CVD Equipment (CVV) 15 May 232023 Q1 Earnings call transcript

Greetings and thank you for standing by and welcome to the CVD Equipment Corporation's First Quarter Fiscal 2023 Earnings 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 website 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 limited not a company's year on press and December risks uncertainties may in our These but based expectations, SEC, projections Risk the XXst, of certain described the results forward-looking including, statements section of those that number to, XX-K and and with in Factors our Actual release assumptions, are this from are the subject to for ended call. differ during the materially XXXX. described

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

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

afternoon us and our you our you Thank all and thank business. important company joining other XXXX good QX information developments and for related Paul, pertinent discuss to everyone. financial to today results

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

first a an quarter growth We quarter of XXXX, first strong over increase quarter XXXX. XX% and our are of revenue for XXXX increase of over XX% fourth pleased report to the our

$X.XX diluted or quarter This million compares recognized the $XX,XXX net the basic a and of same we per share XXXX, for $X basic share. XXXX. During or to first net and loss $X.XX period of loss diluted a per

of the a million This the million for at orders $XX.X in XXXX, fluctuations the $XX lower million, XXXX. we fluctuations due revenue our XXst, from to the XXXX timing decrease quarter. at noted for this $X.X orders. in backlog anticipated that was of in XXst, in March have were December than Orders to resulted in past first quarter We the expect

quarters. next over The impact negative on revenues our of decrease in couple order may the have a

optimistic level. cautiously and be be recover, order We as will continue our to grow, develop, to we increased markets able an served obtain

history a few growing cyclicality, As strategy is market is a our there of markets. to serve

the our We focus market, and and have narrowed being legacy defense three market, our market high-growth electronics aerospace battery emerging materials market. first to power our areas;

electronics subsequently announced for total customer a uses of previously wafers. receiving These power system XXXX carbide from market, systems. the XXXX processed PBT our silicon were XXX-millimeter In XXX we order received into carbide silicon that a to an are XX orders crystals grow and in who

of related expect $X.X recognized the quarter to and We million quarter. to XX XX of XXXX revenue the ship the during the end these orders remaining before of first second of units

also carbide-related our first conferences. efforts expanded quarter hire and sales of the broadening key and silicon with shows a our marketing during attendance dedicated including in We general the efforts, marketing manager

The the success to on efforts product ability equipment our customers' of our Overall in as performance of qualify is as markets. end the our field. well capital conditions, the dependent market their

our and received order development PowderCoat-XXXX XD market million. Battery system early in battery have we May in for to components are material repeat $X.X recent A Solutions a occurred approximately from for and excited our

everything. enhances focus be will is This to application electrify in to on solutions the in battery section of markets anode use and by used with system This that of powder the carbon XD add for nanoscale addition silicon the silicon line the performance our battery battery. of the

also composite a CMC engine chemical manufacturer systems Related we leading manufacture ceramic components. for of use coating referred gas vapor and matrix also are materials tow aerospace systems in as to defense, to turbine infiltration and to a

jet super and engines less This hotter, emitting pollutants. one-third allows weight the nickel-based alloys. are withstand fuel less thereby CMCs can extreme run temperatures to and of consuming

CMCs we turbine for received during million. As fourth engines announced, approximately to for of XXXX, manufacture aerospace the production gas tool quarter previously the $X.X CIV

customers revenue engines. quarter turbine $XXX,XXX the This include contributed order of of first to two of approximately gas manufacturers during Our now XXXX. leading of

short We requirements continue long-term. to the capacity engage also with our aerospace and customers and technology on both for their production

be growth objective company achieve long-term profitable of and return on focus to on strategy aerospace through and Equipment stay hot growth course CVD growth We specialty materials, products electronics, consistent specifically materials. that markets, investment. a and committed profitability, battery defense a remain Corporation's the remains our EV power to to serve

Catalano, you results. Rich would our the an over of I our turn like provide overview to first to call who quarter CFO, will

Manny Okay. you, afternoon. good and Thank

first our quarter compared or Our PBT of of revenue XX%. the quarter primarily XXXX, the that which million to increase XXX was $X.X as XXXX. our to revenue attributable represents the for $X.X for in million an in line, was to product The compared current million first as of $X.X the contributed XXXX increase first million quarter quarter of revenue $X to

of the increase our an addition, of an in first a over In SDC representing quarter segment $XX,XXX XXXX, had revenue strong increase XX%. quarter of with

for was for segments. revenue Our also equipment million higher XXXX. increase and due higher fourth of than was $X.X quarter the revenues first XXXX XX% This to both from SDC the quarter CVD of the our

quarter. quarter for of of slightly lower $XXX,XXX operating of the an operating reported XXXX in loss first represents the XXXX we quarter was fourth improvement $XXX,XXX recent as Our to the than and our compared This $XXX,XXX. loss first is

quarter The related million. our the $X.X prior operating offset in gross operating profit the increase by million, in in was results resulted of improvement an year This was $XXX,XXX. increased in approximately from of increased expenses $X of our part which to revenue

compared and to the recent fourth compared in first XX.X% our Our gross in to as first quarter. profit margin in current quarter percentage was XX.X% year prior as XX.X% the quarter

leveraging as the year These result fixed as primarily levels compensation as increases prior quarter was costs. material the components offset as The profit our in well on benefits improvement sales of an costs mix. higher product gross from improved in certain well

our quarter as -- is from due to professional businesses for fourth of The year our also operating expenses had support increase to well quarter we costs and expenditures in our from higher as prior the additional and selling employee-related the growth fees. both and

loss our per and million net net the a $X share to This After which of loss was for XXXX other non-operating diluted. and compares basic income, $X.XX quarter for accounting the consist for per both for loss $X.XX or or of diluted. first of for interest first income, $XX,XXX quarter principally share basic

Our quarter the $X.XX basic of or and fourth per net diluted. was income in share $X.X million XXXX earnings

certain of the did $X.X However, receive completed we the recorded during fiscal XXXX. was eligible fourth as quarter a that company for for analysis the retention we recognition million credit to other determined employee this of reminder, income after that include an quarters credit

backlog. to turning our Now,

our at as XXst, of as exceeded to represent XXXX XXXX. million $XX Our $X.X XXst, of $XX.X March was of does bookings backlog our million $X.X million million as This compared decrease $X.X million. of revenue a December

as obligations representing Our remaining in balance other parts. well backlog consists at our progress as such relating million March from as performance on customers contracts yet XXst contracts $X.X the started to of orders with not received spare certain $XX.X million, approximately of

progress. in to assets contracts cash we million cash as of XXXX. of at million Our The $X.X we and XXst, the million decreases in as contract in December costs $X.X incurred was equivalents million $XX.X and March decrease contract that compared currently due increases at on XXXX $X.X $XX to million XXst, of have liabilities was

decrease increase million. accounts due reduction inventories in impacting year accrued was a approximately receivable of flow of quarter partially in were a expenses small during $XXX,XXX, These the offset payment $X.X end Other our cash in by $XXX,XXX, of factors bonuses. to about the of primarily changes a

XXXX, XXst, at March at was as to capital working compared $XX.X million Our $XX.X XXXX. XXst, million December

we are flows. and financial and results, impact our of able geopolitical will to current the not our future position what predict have cash As our results to future uncertainties on operations and economic

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

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

and our After meet considering be for from sufficient capital requirements months. expenditure will we our our cash cash these and factors, XX cash equivalents and capital to next projected operations working the all flow believe

continue will as will and actions capital working our necessary support to to cash assess take our needs. operations operating to We maintain our

turn it Manny. now I'll to back

serve. Rich, In everything our thank focus we presentation. reflect summary, and for you for your the quarter XXXX to first efforts who we those do continue results on to

shareholders, on profitability. remains employees, customers, the pursuit our focus our to growth consistent and course, of return of our Our and

and We year continuing continue look forward the on in to to our success build ahead be cautiously optimistic. to

and important questions are Your us. comments to

your questions. the like of close to up open the to would presentation, With I the floor canned

Thank you.

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

Thank you.

proceed Jamie question Rice Please is Brett from first with your with Our Scott. question. Montgomery

are Hi Richard. hi Manny, you doing? How guys

yourself? We're doing well Brett. And

good. first everything orders is good, The is why the than less it that? macroeconomic? Good, Is anticipated, quarter in being

three Sure. each orders have it's competitors. any it. did to didn't in a any say, and different I a it's a of to Well, and in the that spin we lose those mention -- interesting markets, bit let me But one -- our of

capital our step carbide raise potential arena our us with involved our also waiting customer from second getting of that. In on or bit take and our there the product qualification for and expansion silicon is for there's next PBT a area to line, by always customer the then it order

So, to it's process capital to but qualified. does in market, of it's a a get time, of it take period also the be able and and process, bit the qualification a quarters

little a capital is there a side, aerospace the capital On through side pushed procurement bit orders out process. a

December legacy also in our to be time we the we are and in more have continue presently closed We frame. that order more customers the recently two engaged with that customer

to some And airplane gas we the as engine, Boeing, -- aerospace requirements gearing the turbine Airbus, airline is manufacturers about start actually start more. their continue capital industry, et talk manufacturers, cetera, up now the the to

So, there's some news positive there. been

the into that order we was received in partnership continues on business, May. We're our then believe of order battery have a delayed That have QX very we timeframe. course. into be QX And closed the that to pleased side were hopeful in the to that and solid to

their the we and do in concert such. did the material, for XD battery customer can We announce acknowledgment Brett, course, of with that that's that's

Great. Great.

which margins? Now, the PBT the of the the have system, XXX, best the margins CVI PowderCoat-XXXX [ph] and

obviously, margins, We similar they Yes. economy higher have on. some the We volume scale get of -- tools.

points our overhead and present few factory. -- So, but with tool, our on getting that would Again, level. it's We'll the up some be we'll continue that believe absorption several PBT of our or we the points be you'll and to volume. volume-based see above margin all a getting margin higher, additional

Right.

to going the will appetite new from it the might XX customer on customers system? come that and that satiated? list a them they particular Now, has from whose existing PBT on of additional ordered come Or be XXX, orders, of is

Okay.

So, that the Clearly, needs, I'll wouldn't go supplier. initial of such performance think There that case. additional the as with that, can be of both. will we no the customer that tools is reason tool selected we anticipate I be our that is our

also our John we've that's the with additional additional The year objective customers launch my it In objective. get was accounts, a we had with -- question was and for two to I -- and my last of the was few we in the still engaged call, efforts it QX, that the asked what then marketing -- think already.

thank Can the background tell sales you us question -- the new dedicated Last bit a about your response. of little manager? you Right. for

LED background. an from comes He Yes.

very with sales manufacturers heading the history he very all a portion in the have with the accounts. worked manager efforts. three their of and well LED top faith He sales a So, prior with into selling have of him. up is previously as familiar one I large had

Great. questions. Great. as for very Thank you taking always my much

Thank you, Brett.

Thanks Brett.

Thank you.

Our with Company. is your from Cowen with question Sankar Krish Please proceed and next question.

my Robert on questions. Thanks is Krish. Mertens this for taking for Hi,

Thanks for color. Just providing backlog. Fire real quick the on the

quick as quarters is say might fair not the recovered demand? pushouts much difference in is the and in follow-up. majority to to it be And pullback then the as a So, and probably had and later timing I general expected due of be to

are quarter correct -- even that, as I that it those matter we're the was it definitely closing of orders there I I all -- And of no pushout. close again, the of to anticipating first that pushing said lost speak. think I timing, a Yes, be that course, was we it's are that that know -- would are we orders that in as earlier, and still we think

And that quarter. $X.X of we've to about equate closed already them actually $X.X million, two this million

absolute So, timing it yes, event me it's more for than is a an number.

growing on color course, then just That's got little you're silicon earn what chain, carbide the the a additional Okay, are wafer of side market? customer or the on major opportunities the expanding provide it's opportunities And the account? helpful. or outside equipment could growth of, a focus list carbide Is And silicon on Thanks. you customer are market? seeing supply there whether it. more there the in within what of

good It's questions. good presentation. broad two great -- for Yes, different a

first is, some then to we base? expand The manufacturers as far devices. European to outside manufacturers and wafers do expand customer of US Yes, plan we and do plan as wafers, to other the

Some are devices, equipment. wafers, and also flash

we one a have each of So, strategy for categories. those

then time. focus a Our Asia there's We think lot point Europe. us. on again, business is, at putting and We're of primary not United in the States for enough this focus

that additional least out have at account to say, would So, and we an one already have, base. installed three to at in seven least we the reached engaged with discussion ones I

we're selling process. the So, in

far expand in carbide working do on account, account? also epi as we after system. previously in as land We that you you how a the announced Now, the were silicon

we on XXXX, be For timeline. that to continue and path

Okay, got you Thank for for all questions. appreciate it. clarity. taking Thanks Really the my it.

Pleasure.

[Operator Instructions]

Please your with question. Our proceed is John from next question [Indiscernible].

afternoon. Good

John. Hey

-- on with I'm haven't large anywhere shipped the they They customer. on that. you foot or order -- order to current what? a -- your cover units feet even near little issue got have facility, won't XXX,XXX hang-up a an you on on begin follow-up Why that the there? huge on and a your What's or these qualification have units confused square

I I to installed week. -- floor systems on the be they are has speak XX they and ahead can't are that over or may starting there couple next or been any or And road aware really their behind there next -- the XX weeks tools of are how that XX -- the have you? that on that am are issues John I having map.

they're looking is. the installed, be being to is So, you're on. help? many at beginning closed. Did shipping. can't don't all that those shipped have I will if out And -- a I But We I that believe prior location the middle the or where facility XX facility of that closed I really by know I just say of June. been announcement out systems has but

So, what up that hang cost the units the on to do more is customer? initial

And really than I feeling the this say comfortable it's have point. I at that think they based on wafers. more can't that

Okay.

targets, Second you industry, big an when question gather initial new either European -- then expect get is order on to your US? our new the your do from orders targets, other the players or in

different at We them have stages.

We have going one funding. capital through

have it's We the out on closing so -- funding. their based on

We in little statement, we of in evaluating And the where course. have they're our process it's technology. then -- a a that's is earlier another have --

depends think to and get growth us QX are silicon demand. big out. to Now, thought conditions, that's your It I that question results. to I Will a happen which disagree of answer market was QX in early are really specifically, proven none market QX? and carbide hoping they going in they've acceptance our some orders technology, I on I moved think which their The of or

-- mark, The ability to the capital get their with ability wafers our and question market, produced present and and account. some in that's that's a to cases,

least So, evaluation next I we're at not I get kind answer the quarter, units. be quarter, would this able the to end of question, think disappointed if of this

Okay. Thank you.

Thanks John.

Thank you.

is proceed question from with Investment with your Hirschman Please Orin AIGH next Our question. Partners.

additional Can silicon tool Hi. that to carbide. working go for Thank on you you. you're back the epi

control other And into obviously, Do bigger pool? let's that secret in much your bigger How had and have much say, into play How tool is pool temperature tool in expected out it's play and TAM that does things terms ASP. they experimental You at of, come source that there. an a done? a all?

asking don't appreciate do -- the you're be secret how otherwise, it thanks, I I think I it question. Well, think we wouldn't don't me because a anymore.

it And clearly we heating our shipped maturing of we also back bit has epi tool through on in a go originals XXXX. a technologies. to productization -- the So, silicon and carbide

days, ability which We X.X to plus/minus up with four would to say. long control X,XXX demonstrated degrees with campaigns exceptional, weeks, have the fairly I is degree, temperatures

our a have product performance anticipate to competitive I that carbide it silicon speak an gives I advantage manufacture the can't the in-house really system. R&D us in to price the from really the we also ability a perspective. performance what on tool be I field that and to was

XXXX in I and -- very it similar our we're see shipped and we took we in the but which in best tool, results And to that successful the how results, achieving good if can marketplace. not productized we PBT

very I competitive well. a as system think that have also will

are wafers know, cost-sensitive. you very As

allows We other and areas. being middle have man the us give some will market. out of that our on able the the machine manufacturing side advantage, believe, shop I penetrate us to to in cut That internal an the

releasing year beginning And XXXX of be this the release with probably the year. and again, third quarter we'll product more of the information in later into the

release of--? in quarter third product the The

XXXX.

I do lead can't Okay. customer someone interested naming a have name? without here anybody you as you mean

to we QX. that Are they them to carbide the but right that customer an position the have proper of I ownership, interested? performance have can with, data to in I before Everybody end a an need Do can silicon a I have I cost I have QX but list is will really intelligent have of of tool. agreement beginning now, provide discussions discussion customer? be customers interested closer don't of No, with

Hey thanks Okay. much. so

Thank you. How you? Welcome. are

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

also gratitude support my to and of Paul, I attendance employees our to the today shareholders everybody's We appreciate loyalty. on And all express extend to and for thank our want you. their call.

out our concludes please this or you. to any myself Rich And questions, Thank be directly. first you If encouraged either have quarter call. reach to

This today's conference. concludes

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