CPS Technologies Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose modestly to $8.3 million from $8.1 million a year earlier, while gross margin improved sharply from the first quarter to 14.8%. However, higher material and plating costs, increased SG&A, and one-time expenses contributed to an operating loss of about $200,000.
• CPS ended June with $19.2 million in cash and marketable securities after raising $9.6 million in a May secondary offering. The company is nearing a lease agreement for a new facility twice the size of its current site, with relocation and build-out costs expected to total millions of dollars.
• Demand and program opportunities remain strong across defense, energy infrastructure, AI, semiconductor and space markets. Potential growth drivers include tungsten-alloy components, Navy ballistic shields, and follow-on funding for the Amphibious Combat Vehicle lightweighting program.

CPS Technologies NASDAQ: CPSH reported second-quarter revenue of $8.3 million, modestly above $8.1 million in the comparable 2025 period, as the company cited robust demand across its core product markets. The company also said revenue increased from first-quarter levels and expects shipments to continue at a similar pace based on its backlog and outlook.

Gross profit totaled $1.2 million, or 14.8% of revenue, compared with $1.3 million, or 16.5% of revenue, a year earlier. While the year-over-year margin declined because of higher material and plating costs, CPS improved its gross margin by 620 basis points from 8.6% in the first quarter.

“Our outlook remains strong,” President and Chief Executive Officer Brian Mackey said, pointing to demand for existing products and opportunities for newer materials and components.

Profitability and Balance Sheet

Selling, general and administrative expenses rose to $1.5 million from $1.2 million a year earlier. Chief Financial Officer Chris Fraser said the increase reflected certain one-time expenses, primarily non-cash stock-option expenses that occurred in the first quarter of the prior year and the second quarter of the current year.

The company recorded an operating loss of about $200,000, compared with operating income of about $100,000 in the second quarter of 2025. Including other income and tax benefits, CPS reported net income of roughly $40,000, or $0.00 per share, versus approximately $100,000, or $0.01 per share, in the prior-year quarter.

CPS completed a secondary offering in May that generated $9.6 million in gross proceeds. The company ended June with $15.4 million in cash and $3.8 million in marketable securities, for a combined $19.2 million, compared with $13.2 million at the beginning of the year.

• Trade accounts receivable were $4.9 million at the end of June, compared with $5.2 million at the end of the second quarter of 2025.
• Inventory rose to $8.6 million from $5.6 million at the beginning of the year, which Fraser said reflected preparations for a planned facility move.
• Payables and accruals totaled $4 million, compared with $4.3 million as of Dec. 27, 2025.

Facility Relocation Plans

Mackey said CPS is close to finalizing lease terms for a new manufacturing facility that would be twice the size of its current location. The company’s original estimates for completing the relocation process were “overly aggressive,” he said, as requirements involving power, industrial gases, floor build-out and proximity to the current site extended the search and negotiation process.

Once a lease is signed, Dacon Corporation, the company’s design-build partner, is expected to complete detailed architectural and engineering work over approximately three to four months. Construction and equipment installation would then take another seven to eight months, according to Mackey.

The relocation would be phased, with CPS moving work cells sequentially, validating equipment and processes, and obtaining customer approvals as necessary. Mackey said the company is discussing inventory buffers and qualification requirements with customers to minimize production and delivery disruptions. Existing equipment is expected to be moved to the new site, while new capital equipment intended to expand metal matrix composite production capacity would be delivered directly to the new facility.

The company’s current lease runs through February 2028. Mackey said the costs for build-out, equipment and relocation are still being totaled but will be “in the millions of dollars.” He added that capital raised in October was intended to cover most, if not all, of those expenses.

Product and Defense Programs

CPS said it is seeing increased interest from energy infrastructure, artificial intelligence, defense, semiconductor, space and other commercial markets. The company plans to invest in additional customer-facing business development personnel as it seeks to respond to identified sales opportunities.

For its tungsten alloy business, Mackey said U.S. Army funding continues to support development of a controlled-fragmentation 40-millimeter warhead through fall 2027. CPS has also made its first small commercial sale of tungsten alloy components and is actively quoting parts for potential commercial and defense applications. The company believes its QuickSet injection molding process can produce certain tungsten alloy components more cost-effectively than competing manufacturing processes.

Meanwhile, CPS expects contracts for ballistic shields on a small number of U.S. Navy destroyer-class vessels to be resolved and issued later this year. The work, to be carried out with partner Kinetic Protection, would represent a return to revenue for the company’s HybridTech Armor product.

The company also highlighted a six-month option period, exercised by the U.S. Navy in June, for a program involving lightweighting of the Amphibious Combat Vehicle. Following the option period’s expected conclusion in December, CPS anticipates a potential opportunity for follow-on Phase II funding. Mackey said the program could support applications for both its AlMax material and HybridTech Armor.

CPS has additional research and development efforts underway, often through government-funded programs, involving radiation shielding, impact limiters, thermal energy storage and defense applications. Mackey said several SBIR and STTR proposals remain awaiting funding decisions, though the company expects agencies to continue working through their backlog in the coming weeks and months.

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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