CPS Technologies Corporation (NASDAQ:CPSH) Q1 2024 Earnings Call Transcript

So, we do feel we’re getting to the end of that. There is additional testing being done this quarter. But I think the expectation is that, as Brian likes to say, we’re not ready to spike the football yet, but we’re getting very close to the goal line. So, I think, hopefully, we’ll be able to put that behind us relatively soon.

Greg Weaver: Okay, great. And in the just reported quarter, how large was the Armor revenue roughly?

Brian Mackey: The Armor revenue was between — it was $1.7 million, maybe something like that.

Greg Weaver: Okay. And that’s basically nil in the current quarter?

Brian Mackey: No, no. There’s been some. We’ve definitely shipped stuff in Q2 as well. It’s down, but it’s not gone yet.

Greg Weaver: Okay, will be gone by Q3. So, what should I think about then in terms of gross margin, because as I recollect the Armor business was a nice adder, but you had tier with $1.7 million of Armor you had 15% gross margin, right?

Charles Griffith: Right. We expect the margin to go up. As I said, I think there was a significant expense that goes through the testing process, and that all — that becomes part of our cost of sales. So, that’s definitely had a negative impact on margin. The other thing is Brian had mentioned that we have three more engineers now than we did a year ago. I think that we’re viewing this as sort of an investment. Unfortunately, GAAP says, that’s not an investment. You have to expense those people immediately. So, I think that I don’t expect we’re going to be getting back to the levels that we were at a year ago when we were in the high 20s, even I think one quarter, we’re at 30. But I do think that we should be improving over what we had in the first quarter, because of a number of these other expenses that we won’t have going forward.

Greg Weaver: Even at a lower run rate?

Charles Griffith: Yes. I think my fingers crossed, god willing that this quarter had the lowest that it’s going to be. But, yes. But I think it should go up a bit more.

Greg Weaver: Okay. That will do it for me now. Hopefully, we can catch up the next week at the Sidoti. Thanks.

Charles Griffith: Great. Thanks.

Greg Weaver: Bye-bye.

Operator: Thank you very much. Well, we appear to be at the end of our question-and-answer session. I will now hand back over to Brian for any closing comments.

Brian Mackey: Great. Thanks everyone for joining us today and for your ongoing interest in CPS Technologies. We look forward to speaking with you again after the end of the second quarter. If you have any questions in the interim, please reach out to our Investor Relations Advisor. Thanks.

Operator: Thank you very much, everyone. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.