Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CVD Equipment Corp (NASDAQ:CVV) reported a 31.4% increase in third-quarter revenue compared to the same period last year.
• The company successfully shipped a PBT 200 system to a new account, marking a strategic order for silicon carbide crystal growth.
• Orders for the third quarter were $4.1 million, driven primarily by demand in the CBD segment.
• CVD Equipment Corp (NASDAQ:CVV) received a $3.5 million follow-on order from an existing aerospace customer, indicating strong customer relationships.
• The company's backlog increased by 7.6% compared to the 2023 year-end backlog, reflecting a positive outlook for future revenue.

Negative Points

• Year-to-date revenue was 2.8% lower than the prior year period, indicating some challenges in maintaining consistent growth.
• The company recorded a noncash charge of approximately $1 million to reduce the net realizable value of PBT 150 inventory due to market overcapacity.
• Gross profit margin decreased to 22.4% from 25.6% in the same quarter last year, despite higher revenues.
• Working capital decreased from $14.3 million at the end of December 2023 to $13.3 million as of September 30, 2024.
• The company's return to consistent profitability is contingent on new equipment orders and managing inflationary pressures, indicating potential volatility.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with CVV.

Q: Can you disclose the types of clients you have, such as whether they are in the EV or aerospace sectors? A: Emmanuel Laos, President and CEO: We have NDAs with our customers, which prevent us from disclosing specific details about them. However, I can share that the aerospace company we mentioned manufactures gas turbine engines, and the EV-related company produces silicon carbide wafers.

Q: Besides the name of the company, can you mention what type of company it is? A: Emmanuel Laos, President and CEO: Yes, I can mention the type of company. For example, the aerospace company manufactures gas turbine engines, and the EV company is involved in silicon carbide wafer production.

Q: What are the main factors affecting your return to consistent profitability? A: Richard Catalano, Executive Vice President and CFO: Our return to consistent profitability depends on receiving new equipment orders, mitigating inflationary pressures, and managing capital expenditures and operating expenses. Our revenues and orders have historically fluctuated, impacting our financial performance.

Q: How do you plan to manage your cash flow and working capital needs? A: Richard Catalano, Executive Vice President and CFO: We believe our cash and cash equivalents, along with 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 product demand and take necessary actions to maintain our operating cash.

Q: Can you provide more details on the recent $3.5 million order? A: Emmanuel Laos, President and CEO: The $3.5 million order is a follow-on order for our CV I 3,500 system from an existing aerospace customer. This customer is a leading gas turbine engine manufacturer.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.