CPSH - CPS Technologies Corporation Announces Third Quarter 2019 Results

NORTON, Mass., Oct. 30, 2019 (GLOBE NEWSWIRE) -- CPS Technologies Corporation (NASDAQ:CPSH) today announced revenues of $4.4 million and an operating loss of $479 thousand for the quarter ended September 28, 2019. This compares with revenues of $6.1 million and an operating loss of $19 thousand for the quarter ended September 29, 2018. 

For the nine months ending September 28, 2019, revenues are $16.0 million with an operating loss of $966 thousand. For the nine months ending September 29, 2018 revenues were $15.5 million with an operating loss of $1.1 million.

Grant Bennett, President and CEO, said: “Revenues were down in the third quarter due to decreases in AlSiC products, partially offset by an increase in hermetic package revenue.  Negotiating strategies of certain customers were the reason for some of the decline.  In any event, our management team reacted swiftly when notified that certain customers would be reducing third quarter purchases.  The implementation of cost reductions significantly mitigated the potential loss given the reduction in sales.”

The gross margin percentage in the third quarter 2019 was 5% and the year to date gross margin was 10%.  Last year the gross margin for the third quarter was 16% with a year to date gross margin of 11%.   The decrease in gross margins is a result primarily of the revenue reductions in the third quarter.”

Mr. Bennett continued, “While we are disappointed with our third quarter results, developments which occurred in the third quarter will have a positive impact on our performance going forward, beginning in the fourth quarter.  First, we have negotiated new contracts with our three largest customers, signing one one-year contract, and two two-year contracts.  These contracts provide for materially significant price increases, most price increases begin in the fourth quarter, some begin in the second quarter of 2020.  In addition, these contracts provide for increased unit sales volumes from all three of our largest customers, for some products beginning in the fourth quarter, and other products beginning in the first and second quarters of 2020.  Second, as part of our strategic initiative to increase margins, we have made improvements in our product mix.  Third, during the third quarter we replaced our line of credit.  The new line of credit has a $2.5 million cap compared to $1.25 million previously.  The new inclusion of basically all our foreign receivables in the borrowing base creates more availability under the cap.  We had more unused availability under our new line at the end of the third quarter, $1.3 million, than we did total availability under the previous line.  This has allowed us to end our early pay discount policy which will have a positive impact on both our top and bottom line."

Mr. Bennett summed up by stating, “These changes strongly suggest improved performance in the fourth quarter 2019 and throughout 2020.  This improved performance should provide us with the resources necessary to continue expanding our customer base and increase sales volumes and margins.”

The Company will be hosting its third quarter conference call with investors at 4:30pm on Wednesday, October 30. Those interested in participating in the conference call should dial:

Call in Number: 1-855-863-0441

Conference ID: 1581287

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 2019 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                                     
Chuck Griffith, Chief Financial Officer                                        
111 South Worcester Street                                                                        
Norton, MA 02766
Telephone: (508) 222-0614
Web Site:  www.alsic.com