17 November 2023
CVD Equipment’s Q3 revenue down 23.2% year-on-year due to lower system revenue
For third-quarter 2023, CVD Equipment Corp of Central Islip, NY, USA (a designer and maker of chemical vapor deposition, thermal processing, physical vapor transport, gas and chemical delivery control systems, and other equipment and process solutions for developing and manufacturing materials and coatings) has reported revenue of $6.2m, up 21.6% on $5.1m last quarter but down 23.2% on $8.1m a year ago due primarily to lower system revenues.
However, as a result of a modification to certain customer contracts, revenue recognition for certain contracts changed from ‘point in time’ to ‘over time’. The firm hence recorded an increase in revenue of $0.8m during Q3/2023 that was deferred as of 30 June and recognized on the date of the contract modification.
“Our order and revenue levels have historically fluctuated, which is often typical in the highly cyclical process equipment industry. While we saw a year-over-year decline in third-quarter revenue of $1.9m, our year-to-date 2023 revenue of $20m was 7.6% higher than [the $18.6m of] the corresponding period in the prior fiscal year,” notes president & CEO Emmanuel Lakios. “While we are disappointed with our third-quarter revenue, we continue to see opportunities in key strategic markets of high-power electronics, battery materials/energy storage and aerospace & defense,” he adds.
Gross margin was consistent with recent quarters at 25.6%, but less than 29.8% a year ago due principally to lower revenue and changes in contract mix.
Net loss has been cut from $1.1m ($0.16 per share) in Q2/2023 to $0.75m ($0.11 per share) in Q3/2023, but this compares with net income of $63,000 ($0.01 per share) a year ago. Cash and cash equivalents at the end of Q3/2023 was $14.29m.
Order intake was $4.1m in Q3/2023, including about $2m from continued demand from the aerospace sector, expected to be delivered over the next 12 months. Also contributing were orders of about $0.9m from research institutions. Nevertheless, during Q3/2023 order backlog fell from $18.8m to $16.6m.
CVD Equipment continues to make investments in both R&D and sales & marketing, focused on the firm’s three key strategic markets.
In the high-power electronics market, there were no PVT150 system orders received in the first nine months of 2023. The firm expanded its marketing efforts, including direct outreach to multiple potential customers as well as attendance at key silicon carbide-related trade shows and conferences including the International Conference on Silicon Carbide and Related Materials (ICSCRM 2023) in September. The engaged customers include both silicon carbide wafer manufacturers as well as fully integrated wafer and device manufacturers. “The success of our PVT150 and PVT200 systems marketing efforts is dependent on the performance of our equipment in the field, overall market conditions, our customers’ ability to qualify their end product with their customers, and our customers’ ability to obtain the funding necessary to purchase our equipment,” says CVD Equipment.
During Q3/2023, Ms Deb Wasser and Dr Ashraf Lotfi were added to the board of directors. Wasser brings extensive experience in corporate governance and financial communications. Lotfi brings an in-depth knowledge of the power electronics market.
On 8 August, CVD Equipment entered into a purchase and license agreement with a third party to sell certain assets and license certain proprietary information of MesoScribe in exchange for $0.9m, payable in several installments and contingent upon certain performance metrics and other milestones. The firm expects the transaction to be completed in Q4/2023 with the shipment of the equipment to the purchaser.
“We remain committed to stay the course on our strategy to achieve consistent long-term profitability, with a focus on growth and return on investment,” says Lakios. “Our return to profitability is subject to our ability to receive additional system orders and continue our efforts to reduce our overall operating costs.”