CVD Equipment Q1 Earnings Call Highlights

CVD Equipment (NASDAQ:CVV) reported a sharp decline in first-quarter revenue from continuing operations as the company continued to reshape its business following the sale of its SDC division to Atlas Copco.

President and Chief Executive Officer Emmanuel Lakios said the company is focused on cutting fixed costs, improving flexibility and evaluating strategic options for the remaining CVD Equipment business. The company’s transformation plan, launched late last year, included moving away from a vertically integrated fabrication model for certain components, reducing its workforce and expanding the use of distributors and outside sales representatives.

Lakios said the fourth-quarter workforce reduction in the CVD Equipment division is expected to reduce annual operating costs by about $1.8 million in 2026. He said the company is also continuing to explore strategic alternatives for certain business product lines, including potential asset sales or divestitures.

SDC Sale Strengthens Cash Position

CVD Equipment completed the sale of its SDC business to Atlas Copco on April 1, 2026, after announcing the definitive agreement on March 23. The purchase price was approximately $16.9 million in cash, subject to certain purchase price adjustments.

Lakios said net cash proceeds received by the company in April, after transaction costs and employee-related liabilities, totaled $14.8 million. Following the sale, CVD Equipment had approximately $23 million in cash and no long-term debt, after repaying the remaining balance of an equipment loan during the quarter. An additional $900,000 was placed in escrow for post-closing adjustments and indemnification obligations.

The company retained ownership of its Saugerties, New York facility, which is being leased to the buyer for an initial two-year term. Lakios said the divestiture allows CVD Equipment to focus on its core business while strengthening its balance sheet and giving it additional financial flexibility.

Revenue Falls on Lower Systems Sales

Executive Vice President and Chief Financial Officer Richard Catalano said first-quarter revenue from continuing operations was $1.8 million, down from $6.3 million in the prior-year quarter and $2.7 million in the fourth quarter of 2025. The decline was driven primarily by lower CVD systems revenue.

Revenue was concentrated among three key customers, which together represented 66% of total first-quarter revenue. Orders totaled $1.8 million in the quarter, driven primarily by demand for spare parts. Backlog was $4.7 million as of March 31, 2026, roughly in line with the level at the end of 2025.

Gross profit was $147,000, or 8% of revenue, compared with gross profit of $1.7 million and a 27.4% gross margin in the prior-year quarter. Catalano said the decrease reflected lower revenue and higher unabsorbed overhead costs. Gross profit benefited by about $317,000 from a contract modification with one customer.

The company reported an operating loss from continuing operations of $1.8 million, compared with an operating loss of $0.3 million in the prior-year period. Net loss from continuing operations was $1.7 million, or $0.25 per basic and diluted share, compared with a net loss of $229,000, or $0.03 per share, a year earlier.

Income from discontinued operations, related to the SDC division, was $63,000 for the quarter, down from $0.6 million in the prior-year quarter. Catalano said the decline was principally due to $0.4 million of legal and investment banking fees associated with the SDC sale.

Management Cites Uncertain Demand Environment

Lakios said bookings have continued to be affected by several factors, including geopolitical uncertainty, reduced U.S. government funding for universities and a slower pace of adoption in some end markets. He said the company is monitoring customer demand, geopolitical developments and potential tariff impacts while adjusting its plans.

The company said it remains focused on markets including aerospace and defense, industrial applications such as silicon carbide on graphite, silicon carbide for high-power electronics and emerging applications including nuclear energy.

Catalano said CVD Equipment’s return to consistent profitability will depend on improved equipment order flow, disciplined cost management, execution of the transformation plan and continued control of capital expenditures.

Q&A Focuses on Property Value, Pipeline and Strategic Review

During the question-and-answer session, Neil Cataldi of Blueprint Capital Management asked about the book value of the company’s Central Islip property. Management said the company previously evaluated a sale-leaseback transaction in which the valuation was above the property’s stated value, but it did not provide a current valuation. Management described the facility as “still a valued asset of the corporation.”

Asked about potential demand tied to silicon carbide, nuclear energy and data centers, management said the company is seeing a higher rate of requests for quotations than it saw in 2025. However, management cautioned that RFQs can take several months or several quarters to convert into orders.

Management said the market for silicon carbide physical vapor transport systems had been hurt by Chinese wafer suppliers flooding the market, making it difficult for U.S. wafer providers to justify ramping up and purchasing more equipment. The company also emphasized that it is more focused on three-dimensional products and substrates, such as pre-form chemical vapor infiltration and boule growth, than on planar wafer-level semiconductor processing.

On nuclear applications, management said CVD Equipment is seeing RFQs for CVI and CVD equipment, though it remains early in the process. Regarding artificial intelligence and data centers, management said some products could be relevant to related infrastructure, including silicon carbide PVT systems and products associated with power transport, but said it does not currently characterize itself as an AI-enabling company.

Asked about strategic alternatives, management pointed to the SDC sale as one completed strategic initiative and said it continues to evaluate additional options. The company did not provide a timeline for any further actions.

Lakios closed the call by saying the company’s priorities are serving customers, supporting employees, creating shareholder value and returning the core CVD Equipment business to sustained profitability.

About CVD Equipment (NASDAQ:CVV)

CVD Equipment Corporation (NASDAQ: CVV) designs, manufactures and markets custom vacuum deposition systems used to create thin-film coatings and advanced materials for semiconductor, optoelectronic and related industries. Established in 1992 and headquartered in the United States, the company leverages proprietary chemical vapor deposition (CVD), plasma-enhanced CVD, metal-organic CVD (MOCVD), atomic layer deposition (ALD) and physical vapor deposition (PVD) technologies to support both research and production applications.

The company’s product portfolio includes single- and multi-chamber reactors for the deposition of silicon, III-V compounds, metal oxides and other specialty materials, along with fluid-bed reactors for nanoparticle synthesis.