CVD Equipment Q2 2025 Earnings Call Transcript

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August 12, 2025

Key Takeaways

  • Negative Sentiment: Q2 2025 revenue declined 19.4% year-over-year to $5.1 M, reflecting reduced U.S. government funding and tariff uncertainties.
  • Positive Sentiment: Year-to-date revenue rose 19.2% to $13.4 M, driven by sustained customer demand.
  • Negative Sentiment: Net loss widened to $1.1 M ($0.15/share) and cash balance fell to $7 M, highlighting ongoing profitability challenges.
  • Positive Sentiment: Delivered first CVD4000 silicon carbide coating reactor, with two additional systems planned to ship over the next 12 months.
  • Positive Sentiment: FCC segment orders remained strong for gas delivery equipment, supporting current backlog levels.
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Earnings Conference Call
CVD Equipment Q2 2025
00:00 / 00:00

There are 2 speakers on the call.

Operator

Greetings, and thank you for standing by. Welcome to the CVD Equipment Corporation's Second Quarter twenty twenty five Earnings Call. As a reminder, this conference is being recorded. We will begin with prepared remarks followed by a question and answer session. Presenting on the call today will be Emmanuel Lafios, President and CEO and member of the c d d WCBD Board of Directors and Richard Catalano, executive vice president and chief financial officer.

Operator

We have posted our earnings press release and call replay information to the Investor Relations section of our website at www.cedequipment.com. 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 and 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 the new circumstances or revised expectations.

Operator

Now I would like to turn the call over to Emmanuel Latios.

Speaker 1

Operator, thank you, and good afternoon, everyone. Thank you all for joining us today to discuss the second quarter twenty twenty five financial results and other important company developments and pertinent information related to our business. Your thoughts are important to us. We look forward to your questions in our Q and A session. Our second quarter twenty twenty five revenue was $5,100,000 representing 19,400,000.0 decrease from prior year period and a decrease of 38.5% as compared to our 2025.

Speaker 1

Our year to date revenue of $13,400,000 was 19.2% higher than the prior year period. Our orders for the second quarter were $4,500,000 supported by strong demand in our FCC segment for gas delivery equipment. Orders for the company for the 2025 were $7,300,000 as compared to $16,900,000 for the 2024. Our bookings and revenue during the second quarter reflected several factors, including the uncertainties related to proposed tariffs, reduced U. S.

Speaker 1

Government funding for universities, the timing adoption of our product and the dynamic nature of the emerging markets we serve. We are actively monitoring the evolving customer demand and geopolitical landscape and potential tariff impacts as we continue to manage our operating expenses. In early July twenty twenty five, we shipped our first CVD4000 silicon carbide coating reactor system to an industrial customer. The system will be used by our customer to apply a silicon carbide coating on OEM graphite components. The remaining two systems of the three system order are planned for a shipment over the next twelve months.

Speaker 1

Our backlog as of 06/30/2025, was $13,200,000 down from $13,800,000 at 03/31/2025. We believe CVD Equipment Corporation is well positioned to provide solutions across our key markets, aerospace and defense, industrial with applications such as silicon carbide on graphite, silicon carbide, high power electronics and electric vehicle battery materials. In our aerospace and defense market, our key product offerings include chemical vapor and filtration systems used in the production of ceramic matrix composites for commercial jet engines and industrial market customers include silicon carbide and graphite coating systems, and we are also exploring potential uses for the nuclear energy market. Related to silicon carbide high power electronics, our core products are the PVT-one 150 and PVT-two 100 silicon carbide crystal growth systems. In electric vehicle market, we are pursuing new opportunities for our power coat system, which could be used in the production of advanced anode materials.

Speaker 1

In 2025, we are shipping several first nano systems for microelectronic and carbon nanotube applications. We will continue to support the sales activity and development in these areas. We are committed to our long term strategy of growing our presence across key markets while maintaining expense management to support our goal of achieving sustained profitability and cash flow. I would like to turn the call over to our CFO, Rich Catalano, who will provide an overview of our second quarter results. Thank you, Manny, and good afternoon.

Speaker 1

Our revenue for the 2025 was $5,100,000 as compared to $6,300,000 for the 2024. Revenue from our CVD equipment segment was primarily driven by two customers, one in the industrial sector and one in aerospace. These customers represented 41.1% of our revenues for the quarter. The decrease in revenue versus the prior year quarter was primarily attributable to lower revenue of $700,000 from our CVD equipment segment and $600,000 decrease in revenue in our FCC segment. The decrease in the CVD equipment revenue of 17.4% was principally due to lower revenues from Contracts in Progress of $1,100,000 offset by higher nonsystem revenue of $400,000 The resources we focus on our new product launch of the CVD4000, partially attributed to the reduced revenue from other contracts in progress.

Speaker 1

While our segment revenue of $1,400,000 was lower than the $2,200,000 recorded in the 2024 due to less contracts in progress, orders for FCC's gas delivery systems were strong during the quarter. Gross profit for the three months ended 06/30/2025, was $1,100,000 with a gross margin of 21%. This compares to a gross profit of $1,500,000 or 24.3% for the three months ended 06/30/2024. The decrease in gross profit of $500,000 was primarily due to lower revenues for contracts in progress at both CVD equipment and FCC segments, partially offset by higher CVD equipment nonsystem revenues. Our operating loss for the 2025 was $1,100,000 as compared to an operating loss of $900,000 in the 2024.

Speaker 1

After other income, which consists principally of interest income, our net loss for the second quarter was $1,100,000 or $0.15 per share for both basic and diluted. This compares to a net loss for the 2024 of 800,000 or $0.11 per share for both basic and diluted. As to our balance sheet, our cash and cash equivalents at 06/30/2025, was $7,000,000 as compared to $12,600,000 at 12/31/2024. This decrease was principally due to the net loss of $700,000 for the six months ended 06/30/2025, an increase in accounts receivable of $2,800,000 as we achieved certain contract milestones late in the quarter, a net change in contract assets and liabilities of $2,600,000 offset by noncash items of $900,000 Our net working capital at 06/30/2025, was $13,900,000 comparable to what we had at 12/31/2024, up $13,800,000 Our return to 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 planned capital expenditures and operating expenses. In addition, our revenues and orders have historically fluctuated based on changes in order rates as well as other factors in our manufacturing process that impact the timing of our revenue recognition.

Speaker 1

Accordingly, both orders received from customers and revenue recognized historically 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 meet our working capital and capital expense requirements for the next twelve months. 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. Rich, thank you for your presentation. Our focus remains on our customer market, our employees, our shareholders and the pursuit of growth and return to consistent profitability.

Speaker 1

Your comments or questions are important to us. With the close of our presentation, I would like to open the floor up to your questions.

Operator

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And our first question comes from the line of Frank Giordano, Private Investor.

Speaker 1

Hello, Manny and mister Guerrero. I just want to ask you a question quick question regarding the question I asked about two quarters ago. It's about the the NDA that you have. Can you specify if it's a domestic client or if it's an international client? Because of the tariff, you know, environment right now, that might be more important for us to know.

Speaker 1

Frank, how are you? Good evening. Can you be and I apologize if my memory doesn't recollect the question, but for the first time around two quarters ago, I apologize. Can you just that a little bit when you refer to the NDA? What what Well, I want to know specifically what kind of company it was, you know.

Speaker 1

And and again, probably indirectly, I meant if it was domestic or international client. And back then, we didn't have the problem with the tariff. But now we do have a problem with the tariff. So if it's domestic or if it's international, it might make a difference. It's it's it's domestic.

Speaker 1

The facility is located here in The United States. Okay. But your clients your your clients that signed an NDA with you guys, these clients, are they international clients or they're domestic clients? Oh, it could be both U. S.

Speaker 1

Domestic as well as North America, and then expand to Europe and Asia as well. We have NDA nondisclosure agreements with most, if not all, of our clients. But as far as the impact of tariffs on our business, the majority of the orders that we're speaking to are U. S. Based.

Speaker 1

All right. So you won't have no problems with tariffs on those orders? Well, the tariffs that we do have clearly affect the cost of the sold line or the cost of the product, where some of the components come from pumps and things of that sort come from either Europe or from Asia, and there are some import tariffs. So there is some inflationary pressure on the cost of sold line, but we're managing through that. And that's something that we spoke about before.

Speaker 1

And one more thing, just my thought. On that delivery that you had in July, early July, would that be reported in the third quarter? We recognize our revenue using the overtime concept. So as we manufacture the product equipment, very the we've got lot that with And we're product.

Operator

Doing

Speaker 1

Good question. A There

Operator

are no further questions at this time.

Speaker 1

I'd like to

Operator

turn the call back over to Emmanuel Raffios for closing remarks.

Speaker 1

Okay. Well, thank you, operator. Appreciate that, and thank you all for joining the call today. We appreciate the attendance on the call and the support and the loyalty of our shareholders and of our employees. If you have any further questions, please feel encouraged to reach out to myself or to Rich.

Speaker 1

And this concludes our second quarter earnings call. Thank you.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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