Will the company run both current and new facilities in parallel during the move, slowly transferring equipment, and what is the estimated total cost for the upfit and new equipment? Also, are there requalification requirements for the new facility?

Brian Mackey clarified that the move will be phased, with existing equipment transferred to the new facility, and new equipment for metal matrix composites delivered directly there. The total cost for the build-out, rigging, and CapEx is in the millions of dollars, largely covered by the original capital raise. Requalifications are necessary and are being discussed with customers, with buffer inventory planned to bridge the transition. “Ultimately, everything that's here plus the new stuff will end up in the new building after a phased move of certain work cells, it might take a couple of weeks to move this work cell and then a couple of weeks to move these other ones and sequentially do that and overlap that with that validation process where we make sure that equipment operates correctly, and then we make sure the product meets the specifications and the customers are satisfied. But ultimately, everything from here will move over there.”

CPSH

CPS Technologies (CPSH) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

Executive summary

CPS Technologies Q2 FY26 — Gross Margin Recovery and Strategic Facility Relocation Underway

CPS Technologies reported a slight revenue increase and a significant gross margin recovery in Q2 FY26, driven by improved efficiency. The company is actively progressing with its strategic manufacturing facility relocation, which is crucial for future growth and new product manufacturing, despite initial timeline delays. With strong capital resources from recent raises, CPS is focused on expanding production capacity and advancing defense and commercial applications for its AlMax and tungsten alloy materials.

Highlights

Revenue increased to $8.3 million in Q2 FY26, up from $8.1 million in Q2 FY25.
Gross margin substantially recovered to 14.8% in Q2 FY26, up from 8.6% in Q1 FY26.
Successfully completed a secondary offering in May, raising $9.6 million in gross proceeds.
Ended the quarter with $19.2 million in combined cash and marketable securities, up from $13.2 million at the beginning of the year.

Concerns

Operating loss of $200,000 in Q2 FY26, compared to an operating profit of $100,000 in Q2 FY25.
SG&A expenses increased to $1.5 million in Q2 FY26, up from $1.2 million in Q2 FY25, due to one-time noncash stock options.
Gross margin year-over-year decreased to 14.8% from 16.5% in Q2 FY25, impacted by higher material and plating costs.
Initial estimates for the new manufacturing facility relocation were overly aggressive, extending the timeline.

Guidance & targets

Category	Target	Timeline	Confidence
Shipment Pace	similar pace as the second quarter going forward medium materiality	Ongoing	High
Company Performance	better performance high materiality	FY27 and beyond	Medium
HybridTech Armor Contracts Resolution	resolved and issued later this year medium materiality	Later this year · FY26	High
SBIR Proposal Responses	receive responses in the coming weeks and months low materiality	Coming weeks and months	Medium

Orderbook & backlog

Order backlog strong Q2 FY26

Supports anticipated shipments at a similar pace as Q2 FY26 going forward.

Deals & partnerships

Kinetic Protection Collaboration on HybridTech Armor for U.S. Navy destroyers

Congressional funding has been approved to implement ballistic shields from CPS on a small number of destroyer class vessels. Contracts are expected to be resolved and issued later this year.

Capital programs

New Manufacturing Facility Relocation underway millions of dollars

Funding: original capital raise (October)

Start: Q2 FY26 (negotiation phase)

Benefit:twice the size of current location, improved production capacity and efficiencies, better layout for new equipment

The company is close to finalizing lease terms. The process includes 3-4 months for design and permitting, followed by 7-8 months for construction and equipment installation. The total cost for build-out, rigging, and CapEx is in the millions of dollars, largely covered by the original capital raise.

Metal Matrix Composites Production Capacity Expansion underway

Benefit:increased production capacity

Additional capital expenditures are planned to improve and expand production capacity, with new equipment to be delivered to the new facility.

AlMax and Tungsten Alloys Scale-up underway

Benefit:scale-up of capabilities

Anticipate additional expenditure over time to support the scale-up of capabilities for newer offerings such as AlMax material and tungsten alloys produced using QuickSet injection molding process.

Risks & headwinds

Geopolitical events Ongoing

Ongoing conflicts in Ukraine and the Middle East

Economic conditions Ongoing

General economic conditions

Market demands and competitive factors Ongoing

Market demands and competitive factors

Higher material and plating costs Q2 FY26

Caused year-over-year gross margin decrease from 16.5% to 14.8%

Mitigation:Partially offset by improved labor and overhead efficiency

One-time SG&A expenses Q2 FY26

Increased SG&A to $1.5M from $1.2M YoY

Extended timeline for new facility relocation Past and ongoing

Initial estimates were overly aggressive, search and negotiation process took longer than expected

Mitigation:Measured approach ensuring optimal selection, current lease runs through Feb 2028 provides flexibility

SBIR proposal backlog Ongoing, expected responses in coming weeks and months

Significant backlog of Phase 1 and Phase 2 proposals awaiting funding decisions, some dating back to August last year

Mitigation:Agencies are actively working through the backlog, company continues submitting proposals

What to watch in Q3 FY26

New facility lease finalization

Coming weeks/months

Current Very close to finalizing lease terms

Target Formal announcement regarding a new facility

Why it matters

Securing the new facility is fundamental to the company's go-forward growth strategy, enabling expansion and efficiency improvements.

Today, however, we're very close to finalizing the lease terms for a new facility, and I expect we will soon be making a formal announcement regarding a facility that is twice the size of our current location.

Find out whether CPSH delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you comment on the competitive standing of AlSiC versus copper tungsten in terms of cost and price volatility, and if it's retaining or gaining new business?

Brian Mackey acknowledged the competitive nature of the area and stated he would provide more factual details offline, as he was hesitant to go too deep into technical specifics on the call.

“Yes. That's a technical post there that I'm a little hesitant to get too deep into the weeds on that, Steve. I know that that's a competitive area where we like what our offering represents. But specifically how we're seeing that manifest, I'd have to pull some other people into that conversation, and I'd be happy to send you something offline that speaks directly to that.”

asked by Steven Fassey · answered by Brian Mackey

2 min read 5 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

CPS Technologies reported Q2 FY26 revenue of $8.3 million, a slight increase from $8.1 million in Q2 FY25. Gross profit recovered significantly to $1.2 million or 14.8% of revenue, up from 8.6% in Q1 FY26, but down from 16.5% in Q2 FY25 due to higher material and plating costs.

The company posted an operating loss of $200,000 and net income of $40,000, or $0.00 per share, compared to an operating profit of $100,000 and net income of $100,000 or $0.01 per share in the prior year.

Strategic Manufacturing Facility Relocation Update

The company is close to finalizing lease terms for a new manufacturing facility, which will be twice the size of its current location. The relocation process, including detailed architectural design, permitting, construction, and equipment installation, is expected to take approximately 10-12 months after lease execution.

The current lease runs through February 2028, providing flexibility. This move is critical for expanding production capacity, improving efficiencies, and supporting new product lines like AlMax and tungsten alloys.

Growth Initiatives and Capital Allocation

CPS Technologies completed two capital raises within the last 12 months, including a secondary offering in May that generated $9.6 million in gross proceeds, bringing total cash and marketable securities to $19.2 million. These funds are earmarked for outfitting the new facility, physical relocation costs, and capital expenditures to expand production capacity, particularly for metal matrix composites.

Additional CapEx is anticipated to scale up capabilities for AlMax and tungsten alloy offerings.

Tungsten Alloy and AlMax Materials Development

Work on a controlled fragmentation 40-millimeter warhead, funded by the U.S. Army, continues until fall 2027, with optimism for future volume revenue. The company is seeing positive market feedback for tungsten alloy components, actively quoting parts for commercial and defense applications, believing they can be produced more cost-effectively.

AlMax material is also being explored for lightweighting applications, such as replacing steel components in amphibious combat vehicles.

Defense Programs and SBIR Funding

Congressional funding has been approved for ballistic shields from CPS on destroyer class vessels, with contracts expected later this year, marking a return to revenue for HybridTech Armor. The amphibious combat vehicle (ACV) program is in a 6-month option period, with potential for follow-on Phase II funding in December.

While SBIR and STTR programs are reauthorized through FY2031, there is a significant backlog of proposals awaiting funding decisions, with responses expected in the coming weeks and months.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.