. | ||||||||||||||||
| STATEMENT 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 CORP. | ||||||||
| BALANCE SHEET (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 | ||||
| LIABILITIES AND STOCKHOLDERS` EQUITY | ||||||||
| 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 | ||||