CVD Equipment (CVV) 27 Mar 232022 Q4 Earnings call transcript

Greetings, and welcome to the CVD Equipment Corporation 2022 Fourth Quarter and Full Fiscal 2022 Results 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 Catalano, Vice President and Chief Financial Officer.

We have posted our earnings press release and call replay information to the Investor Relations section of our Web site at www.cvdequipment.com.

performance, like on you statements products today's related future I'd the many including and begin, available to made total and comments call financial general I business to for outlook. that remind of those market, conditions Before demand growth, our market contain forward-looking filings a including, on press and risks uncertainties December not in our These based expectations, the section projections of certain forward-looking Risk statements SEC, that XXXX. XX, XX-K of number and and with in limited to, the our release assumptions, ended but for are are the subject to Factors year the described company's Actual results those described differ from during the materially call. may

any In statements the today, made on we expectations. forward-looking new addition, circumstances of or update as statements are forward-looking revised based undertake all and to no obligation

Now, turn I to call Emmanuel Lakios. over would to the like

Equipment Paul. today and and I is fiscal and performance important Lakios, Welcome CEO to to you, year information and our our be company Thank to related quarterly to CVD name My business. quarter pertinent XXXX conference XXXX Emmanuel our fourth pleased presenting And call. President. full Corporation's developments, am regarding you

important Q&A to look and us, questions in your our Your we are session. thoughts to forward

The was results, quarter XXXX. quarter quarter Now, fiscal third strong year. than to revenue over revenue, for XXXX, XX% our we growth while higher than XXXX, an and our fourth fourth be our quarter fiscal XXXX prior for pleased lower are reporting a XX% increase fourth of

net During $X.X million. the of income recognized we XXXX, fourth quarter

and Both is our periods fourth to The other profitability. employee recognition XXXX, quarter we for retention growth, and recognized credit. the return strategy focus, net income operating a year of million of a For the revenue business with performance full $XXX,XXX. federal loss of aligned include XXXX of $X.X fiscal

general as economic our factors timing market on the demand products customers, our conditions. of our by products, the such of it's acceptance The many and of the customers' our dependent conditions,

While to that continue orders to fluctuate, the long-term track our due we will believe are in revenue we the consistent, and ahead. of right timing profitability shipments, down achieve years this on and profitability and to

XXXX the that right for are stakeholders The support all lends rate to Equipment. we order XXXX was belief path. further on period an of our exciting for CVD the

power Our The end silicon electric applications The markets support growing market core electronics are includes which transmission. strategy, present market. that our power electrification in used focusing growth. which on the and focuses everything, use is converters, on electric charging, segment of fueling carbide specifically are high-power the vehicle motor

have Systems million as the orders $XX we $XX for same our approximately received XXXX. XXXX, for CVD exceeding For segment, compared and period, million Services to

XX% This the increase CVD is year-on-year orders segment. a for in

we million. XXXX crystal for PVT-XXX QX crystals from million. had (ph) to The ordered of broader PVT-XXX silicon customers. carbide quarter, launch fabricated PVT-XXX the In are the carbide All orders orders carbide The orders were is fourth wafers. to recently to $X.X into which Our unit crystal growth XX the XXXX silicon were the carbide quarter. grow XX additional silicon approximately in the our the [sequentially] system customer, systems included fourth launched were initial of silicon our PVT-XXX utilized initial of alpha/beta of units system $X.X amounted XX base growth. and

vapor at valued order a production selected aircraft chemical major and In from system infiltration approximately was the $X.X million. received system a were manufacturer, fourth quarter, for we a the engine and specifically

recovery, the aerospace engine that matrix stated well FirstNano earlier, used gas Corporation's beginning of as aerospace As system's materials the the manufacture our to sign of is advanced believe orders for We XXXX were be products composite this segments. the legacy I been significant business. order traditionally a components. will The turbine and a for system as of this our of part market has non-core ceramic CVD R&D which Equipment SDC remainder division tangible

year That increased XX%. as SDC over the group, enabling liquid captive Equipment segment had markets. supplier is sales SDC and and emergent prior system reflects both of supplier the for a Our an control to products. approximately microelectronics industrial our as CVD higher gas well to demand

Our added towards installed additional system times and segments deem Tantaline increased revenue relative our our and to we to to In all continue Islip profitability profitable to in were the continue and self-reliance. non-core our company. for and drive operational MesoScribe, and inflation chain which product timing Supply capacity impact Central our machine of to we increase output as issues XXXX, lines, centers, XXXX. facility both to negatively lead

The product has precise been our us. a our control times management equipment with for advantage the of lead competitive of along

I would XXXX the CFO, turn call like you over Rich summary. and Catalano, our will provide quarter our who to to financial fourth

good Thank afternoon. you, Manny, and

revenue fourth quarter. That the quarter the or $X.X $X.X million increase for XXXX This year which prior quarter, increase our in was revenues of prior fourth all as fourth in fourth in revenue quarter. year XX%. an attributable our primarily represents Our million. PVT-XXX line million the approximately XX% in This to compares million was compared of $X.X product of revenues the $X.X or to to such represented no

improvement was year, the $XXX,XXX. an prior for improvement fourth This Our approximately the an operating quarter over $XXX,XXX. of loss was

increased increased revenue in in our in operating resulted the increase by of million profit of that driven approximately gross that expenses $X.X of $XXX,XXX. improvement somewhat results offset was This an by $X.X operating was million

on profit fourth This gross this the the an our Our fourth our quarter XX% in product compared components, primarily in fixed were material costs costs. in well somewhat quarter improved sales percentage as These -- fourth as levels, as profit was quarter. benefits well XX% offset in as higher to gross prior-year compensation was increased improvement by as material over costs mix. the as leveraging of result

marketing, as operating in cost in well end expenses including certain the as to increase our personnel employee-related overall. increase principally some business. to due support general The our are That's higher of growth our costs

fourth that in credit quarters whether we analysis employee 'XX, income mentioned XXXX, our of was non-operating of an we of completed $X.X Manny were company two in a and quarter the and quarter. to million, in entitled item entitled a for was As as we the that recorded to credit, fourth retention the determined

credit, income basic that the Based million, per was of on both our or diluted. $X.X ERC for and net recognition about $X.XX share,

should about of intercompany $X.X quarter on benefited our per the net subsidiary fourth of fourth for $X.XX Our Overall, million. our foreign loss or -- for exchange this I was $XXX,XXX. Denmark million $X.X quarter loan quarter year from share. loss our income the interest gain also and was $XX,XXX of income net our Net a say with 'XX,

increase represented the to product compares to $X.X XX%. was to full-year turning in $XX.X our period XXXX. the the in XXXX the of Just revenue to Similar our briefly, That's fourth which or was of this an million PVT-XXX million. of $XX.X XX% quarter, or attributable line, approximately increase revenue million, of This XXXX. $X.X in same revenue

that in increased million. were principally no revenue we compare such operating the had $X.X These experienced 'XX, results an it and 'XX. full-year fiscal improvements we for million. gross resulted in of when the the $X.X was in overall increased The loss to of loss million. million we for revenues $X.X Again, operating million, in represents improvement of profit to course of related This of again $X.X or XX% XXXX $X.X

had an $XXX,XXX. also offsetting of approximately increase We expense operating

for fiscal This our related profit we spread was XX%. to much XX%. levels Our to full the gross the us Again, that the costs. overhead higher improvement to sales allowed year compares fact is had and

had revenue some our grew expenses. mentioned in increase operating marketing some, personnel general some had business, increases as also increases in our We we I like did quarter, have the the we including We costs. and for

the operating offset. by did favorable. operating The had These lower approximately approximately for In did we have professional full-year. $XXX,XXX, about some severance here the of charge cost another Central We building XXXX, in sell $XXX,XXX building that were we a our Islip. for had benefited did July We were expenses reduction reductions increases also have and one-time building, fees in we of $XXX,XXX. that

had credit. of benefit the of would $X.X of the from that our $X.X employee retention we forgiveness loan mention helped mentioned, PPP have previously prior-year, in I a We also from million we from had that obviously the the benefits. sale benefited million a the and did the building, line. two one-time As year of recognition bottom

net income share. or two $X.XX gains overall for -- XXXX there XXXX So, say or $X.XX loss was million. prior-year in should mind, that $X.X But $X.X non-operating again, I those $XXX,XXX million. totaled was net The share. $X.X that includes per loss the million for the earnings was were for income per keep the Net

represents $XX.X million. an million our turning at backlog Now, was compares year and of the our this beginning December million. backlog, This $X.X the of at to $XX.X XX increase to XXXX

$X.X our Our contracts we of received. performance orders represents $XX.X and obligations remaining balance that that on in about we've progress backlog of unfulfilled million million purchase principally consists have the

Turning to also Central and on million as $X.X facility. of And of expenditures that compared about XX very $XXX,XXX. our December movement to was was our $XX.X from the principally at operations the sheet, a mortgage million cash of decrease had balance This $XX.X we but equivalents million, Islip prior-year. was our our in cash payoff little $X.X capital

to Our and working $XX.X XX, year at compares million capital million at this December $XX.X of this the end is XXXX.

our economic and to unable or position that geopolitical notes, flows. our financial results operations the closing have predict are uncertainties of of we and will some on Just cash impact current future the

of will things, and managing Our capital upon expenses. other our disruptions mitigate be our to inflationary well receipt consistent orders, chain as of new as supply return pressures, the ability the to dependent our the operating and profitability impact equipment planned expenditures

on that rate timing may have addition, Accordingly, our the fluctuate orders historically from revenue factors customers and order revenues revenue In recognized as recognition. quarter-to-quarter. manufacturing our orders changes and in received well in from process as based of fluctuated impacts our

our believe our and to actions these we our all to our factors, from to will working considering requirements flow for operations cash working continue next support take months, be sufficient operating expenditure projected meet our and needs. our assess and capital we and equivalents cash the maintain will cash After capital operations anticipated to XX capital cash and

Manny. I'll now over to back it turn

we serve. presentation. Rich, quarter took for your back thank XXXX we In reorganize everything and reflect the for on focus those you XXXX we who actions year results the fourth full and summary, to do since fiscal

our year on our and to profitability. focus continue forward in to our the employees continue We pursuit to return Our growth customer of cautiously success on and the optimistic. build and and our to remains ahead consistent look shareholders, markets, be

the comments important of questions presentation, the Your would us. like to questions. floor to to our and open close your At are I

you. Thank

a session. We question-and-answer will you. [Operator now conducting be Instructions] Thank

Montgomery Reiss question proceed Janney is Brett your with Scott. with from Our Please question. first

Hi, Rich. Manny. Hi,

are to Good from Brett, Hey, you? how you. hear

Good, good, respectable another good quarter.

Thank you.

to fourth working million. Half quarter third a capital. was the it quarter was reduction The in up from cash $X.X of

other positive The was generation? flow half, that cash

Hi, will contract Brett. think complete contracts, the This of is we a percentage there fluctuate for we toward the receipt does as cash the be payment of payments certain Rich. our on end Yes, of down receive Also, flow the contract. typically upon I a depending contracts price.

in will see you from So, fluctuations our period-to-period. cash balance some

Right.

potential basically whole banks, a the are any that us non-event unfold for of contraction lines not it's the credit statement? Now, Is that fair We're commanding really cash bank may in with a position. drawing we credit. on a because

at credit with the small loan loan and out say very I little -- the debt we about point, on point, that We're cash the took working like. off we're balances paid -- should capital one year And after our this during $XXX,XXX. at in just have. year, the mortgage and XXXX, working equipment not we this have for lines we during we this As relying last

they the to Right. issues, seem be And chain supply abating?

suppliers, being that to they're We able Brett. process day-to-day, of combat hand-to-hand been still some manage XXXX. have in but our we've Well, managed, with through

actions a it's out impact I pressure that So, taken inflationary reduce bit delays. the think say I both inflationary we on mean we'll know chain we've to that there's of and can't abated, supply It quite continue, there. doesn't all but

Thank drop back in I'll queue. Right, you.

Thank Brett. you,

you, Brett. Thank

you. Thank

investor. private Please question next with your is question. from proceed [John (ph), Our Gruber]

on Yes, gross and versus the PVT-XXX, afternoon. margin of average? corporate profile the start with product Good that the what's [Indiscernible] question. the what's outlook, that

call. the Of course. you're is Hey, how John, Manny. on are you. Glad This

we of XXX, on is a XXX, make-to-order the make-to-order. the that a is termed major some one of XXX products have more the versus the be First, to what differences design versus legacy PVT-XXX the the

improved cost. tools that are not engineering line margins PVT-XXX So, by the engineering are that in DNA, goods and products gross you greatly each and the one every with cost of on charging of that sold the

make-to-orders as margins. the that versus gross that So, anticipate rate see increased the design will margins out, PVT-XXXs. the specifically gross you our XX%-plus make-to-order. margin be the don't sake, on said, increase the for our we But we better that contribution typically customers' inherently we on for would on With should order sales give

would do the have So, plus, you we in silicon the the new And [big on be PVT-XXX? stand boules] for the XX% getting nameplates orders, what business? that boys just good. progress and made carbide where (ph) with new And

Sure.

been doing a while. this for you've So,

answer the a follow so, process, your regimented And to is we lifecycle. question PLC product pretty

and customer we We December we we Typically, July of Well, developed two And I alphas said, received an productized or betas. one that shipping base. performing back XX the betas. a more shipping ended them alphas as you product. subsequently XXXX, one, production last the ship We think So, well started order XX one the XXXX. are we up of first and it in tools. have of alphas in shipped installed for of starting as and for we We and in betas in them XXXX. year,

them only betas, the workflows in and the documentation production those just and term differences alphas, And on manufacturing in control reduction shop, we systems. are

you emerging boules engage by boule that can't vertical product folks that's the them. established. to to have is wafer chain. the mean wafers. And space. launched looking their are first really We on what have the they're this manufacturers, And And we that you then own officially sell there's And ones. the make the tell that there own and I by You own or And make one entrée of and all their boule quarter. integration they wafer. different And equipment difference their manufacturer segments at do, couple our make into started

[STs, And own would their then make Wolfspeeds, the their the integrated. also (ph), have for they, most devices. the their make II-VI] be fully equipment, the and (ph), you fully [onsemis] and boules, integrated make part, the wafers, grow And

attack primary going timeframe, the to of been growth equipment was get launched customer So, And on January-February for starting boule to the product We our with some going provider a now to be and to folks. as bit boule we've of adoption. wafer. time the recognized first crystal us literally take in to the It's conferences. traction our and we're a

several providing customers. And quotations so and what I is that presentations would now to say we're with potential

portfolio do how year-end you year-end, year-end at add could So, the product the PVT at calendar -- of of this think you many new for the into customers boules?

key, existing to additional In an -- has and addition penetrate serving two to the customer, because all our accounts. objective are we customers sales objective,

you Thank Thank much. very you.

Thank at comments. the you. any hand back like over for further management questions this There closing to I'd are to time. no floor

support, the of are the Well, are attendance optimistic. who some call, we from and shareholders We and appreciate our the again the also and on employees our call. on loyalty the cautiously

line, we of where a gross up team, period revenue, margin have time. the have profit balance that bookings operating have a the from the grown grown improved come and XXXX, in shored sheet since position We as line,

be conservative. to continue optimistic and We cautiously

forward, a we forward again, Thank successful As move you. to your look And XXXX. attendance appreciate and we we support.

today's This concludes conference.

your You for at lines may this participation. Thank your time. disconnect you