CVD Equipment Corp’s Earnings Call: Growth Amid Challenges

CVD Equipment Corporation ((CVV)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for CVD Equipment Corporation highlighted a mixed sentiment, with notable achievements in revenue growth and gross profit margins, particularly in the aerospace and defense sectors. However, challenges in the silicon carbide market and geopolitical risks remain significant concerns for the company moving forward.

Significant Revenue Growth

CVD Equipment Corporation reported a remarkable revenue growth in the fourth quarter of 2024, reaching $7.4 million, which marks an 80.3% increase from the same period last year. For the full year, the company achieved a revenue of $26.9 million, reflecting an 11.5% increase compared to 2023. This growth underscores the company’s ability to expand its market presence and capitalize on emerging opportunities.

Backlog and Orders Increase

The company’s backlog at the end of 2024 was $19.4 million, representing a 4.9% increase from the previous year. Additionally, full-year orders amounted to $28.1 million, an 8.9% rise from 2023. This increase in backlog and orders indicates a strong demand for CVD’s products and services, providing a solid foundation for future growth.

Aerospace and Defense Recovery

CVD Equipment Corporation received a significant follow-on order worth $3.5 million for its CVI/CVD3500 from an existing aerospace customer. This order highlights the recovery and potential growth in the aerospace and defense sectors, which are crucial markets for the company.

Improved Gross Profit Margin

The company achieved a gross profit margin of 27.3% in the fourth quarter, a significant improvement from a negative margin in the same period of 2023. For the full year, the gross profit margin improved to 23.6% from 21% in the prior year, showcasing enhanced operational efficiency and cost management.

Decline in Silicon Carbide Market

Despite the positive developments, the silicon carbide market remains challenging for CVD Equipment Corporation. The global overcapacity of wafers and declining wafer prices have impacted this segment, posing challenges to the company’s growth in this area.

Inventory Write-Down

The company recorded an additional non-cash charge of $300,000 to reduce the net realizable value of its PVT150 inventory, contributing to a total charge of $1.3 million for the fiscal year 2024. This write-down reflects the ongoing challenges in managing inventory levels effectively.

Operating Loss for Fiscal Year

CVD Equipment Corporation reported an operating loss of $2.4 million for the fiscal year, a significant improvement from the $4.9 million loss in the prior year. The net loss for the year was $1.9 million, compared to a net loss of $4.2 million in 2023, indicating progress in reducing overall losses.

Geopolitical and Tariff Concerns

The potential imposition of tariffs and geopolitical issues pose risks to CVD Equipment Corporation’s supply chain and cost structure. These concerns could present challenges in fiscal 2025 and beyond, affecting the company’s ability to maintain its growth trajectory.

Forward-Looking Guidance

Looking ahead, CVD Equipment Corporation anticipates fluctuations in orders and revenue due to market conditions and geopolitical factors. Despite the challenges, the company remains optimistic about its ability to navigate these uncertainties and continue its growth trajectory.

In summary, CVD Equipment Corporation’s earnings call reflected a cautiously optimistic sentiment with significant achievements in revenue growth and gross profit margins. However, challenges in the silicon carbide market and geopolitical risks remain areas of concern. The company’s ability to manage these challenges will be crucial for its future success.