CVD Equipment Corporation

Greetings and thank you for standing by, and welcome to CVD's Equipment Corporation's first quarter fiscal year 2024 earnings conference call. 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 member of the CVD Board of Directors, and Richard Calano, Catalano, 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, www.cvdequipment.com. Before I begin, I'd 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 markets, 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 filing with the SEC, included but not limited to risk factors sections of the company's 10-K for the year ending December 31, 2023. 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 obligations to update any forward-looking statements based on new circumstances or revised expectations. Now I'd like to turn the call over to Emmanuel Lakios.

Operator, thank you, and good afternoon, everyone. Thank you all for joining us today to discuss our first quarter 2024 financial results and other important company developments and pertinent information related to our business. Your thoughts are important to us, and we look forward to your questions in the Q&A session. First quarter 2024 revenue was $4.9 million, down significantly versus same prior year period, as our business continues to experience fluctuations in revenue given the nature of the emerging growth and markets we serve. While we are disappointed with our first quarter performance, we'll stay the course on strategic efforts to achieve profitability carefully managing our costs and cash flow while simultaneously focusing on growth and return on investment. As we mentioned in our year-end press release, we started off 2024 with several key order wins during the first quarter. Specifically, this included a strategic order for our PBT 200 system from a new customer, marking an important milestone for our silicon carbide crystal growth system. The PBT 200 customer plans to evaluate our equipment for potential additional orders. In addition, we received a multi-system order for our industrial market silicon carbide CVD coating system for approximately $10 million. The order performance of the first quarter resulted in an increase in backlog from 18.4 million at year end to 27.1 million at March 31st, 2024. We are encouraged by these orders as we continue to fund both research, development, sales, marketing activities, including direct engagement with multiple potential customers, highly focused on penetrating key market opportunities. I would like to turn the call over to our CFO, Rich Catalano. will provide an overview of our first quarter financial results.

Thank you, Manny, and good afternoon. Our revenue for the first quarter was $4.9 million. This compares to $8.7 million for the first quarter of 2023. This is a decrease of $3.8 million, or 43 percent. The decrease in revenue versus the prior year period was primarily attributable to lower revenue of $2.9 million from our CBD equipment segment, a $0.4 million decrease in revenue from our SDC segment, and a $0.6 million decrease from the CBD material segment due to the disposition of tantaline in May 2023 and the wind-down of mesoscribes operations. The decrease in CBD equipment revenue in the period was principally the result of the revenue associated with our PVT-150 systems in the prior period as compared to no such revenue in the current period. While our SDC segment revenues were 16% lower than the first quarter of 2023, it was $0.6 million or 44% higher than the fourth quarter of 2023 due to increased demand for SDC's gas and chemical delivery systems. Gross profit for the three months ended March 31, 2024 was $0.9 million with a gross profit margin of 17.5%. This compares to a gross profit of $2.4 million and a gross profit margin of 28 percent for the three months ended March 31st, 2023. The decrease in gross profit of $1.6 million was primarily the result of lower gross profit margins on contracts currently in progress as compared to the first quarter of 2023, which benefited from contracts with higher gross margins. The operating loss for the first quarter of 2024 was $1.6 million as compared to an operating loss of $0.2 million in the first quarter of 23. This increase in the operating loss was due to the lower gross profit margin of $1.6 million that was partially offset by lower personnel costs from a reduction in our workforce in January 2024 and also lower bonus accruals. After that income, which consists principally of interest income, our net loss for the first quarter was 1.5 million or 22 cents per share for both basic and diluted. This compares to a net loss for the first quarter of 2023 of 40,000 or one cent per share for both basic and diluted. As for our balance sheet, our cash and cash equivalents at March 31st, 2024 was $11.9 million as compared to $14 million at December 31st, 2023. This decrease in cash was principally due to the net loss of $1.5 million, an increase in contract assets of $1.1 million, an increase in accounts receivable of $1.1 million, as well as an increase in inventories of $0.5 million. These were offset by an increase in contract liabilities of $1.1 million, and also we have non-cash items of $0.4 million, principally depreciation as well as stock-based compensation. Our working capital at March 31st, 2024 is $13.1 million. This compares to $14.3 million at December 31st, 2023. We are unable to predict what impact the current economic and geopolitical uncertainties will have on our financial position and future results of operations and cash flows. Our return to profitability is dependent upon, among other things, the receipt of new equipment orders, our ability to mitigate the impact of supply chain disruptions and inflationary pressures, as well as managing planned capital expenditures and operating expenses. In addition, our revenues and orders have historically fluctuated based on changes in order rate, as well as other factors in our manufacturing process that impacts the timing of our revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter. After considering all these factors, we believe our cash and cash equivalents and our 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 the demand for our products, assess our operations, and take actions as necessary to maintain our operating cash to support our working capital needs. I'll now turn it back to Manny.