CVD Equipment Corporation Reports Fourth Quarter and Fiscal Year 2023 Financial Results
- CVD Equipment aims to return to consistent profitability by focusing on growth and ROI.
- The company secured new orders in early 2024, including a $10 million order for a SiC CVD coating reactor.
- Full-year revenue for 2023 was $24.1 million, down 6.6% YoY, with an operating loss of $4.9 million.
- The company faced workforce reductions in early January 2024 to align with current customer demand.
- Backlog as of December 31, 2023, stood at $18.4 million, reflecting an increase from the prior year end.
- Fourth-quarter 2023 revenue saw a significant decline of $3.1 million or 43.2% YoY primarily due to lower system revenues.
- Q4 gross profit margin percentage was negative 8.5% due to significant cost overruns on a large contract.
- Operating loss in Q4 was $2.5 million, with a net loss of $2.3 million or $0.33 per basic and diluted share.
- Full-year 2023 net loss was $4.2 million or $0.62 basic and diluted share, compared to a net loss of $0.2 million in the prior year.
- The decline in bookings in 2023 was approximately 22.1% compared to 2022 bookings of $33.1 million.
Insights
The recent financial results from CVD Equipment Corporation reflect a significant downturn in revenue and profitability. The 43.2% year-over-year decline in fourth-quarter revenue, coupled with a negative gross profit margin of 8.5%, indicates that the company is facing substantial cost management challenges. This is further evidenced by the operating loss of $2.5 million and a net loss of $2.3 million for the quarter. The comparison to the previous year's net income, which included Employee Retention Credits, underscores the volatility in the company's financial performance.
From an investor's perspective, this performance may raise concerns about the company's ability to manage expenses and achieve profitability, especially in the context of the emerging growth markets it serves. However, the announcement of new orders, including a $10 million order for a SiC CVD coating reactor, suggests potential for future revenue growth. Investors should monitor the company's ability to convert these orders into profitable revenue streams and the effectiveness of cost reduction strategies, including workforce reductions.
Looking at the industry context, CVD Equipment Corporation's performance must be evaluated against the backdrop of the high power electronics, battery material, aerospace and industrial applications sectors. The company's focus on expanding penetration with equipment solutions like the PVT200 system for growing silicon carbide crystals indicates a strategic alignment with industry trends towards advanced materials. The successful penetration of a second PVT equipment customer and the receipt of a substantial multisystem order suggest that the company's products are gaining traction.
However, the decline in bookings and the operational performance that indicates a 22.1% decrease compared to the previous year's bookings reveal a competitive and challenging market environment. Investors should consider the long-term potential of the company's technology and market positioning, as well as the short-term execution risks associated with the fluctuating demand in these specialized sectors.
The operational challenges faced by CVD Equipment Corporation are apparent in the financial results, with significant cost overruns on a large contract impacting gross profit margins. The company's response, including a workforce reduction and a focus on operating cost reduction, is a necessary step towards improving operational efficiency. It will be critical to observe how these cost-cutting measures will affect the company's ability to deliver on new orders and maintain quality and innovation in a highly technical field.
The backlog increase to $18.4 million suggests that the company has a cushion of orders to work through, which could provide some stability as they streamline operations. Yet, the success of their PVT150 and PVT200 systems is contingent upon various factors including market conditions and customer funding capabilities. Stakeholders should assess the company's operational adjustments and their impact on future performance, particularly in the context of the company's strategic investments in research and development and sales and marketing.
Manny Lakios, President and CEO of CVD Equipment Corporation, commented, “Fourth quarter 2023 revenue was
Mr. Lakios added, “Our primary goal is to expand penetration of our equipment solutions into high power electronics, battery material, aerospace and industrial applications. To this end, I am very pleased to announce that we started off 2024 with several key new order wins. First, we successfully penetrated a second PVT equipment customer, with an evaluation order for our newly launched PVT200 system used to grow 200 mm silicon carbide crystals. This represents an important milestone for CVD, with potential follow-on production orders should our equipment effectively meet the customers’ needs. Second, we received a
Fourth Quarter 2023 Financial Performance
-
Revenue of
$4.1 million $3.1 million 43.2% year over year primarily due to lower system revenues. -
Gross profit margin percentage was a negative
8.5% due to a large contract that experienced significant cost overruns during the quarter. -
Operating loss of
$2.5 million -
Net loss of
$2.3 million $0.33 $1.5 million $0.23 $1.5 million -
Cash and cash equivalents of
$14.0 million
Full Year 2023 Financial Performance
-
Revenue of
$24.1 million $1.7 million 6.6% year over year primarily due to the disposition of Tantaline and the wind down of MesoScribe’s operations. -
Our gross profit margin percentage was
21.0% in 2023 as compared to25.7% in the prior year due to a large contract in 2023 that experienced significant cost overruns and other higher margin system contracts in 2022. -
Operating loss of
$4.9 million -
Net loss of
$4.2 million $0.62 $0.2 million $0.03 $1.5 million
Fourth Quarter 2023 Operational Performance
-
Orders for the fourth quarter were
$5.8 million -
Received a
$2.1 million -
Received a
$1.0 million - During the fourth quarter, we developed a plan to reduce our operating costs to be consistent with current customer demand. This resulted in a reduction in our work force in early January 2024. We continue to evaluate opportunities to reduce our operating costs.
Full Year 2023 Operational Performance
-
Booking of new orders from customers was
$25.8 million 22.1% compared to 2022 bookings of$33.1 million -
Backlog as of December 31, 2023 of
$18.4 million $17.8 million
The success of our PVT150 and PVT200 marketing efforts is dependent on the performance of our equipment in the field, overall market conditions, our customers’ ability to qualify their end product with their customers and our customers’ ability to obtain the funding necessary to purchase our equipment.
Management Conference Call and Webcast
The Company will hold a conference call to discuss its results today at 5:00 pm (Eastern Time). To participate in the live conference call, please dial toll free (877) 407-2991 or international (201) 389-0925. A telephone replay will be available for 7 days. To access the replay, dial (877) 660-6853 or international (201) 612-7415. The replay passcode is 13744891.
A live and archived webcast of the call will also be available on the company's website at www.cvdequipment.com/events. The archived webcast will be available at the same location approximately two hours following the end of the live event.
About CVD Equipment Corporation
CVD Equipment Corporation (NASDAQ: CVV) designs, develops, and manufactures a broad range of chemical vapor deposition, thermal processing, physical vapor transport, gas and chemical delivery control systems, and other equipment and process solutions used to develop and manufacture materials and coatings for industrial applications and research. Our products are used in production environments as well as research and development centers, both academic and corporate. Major target markets include high power electronics (silicon carbide), EV battery materials / energy storage (carbon nanotubes, graphene and silicon nanowires), aerospace & defense (ceramic matrix composites) and industrial applications. Through its application laboratory, the Company allows customers the option to bring their process tools to our laboratory and to work collaboratively with our scientists and engineers to optimize process performance.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by CVD Equipment Corporation) contains statements that are forward-looking. All statements other than statements of historical fact are hereby identified as “forward-looking statements, “as such term is defined in Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward looking information involves a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management. Potential risks and uncertainties include, among other factors, market and business conditions, the success of CVD Equipment Corporation’s growth and sales strategies, the possibility of customer changes in delivery schedules, cancellation of, or failure to receive orders, potential delays in product shipments, delays in obtaining inventory parts from suppliers and failure to satisfy customer acceptance requirements, competition in our existing and potential future product lines of business, including our PVT systems; our ability to obtain financing on acceptable terms if and when needed; uncertainty as to our ability to develop new products for the high power electronics market; uncertainty as to our future profitability; uncertainty as to any future expansion of the Company; uncertainty as to our ability to adequately obtain raw materials and components from foreign markets in light of geopolitical developments; and other risks and uncertainties that are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the Company’s other filings with the Securities and Exchange Commission. For forward-looking statements in this release, the Company claims the protection of the safe harbor of the Private Securities Litigation Reform Act of 1995. The Company assumes no obligations to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise. Past performance is not a guarantee of future results.
CVD EQUIPMENT CORPORATION AND SUBSIDIARIES |
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Condensed Consolidated Statements of Operations |
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(In thousands, except per share data - Unaudited) |
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|
|
Three Months Ended
|
|
|
Year Ended
|
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|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
||||||||
Revenue |
|
$ |
4,111 |
|
|
$ |
7,234 |
|
|
|
$ |
24,109 |
|
|
$ |
25,813 |
|
||
Cost of revenue |
|
|
4,459 |
|
|
|
|
5,234 |
|
|
|
|
19,038 |
|
|
|
|
19,186 |
|
Gross profit |
|
|
(348 |
) |
|
|
|
2,000 |
|
|
|
|
5,071 |
|
|
|
|
6,627 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development |
|
|
731 |
|
|
|
|
509 |
|
|
|
2,596 |
|
|
|
|
1,906 |
|
|
Selling |
|
|
351 |
|
|
|
321 |
|
|
|
1,632 |
|
|
|
|
1,216 |
|
||
General and administrative and other |
|
|
1,041 |
|
|
|
1,391 |
|
|
|
(2) 5,724 |
|
|
|
|
5,328 |
|
||
Total operating expenses |
|
|
2,123 |
|
|
|
|
2,221 |
|
|
|
9,952 |
|
|
|
|
8,450 |
|
|
Operating loss |
|
|
(2,471 |
) |
|
|
(221 |
) |
|
|
(4,881 |
) |
|
|
|
(1,823 |
) |
||
Net income (loss) |
|
$ |
(2,274 |
) |
|
|
$ |
(1) 1,549 |
|
|
$ |
(4,180 |
) |
|
|
$ |
(224 |
) |
|
Basic and diluted income (loss) per share |
|
$ |
(0.33 |
) |
|
$ |
0.23 |
|
|
|
$ |
(0.62 |
) |
|
|
$ |
(0.03 |
) |
|
(1) Net income for three months and year ended December 31, 2022 includes |
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(2) Year ended December 31, 2023 includes loss on sale of Tantaline subsidiary of |
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CVD EQUIPMENT CORPORATION AND SUBSIDIARIES |
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Condensed Consolidated Balance Sheets |
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(In thousands - Unaudited) |
|||||||
|
|||||||
|
|
December 31,
|
|
|
December 31,
|
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Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
14,025 |
|
|
$ |
14,365 |
Accounts receivable, net |
|
|
1,906 |
|
|
|
3,788 |
Contract assets |
|
|
1,604 |
|
|
|
2,170 |
Inventories, net |
|
|
4,454 |
|
|
|
2,538 |
Other current assets |
|
|
852 |
|
|
|
797 |
Total current assets |
|
22,841 |
|
|
23,658 |
||
Employee retention credit receivable |
|
|
- |
|
|
|
1,529 |
Property, plant and equipment, net |
12,166 |
12,596 |
|||||
Intangible assets, net |
|
|
9 |
|
|
|
119 |
Other assets |
|
|
9 |
|
|
|
10 |
Total assets |
|
$ |
35,025 |
|
|
$ |
37,912 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Current liabilities |
|
$ |
8,554 |
|
|
$ |
8,164 |
Long-term debt, net of current portion |
|
|
268 |
|
|
|
349 |
Total stockholders’ equity |
|
|
26,203 |
|
|
|
29,399 |
Total liabilities and stockholders’ equity |
|
$ |
35,025 |
|
|
$ |
37,912 |
This earnings release should be read in conjunction with the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for fiscal year ended December 31, 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240328335104/en/
For further information about this topic please contact:
Richard Catalano, Executive Vice President & CFO
Phone: (631) 981-7081
Email: investorrelations@cvdequipment.com
Source: CVD Equipment Corporation
FAQ
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