Earnings call transcript: CPS Technologies sees record Q2 2025 revenue, stock up 12%

CPS Technologies reported a record revenue of $8.1 million for the second quarter of 2025, representing a 61% increase year-over-year. The company’s stock surged 12.26% following the announcement, reflecting investor optimism about its financial turnaround and strategic initiatives. With a market capitalization of $43.21 million, InvestingPro data shows the stock has delivered an impressive 62.11% return year-to-date. The company also reported a net income of $100,000, a significant improvement from a net loss of $900,000 in the same quarter last year.

Key Takeaways

• Record quarterly revenue of $8.1 million, up 61% year-over-year.
• Stock price increased by 12.26%, closing at $2.93.
• Net income improved to $100,000 from a net loss of $900,000 last year.
• New product innovations and contracts, including a fourth SBIR contract with the US Navy.
• Added a third production shift to boost manufacturing capacity.

Company Performance

CPS Technologies demonstrated strong performance in Q2 2025, achieving record revenue levels and returning to profitability. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, despite showing strong momentum with a 48.76% price return over the past six months. The company’s focus on product innovation and strategic contracts, particularly in defense, has driven significant growth. This performance is notable compared to the previous year’s loss, highlighting a successful turnaround strategy. InvestingPro subscribers have access to 8 additional key insights about CPSH’s valuation and growth prospects.

Financial Highlights

• Revenue: $8.1 million, up 61% year-over-year.
• Net income: $100,000, compared to a net loss of $900,000 in Q2 2024.
• Gross profit: $1.3 million, representing 16.5% of sales.
• Cash and marketable securities increased by $500,000.

Outlook & Guidance

CPS Technologies is on track for its best revenue year ever, with expectations of continued strong demand across its core product lines. The company is focusing on improving bottom-line results and expanding its market presence. Future projections include opportunities in wind turbine and high-voltage DC markets, alongside ongoing pursuit of SBIR contracts.

Executive Commentary

CEO Brian Mackey stated, "We’re on track for our best revenue year ever," emphasizing the company’s commitment to expanding margins and improving performance. Mackey also highlighted the strong demand for core products and the strategic initiatives underway to capitalize on market opportunities.

Risks and Challenges

• Tariffs impacting domestic pricing could affect profitability.
• Capacity constraints, although being addressed, may limit growth.
• Cancellation of a radiation shielding contract, though new opportunities are being explored.
• Potential market volatility and economic pressures could impact future performance.

Q&A

During the earnings call, analysts inquired about potential opportunities in the data center and wind turbine markets. The company addressed concerns about capacity constraints, noting strategic planning efforts to mitigate these challenges. Despite the cancellation of a radiation shielding contract, CPS Technologies is actively seeking new opportunities in this area.

Full transcript - Cps Technologies (CPSH) Q2 2025:

Chuck Griffith, Host/Moderator, CPS Technologies: Hello, Bruce.

Jenny, Conference Operator: Good morning, everyone, and welcome to CPS Technologies second quarter earnings call. At this time, all participants have been placed on a listen only mode, and we will open the floor for questions following the presentation. It is now my pleasure to turn the floor over to your host, Chuck Griffith of CPS Technologies. Chuck, the floor is yours.

Chuck Griffith, Host/Moderator, CPS Technologies: Thank you, Jenny, and good morning, everyone. Today, I’m joined by Brian Mackey, our President and CEO, and we look forward to discussing our second quarter results with you. But first, Chris Witty, our Investment Relations Advisor, will provide a brief safe harbor statement. Chris?

Chris Witty, Investment Relations Advisor, CPS Technologies: Thanks, Chuck, and good morning, everyone. Before we begin the business portion of today’s call, I would like to point out that statements in this conference call that are not strictly historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist in CPS’ operations and environment. These uncertainties include, but are not limited to, the ongoing conflicts in Ukraine and Israel, other geopolitical events, economic conditions, market demands and competitive factors. Such factors could cause actual results to differ materially from those in any forward looking statement. Additional information can be found in our filings with the SEC.

Now I will turn the call over to Brian to offer his perspective on the quarter, after which Chuck will review the financial results in greater detail. Brian?

Chuck Griffith, Host/Moderator, CPS Technologies: Thanks, Chris, and good morning, everyone. I’m pleased to announce that for the second consecutive quarter, we have established a new quarterly revenue record for the company at $8,100,000 for Q2. Not only is this up quite significantly year over year, but it represents 8% growth sequentially from the first quarter of this year. We continue to execute across our various products and are focused on fulfilling strong demand for the remainder of this year and beyond. We’re on track for our best revenue year ever, and as I’ll explain further in a moment, are dedicated to also improving our overall bottom line results.

We’re excited by the aspect by all aspects of our operating environment, including ongoing strong demand, increased defense spending, a growing portfolio of marketable technologies often created with external funding, and a highly capable team with a demonstrated ability to address our customers’ material science challenges. I’ll now turn the call over to Chuck to provide further details about our financial results, after which I will provide some additional perspective. Chuck? Thanks, Brian. We’re very pleased with our second quarter second consecutive strong quarter of 2025, which is further evidence of our effective approach to growing CPS.

The company’s revenue for the quarter totaled a record $8,100,000 compared with $5,000,000 in 2024, an increase of 61%. In the year over year comparison, most of the variance was driven by strong customer demand, combined with our improved ability to increase manufacturing output, including the addition of a third shift of production. We continue to broaden the company’s core product offerings with new and existing customers, and we anticipate continued strong revenue results. We reported a gross profit in the second quarter of $1,300,000 or approximately 16.5% of sales compared with a gross loss of $200,000 last year. The increase was due to the higher revenue and greater manufacturing efficiencies.

While pleased with the much improved margins year over year, we remain focused on growing our profitability going forward. We believe the coming quarters will show the results of our efforts to further improve manufacturing efficiencies, increase capacity utilization and bolster return on assets. Selling, general and administrative expenses totaled $1,200,000 in the second quarter versus $1,100,000 in the prior year period. We continue to manage our costs even while ramping up production output and investing for growth. The company posted an operating profit of about $137,000 in the second quarter compared with an operating loss of approximately $1,300,000 last year, and we reported net income of just over $100,000 or $01 per share versus a net loss of about $900,000 or $07 per share in 2024.

Turning to the balance sheet. We ended the quarter with $2,400,000 of cash and $1,000,000 in marketable securities versus $3,300,000 in cash and 1,000,000 in marketable securities at the 2024. Of more significance is that our cash and marketable securities increased by almost $05,000,000 from the 2025 to the 2025. Trade accounts receivable totaled 5,600,000 as of 06/28/2025, versus $4,900,000 as of 12/28/2024. Inventory rose to $5,200,000 at the end of the second quarter as we produced more to meet our customers’ growing demand compared with $4,300,000 at the start of the fiscal year.

Turning to the liability side. Payables and accruals totaled $4,300,000 at the end of the second quarter versus $4,000,000 at the end or as of 12/28/2024. Now Brian will provide a more in-depth discussion of the period. Thanks, Jeff. We are in the middle of CTS’ best revenue year ever, but we also know that even better days lie ahead.

Manufacturing capacity has increased dramatically over the last several quarters in response to increased demand. New technologies are being brought to market, and we continue to land new development contracts as we develop innovative solutions to real world problems. As previously announced, we recently won our fourth new SBIR development contract of the year, continuing our partnership with the US Navy to support next generation defense solutions. This particular phase one SBIR with funding from the US Navy is focused on reducing the weight of the amphibious combat vehicle or ACV, a vital transport platform for the US Marine Corps operations. This is a six month award worth a $140,000 with an optional six month extension at the end of the period of performance worth another $100,000.

Given our expertise in advanced composites and engineering, we will be evaluating various vehicle components such as hatches, armor, suspensions, etcetera, to identify opportunities for redesign with lightweight alternatives to improve fuel efficiency, buoyancy, and operational range. This evaluation is applicable to all variants of the ACV whose designs have significant overlap of their constituent parts. It’s a great contract that could lead to additional work going forward given the military’s interest in making vehicles lighter, more durable, and fuel efficient. This process will be led by Matthew Carnett, one of our material scientists and now a two time SBIR award recipient who has a strong background in composite innovation and structural optimization. I’d like to publicly thank Matthew for his great work at CTS over the last three years.

In addition, we also recently announced the receipt of our first purchase order for Almax Materials. As a reminder, last year, we became the exclusive global licensee of fiber reinforced aluminum composites originally developed and patented by Triton Systems. We’re now making headway commercializing this technology under the Almax brand and are excited to announce this initial contract. Relative to aluminum, Almax offers superior performance, including exceptional wear resistance and greater strength at both room temperature as well as elevated temperatures. Indeed, we are seeing expanded interest across multiple large addressable markets for the unique performance advantages that Almex provides.

Customer feedback has been highly encouraging. This first order from a domestic manufacturer signal prompting commercial traction and an important milestone as we pursue a variety of intriguing opportunities for commercializing this material. Additionally, we are now executing two distinct Phase one SBIR programs, one funded by the Army and one funded by the Navy targeting the ACV, where these Almax materials may offer key advantages for improving the operability of military ground vehicles. Together, the new SBIR contract and Almax’s first commercial order underscore our ongoing commitment to innovation in material science and our mission to deliver practical, mission ready solutions for government and industrial customers alike. Technical work on our other funded effort continues.

Though I will not go into detail on each of them here, I will note that we recently filed a nonprovisional patent application for our radiation shielding material. We are less than halfway through the two year development effort for radiation shielding that is funded by the Department of Energy, and we continue to pursue relevant commercial opportunities as development work continues in parallel. This recent patent filing provides necessary protections for the intellectual property developed by CPS. These development activities build upon a very positive growth outlook. At the same time, we are committed to expanding our gross margins and improving bottom line results.

We are dedicated to increasing manufacturing efficiencies, which ultimately generate stronger profitability and better returns for our shareholders. This is a key area of focus for the entire company. We have a number of initiatives underway that we expect will have a positive impact on margins. These range from smaller cost down initiatives to larger modernization programs, each with its own time line for execution and implementation. And our impact on the income statement will be realized as this is incorporated into our daily operational activities.

We have faced some headwinds in our ability to improve margins in the near term, including the form of tariffs. While we source many of our raw materials domestically, tariffs can nevertheless have an impact on domestic pricing. Domestic producers, in some cases, can raise prices if their competitors who import goods are compelled to do so due to tariffs. Although the impact of these tariffs is not a severe threat, it does work against our efforts to improve margins. The opportunity for future armor orders remains possible given the strong track record that has been built with the US Navy by CTS and our key partner, Kinetic Protection or KP.

The federal budget for fiscal twenty twenty six prioritizes defense spending, and our ballistic solutions address a large market across various types of ships as well as other military applications. Productive discussions are ongoing between CPS, KT, and relevant members of the Department of Defense, and we remain optimistic about the opportunity for additional orders in the quarters to come. With regard to our SBIR portfolio, including the new program I spoke of earlier, we now have four active Phase I, two active Phase IIs as well as non SBIR funding from the U. S. Naval Air Command at China Lake.

Now with seven active programs, this provides another significant milestone for CPS in terms of the number of externally funded projects underway. Aside from one DOE program for radiation shielding, all of these are funded by the Department of Defense. And given priorities of budget in congress, these represent real opportunities for further military r and d and commercialization upon success successful outcomes of the funded research. As always, we continue to pursue additional SBIR contracts where we believe we can provide unique technical solutions that also offers commercialization potential for CPS. Demand remains strong for our core products, which includes both metal matrix composite and cement packaging, including our newly added capability of five axis machine.

We have a solid backlog in hand, and we’ll continue to execute throughout the year and beyond to meet the robust demand we are experiencing from both existing and new customers. In closing, we’re excited by the accomplishments we have consistently demonstrated thus far in 2025 and look forward to even better days ahead. Fifteen months ago, our armor shipments ended as we fulfilled that contract. Since then, we have more than made up for the loss of revenue through the growth of our other products and with additional revenue from externally funded development contracts. While actively pursuing additional armor awards, we are leveraging our unique capabilities in radiation shielding, hermetic packaging, Almex composites, and a host of SBIR awards to accelerate growth going forward.

And as I mentioned earlier, we are committed to expanding margins and improving the company’s underlying performance, leading to greater profitability and cash flow in the quarters to come. We’re proud of everything our team has done to put us in position for our best revenue year ever. We are confident that our commitment to growth through innovation, commercialization of our technologies, and ongoing operational improvements will provide enhanced return for our investors. At this point, we can open up the call for questions. Jenny?

Jenny, Conference Operator: Thank you very much. We’re now opening the floor for questions. If you have any questions, you can press star one on your phone keypad now. We ask that while you’re posing your question, you please pick up your handset if you are listening on the speakerphone to provide optimum sound quality. Please wait a moment while we poll for questions.

Thank you. Your first question is coming from Michael Legg of Ladenburg. Michael, your line is live.

Chuck Griffith, Host/Moderator, CPS Technologies: Thanks. Good morning. Congratulations on the quarter. Could you talk a little bit about your visibility into future revenues, what type of pipeline you may have, and just kinda get into the sales cycle and how it all develops? Thanks.

I think I’ll start. Thanks, Michael. I think one aspect of it is the the cycle of ordering which our different customers execute on. Some of them are just a couple of months out. So in the near term, it’s very clear to us.

Others are sort of in the four to six month time frame where they’re adding to our order book at that window. And on a less frequent basis, we’ll have an order up to twelve months in advance. Collectively, I would say our our window is four to six months on average, and we do continue to see strong demand that we’ve seen throughout this year so far. Chuck, do wanna add to that? No.

Think you’ve said that. Okay. Pretty much covered. Yeah. Okay.

Great. Thank you very much.

Jenny, Conference Operator: Thank you very much. And your next question is coming from Ron Richards, and he’s a private investor. Ron, your line is live.

Ron Richards, Private Investor: Morning, guys. Congratulations on the revenues. It’s good to see. I was wondering as far as the build out in data centers, does CPS expected all that money spending in that area is gonna benefit them somewhere down the line?

Chuck Griffith, Host/Moderator, CPS Technologies: Yeah. Thanks for the question. Good morning. It’s certainly an area of great interest to us, which has significant opportunity for us. The the high voltage DC lines or HVDC, there’s a number of projects that are are cropping up around the world, such as Europe.

There’s a number of things that are active that are very relevant to CPS. In the past, when we’ve been asked about data centers, our answer has been that they are not particularly relevant to CPS. When we are adding our base plate for our customers’ high power electronics, it’s typically necessary because those electronics are switching on and off with generally high frequency. So you think of a subway car or a train that’s starting and stopping or a wind turbine starting and stopping, it’s generating heat in the electronics through that starting and stopping, and it requires our base plate to help dissipate that heat, but stay in contact with those electronics through matching of the coefficient of thermal expansion. Those data centers are typically on and hot twenty four hours a day, which means they’re typically not relevant for our solution.

However, the ACDC projects which are actively underway and being planned, include one of the sources of this growing demand for electricity to satisfy that demand being wind turbines, wind farms, whether over land or over water. And when you’re generating electricity with those types of solutions, those wind farms do need base plates like ours to address that switching and therefore that heat. So this is an additive opportunity related to HVDC that is completely separate from our core markets such as traction or transportation train, subway cars, etcetera. While we’ve always had sales into the wind turbine market, this is a completely new opportunity that we expect to play out over the next couple of years.

Ron Richards, Private Investor: Okay. Thank you.

Jenny, Conference Operator: Thank you very much. Just a reminder there, if there are any remaining questions, you can press star one on your phone keypad now to join the queue. Our next question is coming from Steven Soffey. Steven is a private investor. Your line is live.

Chuck Griffith, Host/Moderator, CPS Technologies: Hi. Good morning. Good morning, Frank. You guys had a oh, yes. Good morning.

Sorry. As I recall, you guys had a radiation shielding contract that was terminated. Have you Yes. Had any inkling that that might be reconstituted, you know, perhaps in a different way? Regarding that specific contract, we we were in the middle of ex we had started executing on that contract.

The the very high level program was canceled. We were uncertain for a while whether that would be reinstituted. It has now become clear that it will not. So that particular instance has has tailed off, but other opportunities that we’re pursuing are under active discussions and that remains a an area where we’re very optimistic about our future with radiation shielding. But that particular PO has been fully canceled and we are being paid for the work done prior to cancellation.

Yeah. Sure. Okay. Thank you.

Jenny, Conference Operator: Thank you very much. And just a reminder, if there are any remaining questions, you can join the queue by pressing star one on your phone keypad now. Wait to see if anybody else joins the queue. Oh, we do have another question come in, and it’s from Steven Coffey. Steven, your line is live.

Chuck Griffith, Host/Moderator, CPS Technologies: Oh, okay. Hi again. So you guys have added a third shift. Are you see any capacity constraints in in the near future with the higher run rate you’ve had? Yeah.

The third shift was added roughly Labor Day of last year on the metal matrix composite side. And there’s a number of things underway that are intended to address the growing demand that we’re seeing from our customers. So it is a challenge for us, but there’s also plans underway to address that. The third shift was the easiest way to add capacity quickly, that demand does remain robust going forward. And as I mentioned in our earlier call, we anticipate significant opportunities.

So it is a key point of discussion strategically for best way for us to address those growing demands. Good problem to have. We know how to make these products, and we’re seeing strong demand going forward. But there are things underway to address that need because it it is an area of growth for us that we anticipate for some time to come. Yeah.

Great. Thank you. And I guess if I could follow-up on on one last bit about the fiber fiber reinforced aluminum. You guys so you’ve licensed it. You bring, you know, proprietary technology to the materials you’re doing that are beyond what what you’re licensing?

Yeah. There are two elements of that. We so, yeah, we are the the exclusive global licensee of the the technologies, you know, the material, the fiber reinforced aluminum developed by Trident Systems, which they patented and developed. So with our metal matrix composite know how, we’re the right place for that to take that forward. What that’s why we’re able to work out that agreement.

So what we bring to that is all the other things that we were able to do. So that core material is, you know, developed by them is one thing that we are making in our facility today. Over the past year, we’ve validated the ability to make the same product that they made and and match the data sheet that they made so that when we’re talking to customers, they know that this is indeed what we claim to be. The the added layer on top of that is potential combinations or overlap. For example, if you need a multilayer material to satisfy a particular need, whether it’s high thermal challenges or even, you know, maybe a ballistic solution or something related to the vehicles for the military.

We now have that in our portfolio of products that can then potentially be combined or improved upon that that will play out going forward. So it fits very well in our portfolio, and we may well see things that we tweak or improve upon. But even fundamentally, that Almex material in and of itself is generating significant interest. Great. Thank you.

Jenny, Conference Operator: Thank you very much. Well, there are no further callers in the queue. I will now hand back over to Brian for closing remarks.

Chuck Griffith, Host/Moderator, CPS Technologies: Okay. Thanks everyone for joining us today and your ongoing interest in CTS. We look forward to speaking with you again after the end of the third quarter. If you have any questions in the meantime, please reach out to our investment investor relations adviser. Thank you.

Jenny, Conference Operator: Thank you very much, everyone. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.

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