CPS Technologies Q1 Earnings Call Highlights

Key Points

• Q1 results: Revenue fell to $7.0M (from $7.5M a year earlier) with a gross margin decline to 8.6% and an operating loss of about $500k, while cash plus marketable securities totaled $12.5M and inventories were increased to support a planned facility transition.
• Order and product momentum: Management attributes the sales dip to order timing but says backlog and intake remain strong, highlighted by a $4M hermetic packaging contract to be fulfilled within 12 months and growing interest in AlMax and QuickSet tungsten components; HybridTech Armor revenue is currently near zero but potential Navy contracts are expected later this year.
• Corporate developments: Chris Fraser will become CFO later this month as the company evaluates relocation sites (current lease runs to Feb 2028), and Congress reauthorized SBIR/STTR through FY2031 while the Navy added $100k to an ACV Phase 1 option for CPS.

CPS Technologies NASDAQ: CPSH reported first-quarter fiscal 2026 revenue of $7.0 million, down from $7.5 million a year earlier, with management attributing the decline primarily to order timing rather than demand. President and CEO Brian Mackey said the lower sales “does not diminish our positive outlook for 2026, nor reflect a lack of orders or demand,” while the company continues to evaluate sites for a future manufacturing facility relocation.

Leadership transition highlighted

The call featured an introduction of Chris Fraser, who is set to become CPS’s next chief financial officer later in the month. Mackey said Fraser will spend time working with outgoing CFO Chuck Griffith before officially taking the role, and he thanked Griffith for seven years of service. Griffith said his departure is “tentatively scheduled for the end of this month.”

Fraser told investors his background includes serving as controller at Precision Castparts Corp. and CFO roles tied to federally funded early-stage ventures at the Advanced Regenerative Manufacturing Institute. He noted familiarity with SBIR and STTR programs and said he is excited to help CPS improve financial performance and pursue growth opportunities.

Quarterly financial results

Griffith reported gross profit of $0.6 million, or 8.6% of revenue, compared with $1.2 million, or 16.4% of revenue, in the first quarter of fiscal 2025. He said the decline was largely driven by lower revenue and the current period impact of an inventory build. Griffith said that “in future quarters, due to expected revenue growth and changes in product mix, we anticipate margins will grow,” and he added the company expects operating efficiencies to improve following the move to a new facility.

Selling, general and administrative expenses were $1.1 million, unchanged from the year-ago quarter. CPS posted an operating loss of about $500,000, compared with operating profit of approximately $100,000 in the prior-year period. Net loss was roughly $300,000, or negative $0.02 per share, versus net income of just under $100,000, or $0.01 per share, in the first quarter of fiscal 2025.

On the balance sheet, CPS ended the quarter with $5.7 million in cash and $6.8 million in marketable securities, for $12.5 million combined, down from $13.2 million combined at the beginning of fiscal 2026. Accounts receivable totaled $3.8 million as of March 28, 2026, down from $5.2 million at Dec. 27, 2025.

Inventories increased to $7.1 million from $5.6 million at the start of the fiscal year. Griffith said the inventory growth is intended to support sales during the facility transition and is “acceptable as it will allow us to continue shipping and generating revenue during the transition to our new facility.” Payables and accruals were $3.9 million, compared with $4.3 million at the end of fiscal 2025.

Facility relocation plans still in review

Mackey said the facility search is taking longer than expected due to the complexity of CPS’s requirements. He cited considerations such as “power requirements, industrial gas supply, floor space, et cetera,” and said the company is focused on evaluating top candidate sites. Mackey noted CPS’s current lease runs through February 2028, giving the company time to choose what it believes is the best location rather than rushing the decision.

Griffith said the specific timing of the move is not yet finalized, but management remains optimistic it can be executed “in the coming quarters,” which he said would position CPS for stronger growth.

SBIR/STTR reauthorization and program updates

Mackey said the SBIR and STTR programs have been fully reauthorized by Congress through fiscal 2031, which he described as providing a “long runway of clarity and certainty.” He said CPS’s ongoing programs had continued to be funded even before reauthorization, and that new research topics are being released, enabling the company to bid on additional work.

He said CPS continues work on funded programs including radiation shielding, energy storage for long-range missiles, and controlled fragmentation 40-millimeter warheads made from tungsten alloys. Mackey also said the Navy SBIR office executed an option to extend CPS’s Phase 1 program related to Amphibious Combat Vehicles, providing $100,000 in additional funding and extending the program six months beginning in June. The work includes methods to reduce ACV weight, potentially incorporating CPS’s HybridTech Armor as ballistic protection in place of steel plates, he said, while the Navy’s decision on potential Phase 2 funding will come later.

Orders, product momentum, and market commentary

Mackey said there has been “some recent softening of product deliveries, particularly in metal matrix composites,” but added that CPS’s backlog and order intake remain strong and that the company is familiar with revenue lumpiness in its markets. As an example of recent demand, Mackey said CPS booked a $4 million Hermetic Packaging contract that the company expects to fulfill in less than 12 months, with shipments expected to begin soon.

He also said CPS’s proprietary AlMax material is seeing increased interest, with more samples being provided to customers across different markets. In addition, CPS shipped its first small order for tungsten alloy components using its proprietary QuickSet Injection Molding process, describing it as an order received in March and fulfilled in April. Mackey said the same technology is being used in the company’s Army Phase II program for 40-millimeter controlled fragmentation warheads, and he noted that CPS has also engaged with a commercial customer seeking tungsten alloy components that are difficult to produce cost-effectively using other methods.

During the Q&A, Mackey said HybridTech Armor revenue is currently “effectively zero” after the company completed aircraft carrier-related Navy orders that ran from 2021 until about April 2024. However, he said Kinetic Protection has advised that new U.S. Navy-related contracts are anticipated in the latter half of the current calendar year. Mackey said the potential new business would involve a small quantity of Navy destroyers, with congressional funding already secured for ballistic shields on a handful of vessels and detailed contract negotiations expected to begin soon.

Asked about the mix among CPS’s product areas, Mackey said metal matrix composites versus hermetic packaging is “maybe 60-40, 70-30,” while emphasizing there can be significant fluctuation. He also estimated SBIR funding represents “probably 5%” of revenue.

On costs, Griffith said raw materials are not a large part of the cost structure for metal matrix composites compared with labor and overhead, and he described aluminum price increases as modest in overall product cost. He noted that tungsten prices have “skyrocketed,” but said CPS can price accordingly and added that its manufacturing process reduces tungsten waste compared with machining.

Mackey said the company remains upbeat about 2026 and beyond, pointing to continued demand, ongoing bidding activity, and efforts to broaden its technology portfolio as it works toward a larger manufacturing footprint.

About CPS Technologies NASDAQ: CPSH

CPS Technologies Corp is a materials technology company specializing in the design and manufacture of advanced engineered composites and metal systems. The company develops bonded metal components, high-performance polymer composites and ceramic-to-metal brazed assemblies that address the demanding requirements of high-temperature, high-stress and high-frequency applications. CPS Technologies' product portfolio includes thermal management solutions, electromagnetic interference (EMI) shielding materials, structural composites and electronic packaging substrates tailored for critical end markets.

Serving the aerospace, defense, electronics and energy industries, CPS Technologies works closely with original equipment manufacturers and system integrators to deliver custom materials solutions that reduce weight, improve thermal efficiency and enhance mechanical performance.

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