CPS Technologies Corp.

Good afternoon. My name is Ivo, and I'll be your conference operator today. At this time, I would like to welcome everyone to CPS Technologies' first quarter conference call. All lines have been placed in mute to prevent any additional noise. After the speaker's remarks, there will be a question and answer session. Instructions on how to do so will be announced later. Thank you. It is now my pleasure to turn the call over to your first presenter, Speaker Chuck Griffith. The floor is yours. You may begin.

Thank you, operator, and good afternoon. I'm joined today by Grant Bennett, our president and CEO. Before we begin the business portion of the call, I would like to point out to all of you 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 the impact of COVID-19, economic conditions, market demands and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statement. Now, I'll turn the call over to Grant to offer his perspectives on the first quarter's results.

Thank you, Chuck, and welcome to each one of you. Thank you for joining us. It's a beautiful day here in Massachusetts, and I hope it is wherever you are. I'm pleased to report our first quarter 2020 revenues of $6.5 million and operating profit of $622,000. This compares with revenue of $5.3 million and an operating loss of $744,000. for the same period a year ago. Our first quarter results build nicely on our fourth quarter 2019 results, which were revenues of $5.4 million and operating profit of $368,000, suggesting over the last six months operating profit near a million dollars. Our revenues of $6.5 million represent the highest quarterly revenue in the company's history. And the operating profit of $622,000 is the fourth highest operating profit in our history. Let me provide additional context by commenting on three topics. First, some specific details relating to Q1 results. Second, the status and our progress on our longer-term strategic initiatives, which certainly impacted Q1 results and will impact future quarters. And thirdly, after Chuck discusses our Q1 financial results, I'd like to comment on the elephant in the lobby of all businesses today, namely the COVID-19 pandemic. So first, some Additional information regarding the first quarter results. In the last two quarterly calls, I've commented on the fact that in the third quarter last year, we entered into new contracts with our three largest customers. One contract was for one year, the other two contracts are for two years. All three contracts called for higher prices and higher volumes. The phase-in period or phase-in timing of the price and volume changes vary from contract to contract, but these changes began to be phased in in Q4 of last year, continue to be phased in in Q1, and will be fully phased in by the end of Q2, our current quarter. These increased volumes and increased prices obviously had a positive impact on our Q1 results and they should continue to do so. In our fourth quarter conference call, we mentioned a focused effort to improve our product mix, namely to focus on those products where we bring the greatest value and therefore can generate a more attractive margin. This initiative also contributed to our Q1 results. We've stopped making some products which were not profitable, and we've improved our ability to evaluate the attractiveness of an opportunity during the quotation stage. As I described earlier, we're a custom manufacturer, and it can be challenging in some cases to accurately estimate costs have a complex product beforehand. Yes.