Good day and thank you for standing by. Welcome to the CPS Technologies Corporation Third Quarter Investor Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chuck Griffith. Please go ahead, sir.

Thank you, operator. Good afternoon everyone and thank you for joining our call. Unfortunately, Michael McCormack, our President and CEO, will not be able to join us this afternoon. He is currently with his wife, daughter and brand new granddaughter. So, I would like to take a moment to congratulate the McCormack family on their new addition. Michael has provided me with his comments for the call and I will be giving those for you, to you. I am also joined by Dan Barton. Dan is our Senior Director of Operations. And if there are any questions later regarding operationally oriented items, Dan will be able to help out in answering those questions. 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' 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 statements. And now, I am going to put on my Michael hat and I will give you some his comments. Today, we announced revenues of $5.5 million and an operating loss of $88,000 for the quarter ending September 25, 2021. This compares with revenues of $4.4 million and operating income of $254,000 for the quarter ending September 26, 2020. The financial results in the third quarter were not unexpected given that the quarter included over $325,000 in significant non-recurring restructuring costs. We believe these one-time restructuring costs will immediately begin to demonstrate a positive long-term contribution to…

[Operator Instructions] Your first question comes from the line of Lenny Dunn [Mutual Trust Company]. Your line is now open.

Hi, Lenny.

Yes. Yes, hi, Chuck. Just wanted to compromise you, I'm being scrupulously honest in the way you presented this, because awful lot of companies would have presented the $0.19 in earnings and it would be legitimate because that's what your earnings were. So you broke it down kind of negative first and then brought it back in later. So I wanted to compliment you on that, but it's pretty easy for me to figure out just not sure if it is for everybody.

Yes, I thought – I think you're right about that. That's why we tried to be very thorough with our explanation.

Okay. And everything looks good. So we're just looking forward to the next naval contract or whatever good news you can put out there, but obviously it only happens when it happens, so hopefully soon. And that's all I wanted to compliment you and everything looks very good.

Thank you. Thank you. And as far the soonest of the next orders from your lips to God's ears.

Okay. Fine with me.

Thank you, Lenny.

Your next question comes from the line of Patrick White [ph]. Your line is now open.

Hi, Patrick. Patrick?

Mr. Patrick White, your line is now open. You can state your question.

I apologize. Congratulations on solid quarter. I wanted to maybe focus on a couple areas. One is the hybrid armor as well as touching base on the EV topic because it's certainly a really growing space and has such a huge potential out to 2030. So first on the hybrid armor tech, last time you indicated there was, I think, four call – four programs going and they all were comparable size maybe to the existing ship program for the Navy. And I I'm wondering if that has changed a little, whether there's still four programs out there, you've mentioned I think two or three today. And one of which seems to be rather sizeable the Southeast Asia one, if you're dealing with vehicles. Can you – and things changed in the last quarter more programs less?

No, I think – first of all, I would – I don't believe that we would have stated that they were of – necessarily of comparable size to the one we have from the Navy. There are three additional programs right now that are out there. One is relatively small today, but it's – potentially it could grow obviously. And then the other two that we talked about – the – that we made a shipment of armor to be tested for this Southeast Asia program. And that could – we certainly expect that the results of the test will be very good so far. I think all of our testing has been good. Do you want to comment, Dan, maybe on that a little bit? No.

No, everything is going well.

Yes. Okay, good. And then the FLAAR – AAR, whatever it was, program that's – that – FLRAA program, sorry, that's something that we're pretty excited about. We just got some very good news about that two, three weeks ago, I want to say. So, we're really pretty excited about that, yes.

Is that the acronym for the assault aircraft and is that…

Correct, yes.

Right. And I assume that is contingent upon that particular prime contractor getting wins. In other words, it's a design win only in name and not necessarily indicative of sales till they – till your prime wins.

Yes, exactly right, exactly right, but, yes, we're very optimistic, but yes, that's – we don't have an order yet. Let's just – we'll just say that, but we're very optimistic.

Sure, great, great. Flipping over to the EV space, certainly it's gotten an awful lot of attention and my understanding is that at least in some applications, the higher cost associated with AlSiC might justify some OEMs designing in your products. And so, the growth rate with additional players coming on in some large OEMs, including GM and Ford, all suggests that – we're talking about maybe $20 million, $30 million – 20 million or 30 million vehicles out towards the end of this decade. And so, I was wondering to what extent do you see AlSiC being able to penetrate the passenger vehicle market? And if not that market maybe larger vehicles and has anyone attempted in the company to quantify what the size of that market might be even if it's a range and how do you see that playing out?

Sure. So I think certainly we've already produced base plates for the hybrid and electric high end luxury vehicles. I'm sure that before I even got here, I know that Audi – one of the Audi models was using our base plates. I think certainly on the luxury side it's – of the passenger market, there's a lot of opportunity. I think the other big area is that with the – the AlSiC base plates are used for high voltages because of the positive properties it has with silicon chips. But with electric vehicles, there is more interest in doing – in using silicon carbide chips, which run hotter, which makes the likelihood of needing an AlSiC base plate greater. And where that line falls in terms of how high up on the passenger vehicle market or – is it going to be in a Chevy Volt, or is it going to be only in an Audi or a very high, you know, Lincoln hybrid or whatever? I couldn't say at this point in time, but I do know that there are those that – that AlSiC is much more conducive with the silicon carbide chips. And by the way, the silicon carbide chips are more efficient, so you can get more life out of a single charge on your battery and that kind of thing. So it makes sense that they would try to work with those when it comes to electric vehicles. As far as size of market, we've had some projections from some customers that that in six or seven or eight years we – they could be our largest customer and that kind of thing, but six or seven or eight years from now is too far away for me to make any specific comments on. So…

No, I understand.

I'll leave it at that. Does that answer your question?

It does. It does. So I'm gathering that you don't see enough of a market opportunity in the next, I'm going to say two to four years to justify necessarily taking your pitch directly to the OEMs. I assume you're only working through the Tier 1 suppliers and not necessarily the OEMs…

That's correct.

…to make the value proposition, I guess, more widely known.

That's correct. Yes. And we are doing a lot of work with those folks, but as I said, at this point, it's real work and real sales and real money, but it's not whether it grows faster than we – than they originally thought or who knows.

Is there any indication that the silicon carbide, I know it enables higher voltages, but it gets to such higher voltage that almost AlSiC becomes necessity.

I don't think I want to answer that because I'm not an engineer and I don't really know the technical side of that. I mean, I think that at some point, as I said before, there's going to be – whereas today with silicon chips, you might say that – and again, don't take this to the bank, a 900 volt power module would – you're fine with a copper base plate, but a 1,200 volt you want an AlSiC base plate. And then if – does that shifts with a silicon chip to maybe 600, 900, I don't know the answer to that question, but certainly at some level it would.

Sure. Yes, I understand that 800 volt may be where things start to get interesting for you all at least might justify consideration of the AlSiC base plate. Okay. Well, Chuck, thanks for a pitch – pinch hitting today and good luck in the next couple quarters, and look to talk to you in the future. Thanks.

Thanks Patrick.

Take care.

[Operator Instructions] There are no further questions at this time. Presenters, please continue.

All right. Well then if that – in that case, I'd like to thank everybody for calling in and listening to us. And Dan say hello just so they know your voice.

No, everything was very well, Chuck. You did a great job.

Thank you. I paid him to say that. Anyway, thanks everybody for joining the call. And we look forward to speaking with you again in the future and hope to have even better news next quarter. Thank you very much.

This concludes today's conference call. Thank you everyone for participating. You may now disconnect.