CVD Equipment Corporation

Good afternoon and welcome to the CBD Equipment Corporation second quarter 2026 earnings conference call. As a reminder, today's call is being recorded. We'll begin with prepared remarks followed by a question and answer session. Presenting on today's call are Emmanuel Lakios, President and Chief Executive Officer, and Richard Catalano, Executive Vice President and Chief Financial Officer. Our earnings press release and information about today's call are available in the investor relations section of our website. Before I begin, please note that the comments made during this call may include forward-looking statements, including statements regarding future financial performance, marketing conditions, customer demand, strategic initiatives, potential asset monetization opportunities, and the execution of our transformation strategy. These statements are based on current expectations and are subject to risks and uncertainties, that could cause actual results to differ materially. For discussion for these risks, please refer to our filings with the Securities and Exchange Commission, including the risk factor section of our annual report on Form 10-K for the year ended December 31st, 2025. We undertake no obligation to update any forward-looking statements except as required by law. With that, I'll turn the floor over to Emmanuel Lakios, President and Chief Executive Officer. Please go ahead.

Thank you, operator, and good afternoon, everyone. We appreciate you joining us today to review our second quarter 2026 financial results and to provide an update on our business and strategic initiatives. Second quarter marked a transformational period for CBD equipment. Most notably, we completed the sale of our SDC business on April 1st, 2026. This transaction significantly strengthened our balance sheet, increased our financial flexibility, and allowed us to focus on our future strategy, including our core advanced material process equipment group. As a result of the investiture, we ended the quarter with approximately $23,500,000 in cash and cash equivalents and no long-term debt. providing us with a strong financial foundation as we navigate a challenging market environment. In addition to completing the divestiture, we substantially completed the operational restructuring initiative that we began last year. These efforts were designed to align our cost structure with our current business activity levels, improve operating efficiency, and positioned the company to respond more effectively when market conditions improve. We expect these actions to materially reduce our fixed operating costs going forward. While customer orders level continue to be adversely affected by broader economic and geopolitical uncertainty, we remain actively engaged with our customers and are continuing to pursue opportunities developing across our targeted markets. We are also focused on maintaining a disciplined approach to capital allocation and expense control with the goal of creating long-term shareholder value. Returning to operating performance, second quarter revenue from continuing operations was approximately $2 million, compared with $3.4 million in the prior year quarter. Orders during the quarter totaled approximately $1.2 million in backlog at the end of June 30th, 2026 was 3.9 million. With that, I'll turn the call over to our CFO, Rich Catalano, to review the financial results in more detail.

Thank you, Manny, and good afternoon. As Manny noted, the sale of the SDC business closed on April 1st, 2026. Accordingly, the results of SDC continue to be reported as discontinued operations for all periods presented. following the divestiture, CBD Equipment operates as a single reportable segment focusing on advanced material processing equipment and related technologies. Second quarter of 2026 revenue from continuing operations was $2 million, as Manny mentioned, compared to 3.4 million in the second quarter of 2025, a decline of approximately 43%. This reduction primarily reflects lower system revenue resulting from weaker bookings experienced during 2025 and the first half of 2026. Gross profit for the quarter was approximately $329,000 resulting in a gross margin of 16.8% compared to a gross profit of approximately $481,000 and a gross margin of 14.1% in the prior year quarter. The increase in gross margin percentage was primarily attributable to a higher proportion of non-system revenues during the current quarter. Our operating loss from continuing operations was approximately $1.6 million for the quarter. After interest, income, and other items, the net loss from continuing operations was approximately $1.4 million, or $0.20 per share, basic and diluted, compared to a net loss from continuing operations of $1.3 million, or $0.19 per basic and diluted share in the prior year quarter. Net income from discontinued operations was approximately $13.9 million. This is the regain on the divestiture of SDC, net of transaction expenses, and income tax expense. Including transaction costs we recorded in the first quarter, the total gain on the divestiture was approximately $13.5 million. As a result, the total income for the second quarter was approximately $12.6 million, or $1.81 per basic and diluted share, compared to a net loss of 1.1 million in the prior year quarter. Turning to our balance sheet, we ended the quarter with approximately 23.5 million in cash and cash equivalents compared with 8.7 million at December 31st, 2025. We also have $900,000 that is being held in escrow related to the SDC transaction and no long-term debt. Our stockholders' equity increased to approximately $36 million as of June 30th, 2026 as compared to $24.7 million at year end. Following our quarter end, the customer associated with the $0.8 million system order that we received in Q2 filed a prepackaged Chapter 11 bankruptcy proceeding. Although the unsecured trade creditors are expected to be unimpaired according to the proposed plan, we will be evaluating the potential impact on the order we just received as well as the impact on our backlog, our financial results, financial positions, and cash flows. With that, I'll turn it back to Manny.