CVD Equipment Corporation (CVV) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals declining orders, backlog, and gross margins, coupled with operating and net losses. The Q&A section highlights management's lack of clear strategic direction, with vague responses about future plans and no immediate shareholder returns. Despite improved full-year gross profit and reduced operating losses, the overall sentiment is negative due to financial underperformance and uncertainty.
Key Financial Performance
Fourth Quarter 2025 Revenue $5 million, down 33% year-over-year and down 33% sequentially from the third quarter. The decline was primarily driven by lower CVD systems revenue.
Full Year 2025 Revenue $25.8 million, a decrease of 4.1% from fiscal year 2024. The decline was primarily due to lower SDC revenue and lower MesoScribe revenue as the MesoScribe business ceased operations in 2024.
Fourth Quarter 2025 Orders $3.5 million, driven primarily by demand in the SDC segment for gas delivery equipment and two orders from Stony Brook University for PVT150 units.
Full Year 2025 Orders $13 million compared to $28 million in 2024, primarily driven by demand in the SDC business for gas delivery equipment and orders for spare parts and service for the CVD Equipment division.
Backlog at December 31, 2025 $6.6 million compared to $8 million at the end of September 30, 2025, and $19.4 million at the end of December 31, 2024. The decline was due to softer demand for products in the CVD Equipment division, tariff-related uncertainties, reduced U.S. government spending for universities, and slower adoption of solutions in certain end markets.
Fourth Quarter 2025 Gross Profit $1.1 million, resulting in a gross margin of 22.2%. This compares with a gross profit of $2 million and a gross margin of 26.4% in the prior year quarter. The decrease was primarily due to lower CVD revenue, higher unabsorbed overhead, and a less favorable contract mix.
Full Year 2025 Gross Profit $7.3 million or 28.3% of revenue compared to $6.1 million or 22.5% of revenue in fiscal 2024. The increase was primarily due to improved gross margins in the CVD Equipment segment, as there was no $1.6 million inventory write-down charge in 2025, unlike in 2024. However, this was partially offset by lower gross profit in the SDC and MesoScribe segments due to lower revenues.
Fourth Quarter 2025 Operating Loss $1.3 million compared to operating income of $34,000 in the fourth quarter of 2024. The loss included a noncash impairment charge of $163,000 related to equipment and capitalized software associated with the transition to outsourced fabrication in the CVD business.
Full Year 2025 Operating Loss $1.9 million compared to an operating loss of $2.4 million in fiscal 2024. The improvement was due to disciplined cost management and the absence of a $1.6 million inventory write-down charge in 2025.
Fourth Quarter 2025 Net Loss $1.3 million or $0.18 per diluted share compared with net income of $132,000 or $0.02 per diluted share in the prior year quarter.
Full Year 2025 Net Loss $1.6 million or $0.23 per diluted share compared to a net loss of $1.9 million or $0.28 per diluted share in fiscal 2024. The improvement was due to disciplined cost management and the absence of a $1.6 million inventory write-down charge in 2025.
Cash and Cash Equivalents at December 31, 2025 $8.7 million compared to $12.6 million at December 31, 2024. The decrease was largely driven by changes in working capital and contract timing as far as milestone billings.
Working Capital at December 31, 2025 $14.1 million compared to $13.8 million at the end of 2024. The improvement was due in part to the classification of approximately $0.5 million of fixed assets held for sale, which were sold in early 2026.
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Operating Highlights
Transformation strategy: Initiated during Q4 2025 to reduce fixed operating costs, create a more agile organization, and maximize shareholder value. Key actions include transitioning to outsourced fabrication for certain components, workforce reduction in the CVD Equipment division (expected to save $1.8 million annually in 2026), revising sales approach by leveraging distributors and external representatives, and exploring strategic alternatives for certain businesses and product lines.
Workforce reduction: Completed in Q4 2025 within the CVD Equipment division, expected to reduce annual operating costs by approximately $1.8 million in 2026.
Outsourced fabrication: Transitioned from a vertically integrated fabrication model to outsourcing certain components to reduce fixed costs and improve scalability.
Sale of SDC business: Entered into a definitive agreement to sell the SDC business to Atlas Copco Group for $16.9 million in cash, subject to adjustments. Expected net cash proceeds after expenses and taxes are approximately $15 million, with $900,000 held in escrow. The transaction is expected to close in Q2 2026. This move aims to sharpen focus on the core CVD Equipment business and strengthen the balance sheet.
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Risk or Challenges
Volatility in Order Rates and Decline in Bookings: The company is experiencing continued volatility in order rates and a recent decline in bookings within the CVD Equipment division, which could adversely impact revenue and operational stability.
Transition to Outsourced Fabrication: The shift from a vertically integrated fabrication model to outsourcing certain components may pose risks related to quality control, supply chain reliability, and potential delays.
Workforce Reduction: The workforce reduction in the CVD Equipment division, while aimed at cost savings, could lead to operational disruptions and loss of institutional knowledge.
Revenue Decline: Fourth quarter 2025 revenue decreased by 33% year-over-year and sequentially, and full-year revenue declined by 4.1%, indicating financial pressure.
Concentration of Revenue: Revenue in the CVD Equipment segment is heavily concentrated among two key customers, representing 53% of total fourth-quarter revenue, which increases dependency risk.
Backlog Decline: The backlog decreased significantly from $19.4 million at the end of 2024 to $6.6 million at the end of 2025, reflecting reduced future revenue visibility.
Tariff-Related Uncertainties and Geopolitical Risks: Tariff-related uncertainties and geopolitical risks are impacting customer demand and operational planning.
Reduced U.S. Government Spending: Lower U.S. government spending for universities is affecting demand for the company's products.
Slower Market Adoption: A slower pace of adoption of the company's solutions in certain end markets is pressuring bookings and revenue.
Operating Loss: The company reported an operating loss of $1.3 million for the fourth quarter of 2025, compared to operating income in the prior year, highlighting financial challenges.
Cash Flow and Liquidity Concerns: Net cash used in operating activities during fiscal 2025 was $3.7 million, and cash and cash equivalents decreased from $12.6 million in 2024 to $8.7 million in 2025, raising concerns about liquidity.
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Guidance & Outlook
Transformation Strategy: The company has initiated a transformation strategy to reduce fixed operating costs, create a more agile organization, and better position the company for shareholder value. This includes outsourcing fabrication for certain components, reducing workforce in the CVD Equipment division (expected to save $1.8 million annually in 2026), revising the sales approach, and exploring strategic alternatives for certain businesses and product lines.
SDC Business Sale: The company has entered into a definitive agreement to sell its SDC business to Atlas Copco Group for $16.9 million in cash, with the transaction expected to close in Q2 2026. Net cash proceeds after expenses and taxes are expected to be approximately $15 million, with $900,000 held in escrow. This sale is expected to strengthen the balance sheet and provide financial flexibility for the core CVD Equipment business.
Future Financial Position: The company expects its current cash position and projected cash flows to be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Upon closing the SDC transaction, the company plans to invest the proceeds in U.S. treasury securities.
Profitability Outlook: The return to consistent profitability depends on improved equipment order flow, disciplined cost management, successful execution of the transformation plan, and controlled capital expenditures. Quarterly results may fluctuate based on order timing.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you describe the skill sets of your existing engineers and how they might complement potential acquisitions with the $23-$24 million in cash?
A:The talent pool remains consistent with the capabilities from a year ago, focusing on CVD and CVI equipment. The Board is exploring opportunities to increase shareholder value but currently has no material plans to announce.
Q:What is the pipeline of opportunities being considered, and how long have these been under review?
A:The Board has been reviewing strategic alternatives for several quarters. However, no specific opportunities can be disclosed at this time, and further information may be shared in the coming quarters.
Q:Are you optimistic about finding opportunities that provide a less lumpy or more recurring revenue stream?
A:The equipment business is inherently lumpy, but the company aims to find opportunities with smoother revenue streams, including spares and service. However, no specific details can be shared at this time.
Q:Have you considered paying a special dividend with the available funds?
A:The company has not paid a special dividend in the past nine years and is focused on growing the business and utilizing funds conservatively. A special dividend is not currently under consideration.
Q:Is the company focusing on military-related business, such as drones, given the current global situation?
A:Yes, aerospace and defense are key markets, accounting for 78% of revenue in recent years. The company supplies equipment for military and commercial gas turbine engines and advanced materials like ceramics for hypersonics. This focus is expected to continue.
Q:Have you looked into the company SAES Getters for potential ideas or inspiration?
A:The management acknowledged the suggestion to research SAES Getters, a company based in Milan, and expressed interest in exploring it further.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details or timelines regarding potential acquisitions, the pipeline of opportunities, and efforts to achieve smoother revenue streams. Responses were vague and lacked concrete information.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Atlas Copco
Chief Executive
Copco Group
Equipment division
Equipment segment
Executive Officer
New York
SDC MesoScribe
adjustment
agreement
application
asset sale
booking
cash proceeds
charge
decline
delivery equipment
demand SDC
escrow
fabrication component
facility
income loss
loss share
plan
product line
purchase price
revenue
segment SDC
silicon carbide
solution
transaction
transformation
value
year
CVV Transcript
CVD Equipment Corporation (CVV) Q1 2026 Earnings Call Transcript
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The earnings call reveals a significant decline in gross margin from 27.4% to 8%, increased operating and net losses, and uncertainties in the market strategy, particularly with geopolitical impacts and competitive pressures from Chinese vendors. While the SDC sale improved cash position, management's evasive responses in the Q&A and lack of clear guidance further contribute to a negative sentiment. These factors, combined with the absence of a new partnership or optimistic guidance, suggest a likely negative stock price movement.
CVD Equipment Corporation (CVV) Q4 2025 Earnings Call Transcript
Unknown3-30
The earnings call reveals declining orders, backlog, and gross margins, coupled with operating and net losses. The Q&A section highlights management's lack of clear strategic direction, with vague responses about future plans and no immediate shareholder returns. Despite improved full-year gross profit and reduced operating losses, the overall sentiment is negative due to financial underperformance and uncertainty.
CVD Equipment Corporation (CVV) Q3 2025 Earnings Call Transcript
Unknown11-10
The earnings call reveals significant challenges: lower bookings, reduced backlog, liquidity concerns, and heavy reliance on key customers. Although there are some positives, like improved gross margins and net income, the overall sentiment is negative due to operational restructuring risks, potential impairment charges, and external market uncertainties. The Q&A provided no additional positive insights, and the strategic plan highlights fluctuating revenue and order rates. Given these factors, the stock is likely to react negatively in the short term.
CVD Equipment Corporation (CVV) Q2 2025 Earnings Call Transcript
Unknown8-12
The earnings call revealed several negative factors: a significant revenue decrease, an operating loss, cash and liquidity challenges, and geopolitical risks. The Q&A section highlighted uncertainties around tariffs and inflationary pressures, with unclear management responses. Despite some positive aspects, like a year-to-date revenue increase, the overall sentiment is negative due to declining orders, backlog reduction, and increased operating loss, likely leading to a negative stock price reaction.
CVV Report
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