Q2 2024 CVD Equipment Corp Earnings Call

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Unknown Executive: Executive, Brett Reiss, Richard Catalano, CVD Equip Executive, Brett Reiss, Richard Catalano, CVD Equip Greetings, and thank you for standing by. And welcome to CVD Equipment Corporation's second quarter 2024 earnings call. As a reminder, this conference is being recorded. We will begin with some prepared remarks followed by a question and answer session.

Speaker Change: Greetings and thank you for standing by and welcome to CBB Equipment Corporation's second quarter 2024 earnings call.

Speaker Change: As a reminder, this conference is being recorded.

Unknown Executive: 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 on the investor relations section of our website at www.cvdequipment.com. Before I begin, I'd 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, the total available market, demands for our products, and general business conditions, etc.

Speaker Change: 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.

Speaker Change: We have posted our earnings press release and call replay information to the investor relations section of our website at www.cddequipment.com.

Unknown Executive: 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-K for the year ended December 31, 2023. The 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'd like to turn the call over to Emmanuel Lakios. Please go ahead.

Speaker Change: Before I 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, demands for our products, and general business conditions and outlook.

Speaker Change: 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-K for the year ended December 31, 2023.

Speaker Change: 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.

Speaker Change: Now I'd like to turn the call over to Emmanuel Lakios. Please go ahead.

Emmanuel Lakios: Joe, thank you and good evening, everyone. Thank you for joining us today to discuss our second quarter 2024 financial results and other important company developments and pertinent information related to our business. Your thoughts are important to us, and we look forward to your questions in our Q&A session. Our second quarter 2024 revenue was $6.3 million, representing a 25.2% increase from the prior year period and was up 28.9% as compared to our first quarter of 2024.

Emmanuel Lakios: Joe, thank you and good evening, everyone.

Emmanuel Lakios: While our year-to-date revenue was $11.3 million, which is 18.1% lower than the prior year period, we are pleased to have recently shipped our newly launched PVT-200 system, which was part of the first quarter strategic order for silicon carbide 200mm crystal bull growth. The performance of the system will be evaluated for production by our now second account.

Emmanuel Lakios: Thank you for joining us today to discuss our second quarter 2024 financial results and other important company developments and pertinent information related to our business. Your thoughts are important to us and we look forward to your questions in our Q&A session.

Emmanuel Lakios: Our second quarter 2024 revenue was $6.3 million, representing a 25.2% increase from the prior year period, and was up 28.9% as compared to our first quarter of 2024.

Emmanuel Lakios: while our year-to-date revenue was $11.3 million, which is 18.1% lower than the prior year period.

Emmanuel Lakios: We are pleased to have recently shipped our newly launched PVT-200 system, which was part of the first quarter strategic order for silicon carbide 200mm crystal bull growth.

Emmanuel Lakios: The performance of this system will be evaluated for production by our now second account.

Emmanuel Lakios: We are encouraged that our backlog of 24 million units at the end of June 30, 2024 is meaningfully higher than our year-end backlog of 18.4 million. Our orders for the second quarter were $3.2 million, primarily driven by demand in our SDC segment for our gas delivery equipment. Orders for the first six months of 2024 were $16.9 million as compared to $15.8 million for the first six months of 2023. During the first quarter, we received a $10 million multi-system order in our industrial market from a company coding components with silicon carbide.

Emmanuel Lakios: We are encouraged that our backlog of 24 million at the end of June 30th, 2024 is meaningfully higher than our year-end backlog of 18.4 million.

Emmanuel Lakios: Our orders for the second quarter were $3.2 million, primarily driven by demand in our SDC segment for our gas delivery equipment. Orders for the first six months of 2024 were $16.9 million, as compared to $15.8 million for the second quarter.

Emmanuel Lakios: first six months of 2023. During the first quarter, we received a 10 million multi-system order in our industrial market from a company coding components with silicon carbide.

Emmanuel Lakios: Overall, we are disappointed with CVD's operating performance in the first half of the year as order and revenue levels continue to fluctuate given the nature of the emerging growth and markets we serve and the adverse financial impact of the specific first article system that shipped in the second quarter. We'll stay the course of strategic focus to build critical customer relationships, achieve profitability, and carefully manage our costs and cash flow while simultaneously focusing on growth and return on investment. I would like to turn the call over to our CFO, Richard Catalano, who will provide an overview of our second quarter results. Thank you, Manny. And good afternoon,

Speaker Change: Overall, we are disappointed with CBD's operating performance in the first half of the year.

Speaker Change: as order and revenue levels continue to fluctuate given the nature of the emerging growth and markets we serve and the adverse financial impact of the specific first article system that shipped in the second quarter.

Speaker Change: We'll stay the course of strategic focus to build critical customer relationships, achieve profitability, carefully managing our costs and cash flow while simultaneously focusing on growth and return on investment.

Unknown Executive: Greetings, and thank you for standing by. I welcome to CVD Equipment Corporations 2nd quarter, 2024 earnings fall. As a reminder, this conference is being recorded.

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

Richard Catalano: As Manny mentioned, our revenue for the second quarter of 2024 was 6.3 million as compared to 5.1 million for the second quarter of 2023. This represents an increase of 1.3 million, or 25.2%. The increase in revenue versus the prior year quarter was primarily attributable to higher revenue of $1 million from our CVD equipment segment and a 0.5 million increase in revenue from our SDC segment, offset by a 0.3 decrease from our CVD material segment due to the disposition of Tantaline in May of 2023 and the exit of our mesoscribe business. The increase in CVD equipment was principally due to increases in revenue from aerospace contracts offset in part by lower revenues for PBT-150 systems and spare parts.

Unknown Executive: 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 weekly information to the Investor Relations section of our website at www.cvdequipment.com. Before I 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, demands for our products and general business conditions and outlook.

Richard Catalano: Thank you, Manny, and good afternoon. As Manny mentioned, our revenue for the second quarter of 2024 was $6.3 million, as compared to $5.1 million for the second quarter of 2023. This represents an increase of $1.3 million, or 25.2%.

Speaker Change: The increase in revenue versus the prior year quarter was primarily attributable to higher revenue of $1 million from our CBD equipment segment.

Unknown Executive: 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 file links with the SEC, including but not limited to the risk factors section of the company's 10k for the year ended December 31, 2023.

Speaker Change: A .5 million increase in revenue from our SDC segment offset by a .3 decrease from our CBD material segment due to the disposition of Tantaline in May of 2023 and the exit of our mesoscribe business.

Speaker Change: The increase in CVD equipment was principally due to increases in revenue from aerospace contracts, offset in part by lower revenues for PVT-150 systems and spare parts.

Richard Catalano: Our SDC segment revenues were 29% higher than the second quarter of 2023 and were 0.4 million, or 20% higher than the first quarter of 2024, as demand for SDC's gas delivery system remains strong. Gross profit for the three months ended June 30, 2024 was 1.6 million, with a gross profit margin of 25.4%, as compared to a gross profit of 1.4 million, or a gross profit margin of 27.4%, for the three months ended June 30, 2023. This increase in gross profit of $0.2 million was primarily due to higher revenues that were offset by a contract mix with lower gross margins as compared to the prior year quarter.

Speaker Change: Our SDC segment revenues were 29% higher than the second quarter of 2023, and were $0.4 million, or 20% higher than the first quarter of 2024, as demand for SDC's gas delivery system remains strong.

Speaker Change: Gross profit for the three months ended June 30, 2024 was $1.6 million, with a gross profit margin of 25.4%, as compared to a gross profit of $1.4 million, or a gross profit margin of 27.4%, for the three months ended June 30, 2023.

Unknown Executive: As for results made different 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.

Speaker Change: This increase in gross profit of $0.2 million was primarily due to higher revenues that was offset by a contract mix with lower gross margins as compared to the prior year quarter.

Richard Catalano: Our operating loss for the second quarter of 2024 was $0.9 million, as compared to an operating loss of $1.2 million in the second quarter of 2023. The operating loss in the prior year's second quarter both included a non-recurring charge of $0.3 million related to the sale of the Tampalang subsidiary and also an impairment charge resulting from our decision to exit our mesoscribe business. So that's a total charge, one-time charges last year of 0.3 million.

Speaker Change: Our operating loss for the second quarter of 2024 was $0.9 million as compared to an operating loss of $1.2 million in the second quarter of 2023.

Speaker Change: The operating loss in the prior year's second quarter both included a non-recurring charge of $0.3 million related to the sale of the Tantalang subsidiary and

Speaker Change: and also an impairment charge resulting from our decision to exit our mesoscribe business. So that's a total charge, one-time charges last year of $0.3 million.

Richard Catalano: After other income, consisting principally of interest income, our net loss for the second quarter was $761,000, or $0.11 per share for both basic and diluted. This compares to a net loss for the second quarter of 2023 of $1.1 million, or $0.16 per share for both basic and diluted. Our cash and cash equivalents at June 30, 2024 were $10 million as compared to $14 million at the end of December. This decrease was principally due to a net loss of $2.2 million, an increase in our accounts receivable of $3 million, offset by an increase in accounts payable, and we also had non-cash expense items of $0.8 million.

Speaker Change: After other income consisting principally of interest income, our net loss for the second quarter was $761,000, or $0.11 per share for both basic and diluted. This compares to a net loss for the second quarter of 2023 of $1.1 million, or $0.16 per share for both basic and diluted.

Speaker Change: Our cash and cash equivalents at June 30, 2024 was $10 million, as compared to $14 million at the end of December. This decrease was principally due to the net loss of $2.2 million, an increase in our accounts receivable of $3 million.

Speaker Change: Offset by an increase in accounts payable, and we also have non-cash expense items of $0.8 million. Our working capital at June 30, 2024 was $12.7 million, and this compares to $14.3 million at December 31, 2023.

Richard Catalano: Our working capital at June 30, 2024 was $12.7 million, and this compares to $14.3 million at December 31, 2023. Our return to profitability is dependent upon, 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. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

Speaker Change: Our return to profitability is dependent upon, 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.

Speaker Change: In addition, our revenues and orders have historically fluctuated based on changes in order rate, as well as other factors in our manufacturing process that impact the timing of our revenue recognition.

Speaker Change: Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

Unknown Executive: 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 expenditure requirements for the next 12 months. We will continue to evaluate the demand for our products and sets of operations. Unknown Executive, Brett Reiss, Unknown Executive, Brett Reiss, Unknown Executive, Brett Reiss, Rich, thank you for your presentation. Our focus remains on our customer markets, our employees, our shareholders, and the pursuit of growth and a return to consistent profitability. We look forward to continuing to build on our success in the year ahead.

Speaker Change: 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 expenditure requirements for the next 12 months. We will continue to evaluate the demand for our products, sets of operations.

Emmanuel Lakios: Now, I'd like to turn the call over to Emmanuel Lachios. Let's go ahead.

Speaker Change: Assessor Operations and take actions anticipated to maintain our operating cash to support our working capital needs. I'll now turn it back to Manny.

Emmanuel Lakios: Joe, thank you and good evening everyone. Thank you for joining us today to discuss our second quarter, 2024 financial results and other important company developments and pertinent information related to our business. Your thoughts are important to us and we look forward to your questions in our Q&A session. Our second quarter, 2024 revenue was 6.3 million representing a 25.2% increase from the prior year period and was up 28.9% as compared to our first quarter of 2024.

Emmanuel Lakios: While our year-day revenue was 11.3 million, which is 18.1% lower than the prior year period. We are pleased to have recently shipped our newly launched PVT 200 system, which was part of the first quarter, strategic order for silicon car by 200 millimeter crystal blue growth. The performance of the system will be evaluated for production by our now second account. We are encouraged that our backlog of 24 million at the end of 2030, 2024 is meaningfully higher than our year-end backlog of 18.4 million.

Manny: Rich, thank you for your presentation. Our focus remains on our customer markets, our employees, our shareholders, and the pursuit of growth and return to consistent profitability.

Operator: Your comments and questions are important to us. At the close of our presentation, I would like to open the floor to your questions. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue, for participants using speaker equipment.

Manny: We look forward to continuing to build on our success in the year ahead. Your comments and questions are important to us. With the close of our presentation, I would like to open the floor to your questions.

Manny: so

Speaker Change: Ladies and gentlemen, if you would like to ask a question please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue.

Operator: It may be necessary to pick up your headset before pressing the start button. One moment, please, while we pull up the questions. Ladies and gentlemen, there are no further questions at this time. I'd like to call back to Emmanuel Lakios for his closing remarks. Thank you, operator. And thank you everyone for dialing in today. We appreciate your attendance on the call and your support. And, of course, the loyalty from our shareholders and employees alike.

Speaker Change: for participants using speaker equipment. It may be necessary to pick up your headset before pressing the start keys.

Speaker Change: One moment, please, while we pull up the questions.

Speaker Change: . . . . .

Speaker Change: Thank you for watching, and I'll see you in the next video.

Speaker Change: Thank you for watching!

Speaker Change: Ladies and gentlemen, there are no further questions at this time. I'd like to call back to Manuel Lakios for closing remarks.

Manuel Lakios: Thank you, operator, and thank you everyone for dialing in today. We appreciate the attendance on the call and the support, and of course the loyalty from our shareholders and employees alike.

Emmanuel Lakios: If you have any further questions, please reach out to me directly. This concludes our second quarter call. Thank you. This concludes today's conference. You may now disconnect your lines. Thank you for your participation. Mike Waldman, Kevin Center, Robert Collins, Kevin Smed disrespect ??????, tua Unknown Executive, Brett Reiss, Unknown Chief Executive, Mike Lambert, Date of Death, Reese Mango, Geneva, Spain, On Pas, much like this one. This is theusters.

Manuel Lakios: If you have any further questions, please reach out to me directly this concludes our second quarter call. Thank you

Speaker Change: Thank you. This concludes today's conference. You may now disconnect your lines. Thank you for your participation.

Speaker Change: [music]

Speaker Change: [inaudible]

Emmanuel Lakios: Our orders for the second quarter were 3.2 million primarily driven by demand in our SDC segment for our gas delivery equipment. Orders for the first six months of 2024 were 16.9 million as compared to 15.8 million for the first six months of 2023. During the first quarter, we received a 10 million multi-system order in our industrial market from a company co-ordering components with silicon car by. Overall, we are disappointed with CVD's operating performance in the first half of the year as order and revenue levels continue to fluctuate giving the nature of the emerging growth and markets we serve and the adverse financial impact of a specific first article system that shipped in the second quarter. We'll stay the course of strategic focus to build critical customer relationships, achieve profitability, carefully managing our costs and cash flow while simultaneously focusing on growth and return on investment.

Richard Catalano: I would like to turn the call over to our CFL, Richard Catalano, who will provide an overview of our second quarter results. Thank you, Maddie, and good afternoon. As Maddie mentioned, our revenue for the second quarter of 2024 was 6.3 million as compared to 5.1 million for the second quarter of 2023. This represents an increase of 1.3 million or 25.2%. The increase in revenue versus the prior year quarter was primarily attributable to higher revenue of $1 million from our CVD Equipment segment, 0.5 million increase in revenue from our SDC segment offset by a 0.3 decrease from our CVD material segment due to this disposition of Tantaline in May of 2023 and the exit of our mesoscry business.

Richard Catalano: The increase in CVD Equipment was principally due to increases in revenue from aerospace contracts offset in part by lower revenues for PVT-150 systems and spare parts. Our SDC segment revenues were 29% higher for the second quarter of 2023 and were 0.4 million or 20% higher than the first quarter of 2024 as demand for SDC's gas delivery system remains strong. Gross profit for the three months ended June 30, 2024 was 1.6 million with a gross profit margin of 25.4%.

Richard Catalano: As compared to a gross profit of 1.4 million or gross profit margin of 27.4% for the three months ended June 30 at 2023. This increase in gross profit of 0.2 million was primarily due to higher revenues that was offset by a contract mix with lower gross margins as compared to the prior year quarter. Our operating loss for the second quarter of 2024 was 0.9 million as compared to an operating loss of 1.2 million in the second quarter of 2023.

Richard Catalano: The operating loss in the prior year second quarter both included a non-recurring charge of 0.3 million related to the sale of the tampalanx subsidiary and also an impairment charge resulting from our decision to exit our mesoscry business. So that's total charge one time charges last year of 0.3 million. After other income consisting principally of interest income our net loss for the second quarter was 761,000 or 11 cents per share for both basic and diluted.

Richard Catalano: This compares to a net loss for the second quarter of 2023 of 1.1 million or 16 cents per share for both basic and diluted. Our cash and cash equivalent at June 30, 2024 was 10 million dollars as compared to 14 million at the end of December. This decrease was principally due to the net loss of 2.2 million and increase in our accounts receivable of $3 million dollars offset by increasing accounts payable and we also have non-cash expense items of 0.8 million.

Richard Catalano: Our working capital at June 30, 2024 was 12.7 million and this compares to 14.3 million at the 731st 2023. Our return to profitability is dependent upon, 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 rate, as well as other factors in our manufacturing process that impacts the timing of our revenue recognition.

Richard Catalano: 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 equivalent and our projected cash growth operations will be sufficient to meet our working capital and capital expenditure requirements for the next 12 months. We will continue to evaluate the demand for our products, assessive operations, assessive operations and take actions anticipated to maintain our operating cash to support our working capital needs.

Emmanuel Lakios: I will now turn it back to Manning.

Emmanuel Lakios: Rich, thank you for your presentation. Our focus remains on our customer markets, our employees, our shareholders and the pursuit of growth and return to consistent profitability. We look forward to continuing to build on our success in the year ahead. Your comments and questions are important to us.

Unknown Executive: With the close of our presentation, I would like to open the floor to your questions. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and a confirmation tele will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment please, or we both have questions. Please gentlemen, there are no further questions at this one.

Emmanuel Lakios: Let's call Dr. Manuel Laquios for closing remarks. Thank you operator. And thank you everyone for dialing in today. We appreciate the attendance on the call and the support. And of course, the loyalty from our shareholders and employees alike. If you have any further questions, please reach out to me directly.

Unknown Executive: This concludes our second quarter call. Thank you.

Unknown Executive: Thank you, this concludes today's conference. You may now disconnect your lines. Thank you for your participation.