Executive Summary

Record revenue and sequential growth: Q2 2025 revenue reached $8.08M (up 61% YoY; up ~8% QoQ), with gross margin at 16.5% and a return to GAAP profitability (EPS $0.01). Management expects H2 revenue strength, gross margin expansion, and improved profitability .
Cost/efficiency progress and constraints: Operating income was $0.14M as capacity additions (third shift) and higher output drove efficiencies; tariffs are a current headwind to margin expansion despite mostly domestic sourcing .
Strategic momentum: First commercial order for AlMax (fiber-reinforced aluminum) and the company’s fourth SBIR contract of 2025 (ACV weight-reduction) enhance medium-term optionality alongside seven active externally funded programs in Q2 .
Estimates context: S&P Global consensus for Q2 2025 EPS and revenue was unavailable; hence no beat/miss can be determined. Actuals: revenue $8.08M, EPS $0.01 (consensus N/A*) .
Potential stock catalysts: continued sequential growth with margin expansion, commercialization milestones for AlMax, additional SBIR/DoD awards, and any re-emergence of armor orders as defense budgets prioritize relevant applications .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue and sequential growth with sustained profitability: “new quarterly revenue record … $8,100,000 for Q2 … 8% growth sequentially … dedicated to improving bottom line results.” EPS positive at $0.01 .
Margin recovery and operating leverage: Gross margin improved to 16.5% (vs a gross loss in Q2 2024) on higher volumes and manufacturing efficiencies; Q2 operating income turned positive .
Strategic wins/optionality: First AlMax order and fourth SBIR of 2025 (ACV weight reduction) broaden future revenue streams; seven active externally funded programs provide pipeline depth .

What Went Wrong

Margin headwinds from tariffs: Management cited tariffs’ indirect effect on domestic pricing as a headwind to near‑term margin expansion despite domestic sourcing .
Capacity tightness: Demand is robust enough that CPS added a third shift and continues to work through capacity expansion plans to support higher run‑rates .
Radiation shielding contract cancellation: A prior radiation shielding PO tied to a high‑level program was fully canceled (CPS will be paid for work performed), though management remains optimistic on the broader opportunity set .

Financial Results

Sequential and Recent Trend (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD)	$5,933,283	$7,505,921	$8,078,657
Gross Margin %	(4.6)%	16.4%	16.5%
Operating Income ($USD)	$(1,318,984)	$129,651	$136,927
Net Income ($USD)	$(995,153)	$95,962	$103,833
Diluted EPS ($)	$(0.07)	$0.01	$0.01

Management also noted Q2 revenue rose ~61% YoY and ~8% QoQ, driven by strong demand and output gains (third shift) .

Year-over-Year (Q2 2025 vs Q2 2024)

Metric	Q2 2024	Q2 2025
Revenue ($USD)	$5,030,313	$8,078,657
Gross Margin %	(4.6)%	16.5%
Operating Income ($USD)	$(1,314,987)	$136,927
Net Income ($USD)	$(954,304)	$103,833
Diluted EPS ($)	$(0.07)	$0.01

Balance Sheet Snapshot (oldest → newest)

Metric	Dec 28, 2024	Mar 29, 2025	Jun 28, 2025
Cash & Equivalents ($USD)	$3,280,687	$1,929,919	$2,374,037
Marketable Securities ($USD)	$1,031,001	$1,039,714	$1,044,925
AR – Trade ($USD)	$4,858,208	$6,302,650	$5,602,703
Inventory ($USD)	$4,331,066	$4,812,833	$5,198,246
Total Liabilities ($USD)	$4,364,827	$4,492,841	$4,492,347
Stockholders’ Equity ($USD)	$14,512,119	$14,716,067	$14,877,423

Segment Breakdown

No segment detail provided in the earnings materials; results are presented as product sales and corporate-level P&L/BS metrics .

KPIs (operational/program)

KPI	Q4 2024	Q1 2025	Q2 2025
Externally funded programs – active (#)	6 total (incl. 5 SBIRs)	3 new Phase I Army SBIRs initiated (total not specified)	7 total (4 Phase I, 2 Phase II, 1 non‑SBIR)
Production shift expansion	Third shift initiated to raise capacity	Third shift ongoing	Third shift in place; further capacity initiatives underway

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	H2 2025 / FY 2025	None specific	“Expect revenue to remain strong in the second half … on track for our best revenue year ever”	Qualitative positive
Gross Margin	H2 2025	None specific	“Expect … gross margins to expand”	Qualitative positive
Profitability	H2 2025	None specific	“Overall profitability to increase”	Qualitative positive
Armor orders	Multiquarter	None specific	“Opportunity for future armor orders remains possible”	Qualitative optionality

Note: CPS did not issue numeric guidance ranges for revenue, margins, opex, OI&E, tax rate, or dividends in the Q2 release/call; commentary remained qualitative .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Revenue trajectory	Q4’24: revenue rebounded to $5.9M; demand strengthening; third shift added . Q1’25: record $7.5M; profitability restored .	New record $8.1M; +61% YoY; +~8% QoQ; on track for best revenue year .	Improving
Gross margin/efficiency	Q4’24: gross margin negative due to lower scale/startup/training . Q1’25: 16.4% on higher volumes .	16.5% with further efficiency gains; margin expansion targeted in H2 .	Improving
Capacity & shifts	Third shift initiated in late 2024 to meet demand .	Third shift active; additional capacity initiatives under discussion .	Tight but expanding
SBIR/DoD pipeline	Q4’24: three new Army Phase I SBIRs; six externally funded programs . Q1’25: three Army Phase I SBIRs initiated .	Fourth SBIR of 2025 (Navy ACV weight reduction); seven active programs total .	Expanding
Tariffs/macro	Not highlighted in PRs.	Tariffs indirectly lift domestic prices, pressuring margins .	Headwind
AlMax (FRA) commercialization	Q4’24: FRA supported by SBIR; early commercialization discussed .	First commercial order received; broader market interest .	Positive traction
Radiation shielding	Q4’24: first commercial sale announced .	A prior program canceled; paid for work; broader opportunities remain .	Mixed: program-specific setback, broader pipeline intact
Power/energy demand (HVDC, wind)	Not emphasized.	HVDC projects tied to grid/wind create baseplate demand; distinct from traditional data centers .	Emerging opportunity

Management Commentary

“We have again delivered positive net income and record revenue… We expect revenue to remain strong in the second half of the year and, more importantly, for gross margins to expand and overall profitability to increase.” — Brian Mackey, CEO .
“Revenue … totaled a record $8,100,000 … an increase of 61% … driven by strong customer demand … and a third shift of production… gross profit … 16.5% … We remain focused on growing our profitability going forward.” — Charles Griffith, CFO .
“We recently won our fourth new SBIR development contract of the year … focused on reducing the weight of the amphibious combat vehicle (ACV) … a six‑month award worth $140,000 with an optional six‑month extension worth another $100,000.” — Brian Mackey .
“We also … received our first purchase order for AlMax materials … superior performance … across multiple large addressable markets … an important milestone.” — Brian Mackey .
“We have faced some headwinds … including tariffs … Although the impact … is not a severe threat, it does work against our efforts to improve margins.” — Brian Mackey .

Q&A Highlights

Revenue visibility/pipeline: Average order visibility ~4–6 months; some customers order a couple months out, others 4–6 months, occasionally up to 12 months .
Data centers and grid/HVDC opportunity: Traditional data centers (steady load) historically not relevant for CPS baseplates; however, HVDC projects driven by rising power demand (e.g., wind farms) are an additive opportunity requiring CPS baseplates for power electronics switching .
Capacity: Third shift was the fastest step to add capacity; demand remains robust; additional capacity initiatives are underway to support growth .
Radiation shielding: A specific prior contract was fully canceled (CPS will be paid for work completed), but broader radiation shielding opportunities remain under active discussion .
AlMax scope: CPS is the exclusive global licensee of fiber‑reinforced aluminum from Triton; CPS contributes MMC know‑how and potential multi‑layer material combinations for specific applications .

Estimates Context

S&P Global consensus for Q2 2025 was unavailable; therefore beat/miss vs consensus cannot be determined. Actuals shown below for reference.

Metric	Q2 2025 Consensus	Q2 2025 Actual
Revenue	N/A*	$8,078,657
EPS (Primary/Diluted)	N/A*	$0.01

Values retrieved from S&P Global.*

Where estimates may need to adjust: Given record revenue, improving gross margins, and qualitative H2 commentary on margin expansion and profitability, models may need higher revenue run‑rates and improving gross margin trajectories, while incorporating tariff headwinds and capacity ramp timing .

Key Takeaways for Investors

Momentum intact: Two straight quarters of profitability with record Q2 revenue and ~8% sequential growth signal sustained demand and execution .
Margin trajectory: Gross margin rose to 16.5% on scale/efficiency; management targets further expansion in H2, though tariffs temper the pace near term .
Capacity gating factor: Third shift supports growth; additional initiatives are underway—watch for capex or process changes to unlock further throughput and margins .
Optionality from R&D/defense: Seven active externally funded programs and the fourth SBIR of 2025 provide upside paths; armor orders remain a potential incremental driver .
AlMax commercialization: First order indicates early market traction; broader industrial/military use cases could emerge over the next several quarters .
Working capital dynamics: Higher AR and inventory reflect elevated production and shipments; liquidity (cash + marketable securities) improved sequentially in Q2 .
Trading setup: Near‑term stock catalysts include evidence of H2 gross margin expansion, incremental SBIR/DoD wins, AlMax follow‑on orders, and any updates on armor programs as defense priorities evolve .

Appendix: Source Documents

Q2 2025 8‑K 2.02 with press release and financials .
Q2 2025 earnings press release (July 30, 2025) .
Q2 2025 earnings call transcript (July 31, 2025) .
Q1 2025 press release (April 30, 2025) .
Q4 2024 press release (March 12, 2025) .
Other relevant Q2 2025 press releases: SBIR/AlMax (July 15, 2025) .

CPS TECHNOLOGIES CORP/DE/ (CPSH)·Q2 2025 Earnings Summary