CPS Technologies Corporation (CPSH) Bundle
Understanding CPS Technologies Corporation (CPSH) Revenue Streams
Understanding CPS Technologies Corporation’s Revenue Streams
The revenue analysis of CPS Technologies Corporation (CPSH) reveals significant insights into its financial performance as of 2024. The company primarily generates its revenue through product sales, particularly in sectors such as electronics and defense.
Breakdown of Primary Revenue Sources
CPS Technologies’ revenue streams can be categorized into the following primary sources:
- Product Sales: The main source of revenue, contributing significantly to total earnings.
- Services: Limited services offered as part of product support and R&D.
- Geographical Regions: Revenue generated mainly from North America, with some contributions from international markets.
Year-over-Year Revenue Growth Rate
In the first nine months of 2024, total revenue was $15,190,063, which represents a 27% decrease compared to $20,803,447 in the same period in 2023. This decline is attributed mainly to the completion of a significant armor contract for the US Navy and reduced purchases from major customers due to excess inventory.
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the revenue contributions from different segments:
| Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Product Sales | $15,190,063 | $20,803,447 | -27% |
| Service Revenue | Not specified | Not specified | N/A |
| Geographical Revenue (North America) | Majority of total revenue | Majority of total revenue | N/A |
Analysis of Significant Changes in Revenue Streams
The decrease in revenue for the first nine months of 2024 is primarily due to:
- The completion of a major armor contract which significantly boosted revenues in the previous year.
- Reduced purchases from key customers as they work through existing inventory levels.
- Market dynamics affecting demand for CPSH's products in certain sectors.
Quarterly Revenue Performance
For the third quarter of 2024, CPS Technologies reported revenues of $4,247,116, down from $6,285,041 in Q3 2023, reflecting a 32% decrease. This decline is largely attributed to the aforementioned contract completion and inventory adjustments by major clients.
The following table provides a quarterly revenue comparison:
| Quarter | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Q3 | $4,247,116 | $6,285,041 | -32% |
| First 9 Months | $15,190,063 | $20,803,447 | -27% |
Overall, the revenue analysis of CPS Technologies Corporation indicates a challenging environment for the company, with significant impacts from contract completions and customer inventory management strategies affecting revenue streams.
A Deep Dive into CPS Technologies Corporation (CPSH) Profitability
A Deep Dive into CPS Technologies Corporation's Profitability
Gross Profit Margin: In the first nine months of 2024, the gross profit was $153,000, representing a gross profit margin of 2%. This is a significant decline from the gross profit of $5,677,000 and a gross margin of 27% in the same period of 2023.
Operating Profit: The company reported an operating loss of $3,062,000 for the first nine months of 2024, contrasting sharply with an operating income of $1,556,000 in the prior year. For Q3 2024, there was an operating loss of $1,486,000, compared to an operating profit of $131,000 in Q3 2023.
Net Profit Margin: The net loss for the first nine months of 2024 was $2,140,000, resulting in a net profit margin of -14.1%. This is a downturn from a net income of $1,231,000 and a net profit margin of 5.9% in the same period of 2023. For Q3 2024, the net loss was $1,043,000, compared to a net profit of $171,000 in Q3 2023.
Trends in Profitability Over Time
The decline in profitability metrics is evident, with total revenue decreasing by 27% from $20,803,000 in the first nine months of 2023 to $15,190,000 in 2024. This trend reflects the completion of major contracts and reduced orders from significant customers.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross profit margin for similar companies is approximately 25%. The company's gross margin of 2% is substantially below this average, indicating operational challenges. The operating margin for the industry averages around 10%, while the company’s operating loss reflects a margin of -20%.
| Metric | CPS Technologies 2024 | CPS Technologies 2023 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 2% | 27% | 25% |
| Operating Profit Margin | -20% | 7% | 10% |
| Net Profit Margin | -14.1% | 5.9% | 7% |
Analysis of Operational Efficiency
The operational efficiency has notably declined, with selling, general and administrative (SG&A) expenses totaling $3,215,000 in the first nine months of 2024, down 22% from $4,121,000 in the same period in 2023. This reduction was driven by decreased variable compensation due to lower profitability. However, the operational losses indicate that cost management strategies have not sufficiently countered revenue declines.
Days Sales Outstanding (DSO) increased from 60 days at the end of 2023 to 78 days at the end of Q3 2024, indicating potential issues in collecting receivables efficiently.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $4,247,116 | $6,285,041 |
| Gross Profit (Loss) | ($523,432) | $1,235,864 |
| Operating Income (Loss) | ($1,486,496) | $130,637 |
| Net Income (Loss) | ($1,042,839) | $171,081 |
Debt vs. Equity: How CPS Technologies Corporation (CPSH) Finances Its Growth
Debt vs. Equity: How CPS Technologies Corporation Finances Its Growth
Debt Levels:
As of September 28, 2024, the company's total debt consists of:
- Current portion of note payable: $20,103
- Long-term note payable: $0
The total liabilities amount to $3,678,327 in current liabilities .
In March 2020, the company acquired inspection equipment for $208,000, financed through a 5-year note payable. The note is collateralized by the equipment, with monthly payments of $4,000 .
Debt-to-Equity Ratio:
The debt-to-equity ratio is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
As of September 28, 2024:
- Total Debt: $20,103
- Total Equity: $15,449,045
The debt-to-equity ratio is approximately 0.0013, indicating a low level of debt compared to equity .
Recent Debt Issuances:
In May 2023, the company terminated a $3.0 million revolving line of credit (LOC) with Massachusetts Business Development Corporation and entered into a new $3.0 million LOC with Rockland Trust Company, secured by accounts receivable and other assets .
Credit Ratings:
The company does not publicly disclose a credit rating; however, its ability to secure financing indicates a degree of financial stability .
Balancing Debt Financing and Equity Funding:
The company maintains a balance between debt and equity financing, relying on equity to fund operations and growth. The total stockholders' equity as of September 28, 2024, is $15,449,045 . The company’s strategy appears to favor equity financing, minimizing the risks associated with high debt levels.
| Financial Metric | Amount ($) |
|---|---|
| Total Debt | 20,103 |
| Total Equity | 15,449,045 |
| Debt-to-Equity Ratio | 0.0013 |
| Recent LOC Amount | 3,000,000 |
| Monthly Note Payable Payment | 4,000 |
Assessing CPS Technologies Corporation (CPSH) Liquidity
Assessing CPS Technologies Corporation's Liquidity
The liquidity position of CPS Technologies Corporation is critical for understanding its short-term financial health. Below are key metrics and trends as of September 28, 2024.
Current and Quick Ratios
As of September 28, 2024, the company's current assets and current liabilities are as follows:
| Current Assets ($000) | Current Liabilities ($000) |
|---|---|
| Cash and Cash Equivalents: 4,689 | Current Liabilities: 3,100 |
| Accounts Receivable: 4,017 | Accounts Payable: 1,000 |
| Inventory: 4,433 | Accrued Expenses: 840 |
| Total Current Assets: 13,139 | Total Current Liabilities: 3,100 |
Current Ratio = Total Current Assets / Total Current Liabilities = 4.24
Quick Ratio = (Current Assets - Inventory) / Current Liabilities = 3.23
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stood at:
Working Capital: $10,039
This represents a decrease from the previous year, where the working capital was $14,000 as of December 30, 2023. The decrease indicates a tightening liquidity position, primarily due to operational losses and increased capital expenditures.
Cash Flow Statements Overview
The cash flow trends for the nine months ended September 28, 2024, are as follows:
| Cash Flow ($000) | 2024 | 2023 |
|---|---|---|
| Operating Activities | (2,105) | 1,070 |
| Investing Activities | (1,899) | (567) |
| Financing Activities | (35) | 9 |
| Net Cash Flow | (4,039) | 512 |
The cash flow from operating activities has significantly worsened compared to the previous year, indicating challenges in generating cash from core operations.
Potential Liquidity Concerns or Strengths
As of September 28, 2024, the company has cash and cash equivalents of $4,689,000, down from $8,814,000 at the end of December 2023. The decrease is attributed to operational losses and increased capital expenditures. Additionally, the company has a line of credit of $3,000,000, with $0 drawn as of the latest report, allowing for some liquidity flexibility.
Days Sales Outstanding (DSO) increased from 60 days at the end of 2023 to 78 days at the end of Q3 2024, indicating potential issues in collecting receivables.
Overall, while the company maintains a strong current ratio, the significant operational losses and high DSO could raise concerns regarding its ability to meet short-term obligations.
Is CPS Technologies Corporation (CPSH) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze the key financial ratios and stock performance metrics as of 2024.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating a company's valuation relative to its earnings. As of September 28, 2024, the company reported a net loss of $2,140,297 for the nine months ended. The diluted earnings per share (EPS) for this period was $(0.15). Given that the company is currently not profitable, the P/E ratio is not applicable at this time.
Price-to-Book (P/B) Ratio
The P/B ratio compares the company's market value to its book value. As of September 28, 2024, the total stockholders' equity was $15,449,045. The number of shares outstanding was 14,525,960. Assuming a hypothetical market price of $1.00 per share, the book value per share would be calculated as:
- Book Value per Share = Total Stockholders' Equity / Shares Outstanding
- Book Value per Share = $15,449,045 / 14,525,960 = $1.06
Thus, the P/B ratio is:
- P/B Ratio = Market Price per Share / Book Value per Share
- P/B Ratio = $1.00 / $1.06 = 0.94
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is an indicator of how a company is valued relative to its earnings before interest, taxes, depreciation, and amortization. As of September 28, 2024, the EBITDA for the nine months was calculated as:
- EBITDA = Operating Loss + Depreciation + Amortization
- Operating Loss = $(3,061,945)
- Depreciation and Amortization = $369,698
- EBITDA = $(3,061,945) + $369,698 = $(2,692,247)
With a market capitalization of $14,525,960 (assuming a market price of $1.00 per share), the enterprise value (EV) can be estimated as:
- EV = Market Capitalization + Total Debt - Cash and Cash Equivalents
- Total Debt = $20,103 (from notes payable)
- Cash and Cash Equivalents = $4,689,004
- EV = $14,525,960 + $20,103 - $4,689,004 = $9,857,059
Thus, the EV/EBITDA ratio is:
- EV/EBITDA = EV / EBITDA
- EV/EBITDA = $9,857,059 / $(2,692,247) = (not applicable) (negative EBITDA)
Stock Price Trends
The stock price has fluctuated significantly over the past 12 months. The stock was trading at approximately $2.50 a year ago, but as of September 28, 2024, it has decreased to $1.00.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, which means the dividend yield is 0% and the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have a consensus rating of hold for the stock.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 0.94 |
| EV/EBITDA | N/A (Negative EBITDA) |
| Stock Price (Current) | $1.00 |
| Stock Price (1 Year Ago) | $2.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing CPS Technologies Corporation (CPSH)
Key Risks Facing CPS Technologies Corporation
Overview of Internal and External Risks
The financial health of the company is influenced by various internal and external risk factors. Key risks include:
- Industry Competition: The company faces significant competition, particularly from a major competitor in Japan. The strength of the US dollar against the Japanese yen can impact pricing strategies and profitability.
- Regulatory Changes: Changes in regulations can affect operational costs and compliance requirements, potentially impacting profitability.
- Market Conditions: Fluctuations in market demand, particularly in the defense and electronics sectors, can lead to revenue volatility.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Revenue Decline: Total revenue for the first nine months of 2024 was $15,190,063, a 27% decrease compared to $20,803,447 in the same period of 2023.
- Operating Loss: The company reported an operating loss of $3,061,945 for the first nine months of 2024, compared to operating income of $1,555,727 in 2023.
- Net Loss: The net loss for the first nine months of 2024 reached $2,140,297, contrasting with a net income of $1,230,785 in the same period last year.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Cost Control Measures: SG&A expenses were reduced to $3,214,831 in the first nine months of 2024, down 22% from $4,121,099 in 2023.
- Pricing Strategies: Although inflation has impacted costs, the company has managed to pass some increases to customers, but future success in this area remains uncertain.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Revenue Decline | Decrease in total revenue due to customer purchase reductions. | $15,190,063 in 2024 vs. $20,803,447 in 2023 |
| Operating Loss | Operating loss due to reduced gross margin and fixed costs. | $3,061,945 loss in 2024 |
| Net Loss | Significant net loss compared to previous year. | $2,140,297 loss in 2024 vs. $1,230,785 profit in 2023 |
| Cash Flow | Decreased liquid assets impacting operational flexibility. | Cash and equivalents down to $4,689,004 from $8,813,626 |
The company continues to monitor these risks closely and is adapting its strategies as necessary to maintain financial health amidst challenging market conditions.
Future Growth Prospects for CPS Technologies Corporation (CPSH)
Future Growth Prospects for CPS Technologies Corporation
Analysis of Key Growth Drivers
The company is focusing on product innovations and market expansions to drive future growth. Their proprietary armor solution and high-performance materials for electronics are anticipated to see increased demand as industries seek enhanced reliability and reduced costs. The underlying demand for Metal Matrix Composites (MMC) and housings for hybrid circuits is expected to grow, positioning the company favorably in these markets.
Future Revenue Growth Projections and Earnings Estimates
In the first nine months of 2024, total revenue was $15,190,063, a decrease of 27% compared to $20,803,447 in the same period of 2023. The company reported a net loss of $2,140,297 compared to net income of $1,230,785 in the prior year. As a result, the projected revenue growth for 2025 is expected to rebound as new contracts are secured and production scales up.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Total Revenue | $15,190,063 | $20,803,447 | -27% |
| Net Income (Loss) | ($2,140,297) | $1,230,785 | N/A |
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has initiated strategic partnerships to leverage technological advancements in material science. In addition, the completion of significant contracts, such as the armor contract for the US Navy, has paved the way for potential future projects. The recent opening of a third production shift is expected to enhance operational capacity and efficiency.
Competitive Advantages That Position the Company for Growth
CPS Technologies possesses several competitive advantages, including proprietary technologies in MMC and a strong positioning in high-demand sectors such as defense and electronics. The company’s ability to innovate and adapt to market needs enhances its competitive edge. Furthermore, the company does not rely on raw materials from conflict-impacted regions, which mitigates supply chain risks.
Financial Health Indicators
As of September 28, 2024, the company reported cash and cash equivalents of $4,689,004, down from $8,813,626 at the beginning of the year. This decline is attributed to higher capital expenditures and operating losses. Accounts receivable totaled $4,017,000, with days sales outstanding (DSO) increasing to 78 days from 60 days at the end of 2023, indicating potential liquidity challenges.
| Financial Metric | September 28, 2024 | December 30, 2023 |
|---|---|---|
| Cash and Cash Equivalents | $4,689,004 | $8,813,626 |
| Accounts Receivable | $4,017,000 | $4,472,000 |
| Days Sales Outstanding (DSO) | 78 days | 60 days |
Conclusion
The company is positioned to capitalize on growth opportunities through strategic initiatives, innovative products, and a focus on high-performance materials. While current financial challenges exist, the outlook remains positive with anticipated recovery in revenue and operational improvements.
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Article updated on 8 Nov 2024
Resources:
- CPS Technologies Corporation (CPSH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CPS Technologies Corporation (CPSH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CPS Technologies Corporation (CPSH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.