CVD EQUIPMENT CORP (CVV)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue fell to $5.11M (down 19.4% YoY and 38.5% QoQ), gross margin compressed to 21.0%, and the company posted a net loss of $1.06M ($0.15 per share) .
• Orders totaled $4.5M and backlog slipped to $13.2M from $13.8M in Q1, reflecting tariff uncertainty, reduced U.S. university funding, and product adoption timing; management is tightly managing expenses and headcount .
• SDC gas delivery demand remained strong, and the first CVD4000 SiC coating reactor shipped in early July; resources dedicated to CVD4000 launch reduced revenue from other contracts in progress .
• Liquidity at quarter-end: cash and equivalents $7.02M, with AR up $3.6M tied to achieved milestones, expected to be collected in Q3; management believes cash plus projected operating cash flow covers the next 12 months .

What Went Well and What Went Wrong

What Went Well

• Shipped first CVD4000 SiC coating reactor system; CVD sees opportunity across aerospace & defense, industrial SiC-on-graphite, SiC high-power electronics, and EV battery materials. “We remain committed to our long-term strategy… achieving sustained profitability and positive cash flow.”
• SDC segment bookings strengthened; segment backlog increased significantly in Q2, supported by demand for gas delivery systems .
• Two customers (industrial and aerospace) represented 41.1% of revenue, underscoring traction with key accounts; management is actively monitoring demand and geopolitical developments .

What Went Wrong

• Revenue down 38.5% QoQ and 19.4% YoY; gross margin fell to 21.0% (from 24.3% YoY and 32.4% in Q1) as lower contracts-in-progress at both segments weighed on profitability .
• Orders remained light versus prior year (YTD $7.3M vs. $16.9M) and backlog declined sequentially to $13.2M, reflecting tariff uncertainties, reduced government university funding, and adoption lag in emerging markets .
• Revenue impact from allocating resources to the CVD4000 launch and continued headwinds in SiC power electronics (overcapacity, wafer price declines) pressured segment results and outlook visibility .

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our bookings and revenue during the second quarter reflected several factors, including the uncertainties related to proposed tariffs, reduced US government funding for universities as well as a lag in the adoption of our products…” .
• “In early July 2025, we shipped the first CVD4000™ SiC coating reactor system to an industrial customer… The resources allocated to our new product launch… partially attributed to the reduced revenue from other contracts in progress.” .
• “We believe CVD Equipment Corporation is well positioned to provide solutions across our key target markets — aerospace and defense, industrial… SiC high-power electronics, and EV battery materials.” .
• CFO: “Gross margin of 21%… decrease… due to lower revenues for contracts in progress at both CVD equipment and FCC [SDC] segments, partially offset by higher… nonsystem revenues.” .
• CFO: “We believe our cash and cash equivalents and our projected cash flow from operations will be sufficient to meet our working capital and capital expense requirements for the next twelve months.” .

Q&A Highlights

• Tariffs and client mix: Majority of orders are U.S.-based; tariffs primarily affect component input costs (pumps, etc.) from Europe/Asia; management is managing inflationary impacts on cost of goods .
• Revenue recognition: Systems recognized over time as equipment is manufactured and milestones achieved, not solely at shipment; July shipment of CVD4000 aligns with over-time recognition .
• NDA/customer geography: NDAs with most clients; facility referenced is domestic; broader NDAs include North America, Europe, and Asia .

Estimates Context

• S&P Global Wall Street consensus for Q2 2025 EPS and revenue was unavailable for CVV at the time of review; therefore, no beat/miss versus consensus can be determined (Values retrieved from S&P Global).
• Actual Q2 2025: Revenue $5.11M; Diluted EPS $(0.15); margin 21.0% .

*Consensus unavailable via S&P Global.

Key Takeaways for Investors

• Sequential and YoY revenue decline with margin compression reflects lower contracts-in-progress and resource allocation to the CVD4000 launch; watch Q3 collections on AR and CVD4000 rollout for revenue normalization .
• Orders/backlog trajectory remains a swing factor; Q2 orders improved vs Q1 but remain well below prior year—monitor tariff developments and university funding as leading indicators .
• Aerospace & defense remains a relative bright spot with established relationships and recent system orders; this segment can underpin baseline revenue amid SiC electronics market uncertainty .
• Industrial SiC-on-graphite capacity expansion is a multi-quarter story; early CVD4000 delivery is a milestone, but near-term revenue may face timing effects as launch resources are deployed .
• Liquidity is adequate for 12 months; management is focused on expense discipline and working capital—mitigating inflationary/tariff cost pressures should support gross margin stabilization .
• With no formal numerical guidance and limited Street coverage, price action may be driven by incremental orders/backlog updates, tariff policy signals, and follow-on CVD4000/PVT wins—headline sensitivity is high .
• Medium-term thesis hinges on execution in aerospace/industrial systems and selective recovery in SiC power electronics; consider position sizing commensurate with order volatility and macro sensitivity .