CVD Equipment Corporation Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

CVD Equipment (NASDAQ: CVV) reported its Q2 2024 financial results, showing a 25.2% year-over-year revenue increase to $6.3 million. The company shipped a PVT 200 system for SiC 200mm crystal boule growth, part of a strategic Q1 order. Despite revenue growth, CVD faced challenges:

- Gross profit margin declined due to less profitable contract mix
- Operating loss of $0.9 million
- Net loss of $0.8 million ($0.11 per share)
- Backlog decreased to $24.0 million from $27.1 million in Q1

CEO Manny Lakios expressed disappointment with H1 2024 performance but emphasized focus on strategic efforts, profitability, cost management, and growth. The company maintains $10.0 million in cash and cash equivalents as of June 30, 2024.

Positive

• Revenue increased by 25.2% year-over-year to $6.3 million
• Shipped PVT 200 system for SiC 200mm crystal boule growth
• Orders for first six months of 2024 were $16.9 million, up from $15.8 million in H1 2023
• Maintained strong cash position of $10.0 million

Negative

• Gross profit margin percentage declined compared to prior year quarter
• Operating loss of $0.9 million
• Net loss of $0.8 million ($0.11 per share)
• Backlog decreased to $24.0 million from $27.1 million in Q1 2024
• Orders for Q2 2024 were only $3.2 million, significantly lower than Q1

Insights

Financial Analyst

CVD Equipment's Q2 2024 results present a mixed picture. While revenue increased by 25.2% year-over-year to $6.3 million, the company still reported an operating loss of $0.9 million and a net loss of $0.8 million. The gross profit margin declined, indicating potential challenges in cost management or pricing pressure.

The backlog of $24.0 million is a positive indicator of future revenue, but it's concerning that it decreased from $27.1 million in the previous quarter. The company's cash position of $10.0 million provides some financial flexibility, but careful cash management will be important given the ongoing losses.

Investors should monitor the company's progress in strategic markets and its ability to convert the backlog into revenue while improving profitability.

Market Research Analyst

CVD Equipment's focus on emerging growth markets presents both opportunities and challenges. The shipment of the PVT 200 system for SiC 200mm crystal boule growth is a significant milestone, potentially opening doors in the rapidly growing silicon carbide market.

However, the fluctuating order and revenue levels highlight the volatility in these emerging markets. The company's strategy to build critical customer relationships is prudent, but execution will be key. The increase in SDC segment orders for gas delivery equipment suggests some diversification in revenue streams.

The market's reception to CVD's products, especially in the three key strategic markets they're investing in, will be important for future growth. Investors should closely watch the company's ability to capitalize on these market opportunities and achieve sustainable profitability.

Tech Expert

The shipment of the PVT 200 system for SiC 200mm crystal boule growth is a significant technological milestone. Silicon carbide (SiC) is gaining traction in power electronics due to its superior properties over traditional silicon, particularly in electric vehicles and renewable energy applications.

CVD's ability to produce 200mm SiC boules could position them well in this growing market. However, the technology's success will depend on the system's performance evaluation by the customer. If successful, it could lead to more orders and potentially establish CVD as a key player in the SiC equipment market.

The continued investment in R&D across three key strategic markets suggests a forward-looking approach, but the company needs to balance innovation with profitability to ensure long-term success.

CENTRAL ISLIP, N.Y.--(BUSINESS WIRE)-- CVD Equipment Corporation (NASDAQ: CVV), today announced its financial results for the second quarter ended June 30, 2024.

Manny Lakios, President and CEO of CVD Equipment Corporation, commented, “Second quarter 2024 revenue was $6.3 million, a 25.2% increase from the prior year period. We are pleased to have recently shipped a PVT 200 system which was part of the first quarter strategic order for SiC 200mm crystal boule growth. The performance of the system will be evaluated for production by our now second account. We are encouraged that our backlog at June 30, 2024 is meaningfully higher than our year-end backlog."

"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 end markets we serve. We'll stay the course on strategic efforts to build critical customer relationships, achieve profitability, carefully manage our costs and cash flow while simultaneously focusing on growth and return on investment."

Second Quarter 2024 Financial Performance

• Revenue of $6.3 million, an increase of 25.2% year over year primarily due to higher system revenues and an increase in SDC revenues
• Backlog as of June 30, 2024 of $24.0 million, a decrease from $27.1 million at March 31, 2024
• Our gross profit margin percentage declined to 25.4% as compared to the prior year quarter due to a less profitable mix of contracts
• Operating loss of $0.9 million
• Net loss of $0.8 million or $0.11 per basic and diluted share, compared to a net loss of $1.1 million or $0.16 per basic and diluted share during the prior year second quarter
• Operating loss and net loss for the prior year second quarter both included non-recurring charges of $0.3 million consisting of a loss on the sale of our Tantaline subsidiary of $0.2 million and an impairment charge of $0.1 million resulting from our decision to wind down our MesoScribe business
• Cash and cash equivalents as of June 30, 2024 of $10.0 million

Second Quarter 2024 Operational Performance

• Orders for the first quarter were $3.2 million primarily driven by demand in our SDC segment for 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.
• We continue to make investments in both research and development and sales and marketing focused on our three key strategic markets.

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 13747925.

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
Condensed Consolidated Statements of Operations
(In thousands, except per share data – Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue		$	6,345			$	5,069			$	11,267			$	13,764
Cost of revenue			4,736				3,681				8,799				9,943
Gross profit			1,609				1,388				2,468				3,821
Operating expenses:
Research and development			665				559				1,410				1,161
Selling			426				428				845				847
General and administrative and other			1,416				*1,633				2,739				*3,233
Total operating expenses			2,507				2,620				4,994				5,241
Operating loss			(898)				(1,232)				(2,233)				(1,420)
Net loss		$	(761)			$	(1,113)			$	(2,233)			$	(1,142)
Basic and diluted loss per share		$	(0.11)			$	(0.16)			$	(0.33)			$	(0.17)
* Includes loss on sale of Tantaline subsidiary of $0.2 million and an impairment charge related to MesoScribe fixed assets of $0.1 million.

CVD EQUIPMENT CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands - Unaudited)
		June 30, 2024				December 31, 2023
Assets
Current assets
Cash and cash equivalents		$	10,031			$	14,025
Accounts receivable, net			4,951				1,906
Contract assets			1,554				1,604
Inventories			4,658				4,454
Other current assets			592				852
Total current assets			21,786				22,841
Property, plant and equipment, net			12,041				12,166
Other assets			18				18
Total assets		$	33,845			$	35,025
Liabilities and Stockholders' Equity
Current liabilities		$	9,116			$	8,554
Long-term debt, net of current portion			225				268
Total stockholders’ equity			24,504				26,203
Total liabilities and stockholders’ equity		$	33,845			$	35,025

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/20240813282200/en/

For further information about this topic please contact:

Richard Catalano, Vice President & CFO

Phone: (631) 981-7081

Email: investorrelations@cvdequipment.com

Source: CVD Equipment Corporation

FAQ

What was CVD Equipment 's (CVV) revenue for Q2 2024?

CVD Equipment 's revenue for Q2 2024 was $6.3 million, representing a 25.2% increase from the same period in the previous year.

How did CVV's stock perform in terms of earnings per share (EPS) in Q2 2024?

CVV reported a net loss of $0.11 per basic and diluted share for Q2 2024, compared to a net loss of $0.16 per share in Q2 2023.

What was the backlog value for CVD Equipment (CVV) as of June 30, 2024?

The backlog for CVD Equipment as of June 30, 2024, was $24.0 million, which decreased from $27.1 million at March 31, 2024.

How much cash and cash equivalents did CVV have as of June 30, 2024?

CVD Equipment reported cash and cash equivalents of $10.0 million as of June 30, 2024.