CVD Equipment Corporation

Good afternoon and welcome to the CVD Equipment Corporation fourth quarter and full year 2025 earnings conference call. As a reminder, today's call is being recorded. We will begin with prepared remarks, followed by a question and answer session. Presenting on today's call are Emmanuel Lekios, President and Chief Executive Officer, and Richard Catalano, Executive Vice President and Chief Financial Officer. Our next press release and information about today's call replay are available in the investor relations section of our website at cvdequipment.com. Before we begin, please note that comments made during this call may include forward-looking statements, including statements regarding our future financial performance, market growth, product demand, business outlook, and strategic initiatives. These statements are based on current expectations and are subject to risk and uncertainties that could cause actual results to differ materially. For discussion of these risks, please refer to our filings with the Securities and Exchange Commission, including the risk factors section of our annual report on Form 10-K for the year ended December 31, 2025. We undertake no obligation to update any forward-looking statements except as required by law. With that, I will now turn the call over to Emmanuel Alekios, President and Chief Executive Officer.

Thank you, Diego, and good afternoon, everyone. We appreciate you joining us today to review our fourth quarter and full year 2025 financial results and to provide you an update on our business and strategic initiatives. Following our prepared remarks, we will be happy to take your questions. As previously disclosed in response to continued volatility in order rates and recent decline in bookings within our CBD equipment division, we have initiated a transformation strategy during the fourth quarter designed to significantly reduce fixed operating costs, create a more agile organization, and better position the company to maximize shareholder value. Key elements of this plan included transitioning the CVD equipment business from a vertically integrated fabrication model to outsource fabrication for certain components, which we expect will reduce fixed costs and improve scalability. Completing a workforce reduction in the CVD equipment division during the fourth quarter, which was to right-size the organization, and is expected to reduce annual operating costs by approximately 1.8 million in 2026, revising our sales approach by leveraging distributors and external representatives to complement our internal sales organization, and exploring strategic alternative for certain businesses and product lines, including potential asset sales or divestitures. As part of our strategic review, On March 23, 2026, we announced that we had entered into a definitive agreement under which our SDC business will be sold to Atlas Copco Group. The purchase price is approximately $16.9 million in cash, subject to certain purchase price adjustments. The transaction is expected to close during the second quarter of 2026, subject to customary closing conditions. This transaction will allow us to sharpen our focus on our core CVD equipment business in Central Islip, New York. It is also expected to strengthen our balance sheet and provide additional financial flexibility as we continue to evaluate opportunities across the CVD equipment business, its product lines, and our facilities. We expect net cash proceeds after transaction expenses and taxes to be approximately $15 million. of which 900,000 will be held in escrow for post-closing adjustments and identification obligations under the agreement. We retain ownership of our Saugerties New York facility, which will be leased to Atlas Copco Group for the initial term of two years following the closing. I also want to express our appreciation to our SDC employees for their contribution to the company over the years. Turning to our financial results, fourth quarter 2025 revenue was $5 million, down 33% from prior year period, and down 33% sequentially from the third quarter. For our full year 2025, revenue was $25.8 million, a decrease of 4.1% from fiscal year 2024. Orders in the fourth quarter totaled $3.5 million, driven primarily by the demand in our SDC segment for gas delivery equipment and the receipt of two orders from Stony Brook University for two PBT-150 units. For the full year, orders totaled $13 million compared to $28 million in 2024, primarily driven by demand in our SDC business for gas delivery equipment and order for spare parts and service for our CBD equipment division. At December 31st, 2025, backlog was 6.6 million compared with 8 million at the end of September 30th, 2025. and $19.4 million at the end of December 31st, 2024. Our bookings continued to be pressured by several factors, including softer demand for our products in our CBD equipment division, tariff-related uncertainties, reduced U.S. government spending for universities, and a slower pace of adoption of our solutions in certain end markets. We continue to monitor our customer demand, the general uncertainty of the geopolitical environment, and potential tariff impacts, and we are planning accordingly. Even against this backdrop, we remain focused on delivering solutions across our key targeted markets of aerospace, defense, industrial applications, including silicon carbide on graphite, and silicon carbide use in hyper-electronics and other emerging applications. With that, I will turn the call over to our CFO, Richard Catalano, to review the financial results in more detail.

Richard Catalano Thank you, Manny, and good afternoon, everyone. Fourth quarter of 2025 revenues was $5 million. This compares to $7.4 million in the fourth quarter of 2024. This year-over-year decline was primarily driven by lower CBD systems revenue. Revenue in our CBD equipment segment was concentrated among two key customers, which together represented approximately 53% of total fourth quarter revenue. Our SDC segment reported revenue of $2.2 million in the quarter, compared to $1.9 million in the fourth quarter of fiscal 24, and $1.7 million in the third quarter of 2025. Consolidated gross profit for the quarter was $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 CBD revenue, which resulted in higher unabsorbed overhead as well as a less favorable contract mix. Our operating loss for the fourth quarter of 2025 was $1.3 million compared to operating income of $34,000 in the fourth quarter of 2024. Included in the fourth quarter 2025 results was a non-cash impairment charge of $163,000. This was related to certain equipment and capitalized software associated with our transition to outsource fabrication of certain components in our CBD business. After interest income, the net loss for the quarter was $1.3 million or 18 cents per diluted share, compared with net income of $132,000 or 2 cents per diluted share in the prior year quarter. For the full fiscal year, revenue was $25.8 million. This compares to $26.9 million in fiscal 2024. The year-over-year decline was primarily due to lower SDC revenue and lower Mesoscribe revenue. As we ceased that business, Mesoscribe ceased operations in 2024. Revenue in our CBD equipment segment was again concentrated among two key customers, which together represent 41 percent of total revenue for the year. Our SDC segment reported full-year revenue of $7.6 million as compared to $7.8 million in fiscal 2024. The consolidated gross profit in fiscal 2025 was $7.3 million or 28.3% of revenue compared to $6.1 million or 22.5% of revenue in fiscal 2024. The increase in gross profit was primarily due to improved gross margins in our CBD equipment segment This was primarily due to a prior year charge of $1.6 million that we took last year to write down certain inventory to net realizable value. We did not incur a similar charge in fiscal 25. This improvement, not having the charge, was partially offset by lower gross profit in the current year in our SDC and mesoscribe segments due principally to lower revenues. Operating loss for fiscal 25 was 1.9 million. This compares to an operating loss of 2.4 million in fiscal 24. Interest income, net loss for the year was 1.6 million or 23% for diluted share compared to a net loss of 1.9 million or 28 cents for diluted share in fiscal 24. At December 31st, 25, we had cash and cash equivalents of 8.7 million This compares to 12.6 million at December 31st, 24. Net cash used in operating activities during fiscal 25 was 3.7 million. This was largely driven by changes in working capital and contract timing as far as milestone billings. Working capital improved to 14.1 million at year end 25. This compares to 13.8 million at the end of 24. This was due in part to the classification of approximately 0.5 million of fixed assets that we had held for sale and for which we sold in the early part of 2026. Looking ahead, our return to consistent profitability will depend on improved equipment order flow, disciplined cost management, successful execution of our transformation plan, and continued control of capital expenditures. While our quarterly results might continue to fluctuate based on order timing, we believe our current cash position and projected cash flows will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. In addition, upon the closing of the transaction to sell SDC, we expect net cash proceeds, excluding the $900,000 escrow amount, to approximately $14 million, and we currently intend to initially invest those proceeds in U.S. Treasury securities. With that, I'll now turn it back to Manny.