Release Date: March 19, 2025

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 significant revenue increase of 80.3% in Q4 2024 compared to the same quarter in the previous year.
• The company achieved a full-year revenue of $26.9 million in 2024, marking an 11.5% increase from 2023.
• CVD Equipment Corp (NASDAQ:CVV) received a substantial $10 million multi-system order in the industrial market for silicon carbide coating.
• The backlog at the end of 2024 was $19.4 million, a 4.9% increase from the previous year, indicating strong future demand.
• The company reported a positive net income for the second consecutive quarter, reflecting improved financial performance.

Negative Points

• The silicon carbide market remains challenging due to global overcapacity and declining wafer prices, impacting potential orders.
• CVD Equipment Corp (NASDAQ:CVV) recorded a non-cash charge of $1.3 million in 2024 to reduce the net realizable value of PVT 150 inventory.
• Operating income for Q4 2024 was only $35,000, indicating tight profit margins despite revenue growth.
• The geopolitical environment and potential tariffs pose risks to the supply chain and could increase component costs.
• The company's return to consistent profitability is contingent on new equipment orders and managing inflationary pressures.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with CVV.

Q: How did the large $10 million silicon carbide coating order come about? A: Emmanuel Lachios, President and CEO, explained that the order was a result of the company's development of a silicon carbide CMC system for aerospace. The customer saw the advertisement for this system and approached CVD Equipment Corp with their need, leading to the order.

Q: Are there other potential customers for the silicon carbide coating systems? A: Emmanuel Lachios stated that the technology is applicable to other customers in the industrial space, but expansion will depend on market growth in specific areas such as crystal growth for silicon carbide wafers and LED markets.

Q: What is the status of the PVT 200 system evaluation by the second customer? A: Emmanuel Lachios mentioned that the PVT 200 system is meeting or exceeding performance specifications. However, due to geopolitical and market conditions, the demand for additional capacity is uncertain and will be clearer in the next one to two quarters.

Q: Can you provide insights into the potential for future orders from aerospace customers? A: Emmanuel Lachios noted that CVD Equipment Corp has relationships with three out of four major gas turbine engine manufacturers. The company is positioned to support these customers with spare parts and consumables and is bidding on contracts for additional capacity.

Q: Will operating margins continue to improve in the future? A: Emmanuel Lachios confirmed that the company aims to maintain operating margins above 30%, contingent on maintaining volume levels and controlling first article costs. The improvements seen in recent quarters are expected to continue as the company becomes more efficient in fulfilling orders.

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