CVD Equipment Corporation Q4 FY2025 earnings call

• Initiated a transformation strategy in fourth quarter to reduce fixed operating costs, create agile organization, and maximize shareholder value. Key elements include transitioning CVD equipment business to outsource fabrication, workforce reduction in CVD equipment division to reduce annual operating costs by ~$1.8 million in 2026, revising sales approach with distributors and external representatives, and exploring strategic alternatives for certain businesses. - On March 23, 2026, announced sale of SDC business to Atlas Copco Group for ~$16.9 million cash, expected to close in second quarter 2026, with net cash proceeds after expenses and taxes ~$15 million. - Remain focused on delivering solutions across key markets of aerospace, defense, industrial applications including silicon carbide on graphite and hyper-electronics.

Fourth quarter 2025 revenue for CBD equipment division was $5 million, down 33% from prior year period and 33% sequentially from third quarter. Full year 2025 revenue for CBD equipment division was $25.8 million, a decrease of 4.1% from fiscal year 2024. SDC segment reported revenue of $2.2 million in the fourth quarter of 2025, and full-year revenue of $7.6 million. Consolidated gross profit for the fourth quarter of 2025 was $1.1 million with a gross margin of 22.2%, while full-year consolidated gross profit was $7.3 million or 28.3% of revenue.

• Return to consistent profitability depends on improved equipment order flow, disciplined cost management, successful execution of transformation plan, and control of capital expenditures. - Current cash position and projected cash flows sufficient to support working capital and capital expenditure requirements for at least next 12 months. - Upon closing of SDC sale, expect net cash proceeds excluding $900,000 escrow to ~$14 million and intend to initially invest in U.S. Treasury securities.

• Volatility in order rates and recent decline in bookings within CBD equipment division. - Geopolitical environment uncertainty. - Tariff-related uncertainties. - Slower pace of adoption of solutions in certain end markets.

Q: Could you describe to us the skill sets of your existing engineers and what type of acquisition you might be contemplating with the $23 million?

A: There are a full complement of resources in the engineering and technology group for CVD equipment. The board is looking at opportunities and strategic alternatives for increasing shareholder value, but at this point in time, there is nothing material or a path yet identified.

Q: Can you give us some sense of what the pipeline of opportunities you're looking at?

A: As a board, we've been looking at strategic alternatives for several quarters, but at this point in time, no specific information to share yet.

Q: Are you guardedly optimistic you'll be able to find something that will have a less lumpy or a more recurring revenue stream?

A: The equipment business is lumpy, but the objective for strategic activity is to have a smooth, non-lumpy revenue stream with spares and service, but can't speak to that at this point.

Q: Have you ever considered paying a special dividend?

A: I do not believe that in the history of the company a special dividend was paid.

Q: Are you concentrating a little bit with the military right now?

A: We do serve aerospace and defense, about 78% of our revenue over the last several years of our orders has come from military and defense, especially in advanced materials for hypersonics.