CPS Technologies Corp.

Ladies and gentlemen, thank you for standing by and welcome to CPS Technologies Corp. Third Quarter Investor Conference. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today. and Chuck Griffith. Thank you. Please go ahead, sir.

Thank you, operator, and good afternoon, everybody. 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 third quarter's results.

Thank you, Chuck, and welcome. Before I begin, let me just mention we understand there was a delay by our press release service in issuing the press release, but it has been released, and so you should be able to access it currently. Evidently, table formatting even stymies the professionals occasionally. Again, we appreciate you joining us. Today, we announced revenues of $4.5 million and an operating profit of $253,000 for the quarter ended September 26, 2020. This compares with revenues of $4.4 million and an operating loss of $479,000 for the quarter ended one year ago. For the nine months ending September 26, Thank you very much. While we're generally pleased with the bottom lines for both the quarter and the nine-month periods just ended, in the third quarter, our top line was increasingly negatively affected by the coronavirus pandemic. We ship each year to approximately 80 customers, and our largest three customers have historically accounted for 50% to 70% of our revenues. In the third quarter, two of these three customers notified us that they were reducing purchases significantly. In one case, the reduction was immediate, and in the other case, the reduction began in the last month of the quarter. These reductions in demand from these two large customers account for more than 100% of the difference in revenue between our first and third quarters this year. As you know, we sell base plates for power modules to both these large customers, who in turn produce power modules for use in trains, subway cars, and wind turbines, as well as the electrical grid. Due to COVID, use of air and rail transportation, including public transportation, is down very sharply. And operators in particular in Europe and the U.S. are delaying expansion and replacement of train sets. For example, I just saw yesterday that New York City subway ridership is down 70% last month compared to a year ago. Thank you very much. One long-term effect of the pandemic in Europe may be a modest shift from air to railway travel as things return to normal. We are confident demand for baseplates will return to previous levels and continue to grow due to the underlying growth in rail travel, in wind turbines, and importantly, due to the increased use of these modules in the electrical grid. However, we do expect reduced baseplate demand to continue through the next several quarters. While the short-term demand from these two customers is down significantly, revenues from our other approximately 75 to 80 customers were up slightly despite the pandemic. After Chuck summarizes our financial results, I'd like to describe some of the developments among these other customers that give us a positive and optimistic outlook despite the pandemic. In the third quarter, we continue to make excellent progress on improving our bottom line. We've stopped producing some unprofitable products, we've improved pricing in many products, and very importantly, we've improved operating efficiencies in our manufacturing operations. For the nine-month period just ended, the improvement in operating profit compared to the same period a year ago is a swing of $2.2 million. Let me turn the time over to Chuck to review the financial results in more detail.