For the nine months ending September 28, 2019, revenues are $16.0 million with an operating loss of $966 thousand. For the nine months ending September 29, 2018 revenues were $15.5 million with an operating loss of $1.1 million.
Grant Bennett, President and CEO, said: "Revenues were down in the third quarter due to decreases in AlSiC products, partially offset by an increase in hermetic package revenue. Negotiating strategies of certain customers were the reason for some of the decline. In any event, our management team reacted swiftly when notified that certain customers would be reducing third quarter purchases. The implementation of cost reductions significantly mitigated the potential loss given the reduction in sales."
The gross margin percentage in the third quarter 2019 was 5% and the year to date gross margin was 10%. Last year the gross margin for the third quarter was 16% with a year to date gross margin of 11%. The decrease in gross margins is a result primarily of the revenue reductions in the third quarter."
Mr. Bennett continued, "While we are disappointed with our third quarter results, developments which occurred in the third quarter will have a positive impact on our performance going forward, beginning in the fourth quarter. First, we have negotiated new contracts with our three largest customers, signing one one-year contract, and two two-year contracts. These contracts provide for materially significant price increases, most price increases begin in the fourth quarter, some begin in the second quarter of 2020. In addition, these contracts provide for increased unit sales volumes from all three of our largest customers, for some products beginning in the fourth quarter, and other products beginning in the first and second quarters of 2020. Second, as part of our strategic initiative to increase margins, we have made improvements in our product mix. Third, during the third quarter we replaced our line of credit. The new line of credit has a $2.5 million cap compared to $1.25 million previously. The new inclusion of basically all our foreign receivables in the borrowing base creates more availability under the cap. We had more unused availability under our new line at the end of the third quarter, $1.3 million, than we did total availability under the previous line. This has allowed us to end our early pay discount policy which will have a positive impact on both our top and bottom line."
The Company will be hosting its third quarter conference call with investors at 4:30pm on Wednesday, October 30. Those interested in participating in the conference call should dial:
Conference ID: 1581287
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STATEMENT OF OPERATIONS (Unaudited)
BALANCE SHEET (Unaudited)
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CPS Technologies Corporation published this content on 31 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2019 14:46:09 UTC