Q2 2025 CVD Equipment Corp Earnings Call

Speaker #2: Greetings. And thank you for standing by. Welcome to the CVD EQUIPMENT CORP second quarter 2025 earnings call. As a reminder, this conference is being recorded.

David Brown: And thank you for standing by. Welcome to the CVD EQUIPMENT Corporation's second quarter 2025 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 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. 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.

Speaker #2: We will begin with 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 #2: We have posted our earnings press release and call replay information to the investor relations section of our website, at www.cvdequipment.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.

Speaker #2: 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 SEC, including but not limited to the risk factors section of the company's 10-K for the year ending December 31st, 2024.

David Brown: 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-K for the year ended December 31st, 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. Now, I would like to turn the call over to Emmanuel Lakios.

Speaker #2: 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.

Speaker #2: Based on the new circumstances, we'll revise expectations. Now, I would like to turn the call over to Emmanuel Lakios.

Speaker #3: Operator, thank you and good afternoon, everyone. Thank you all for joining us today to discuss our second quarter 2025 financial results and other important company developments and pertinent information related to our business.

Emmanuel Lakios: Operator, thank you and good afternoon, everyone. Thank you all for joining us today to discuss the second quarter 2025 financial results, another important company development, and pertinent information related to our business. Your thoughts are important to us. We look forward to your questions in our Q&A session. Our second quarter 2025 revenue was 5.1 million, representing a 19.4 decrease from prior year period and a decrease of 38.5% as compared to our first quarter of 2025. Our year-to-date revenue of 13.4 million was 19.2% higher than the prior year period. Our orders for the second quarter were 4.5 million, supported by strong demand in our SDC segment for gas delivery equipment. Orders for the company for the first six months of 2025 were 7.3 million as compared to 16.9 million for the first six months of 2024.

Speaker #3: Your thoughts are important to us. We look forward to your questions in our Q&A session. Our second quarter 2025 revenue was $5.1 million, representing a 19.4% decrease from the prior year period and a decrease of 38.5% as compared to our first quarter of 2025.

Speaker #3: Our year-to-date revenue of $13.4 million was 19.2% higher than the prior year period. Our orders for the second quarter were $4.5 million, supported by strong demand in our SEC segment for gas delivery equipment.

Speaker #3: Orders for the company for the first six months of 2025 were $7.3 million, as compared to $16.9 million for the first six months of 2024.

Speaker #3: Our bookings and revenue during the second quarter reflected several factors, including the uncertainties related to proposed tariffs, reduced US government funding for universities, the timing of the adoption of our products, and the dynamic nature of the emerging markets we serve.

Emmanuel Lakios: Our bookings and revenue during the second quarter reflected several factors, including the uncertainties related to proposed tariffs, reduced US government funding for universities, the timing of the adoption of our products, and the dynamic nature of the emerging markets we serve. We are actively monitoring the evolving customer demand, geopolitical landscape, and potential tariff impacts as we continue to manage our operating expenses. In early July 2025, we shipped our first CVD 4000, the 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 orders are planned for shipment over the next 12 months. Our backlog as of June 30th, 2025, was 13.2 million, down from 13.8 million at March 31st, 2025.

Speaker #3: We are actively monitoring the evolving customer demand, geopolitical landscape, and potential tariff impacts as we continue to manage our operating expenses. In early July 2025, we shipped our first CVD 4000 silicon carbide coating reactor system, to an industrial customer.

Speaker #3: 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 orders are planned for shipment over the next 12 months.

Speaker #3: Our backlog, as of June 30th, 2025, was $13.2 million, down from $13.8 million at March 31st, 2025. We believe CVD EQUIPMENT CORP 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.

Emmanuel Lakios: 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 infiltration systems used in the production of ceramic matrix composites for commercial jet engines and for silicon bond coat systems for CMC components. Our industrial market customers include silicon carbide on 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 PBT 150 and PBT 200 silicon carbide crystal growth systems. In the electric vehicle markets, we are pursuing new opportunities for our powder coat systems, which could be used in the production of advanced anode materials.

Speaker #3: In our aerospace and defense market, our key product offerings include chemical vapor infiltration systems, used in the production of ceramic matrix composites for commercial jet engines, and for silicon bond coat systems for CMC components.

Speaker #3: Our industrial market customers include silicon carbide on 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 PBT-150 and PBT-200 silicon carbide crystal growth systems.

Speaker #3: In the electric vehicle markets, we are pursuing new opportunities for our powder coat systems, which could be used in the production of advanced anode materials.

Speaker #3: In 2025, we are shipping several first nano systems for microelectronics and carbon nanotube applications. We will continue to support the sales activity and development in these areas.

Emmanuel Lakios: 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.

Speaker #3: 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.

Speaker #3: I would like to turn the call over to our CFO, Rich Catalano, who will provide an overview of our second quarter results.

Speaker #4: Thank you, Manny, and good afternoon. Our revenue for the second quarter of 2025 was $5.1 million, as compared to $6.3 million for the second quarter of 2024.

Richard Catalano: Thank you, Manny, and good afternoon. Our revenue for the second quarter of 2025 was 5.1 million as compared to 6.3 million for the second quarter of 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 a lower revenue of 0.7 million from our CVD Equipment segment and 0.6 million decrease in revenue in our SDC segment. The decrease in the CVD Equipment revenue of 17.4% was principally due to lower revenues from contracts in progress of 1.1 million, offset by higher non-system revenue of 0.4 million. The resources we focused on our new product launch of the CVD 4000 partially attributed to the reduced revenue from other contracts in progress.

Speaker #4: 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.

Speaker #4: The decrease in revenue versus the prior year quarter was primarily attributable to lower revenue of $0.7 million from our CVD EQUIPMENT segment and $0.6 million decrease in revenue in our SEC segment.

Speaker #4: The decrease in the CVD EQUIPMENT revenue of $17.4% was principally due to lower revenues from contracts in progress of $1.1 million offset by higher non-system revenue of $0.4 million.

Speaker #4: The resources we focus on our new product launch of the CVD 4000 partially attributed to the reduced revenue from other contracts in progress. While our SEC segment revenue of $1.4 million was lower than the $2.2 million recorded in the second quarter of 2024, due to less contracts in progress, orders for SEC's gas delivery systems were strong during the quarter.

Richard Catalano: While our SDC segment revenue of 1.4 million was lower than the 2.2 million recorded in the second quarter of 2024 due to less contracts in progress, orders for SDC's gas delivery systems were strong during the quarter. Gross profit for the three months ended June 30, 2025, was 1.1 million with a gross margin of 21%. This compares to a gross profit of 1.5 million or 24.3% for the three months ended June 30, 2024. The decrease in gross profit of 0.5 million was primarily due to lower revenues for contracts in progress at both CVD Equipment and SDC segments, partially offset by higher CVD Equipment non-system revenues. Our operating loss for the second quarter of 2025 was 1.1 million as compared to an operating loss of 0.9 million in the second quarter of 2024.

Speaker #4: Gross profit for the three months ended June 30th, 2025, was $1.1 million, with a gross margin of 21%. This compares to a gross profit of $1.5 million or 24.3% for the three months ended June 30th, 2024.

Speaker #4: The decrease in gross profit of $0.5 million was primarily due to lower revenues for contracts in progress at both CVD Equipment and SEC segments, partially offset by higher CVD Equipment non-system revenues.

Speaker #4: Our operating loss for the second quarter of 2025 was $1.1 million, as compared to an operating loss of $0.9 million in the second quarter of 2024.

Speaker #4: After other income, which consists principally of interest income, our net loss for the second quarter was $1.1 million or 15 cents per share for both basic and diluted.

Richard Catalano: After other income, which consists principally of interest income, our net loss for the second quarter was 1.1 million or 15 cents per share for both basic and diluted. This compares to a net loss for the second quarter of 2024 of 0.8 million or 11 cents per share for both basic and diluted. As to our balance sheet, our cash and cash equivalents at June 30, 2025, were 7 million as compared to 12.6 million at December 31st, 2024. This decrease was principally due to the net loss of 0.7 million for the six months ended June 30, 2025, an increase in accounts receivable of 2.8 million as we achieved certain contract milestones late in the quarter, a net change in contract assets and liabilities of 2.6 million, offset by non-cash items of 0.9 million.

Speaker #4: This compares to a net loss for the second quarter of 2024 of $0.8 million or 11 cents per share for both basic and diluted.

Speaker #4: As to our balance sheet, our cash and cash equivalents at June 30th, 2025, was $7 million, as compared to $12.6 million at December 31st, 2024.

Speaker #4: This decrease was principally due to the net loss of $0.7 million for the six months ended June 30th, 2025, an increase in accounts receivable of $2.8 million as we achieved certain contract milestones late in the quarter, a net change in contract assets and liabilities of $2.6 million offset by non-cash items of $0.9 million.

Speaker #4: Our net working capital at June 30th, 2025, was $13.9 million, comparable to what we had at December 31st, 2024, of $13.8 million. Our return-to-profitability is dependent among other things on 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.

Richard Catalano: Our networking capital at June 30, 2025, was 13.9 million, comparable to what we had at December 31st, 2024, of 13.8 million. Our return to profitability is dependent, among other things, on 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, 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 expenditure requirements for the next 12 months.

Speaker #4: 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 #4: 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 expenditure requirements for the next 12 months.

Speaker #4: 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.

Richard Catalano: 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.

Speaker #3: 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.

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. 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.

Speaker #3: 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.

Speaker #2: Ladies and gentlemen, if you would like to ask a question, please press *1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

Operator: 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, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #2: You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, we may be necessary to pick up your handset before pressing the * keys.

Speaker #2: One moment, please, while we pull for questions.

Speaker #3: Excellent.

Speaker 7: Excellent.

Speaker #2: Yeah, go ahead. Take it. And our first question comes from the line of Frank Giordano, private investor. Please proceed.

Operator: Yeah, go ahead. And our first question comes from the line of Frank Giordano, Private Investor. Please proceed.

Speaker #5: Hello, Manny and Mr. Catalano. I just wanted to ask a question, quick question. Regarding the question I asked about two quarters ago, it's about the NDAs that you have.

Frank Giordano: Hello, Manny and Mr. Catalano. I just wanted to ask a question, a quick question, regarding the question I asked about two quarters ago. It's about the NDAs that you have. Can you specify if it's a domestic client or if it's an international client? Because of the tariff environment right now, that might be more important to us to know.

Speaker #5: Can you specify if it's a domestic client or if it's an international client? Because of the tariffs and the environment right now, that might be more important for us to know.

Speaker #3: Frank, how are you? Good evening. Can you be—I apologize, my memory doesn't recollect the question the first time around two quarters ago. I apologize.

Emmanuel Lakios: Frank, how are you? Good evening. Can you be a, and I apologize, my memory doesn't recollect the question the first time around two quarters ago. I apologize. Can you just rephrase that a little bit when you refer to the NDA?

Speaker #3: Can you just rephrase that a little bit when you refer to the NDA?

Speaker #5: Well, I want to know specifically what kind of company it was, you know, and again, probably indirectly, I meant if it was domestic or international client.

Frank Giordano: Well, I want to know specifically what kind of company it was, you know. And again, probably indirectly, I meant if it was a domestic or international client. Back then, we didn't have the problem with the tariffs. But now we do have a problem with the tariffs. So if it's domestic or if it's international, it might make a difference.

Speaker #5: Back then, we didn't have the problem with the tariffs. But now we do have a problem with the tariffs. So if it's domestic or if it's international, it might make a difference.

Speaker #3: It's domestic; the facility is located here in the United States.

Emmanuel Lakios: It's domestic. The facility is located here in the United States.

Speaker #5: Okay, but your clients, your clients that sign an NDA, with you guys, these clients, are they international clients or are they a domestic clients?

Frank Giordano: Okay, but your clients, your clients that signed an NDA with you guys, these clients, are they international clients or they're domestic clients?

Speaker #3: Oh, it could be both. US, domestic as well as North America, you know, and then expand to Europe and Asia as well. We have NDA non-disclosure agreements with most, if not all, of of our clients.

Emmanuel Lakios: Oh, it could be both, US domestic as well as North America, and you know, and then expand to Europe and Asia as well. We have NDA non-disclosure 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 US-based.

Speaker #3: But as far as the impact of tariffs on our business, the majority of the orders that we're speaking to are US-based.

Speaker #5: All All right. So you won't have no problems with tariffs on those orders?

Frank Giordano: All right. So you won't have no problems with tariffs on those orders?

Speaker #3: Well, you know, the tariffs that we do have clearly affect the cost of goods sold line on 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.

Emmanuel Lakios: Well, you know, the tariffs that we do have clearly affect the cost of goods sold line on 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 goods sold line, but we're managing through that. And that's something that Rich spoke about just before.

Speaker #3: And there are some import tariffs. So there is some inflationary pressure on the cost of goods sold line but we're managing through that. And that's something I said we're going to spoke about just before.

Speaker #5: And one more thing, just that I I thought in my thought. On that delivery that you had in July, early July, would that be recorded in the third quarter?

Frank Giordano: And one more thing, just I thought my thought on that delivery that you had in July, early July, would that be recorded in the third quarter?

Speaker #3: We recognize our revenue using the overtime concept. So as we manufacture the equipment, we recognize a pro-rata amount of revenue. So we've recognized a good portion of that revenue as we've been manufacturing it.

Richard Catalano: We recognize our revenue using the overtime concept. So as we manufacture the equipment, we recognize a pro-rata amount of revenue. So we've recognized a good portion of that revenue as we've been manufacturing it, the equipment that we.

Speaker #5: At the time of the manufacturing, okay.

Frank Giordano: At the time of the manufacturing. Okay.

Speaker #3: Yeah.

Speaker #5: All right. Thank you very much.

Richard Catalano: Yeah.

Frank Giordano: All right. Thank you very much.

Speaker #3: Thank you, Frank. Thank you, Frank.

Emmanuel Lakios: Thank you, Frank.

Richard Catalano: Thank you, Frank.

Speaker #5: You're welcome.

Operator: You're welcome.

Speaker #2: Good Good question. There are no further questions at this time. I'd like to turn the call back over to Emmanuel Lakios for closing remarks.

Speaker 7: Good question.

Operator: There are no further questions at this time. I'd like to turn the call back over to Emmanuel Lakios for closing remarks.

Speaker #3: Okay. Well, thank you, operator. We appreciate that. And thank you all for joining the call today. We appreciate the attendance on the call and the support.

Emmanuel Lakios: Okay. Well, thank you, Operator. We 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 our employees. If you have any further questions, please feel encouraged to reach out to myself or to Rich. and this concludes our second quarter earnings call. Thank you.

Speaker #3: And the loyalty of our shareholders and our employees. If you have any further questions, please feel encouraged to reach out to myself or to Rich.

Speaker #3: 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.