CPS Technologies Corp.

Good afternoon and thank you for standing by and welcome to the CPS Technologies Corp. First Quarter Investor Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Chuck Griffith. Thank you. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. I'm joined today by Grant Bennett, our president and CEO, and Michael McCormick, our COO. 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 results.

Thank you, Chuck. Welcome, everyone. There appears to have been some difficulties with the press release being posted, but it's now posted with our results on it. Today we announced revenues of $4.9 million and an operating profit of $36,000 for the quarter ended March 27, 2021. This compares with revenues of $6.5 million and an operating profit of $622,000 The financial results in the first quarter, from our perspective, were encouraging. And more accurately, I should say there were developments in the first quarter, including the financial results, which were encouraging. Let me touch on two topics. The first is COVID. As described in our press release, the first quarter results to us are confirmation that most likely the worst impacts of COVID-19 are behind us. In other words, our Q1 results are confirmation that the fourth quarter of last year was the nadir or the bottom in terms of the impact of COVID-19 on our customers' demand. Our shipments increased in Q1 compared to Q4. is indicated by the increased revenues. And very importantly, our book-to-bill ratio, which we don't normally publish, but the book-to-bill ratio in the first quarter was very positive. It was approximately two, indicating that for every $1 of shipments, we booked $2 of orders. That book-to-bill ratio of two certainly suggests revenue growth in the quarters ahead. A second important development for us relates to diversification of our customer base. Significant growth in the first quarter in what have historically been our two smaller product lines, namely Hermetic Packaging and Armor, There were very significant growths, primarily in the hermetic packaging line, but growth in both these areas is resulting in a reduction of customer concentration, or to flip the coin over, an increase in the diversification of our customer base and diversification of our revenue sources. This increasing diversification should somewhat reduce the volatility of revenues quarter to quarter going forward. We indicated in the press release that the base plate business was slow in the first quarter and is expected to remain sluggish throughout 2021 as spending on high-speed rail and mass transit systems is delayed due to the pandemic. To be very specific, more than 100% of the revenue decline in our first quarter of 2020 compared to, excuse me, first quarter of 2021 Thank you for joining us. and as it does, we're also very confident the growth in hermetic packaging and now beginning in this, the second quarter, the growth in armor and other applications will also continue with the net result that the increased customer diversification is here to stay as we go forward.