CVD Equipment Corporation

Greetings and welcome to our CVD Equipment's 2021 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. We will begin with some prepared remarks followed by a question and answer session. Presenting on the call today will be Emmanuel Lakios, President and CEO, and Thomas McNeil, Executive Vice President and Chief Financial Officer. We have posted our earnings press release and call replay information to the investor relations section of our website at www.cvdequipment.com. Before I begin, I would like to remind you that many of the comments made on today's call contain forward-looking statements, including those related to future financial performance, market growth, total available market, demand for our products, and general business conditions and outlook. These forward-looking statements are based on certain assumptions, expectations, and projections and are subject to a number of risks and uncertainties described in our press release and in our filings with the SEC, including, but not limited to, the risk factor section of our 10-K for the year ended December 31st, 2020. Actual results may differ materially from those described during this call. In addition, all forward-looking statements are made as of today, and we undertake no obligation to update any forward-looking statements based on new circumstances or revised expectations. Now, I'd like to turn the call over to Manny. Manny?

Thank you. Welcome to our CBD Equipment Corporation quarterly conference call. My name is Manuel Accio, CEO and President, and I am pleased to be presenting today regarding important company developments and pertinent information related to our business. As we will be providing substantive information, your thoughts are important to us. We request that you wait with your questions and at the end of the Q&A session. I would like to introduce our CFO, Mr. Thomas McNeil, who will provide you our financial second quarter 2021 summary.

Thank you, Manny, and good afternoon, everyone. CVD's second quarter 2021 revenue was $4 million, as compared to $3.7 million in the second quarter of 2020, an increase of $300,000, or 8.5%. Net income for the second quarter was $1.5 million, or $0.22 per diluted share, as compared to a net loss of $1.1 million, or $0.17 per diluted share, in the second quarter of 2020. With respect to our first half results, as a result of the COVID-19 pandemic, CVD's new order booking substantially decreased commencing in the first quarter of 2020, which reduced revenues in subsequent quarters, resulting in revenue of $7.4 million in the first half of 2021, as compared to $9.8 million in the first half of 2020, a decrease of $2.4 million, or 24.1%. Net loss for the first half of 2021 was $35,125, or one penny per diluted share, as compared to net income of $500,000, or eight cents per diluted share, for the first half of 2020. Let me note that during the first quarter of 2020, CBD benefited from the CARES Act, which allowed for the carryback of net operating losses and resulted in CBD recognizing an income tax benefit of $1.5 million in the second quarter and first half of 2020. With respect to CVD's second quarter and first half results for 2021, we were positively impacted by the gain on debt extinguishment in the amount of $2.4 million, which was related to our PPP loan received due to the effects of COVID-19 pandemic and subsequently forgiven in June 2021. In our second quarter of 2021, sequential improvement was achieved as CVD's revenue in the second quarter was $4 million as compared to $3.4 million in the first quarter of 2021, an increase of $600,000, and the operating loss decreased to $1.1 million in the second quarter of 2021. as compared to an operating loss of $1.6 million in the first quarter of 2021, an improvement of $500,000. This is a result of increased revenue and the improvement in product margins. The company's backlog at June 30, 2021 improved by $2 million to $8 million at June 30, as compared to $6 million at March 31, 2021. Since the first quarter of 2020, the company continued to experience significant negative effects from the COVID-19 pandemic, including reductions of new orders. However, the company's order activity has improved in both the first and second quarters of 2021, and we believe its longer-term improvements will be benefited by the anticipated slow recovery in the aerospace markets which industry reports indicate will begin to occur in 2022 to 23 timeframe. With respect to our 555 building sale, as previously announced, we are pleased to have closed on the sale of our facility located at 555 North Research Place in Central Islip on July 26, 2021. With a sales price of $24.4 million, We've satisfied our mortgage debt of approximately $9.1 million outstanding at June 30th and paid various transaction-related costs. The net proceeds of approximately $14 million dramatically improves our current cash position, which now exceeds $18 million, and provides us with the balance sheet for sustainable growth strategies. Our cash and cash equivalents were $5.4 $4 million at June 30, 2021 as compared to $7.7 million at December 31, 2020. However, as I just mentioned, with the closing of the 555 sale that occurred in July, our cash balance now exceeds $18 million. Working capital was $11.5 million at June 30, 2021 as compared to $8.1 million at December 31, 2020. an increase of 3.4 million, or 42%. This is primarily the result of our actions taken to sell the 555 building, which we closed in July, and thus resulted in classifying our long-term assets and liabilities related to this sale as short-term at June 30th, 2021. In addition, during the first half, we have substantially reduced our capex from 862,000 in the first half of 2020 to 118,000 during the first half of 2021, this relating to ceasing further U.S. spend on the tantalum product line. The longer-term impacts from COVID-19 outbreak are highly uncertain and cannot be predicted, especially now with the recent outbreaks of the COVID-19 Delta variant. Our return to profitability is dependent upon, among other things, the receipt of new equipment orders, the lessening of the ongoing effects of COVID-19 and the Delta variant on our business and the aerospace market, and improvement in operational efficiencies, as well as managing planned CapEx and operating expenses. Based on all these factors, we believe our cash and cash equivalent positions and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next 12 months of the filing of this Form 10-Q. Should the current environment continue longer or worsen, we will continue to assess our operations and take actions anticipated to maintain our operating cash to support the working capital needs. At this point, I'd like to turn the call back over to Matty, our CEO. Tom, thank you for your presentation.