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 speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Charles Griffith. 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's currently with his wife, daughter, and brand-new granddaughter. 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'll be giving those to you. I'm 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 different 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'm gonna put on my Michael hat, and I will give you some of his comments. Today, we announced revenues of $5.5 million and an operating loss of $88,000 for the quarter ending September 25th, 2021.
This compared with revenues of $4.4 million and operating income of $254,000 for the quarter ending September 26th, 2020. The financial results in the third quarter were not unexpected, given that the quarter included over $325,000 in significant non-recurrent restructuring costs. We believe these one-time restructuring costs will immediately begin to demonstrate a positive long-term contribution to earnings beginning in early fiscal year 2022. The 25% growth in revenue as compared to the same quarter a year ago is extremely positive. In addition to our fiscal year-to-date book-to-bill of 1.6-one, it continues to substantially exceed our plan, reaffirming our growth in sales is sustainable and growing with a larger sample of data.
This increased sales will begin to directly translate into increasing revenue in fiscal year 2022. We are continuing to remain vigilant in ensuring availability of raw goods throughout our supply chain. The viability of our entire chain has been challenged since the pandemic outbreak nearly two years ago. We are confident we have multiple plans in place to control the issues we can control. I'll speak more in detail later on this, but now I'm gonna give it to Chuck for more detail about the financial results. Revenues totaled $5.5 million in Q3, compared with $4.5 million generated in Q3 2020, an increase of 24%.
This increase was due primarily to the company's first pharma production order, which didn't start until Q2 2021, as well as increases in sales to other customers in the aerospace and defense markets. Gross margin in Q3 2021 totaled $1.1 million or 21% of sales as compared with gross margin in Q3 2020 of $0.9 million, also 21% of sales. Obviously, the increase in margin dollars directly correlates to the increased revenue. Selling, general, administrative, and administrative expenses totaled $1.2 million in Q3 2021, compared with SG&A expenses of $684,000 in Q3 2020. This increase was primarily due to non-recurring restructuring costs of $327,000. The company executed a plan to streamline its operations in Q3 2021 and incurred one-time severance and other costs under the plan.
In addition to the restructuring costs, commission expense was increased from Q3 2020- Q3 2021 due to the higher revenue. The company experienced an operating loss of $88,000 in Q3 2021, compared with an operating profit of $254,000 in Q3 2020. This decrease in operating income is due primarily to the increase of SG&A expense previously discussed. In December 2018, the company set up a valuation reserve against its deferred tax asset. At the time, following a period of sustained losses, management determined that it was more likely than not that this tax asset would not be used. Management has reevaluated this decision in light of recent profitability and expected future profitability and has determined that it's more likely than not that the company will be able to fully utilize this tax asset.
As such, a tax benefit of $2.8 million has been recorded on the income statement as of September 25th, 2021. As a result of the above, CPS recorded net income in Q3 2021 of $2.8 million compared to net income of $231,000 in the same quarter last year. Turning to the balance sheet, we ended the quarter with $3.8 million of cash. This is an improvement to our cash position of $195,000 at the end of 2020. In May, we completed our at-the-market filing and began raising funds under that program. Through the end of the third quarter, we raised approximately $3.5 million net under the ATM offering.
These funds have enabled us to completely cease borrowing under our line of credit as our daily cash balance fluctuates. In addition, we've been able to absorb the increases in accounts receivable as our sales grow and in inventory as we develop our armor line. Our raise under this offering has been managed such that as we've covered our short-term cash needs, we've become more selective regarding the date and market prices at which we will sell additional shares. Accounts receivable at September 25th, 2021 totaled $5.0 million compared with $2.9 million at December 26th, 2020. Our days sales outstanding totaled 82 days at the end of the quarter, compared with 62 days at the end of 2020.
The increase in DSO is due to advanced billings to customers whose orders require CPS to purchase special raw materials in order to fulfill those orders. These billings are currently in accounts receivable, but are not reflected in revenue, hence the increase in DSO. Inventory totaled $3.8 million as of September 25th, 2021, compared with $3.7 million at December 26th, 2020. This small increase in inventory is due to increased armor materials, offset by better management of the inventory in our other product lines. Improved inventory management has now become an area of focus for us. The inventory turnover in the most recent four quarters was 4.3x compared to 4.5x for the quarters ending December 26th, 2020.
Turning to the liability side, payables and accruals totaled $2.6 million at September 25th, 2021, up from $1.8 million at December 26th, 2020. This is due to greater expenditures for the higher sales levels as well as the accrued restructuring charges, which we talked about earlier. Now I am going to take a sip of water and then put my microphone back on. What has just happened? This past quarter, we continued to make sizable progress on current operations and our near-term and long-term goals to grow a sustained medium-sized business. We are completely focused on increasing our capacity to add sales and improve our ability to execute what will begin to show both top and bottom-line performance increases in fiscal year 2022 and beyond. These are exciting and transformational times here at CPS.
We're in the final phase of our rebranding and digital strategy launch. We anticipate we'll be substantially completed by the end of this year, and all our product lines will have equal representation and improved content. We have selected a new logo that is representative of where we are going as a company, a technology solutions provider using high-performance material solutions. In addition, we have a new website about to be unveiled that makes CPS Technologies more accessible to customers, investors, as well as prospective employees. For the near-term future, I'd like to take an opportunity to speak directly to the current progress of our HybridTech Armor line. The progress on our current and emerging programs is extremely encouraging. As you are aware, we are currently executing on a U.S. Navy order with our partner, Kinetic Protection.
We just completed the equivalent of one aircraft carrier's worth of HybridTech Armor. We currently have four additional carriers' worth of armor orders in the production cycle, with deliveries into fiscal year 2022. In addition, our partner and the U.S. Navy are signaling the potential for additional orders, which may be coming in by the end of this year. We're cautiously optimistic this will occur and that discussions on expansion beyond the aircraft carrier platform to command and control and other ships will advance. In the long-term future, we're also making progress on other applications of HybridTech Armor. As mentioned earlier, HybridTech Armor is a phenomenal product that is significantly protected with patents. In particular, our armor performs extremely well against high ballistic threats and harsh environmental conditions. The armor also does very well in lightweight applications with significant kinetic energy threats.
We were recently notified by another partner that we've been selected as their strike base for the proposed solution to the requirement for the Future Long-Range Assault Aircraft or the FLRAA program for the U.S. Army. This design, when using a different HybridTech Armor recipe under our intellectual property, is confirmation that CPS Technologies' armor product line is viable for the foreseeable future and beyond. We're also continuing ballistic verification testing with an international partner for a significant vehicle program in Southeast Asia. We've been working with our customer for years now and have scheduled a test sometime in early 2022. After the successful demonstration, we believe the ultimate consumer will delineate the specific threat and solution, and we will move forward into production into late 2022. That takes care of our prepared remarks for today.
We expect our performance to continually and incrementally improve as we move forward, not just year to year, but also quarter to quarter. We're always vigilant on the supply chain and COVID-19 disruptions that can occur. Fiscal year 2021 appears to be growing upon the performance of last year, and fiscal year 2022 looks better than this year. I feel we're on firmly solid footing to see a compound annual internal growth path for the next several years. With that, operator, we can open up the call to questions.
As a reminder to ask a question, you need to press star one on your telephone. To withdraw your question, press the pound key. Your center will compile the Q&A roster. Your first question comes from the line of Lenny Dunn. Your line is now open.
Hi, Lenny.
Hi, Chuck. Just wanted to compliment you on being scrupulously honest with what you presented this because an awful lot of companies would have presented the $0.19 a share and it would be legitimate because that's what your earnings were. You broke it down, kind of addressed it first and then started asking later. I wanted to compliment you on that. It's pretty easy for me to figure out because it feels good for everybody.
Yeah, I think you're right about that. That's why we try to be very thorough with our explanation.
Okay. Everything looks good, so we're just looking forward to the next naval contract or whatever good news you can put out there. Obviously, it only happens when it happens, so hopefully soon. That's all I wanted to compliment you and everything looks very good.
Thank you. As far as the soonness of the next orders from your lips to God's ears.
Okay. Fine with me.
Thank you, Lenny. I appreciate it.
Your next question comes from the line of Patrick White. 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 a solid quarter. I wanted to maybe focus on a couple areas. One is the HybridTech Armor as well as touching base on the EV topic. Because it's certainly a really growing space and has huge potential for thousands and thousands. First on the HybridTech Armor. Last time you indicated there was, I think, four programs going, and they all were comparable size maybe to the existing ship program for the Navy. 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 sizable, the Southeast Asia one that you're dealing with on vehicles.
Have things changed from the last quarter, multiple programs less, you know?
No, I think I've. Well, first of all, I don't believe that we would have stated that they were composite 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 potentially could grow, obviously. The other two that we talked about, we made a shipment of armor to be tested for this Southeast Asia program. That, you know, could. We certainly expect that the result of the tests will be very good so far. I think all of our testing has been good.
Do you wanna comment, Dan, maybe on that a little bit? No?
Everything's going well.
Yeah. Okay, good. The FLRAA program, you know, that's something that we're pretty excited about. We just got some very good news about that, two-three weeks ago, I wanna say. You know, we're really pretty excited about that. Yeah.
Is that the acronym for the assault aircraft? Is that-
Yeah.
Right. I can assume that is contingent upon that particular prime contract and getting wins. In other words, it's a design win only in name and not necessarily indicative of sales till your prime wins.
Yes, exactly right. We're very optimistic, but yes, that's. We don't have an order yet. We'll just say that, but we're very optimistic.
Great. Okay. Switching over to the EV. It's gotten a 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 product. The growth rate with additional players coming on in some large OEMs, including GM and Ford, all suggests that, you know, we're talking about maybe, you know, 20 or 30 million vehicles out towards the end of this decade. I was wondering, you know, to what extent do you see AlSiC being able to penetrate the passenger vehicle market, and if not that market, maybe larger vehicles.
Has anyone attempted in the company to quantify, you know, what the size of that market might be, you know, even if it's a range, and, you know, how do you see that playing out?
Sure. 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, you know, the AlSiC base plates are used for high voltages because of the positive properties it has with silicon chips. With electric vehicles, there's more interest in using silicon carbide chips which run hotter, which makes the likelihood of needing an AlSiC base plate greater.
Where that line falls in terms of, you know, how high up in a, on the passenger vehicle market, you know, or is it gonna be in a Chevy Volt or is it gonna be only in an Audi or a very high-end, you know, Lincoln hybrid or whatever. You know, I couldn't say at this point in time, but I do know that there are those that AlSiC is much more conducive with the silicon carbide chips. 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.
It makes sense that they would try to work with those when it comes to electric vehicles. As far as you know size of markets you know we've had some projections from some customers that you know that in six or seven or eight years you know they could be our largest customer and that kind of thing. You know six or seven or eight years from now is too far away for me to make any specific comments on.
No.
I'll leave it at that. Does that answer your question?
It does. I'm gathering that you don't see enough of a market opportunity in the next, say, two-four years to justify necessarily taking your pitch directly to the OEMs. I assume you're only working through the tier one suppliers and not necessarily the OEMs.
That's correct.
To make the value proposition, I guess, more widely known.
Correct. Yeah, we are doing a lot of work with those folks. As I said, at this point, it's, you know, it's real work and real sales and real money, but it's not, you know, whether it grows faster than we had maybe originally thought or, you know, who knows.
Is there any indication that the silicon carbide, I know it enables higher voltages, but to get to such higher voltage, can AlSiC almost become a necessity?
You know, I don't think I wanna 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 gonna be, you know, whereas today with silicon chips you might say that, and again, don't take this to the bank. The 900 V power module would. You're fine with a copper base plate. Goes 1200 V, you want an AlSiC base plate. And then it, you know, that shifts with the silicon chips to maybe 600, 900. I don't know the answer to that question, but certainly at some level it would.
Sure. Yeah, I understand that 800 V may be where things start to get interesting to you all. This might justify, you know, consideration of the AlSiC base plate. Okay. Well, hey, Chuck, thanks for keeping it low and good luck in the next couple quarters and I'll talk to you in the future too.
Thanks, Patrick.
Okay.
As a reminder, if you would like to ask a question, just press star one on your telephone keypad. Again, that's star one to ask a question. There are no further questions at this time. The conference is continuing.
All right. Well, then if that's 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.
Everything was very well, Chuck. You did a great job.
Thanks. 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.