CVD Equipment Corporation Q1 FY2026 earnings call

• Transformation Strategy Implementation • Initiated a late 2025 transformation strategy to reduce fixed operating costs, improve organizational agility, and maximize shareholder value, in response to sustained order rate volatility and declining bookings in the CBD equipment division • Key initiatives include shifting CBD component fabrication from vertical integration to outsourced manufacturing to reduce fixed costs and improve scalability; implementing a Q4 2025 workforce reduction in the CBD division expected to cut annual operating costs by approximately $1.8 million in 2026; revising the sales model to use distributors and external representatives to complement internal sales and expand market reach; and exploring strategic alternatives for remaining product lines including potential asset sales or divestitures

• Completed SDC Divestiture • Closed the sale of the SDC business to Atlas Copco on April 1, 2026 for a $16.9 million cash purchase price (subject to purchase price adjustments), with $14.8 million in net cash proceeds received after transaction costs and employee-related liabilities; $900,000 is held in escrow for post-closing obligations • The sale allows management to focus exclusively on the core CBD equipment business, strengthened the company's balance sheet, and added new financial flexibility for evaluating future strategic opportunities • CVD retained ownership of the Saugaties, New York facility, which is leased to the buyer for an initial two-year term

• Current Operational Status • Q1 2026 orders for CBD equipment totaled $1.8 million, driven primarily by spare parts demand; backlog of $4.7 million at March 31, 2026 was largely unchanged from December 31, 2025 • Post-sale, the company held approximately $23 million in cash and had no outstanding long-term debt, after repaying the remaining balance of an equipment loan during the quarter; net SDC proceeds were invested in short-term treasury securities • Core target markets remain aerospace and defense, industrial silicon carbide applications, high-power electronics, and emerging nuclear energy applications

Following the April 1, 2026 sale of the SDC business (now classified as discontinued operations), CVD Equipment Corporation has one reportable segment: CBD (CVD) Equipment. For Q1 2026, continuing CBD Equipment operations generated total revenue of $1.8 million, a 70.9% year-over-year decline from $6.3 million in Q1 2025 and a 30.9% sequential decline from $2.7 million in Q4 2025. Three customers accounted for 66% of total Q1 2026 revenue. Gross profit for the segment was $147,000 (8% gross margin), down from $1.7 million (27.4% gross margin) in the prior year quarter. Operating loss from continuing operations was $1.8 million, compared to a $0.3 million operating loss in Q1 2025. Net loss from continuing operations was $1.7 million (25 cents per basic/diluted share), compared to a net loss of $229,000 (3 cents per basic/diluted share) in Q1 2025. For discontinued SDC operations, Q1 2026 pre-transaction cost income was $0.5 million, down from $0.6 million in Q1 2025. After $0.4 million in transaction costs, total income from discontinued operations was $63,000, down from $0.6 million in the prior year quarter.

• Management did not issue formal quantified financial guidance for 2026. It noted that a return to consistent profitability for the core CBD business depends on improved order flow, continued disciplined cost management, successful execution of the ongoing transformation plan, and controlled capital expenditures • Management confirmed it is continuing to evaluate strategic alternatives for the CBD business, its product lines, and remaining facilities, but did not provide a firm timeline for potential additional actions or updates • Management expects that recent increases in request for quotes (RFQs) will eventually convert to orders, but noted this process typically takes several months to multiple quarters, and the company is currently in a waiting period for new order conversions

• Ongoing order and booking weakness for the CBD equipment division is driven by multiple external headwinds: geopolitical uncertainty, reduced U.S. government funding for university customers, slower adoption of CVD solutions in key end markets, and deflation in the global silicon carbide market caused by Chinese vendors flooding the market with low-cost wafers, which has reduced incentive for U.S. wafer producers to ramp production and purchase new equipment • Current revenue is highly concentrated, with just three customers accounting for 66% of Q1 2026 continuing operations revenue, creating counterparty and revenue volatility risk • Lower revenue levels have led to higher unabsorbed overhead costs, driving down gross margins significantly compared to prior periods • All forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, with additional risk factors detailed in the company's SEC filings including the 2025 Form 10-K

Q: With the SDC sale complete and $23 million in cash on the balance sheet, is the $10.4 million PP&E carrying value for the Central Islip property reflective of its current market value? / A: Management states the carrying value is a conservative estimate. A prior pre-transaction valuation several years ago (post-COVID, when industrial real estate demand was high) came in above the carrying value. The property remains a valued corporate asset, and the prior valuation provides a reasonable reference point for investors.

Q: Amid elevated activity in silicon carbide, nuclear, and data center end markets, is this growth translating into an active deal pipeline for your PVT and CVD systems? / A: The U.S. silicon carbide market has been depressed by Chinese wafer imports that have discouraged U.S. producers from ordering new equipment. CVD is primarily focused on 3D industrial and aerospace products rather than planar semiconductor wafers, though it does have a small wafer-level business. Management reports RFQ volumes are higher than 2025, but RFQs typically take multiple quarters to convert to orders, and the company is still in the waiting period. Early-stage RFQ activity exists in the nuclear space, and CVD has some products relevant to data centers via silicon carbide and power transmission applications, but it is not positioned as an AI-focused company.

Q: Is the previously placed PVT-200 system still under customer evaluation, and is collaboration with Stony Brook ongoing? / A: Collaboration with Stony Brook continues. The PVT-200 customer has been impacted by the U.S. silicon carbide market downturn and remains in a holding pattern; there is no new update to share at this time.

Q: Can you provide additional color on the ongoing strategic alternatives review, including what assets are being considered and a potential timeline for conclusions? / A: The sale of SDC was the first completed strategic initiative, which successfully added cash to the balance sheet and placed SDC employees with a new owner. Management continues to evaluate additional strategic options but has no updates to share publicly at this time, and will inform shareholders promptly when there are developments to report.