CPS Technologies Corp. Common Stock 2026 Q2 Earnings Call

Thank you, Ali, and good morning, everyone. Today, I'm joined by Brian Mackey, our President and CEO. We look forward to discussing our second quarter results with you. First, Chris Witty, our Investor Relations Advisor, will provide a brief safe harbor statement.

Chris? Thanks, Chris, 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's operations and environment. These uncertainties include, but are not limited to, the ongoing conflicts in Ukraine and the Middle East, 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. I will turn the call over to Brian to offer his perspective on the quarter, after which Chris Fraser will review the financial results in greater detail.

Brian? Thanks, Chris. As a quick reminder, at the time of our previous quarterly earnings call on May 5th, it was only Chris Fraser's second day with the company.

He officially assumed the role of CFO on May 18th, and our former CFO, Chuck Griffith, retired from CPS at the end of May, as expected. The transition has gone well, and we're very glad to have Chris on board. Turning to our Q2 results. We posted sales of $8.3 million, up slightly year-over-year and with an increase over first quarter levels, reflecting overall robust demand. While pleased with this top-line improvement, we're also glad to note a substantial recovery in gross margins to 14.8% from 8.6% in Q1. Our outlook remains strong, and I'll come back in a moment to talk more about our commercial outlook as well as our plans for an improved manufacturing center.

first, let me turn the call over to Chris to provide further details about our financial results.

Chris? Thank you, Brian. As just stated, CPS reported revenue of $8.3 million for the period, compared with $8.1 million in the second quarter of 2025.

We anticipate shipments to continue at a similar pace as the second quarter going forward, given our current order backlog and outlook. We're very focused on executing a plan to move to a new facility, which will position the company for better performance in 2027 and beyond. Brian will speak more to this in a moment. We reported gross profits of $1.2 million or 14.8% of revenue versus $1.3 million or 16.5% of revenue in the second quarter of last year, with the year-over-year decrease caused in part by higher material and plating costs, which was partially offset by improved labor and overhead efficiencies. As Brian mentioned, our gross margin improved by 620 basis points relative to Q1 levels this year.

SG&A, or selling, general, and administrative expenses, totaled $1.5 million in the second quarter of this year, up from $1.2 million last year, reflecting some one-time expenses, mainly non-cash stock options, which happened in the first quarter of last year and the second quarter this year. The company posted an operating loss of about $200,000 in the current quarter, compared with an operating profit of $100,000 in 2025. Including other income and tax benefits, we reported net income of roughly $40,000 or $0.00 per share this quarter, essentially break even, versus net income of around $100,000 or $0.01 per share in the second quarter of last year. Before I turn to the balance sheet, I'd like to note that we successfully completed a secondary offering in May that raised proceeds of $9.6 million. Those are gross proceeds, providing additional capital to support our growth initiatives.

With this in hand, we ended the quarter with $15.4 million of cash and $3.8 million in marketable securities, for $19.2 million combined versus a combined total of $13.2 million at the beginning of the year. At the beginning of the year, we had $4.4 million in cash and $8.8 million in marketable securities. We are currently very well funded. Trade accounts receivable totaled $4.9 million at the end of June 2026 versus $5.2 million as of the end of Q2 last year. While inventories increased to $8.6 million at the end of the second quarter compared with $5.6 million at the start of the year, reflecting our preparation for a move to a new facility. Turning to the liability side, payables and accruals totaled $4 million at the end of the second quarter versus $4.3 million as of December the 27th, 2025.

Brian will provide a more in-depth discussion of the period and outlook.

Brian? Great. Thanks, Chris. I want to first give an update about our plan to move to a larger improved manufacturing facility.

I realize our investors are eager to hear an update on the status of this initiative to relocate to an improved space, something we consider fundamentally important to our go-forward growth strategy due to both strong demand for our existing products as well as the need for space to manufacture new products that we're bringing to market. It is clear now that our initial estimates were overly aggressive. Today, however, we're very close to finalizing the lease terms for a new facility, and I expect we will soon be making a formal announcement regarding a facility that is twice the size of our current location.