CVD EQUIPMENT CORP (CVV)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue was $7.408M, up 44.9% sequentially but down 9.6% year over year; gross margin expanded to 32.7% and the company delivered net income of $0.384M ($0.06 EPS) .
• Bookings remained soft: orders were $2.2M and backlog fell to $8.0M from $13.2M in Q2 as projects converted to revenue; YTD orders are $9.5M vs $21.0M in the prior-year period .
• Board approved a transformation plan: outsourcing fabrication, workforce reduction (target ~$2.0M annual opex savings in FY2026), revised sales channels, and exploring strategic alternatives; severance of ~$0.1M expected in Q4 2025 and potential non-cash impairments if assets are sold below book value .
• A contract modification enabled recognition of approximately $1M revenue in Q3 (timing only), helping deliver operating income of $0.308M and a third profitable quarter in the past four; this was a meaningful positive surprise in the mix and timing of revenue recognition .
• Strategic catalysts include continued progress in silicon carbide (SiC): order for two PVT150 systems for Stony Brook’s onsemi SiC Crystal Growth Center and ongoing development of 200 mm SiC crystal growth (PVT200) aligned with AI/electrification demand narratives .

What Went Well and What Went Wrong

What Went Well

• Gross margin improved to 32.7% vs 21.5% in Q3 2024, driven by a more profitable contract mix in CVD Equipment; operating income was $0.308M and net income $0.384M ($0.06 EPS) .
• SDC backlog remained strong despite slightly lower quarterly revenue; management highlighted resilience in gas delivery demand and the company’s cash sufficiency for at least the next 12 months .
• SiC momentum: “We are very pleased to support the onsemi Silicon Carbide Crystal Growth Center and provide SBU with state-of-the-art process equipment to advance critical semiconductor materials which are now driving the adoption of artificial intelligence and electrification.” — Emmanuel Lakios .

What Went Wrong

• Orders and bookings were pressured by external factors: proposed tariffs, reduced U.S. government funding for universities, the government shutdown, and slower adoption in growth markets; Q3 orders were $2.2M and backlog dropped to $8.0M .
• Revenue declined 9.6% year over year, principally due to lower Mesoscribe contribution after ceasing operations in 2024, and SDC revenue softened to $1.7M vs $1.9M in Q3 2024 .
• SDC incurred a one-time $0.1M certification cost; order timing and mix continue to drive quarterly fluctuations, which remains a near-term execution risk .

Financial Results

Quarterly Trajectory

Year-over-Year Comparison (Q3 2025 vs Q3 2024)

Segment Breakdown (Revenue)

KPIs

Notes:

• Q3 included approximately $1.0M revenue recognized due to a contract modification (timing only) .

Guidance Changes

Management did not provide revenue, margin, OpEx, OI&E, tax rate, or segment-specific numeric guidance for future quarters .

Earnings Call Themes & Trends

Management Commentary

• “Our bookings during the third quarter remained impacted by several factors, including the uncertainties related to proposed tariffs, reduced US government funding for universities, and the effects of the government shutdown… We are actively monitoring the evolving customer demand, geopolitical landscape and potential tariff impacts and planning accordingly.” — Emmanuel Lakios .
• “These strategic initiatives will enable our company to operate more efficiently as we focus on our core competencies… and… better support our goal of achieving profitability and positive cash flow.” — Emmanuel Lakios .
• “We are very pleased to support the onsemi Silicon Carbide Crystal Growth Center… advancing critical semiconductor materials which are now driving the adoption of artificial intelligence and electrification.” — Emmanuel Lakios .
• “Although order timing can cause quarterly fluctuations, we believe our current cash position and projected operating cash flows will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months.” — Richard Catalano .

Q&A Highlights

• CMC applications: Management does not yet see widespread adoption of SiC-based CMCs in ground-based gas turbine hot sections; potential energy-related opportunities include nuclear reactors and pellet encapsulation over time .
• Outsourcing footprint: The move away from vertical integration will focus on U.S. suppliers, with possible extension to Canada; company retains its IP and select quartz fabrication capabilities in-house .
• Tariff exposure: While many customers are U.S.-based, certain components (e.g., pumps from Europe/Asia) face import tariffs, increasing cost of goods; management is managing through inflationary pressure in costs .

Estimates Context

• S&P Global consensus estimates for CVV’s Q3 2025 EPS and revenue were unavailable; coverage appears limited for this small-cap, so a beat/miss versus Wall Street consensus cannot be determined at this time.*
• Actuals used elsewhere in this recap come from company filings and press releases; where S&P Global was queried, no consensus values were returned.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

• Mix-driven margin expansion and timing uplift: Gross margin improved to 32.7% and a contract modification accelerated ~$1M revenue into Q3, helping deliver operating income and EPS of $0.06 despite soft bookings .
• Near-term order softness: Orders of $2.2M and backlog down to $8.0M (from $13.2M) signal caution on near-term revenue cadence; macro pressures (tariffs, university funding, government shutdown) remain a headwind .
• Cost transformation as earnings lever: Outsourcing and workforce reduction target ~$2.0M annual opex savings in FY2026; severance of ~$0.1M in Q4 2025 is a small, near-term charge .
• SiC growth vectors: New PVT150 order and 200 mm PVT200 development underscore a credible pipeline in high-power electronics and research markets tied to AI/electrification trends .
• SDC resilience: Despite lower quarterly revenue ($1.7M), SDC’s backlog remains strong, offering stability in gas delivery; one-time certification expense ($0.1M) is non-recurring .
• Liquidity runway: $8.4M cash and confidence in meeting capital needs over the next 12 months reduce balance sheet risk, though working capital swings are material given contract timing .
• Trading implications: In the short term, watch order flow updates and transformation execution (outsourcing milestones, sales channel effectiveness); in the medium term, monitor SiC program wins and margin sustainability as the new fabrication model scales .