CPS TECHNOLOGIES CORP/DE/
For the period ended Dec 28, 2024. Filed Mar 17, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 17, 2025
CPSH$3.83+6.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-30; filed 2024-03-14.
0001437749-24-007808
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-03-17.
0001437749-25-008029
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 43 previous paragraphs and 43 current paragraphs.
22 unchanged; 17 reworded; 4 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Total revenue was $21.1 million in 2024, a 24% decrease compared with total revenue of $27.6 million in 2023. This decrease was due primarily to the successful completion of the armor contract in April 2024 compared to a full year of revenue from armor production in 2023, partially offset by increased revenue from AlSiC baseplates.
Current report
Selling, general and administrative (SG&A) expenses were $4.3 million during 2024, down from SG&A expenses of $5.1 million incurred during 2023. This decrease was primarily due to a reduction in variable compensation expense, due to the reduction in revenue and profit year over year, as well as a reduction in salaries paid for selling and administrative personnel.
Current report
Revenues totaled $5.9 million in the fourth quarter of 2024 versus $6.7 million in the fourth quarter of 2023, a decrease of 12%. This decrease was the result of the completion of our armor contract earlier in 2024, partially offset by an increase in AlSiC baseplate sales.
Current report
The Company’s cash and cash equivalents at December 28, 2024 totaled $3.3, restricted cash of $85 thousand and marketable debt securities with a fair value of $1.0. compared with cash and cash equivalents at December 30, 2023 of $8.8 and no restricted cash or marketable debt securities. This decrease was primarily due to the Company’s losses for the year as well as the increase in receivables of $0.6.
Removed paragraphs (4)
Previous report
Total revenue was $27.6 million in 2023, a 4% increase compared with total revenue of $26.6 million in 2022. This increase was due primarily to an increase in the sales of armor compared to 2022, partially offset by a quality problem with the product for one of our major customers which resulted in significant product returns as well as a reserve for potential future returns. Based on information received from the customer subsequent to December 30, 2023, this issue appears to be under control and is not expected to have a material impact on 2024 results.
Previous report
Selling, general and administrative (SG&A) expenses were $5.1 million during 2023, virtually the same as SG&A expenses of $5.1 million incurred during 2022. Several offsetting factors lead to this result. The Company incurred lower variable compensation costs in 2023 due to its reduction in operating profit compared to 2022. Conversely, travel costs were significantly higher in 2023 as customer and trade show exhibiting continued to recover from the limitations due to the Covid-19 pandemic.
Previous report
Revenues totaled $6.7 million in the fourth quarter of 2023 versus $6.1 million in the fourth quarter of 2022, an increase of 10%. This increase was consistent with our expectations, but was also mitigated by the quality issues described above.
Previous report
The Company’s cash and cash equivalents at December 30, 2023 totaled $8.8 compared with cash and cash equivalents at December 31, 2022 of $8.3. This increase was primarily due to the Company’s profitability for the year offset primarily by the decrease in deferred revenue from $2.8 at the end of 2022 to $0.3 at the end of 2023.
Reworded paragraphs (17)
Previous wording
CPS’s products are custom rather than catalog items. They are made to customers’ designs and are used as components in systems built and sold by our customers. At any point in time our product mix will consist of some products with on-going production demand, and some products which are in the prototyping or evaluation stages at our customers. The Company seeks to have a portfolio of products which include products in every stage of the technology adoption lifecycle at our customers. CPS’ growth is dependent upon the level of demand for those products already in production, as well as its success in achieving new "design wins" for future products.
Current wording
CPS’ products are custom rather than catalog items. They are made to customers’ designs and are used as components in systems built and sold by our customers. At any point in time our product mix will consist of some products with on-going production demand, and some products which are in the prototyping or evaluation stages at our customers. The Company seeks to have a portfolio of products which include products in every stage of the technology adoption lifecycle at our customers. CPS’ growth is dependent upon the level of demand for those products already in production, as well as its success in achieving new "design wins" for future products.
Previous wording
The Company believes the underlying demand for metal matrix composites is growing as the electronics and other industries seek higher performance, higher reliability, and reduced costs. CPS believes that the Company is well positioned to offer our solutions to current and new customers as these demands grow. In 2023 the Company’s top three customers accounted for 60% of revenue and the remaining 40% of revenue was derived from 57 other customers. In 2022 the top three customers accounted for 53% of revenue and the remaining 47% of revenue was derived from approximately 49 customers.
Current wording
The Company believes the underlying demand for metal matrix composites is growing as the electronics and other industries seek higher performance, higher reliability, and reduced costs. CPS believes that the Company is well positioned to offer our solutions to current and new customers as these demands grow. In 2024 the Company’s top three customers accounted for 57% of revenue and the remaining 43% of revenue was derived from 45 other customers. In 2023 the top three customers accounted for 60% of revenue and the remaining 40% of revenue was derived from approximately 57 customers.
Previous wording
At December 30, 2023, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $7.6 million and reversals of existing temporary differences to fully utilize the deferred tax asset, assuming a statutory corporate tax rate of 21%.
Current wording
At December 28, 2024, the Company’s deferred tax asset and other temporary differences will require taxable income of approximately $12 million and reversals of existing temporary differences to fully utilize the deferred tax asset, assuming a statutory corporate tax rate of 21%.
Previous wording
Gross profit in 2023 totaled $6.8 million or 25% of sales. This compares with $7.3 million, or 27% of sales, generated during 2022. The decrease in margin was primarily due to the impact of the quality issue described above.
Current wording
Gross profit in 2024 totaled $(0.1) million or (1)% of sales. This compares with $6.8 million, or 25% of sales, generated during 2023. The decrease in margin was primarily due to the impact of the completion of the armor contract described above. As CPS incurs significant fixed costs in its operations, a reduction in revenue has a significant impact on margin. In addition, then growth of AlSiC baseplate sales in Q4 of 2024 required the hiring and training of new employees as well as the incurring of additional expenses for the ramp up of production. A new employee is trained for 2-3 weeks before even beginning their actual work on the shop floor. It can then take a few months before they are fully up to speed.
Previous wording
The Company generated operating income of $1.7 million in 2023, compared with an operating income of $2.2 in 2022. This decrease was due almost entirely to the quality problem, discussed above. The Company recorded net income of $1.4M in 2023 compared to $2.1M in 2022. In 2023 the Company had a provision for income taxes of $0.6 million compared to $0.8 million in 2022. In addition, the Company filed for the Employee Retention Tax Credit of $0.7 million in 2022.
Current wording
The Company generated an operating loss of $4.4 million in 2024, compared with operating income of $1.7 in 2023. This decrease was due almost entirely to the reduction in revenue and additional expenses due to end of year sales growth, discussed above. The Company recorded a net loss of $3.1M in 2024 compared to net income of $1.4M in 2023. In 2024 the Company recorded an income tax benefit of $1.0 million compared to a provision for income taxes $0.6 million in 2023.
Previous wording
Gross margin decreased in the fourth quarter of 2023 compared with the fourth quarter of 2022 to $1.1 million from $1.6 million. This decrease was due to the quality issue described above.
Current wording
Gross margin decreased in the fourth quarter of 2024 compared with the fourth quarter of 2023 to $(0.3) million from $1.1 million. This decrease was due to lower revenue as well as the costs associated with the production ramp up described above.
Previous wording
SG&A expenses totaled $1.0 million during the quarter, a decrease of 23% compared to $1.3 million in the same quarter of 2022. This decrease was primarily due to the decreased variable compensation costs discussed above.
Current wording
SG&A expenses totaled $1.0 million during the quarter, compared to $1.0 million in the same quarter of 2023.
Previous wording
The Company recorded operating income of $0.1 million in the fourth quarter of 2023 compared to operating income of $0.3 million in the fourth quarter of 2022.
Current wording
The Company recorded an operating loss of $1.3 million in the fourth quarter of 2024 compared to operating income of $0.1 million in the fourth quarter of 2023.
Previous wording
The Company recorded net income of $0.1 million in the fourth quarter of 2023 compared to net income of $0.3 million in the fourth quarter of 2022.
Current wording
The Company recorded a net loss of $1.0 million in the fourth quarter of 2024 compared to net income of $0.1 million in the fourth quarter of 2023.
Previous wording
Accounts receivable at December 30, 2023 totaled $4.4 compared to $3.8 at December 31, 2022. Days Sales Outstanding (DSO) increased to 60 days at the end of 2023 compared to 52 days at the end of 2022. This change was due to the reduction of deferred revenue occurring in the 4 th quarter of 2022. Prepayments received in 2021 were used to pay for shipments shipped in the 4 th quarter of 2022 thus immediately reducing accounts receivable, rather than the customer paying 30-45 days later. The accounts receivable balances at December 30, 2023, and December 31, 2022 were both net of an allowance for doubtful accounts of $10 thousand.
Current wording
Accounts receivable at December 28, 2024 totaled $4.9 compared to $4.4 at December 30, 2023. Days Sales Outstanding (DSO) increased to 75 days at the end of 2024 compared to 60 days at the end of 2023. This change was due to continued growth of sales throughout the 4 th quarter. This resulted in collections on the earlier lower sales, while the higher later sales remained in receivables. The accounts receivable balances at December 28, 2024, and December 30, 2023 were both net of an allowance for credit losses of $10 thousand.
Previous wording
Inventories decreased to $4.6 at December 30, 2023 from $4.9 at December 31, 2022. The inventory turnover in the four quarters ending 2023 was 4.3 times, up from 4.2 times averaged during the four quarters of 2022 (each based on a 5 point average). In July 2022 CPS implemented a new ERP computer system which, among other things, has enabled the Company to better manage its inventory.
Current wording
Inventories decreased to $4.3 at December 28, 2024 from $4.6 at December 30, 2023. The inventory turnover in the four quarters ending 2024 was 4.8 times, up from 4.3 times averaged during the four quarters of 2023 (each based on a 5 point average).
Previous wording
The Company had no inventory on consignment at any customers at the end of 2023 or 2022. At December 30, 2023 and December 31, 2022 inventory of, $0.5 and $0.8, respectively, was located at vendor locations pursuant to inventory agreements.
Current wording
The Company had no inventory on consignment at any customers at the end of 2024 or 2023. At December 28, 2024 and December 30, 2023 inventory of, $0.8 and $0.5, respectively, was located at vendor locations pursuant to inventory agreements.
Previous wording
The Company funded its operations from its profit in 2023. The Company expects it will continue to be able to fund its operations during 2024 from existing cash balances and profits.
Current wording
The Company funded its operations from its cash balances in 2024. The Company expects it will continue to be able to fund its operations during 2025 from existing cash balances and profits.
Previous wording
In May 2023, the Company terminated its $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation (BDC). A new LOC in the amount of $3.0 million was entered into with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal. On December 30, 2023, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated per mutual agreement by both parties.
Current wording
In May 2023 a line of credit (LOC) in the amount of $3.0 million was entered into with Rockland Trust Company. The LOC is secured by the accounts receivable and other assets of the Company and has an interest rate of the National Prime Rate as published by the Wall Street Journal. On December 28, 2024, the Company had $0 of borrowings under this LOC and its borrowing base at the time would have permitted an additional $3.0 million to have been borrowed. The LOC remains in effect until terminated which can be done by either party.
Previous wording
As of December 30, 2023, the Company had $282 thousand of construction in progress and no outstanding commitments to purchase production equipment.
Current wording
As of December 28, 2024, the Company had $109 thousand of construction in progress and no outstanding commitments to purchase production equipment.
Previous wording
During 2023, our leasing arrangements consisted of the Norton, MA facility lease. The Norton facility lease was renewed in February 2021, expires in February 2026 and is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities. The Company also has an option to buy the property and a first right of refusal during the term of the lease. Annual rental payments were $162 thousand in 2023.
Current wording
During 2024, our leasing arrangements consisted of the Norton, MA facility lease. The Norton facility lease was renewed in February 2021, expires in February 2026 and is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities. The Company also has an option to buy the property and a first right of refusal during the term of the lease. Annual rental payments were $165 thousand in 2024.
Previous wording
Thus far inflation has not had a significant impact on our profitability. We have had higher than normal wage increases, have implemented other programs to ameliorate the effects of inflation on our employees (for example, we increased the Company share of health insurance premiums and increased the Company 401k match in 2023) and seen price increases from some of our suppliers. We have been able to pass along many of these price increases to our customers. There can be no assurance that our customers will continue to accept further price increases, that our employees will continue to be satisfied with their wage and benefit increases and that inflation will not affect our operations or business in the future.
Current wording
Recent inflationary trends have had an impact on our profitability. We have had higher than normal wage increases, have implemented other programs to ameliorate the effects of inflation on our employees, such as improvements to our benefit package, and seen price increases from some of our suppliers. We have been able to pass along many of these price increases to our customers, however in some cases we have had to absorb these price increases for a period of time, before being able to pass them along. There can be no assurance that our customers will continue to accept further price increases, that our employees will continue to be satisfied with their wage and benefit increases and that inflation will not further affect our operations or business in the future.