Release Date: May 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CVD Equipment Corp (CVV, Financial) secured several key orders in Q1 2024, including a $10 million multi-system order for a silicon carbide CVD coating system.
- The company's backlog increased significantly from $18.4 million at the end of the previous year to $27.1 million by March 31, 2024.
- Despite a decrease in revenue, the SDC segment saw a 44% increase compared to the fourth quarter of 2023 due to higher demand for its products.
- CVD Equipment Corp (CVV) continues to invest in research and development, maintaining a strong focus on innovation and future growth.
- The company has a healthy cash position with $11.9 million in cash and cash equivalents as of March 31, 2024, which is believed to be sufficient to meet working capital and capital expenditure requirements for the next 12 months.
Negative Points
- CVD Equipment Corp (CVV) experienced a significant revenue decline in Q1 2024, with revenue dropping to $4.9 million from $8.7 million in the same period last year.
- The company reported a net loss of $1.5 million in Q1 2024, a substantial increase from a net loss of $40,000 in Q1 2023.
- Gross profit margin decreased to 17.5% in Q1 2024 from 28% in the same period last year, primarily due to lower gross profit margins on contracts currently in progress.
- The operating loss widened to $1.6 million in Q1 2024 from an operating loss of $0.2 million in the first quarter of the previous year.
- CVD Equipment Corp (CVV) faces ongoing challenges including supply chain disruptions, inflationary pressures, and the need to manage planned capital expenditures and operating expenses effectively.
Q & A Highlights
Q: Good. Backlog increase very nice. The $10 million silicon carbide protective coating order and even the $3.6 million new PVT200 order, I assume you use some sort of percentage of completion method of recognizing revenue. Do you know, kind of what the cadence of recognition will be of the revenues from those two orders -- the balance of the year?
A: (Richard Catalano - CFO, VP, Company Secretary) The $10 million order will be recognized over time, towards the latter part of this year and into 2024 and 2025 as we work on the contract. For the PVTs, revenue recognition will be based on when we ship the product to the end customer, referred to as point-in-time revenue recognition. This will occur later in 2024.
: Okay. That's great. The SG&A, you reduced it from $1.6 million to $1.3 million this quarter. Is that a good run rate going forward?
A: (Richard Catalano - CFO, VP, Company Secretary) Yes, that reflects our current run rate. We've had some workforce reductions and lower bonus accruals. While we don't give specific guidance, this is consistent with what we expect going forward, subject to any unforeseen business activities that might require additional expenses.
Q: Right. And I see despite the soft quarter, you still are keeping the pedal to the metal on R&D with $746,000 versus $602,000. You plan to continue to kind of do that?
A: (Emmanuel Lakios - President, CEO, Director) Yes, we have not affected our engineering programs at all. A significant portion of our engineering effort is going into satisfying the large silicon carbide coating system, as well as the final launch and delivery of our alpha, beta PVT200 system.
Q: How many employees did you have to let go to bring overhead down to our new current reality?
A: (Emmanuel Lakios - President, CEO, Director) We don't release that information as we consider it a competitive advantage.
Q: The SG&A, you reduced it from $1.6 million to $1.3 million this quarter. Is that a good run rate going forward?
A: (Richard Catalano - CFO, VP, Company Secretary) Yes, it does reflect our current run rate. We did have some reduction in force as I mentioned. We do have lower bonus accruals as well. So we don't give guidance per se, but that is kind of consistent what we would expect going forward. And it [reject] other things that might pop off for example, as far as any other business activities that might require additional fees, for example, which we can't predict.
Q: Right. And I see despite the soft quarter, you still are keeping the pedal to the metal on R&D with $746,000 versus $602,000. You plan to continue to kind of do that?
A: (Emmanuel Lakios - President, CEO, Director) We have not affected at all our engineering programs and quite a bit is going -- our engineering effort is going into satisfying the large silicon carbide coating system.
Q: How many employees did you have to kind of let go to bring overhead down to our new current reality?
A: (Emmanuel Lakios - President, CEO, Director) We don't have a tendency to release that information. We find that to be a competitive advantage (multiple speakers) --
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
