CVD Equipment Q1 2025 Earnings Call Transcript

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May 13, 2025

There are 3 speakers on the call.

Operator

Greetings and thank you for standing by and welcome to the CVD Equipment Corporation's First Quarter twenty twenty five Earnings Call. As a reminder, this conference is being recorded. We will begin with some prepared remarks followed by a question and answer session. Presenting on the call today will be Emmanuel Lakios, President and CEO and member of the CVD Board of Directors and Richard Catalano, Executive Vice President and Chief Financial Officer. We have posted our earnings press release and call replay information to the Investor Relations section of our website at www.cvdequipment.com.

Operator

Before we begin, I would like to remind you that many of the comments made on today's call contain forward looking statements, including those related to future financial performance, market growth, total available market, demand for our products and general business conditions and outlook. These forward looking statements are based on certain assumptions, expectations and projections that are subject to a number of risks and uncertainties described in our press release and in our filings with the SEC, including, but not limited to, the Risk Factors section of the company's 10 ks for the year ended 12/31/2024. Actual results may differ materially from those described during this call. In addition, all forward looking statements are made as of today, and we undertake no obligation to update any forward looking statements based on new circumstances or revised expectations. Now, I would like to turn the call over to Emmanuel Lacios.

Speaker 1

Operator, thank you, and good afternoon, everyone. Thank you all for joining us today to discuss our first quarter twenty twenty five financial results and author important company developments information related to our business. Your thoughts are important to us, and we look forward to your questions in our Q and A session. First quarter twenty twenty five revenue was $8,300,000 up 69% versus the prior year quarter and 12.2% higher than the fourth quarter of twenty twenty four. Revenue from our CVD Equipment segment was driven by revenue recognized principally by two contracts, one in the industrial markets and one in the aerospace.

Speaker 1

Our SDC segment continued to see strong demand for its gas delivery equipment. The increased revenue and lower than expected orders in the quarter of $2,800,000 our backlog declined during the quarter from $19,400,000 at the December 2024 to $13,800,000 March 30 20 20 5. Subsequent to the quarter end, we did receive a $1,200,000 semiconductor system order in our CVD Equipment segment. During the quarter, we implemented a plan to reduce our operating cost to be consistent with current customer demand and improve our operating performance. We continue to evaluate the demand for our products and opportunities to reduce our operating costs.

Speaker 1

Our net income for the quarter was $360,000 While the first quarter of twenty twenty five represented the third consecutive quarter of net income, due to the nature of our business, we expect that our order and revenue levels will continue to fluctuate given the markets that we serve. In addition, the recent imposition of tariffs has presented us with a new challenge and uncertainty as such tariffs may affect our cost of components and materials as well as contribute to economic uncertainty, which may potentially affect our order rate. We're evaluating the tariff environment and planning accordingly. We believe we are well positioned for the future, and we are remaining focused on our identifying opportunities in our key targeted markets of aerospace and defense, high power electronics and EV battery energy storage. We are staying the course of our strategic efforts to maintain and grow our order rate, while carefully managing our expenses to achieve our goal of long term profitability and positive cash flow, while simultaneously focusing on growth and return on investment.

Speaker 1

With that, I would like to turn the call over to our CFO, Richard Catalano, who will provide an overview of our first quarter results.

Speaker 2

Thank you, Manny, and good afternoon. As Manny mentioned, our revenue for the first quarter of twenty twenty five was $8,300,000 3 point 4 million dollars or 69% higher than the fourth the first quarter I should say of 2024. This increase in revenue was primarily attributable to our CVD equipment segment. Gross profit for the first quarter was $2,700,000 with a gross profit percentage of 32.4%. This compares to a gross profit of $800,000 or a gross profit percent of 16.2% for the first quarter of twenty twenty four.

Speaker 2

The increase in gross profit of $1,900,000 and also the increase in our gross profit margin percent was primarily the result of higher overall revenues, improved absorption of overhead as well as improved margins on contracts in progress as compared to the contracts in progress in the prior year quarter. Our operating income for the first quarter was $269,000 as compared to an operating loss of $1,600,000 in the first quarter of twenty twenty four. This improvement in operating income was primarily due to increase in gross profit margin as operating expenses were consistent with the prior year quarter. After other income consisting principally of interest income, our net income for the first quarter was $360,000 or $05 per share for both basic and diluted. This compares to a net loss for the first quarter of twenty twenty four of $1,500,000 or $0.22 per share for basic and diluted.

Speaker 2

Now turning to our balance sheet. Our working capital at 03/31/2025 was $14,500,000 This compares to $13,800,000 at the prior year end. Our cash and cash equivalents balance was $10,200,000 as of March 31, as compared to $12,600,000 at 12/31/2024. This decrease in cash and cash equivalents was principally due to cost incurred on contracts in progress that resulted in an increase of $3,000,000 in contract assets and a decrease of $1,300,000 in contract liabilities. This was offset by our net income and our non cash expense charges.

Speaker 2

We are unable to predict the impact of the current economic and geopolitical uncertainties including tariffs that will have on our financial position and future results of operations and cash flows. Our return to consistent profitability is dependent among other things, the receipt of new equipment orders, our ability to mitigate the impact of inflationary pressures, as well as managing our operating expenses and capital expenditures. In addition, our revenue and orders have historically fluctuated based on changes in order rate as well as other factors in our manufacturing process, which may impact the timing of our revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter. After considering all these factors, we believe our cash and cash equivalents and our projected cash flow from operations will be sufficient to working capital and capital expenditure requirements for the next twelve months.

Speaker 2

We will continue to evaluate the demand for our products, assess our operations and take actions anticipated to maintain our operating cash to support our working capital needs. I'll now turn it over back to Manny.

Speaker 1

Rich, thank you for the presentation. Our focus continues to remain on our customers, markets, our employees and our shareholders, of course, the pursuit of growth and return to consistent profitability. We look forward to continuing to build on our success in the year ahead of us. Your comments are important to us and questions. With the close of the presentation, I would like to open the floor up to your questions.

Operator

Thank you. We will now be conducting a question and answer session. All right. I'm not seeing any questions. I'd like to turn the floor back over to Emmanuel Lacchios for any closing remarks.

Speaker 1

Thank you, operator, and thank you everyone for dialing in today. We appreciate the attendance on the call and your support and loyalty of our shareholders and our employees. If you have any further questions, please feel free to reach out to Rich or myself directly. This concludes our call.

Operator

You may disconnect your lines at this time. Thank you for your participation.

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CVD Equipment Q1 2025
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