CVD Equipment Corp. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and good afternoon, everyone.

We appreciate you joining us today to review our second quarter 2026 financial results and to provide an update on our business and strategic initiatives. Second quarter marked a transformational period for CVD Equipment. Most notably, we completed the sale of our SDC business on April 1st, 2026. This transaction significantly strengthened our balance sheet, increased our financial flexibility, and allowed us to focus on our future strategy, including our core advanced material process equipment group. As a result of the divestiture, we ended the quarter with approximately $23,500,000 in cash and cash equivalents and no long-term debt, providing us with a strong financial foundation as we navigate a challenging market environment. In addition to completing the divestiture, we substantially completed the operational restructuring initiative that we began last year.

These efforts were designed to align our cost structure with our current business activity levels, improve operating efficiency, and position the company to respond more effectively when market conditions improve. We expect these actions to materially reduce our fixed operating costs going forward. While customer orders level continued to be adversely affected by broader economic and geopolitical uncertainty, we remain actively engaged with our customers and are continuing to pursue opportunities developing across our targeted markets. We are also focused on maintaining a disciplined approach to capital allocation and expense control with the goal of creating long-term shareholder value. Turning to operating performance, second quarter revenue from continuing operations was approximately $2 million, compared with $3.4 million in the prior year quarter. Orders during the quarter totaled approximately $1.2 million, and backlog at the end of June 30th, 2026, was $3.9 million.

With that, I'll turn the call over to our CFO, Rich Catalano, to review the financial results in more detail.

Thank you, Manny, and good afternoon. As Manny noted, the sale of the SDC business closed on April 1, 2026. Accordingly, the results of SDC continue to be reported as discontinued operations for all periods presented. Following the divestiture, CVD Equipment operates as a single reportable segment, focusing on advanced material processing equipment and related technologies. Second quarter of 2026 revenue from continuing operations was $2 million, as Manny mentioned, compared to $3.4 million in the second quarter of 2025, a decline of approximately 43%. This reduction primarily reflects lower system revenue resulting from weaker bookings experienced during 2025 and the first half of 2026. Gross profit for the quarter was approximately $329,000, resulting in a gross margin of 16.8%, compared to a gross profit of approximately $481,000 and a gross margin of 14.1% in the prior year quarter.

The increase in gross margin percentage was primarily attributable to a higher proportion of non-system revenues during the current quarter. Our operating loss from continuing operations was approximately $1.6 million for the quarter. After interest income and other items, the net loss from continuing operations was approximately $1.4 million or $0.20 per share, basic and diluted, compared to a net loss from continuing operations of $1.3 million or $0.19 for basic and diluted share in the prior year quarter. Net income from discontinued operations was approximately $13.9 million. This is the regain on the divestiture of SDC, net of transaction expenses and income tax expense. Including transaction costs we recorded in the first quarter, the total gain on the divestiture was approximately $13.5 million.

As a result, the total income for the second quarter was approximately $12.6 million or $1.81 per basic and diluted share, compared to a net loss of $1.1 million in the prior year quarter. Turning to our balance sheet, we ended the quarter with approximately $23.5 million in cash and cash equivalents, compared with $8.7 million at December 31, 2025.

We also have $900,000 that is being held in escrow related to the SDC transaction and no long-term debt. Our stockholders' equity increased to approximately $36 million as of June 30, 2026, as compared to $24.7 million at year-end. Following our quarter end, the customer associated with the $0.8 million system order that we received in Q2 filed a prepackaged Chapter 11 bankruptcy proceeding. Although the unsecured trade creditors are expected to be unimpaired according to the proposed plan, we will be evaluating the potential impact on the order we just received, as well as the impact on our backlog, our financial results, financial positions, and cash flows. With that, I'll turn it back to Manny.

Thank you, Rich. The successful completion of the SDC divestiture represents a significant milestone for CVD Equipment. We have transformed the company into a well-capitalized, debt-free organization with a focus on business strategy and a substantially improved financial position. Although market conditions remain challenging, we continue to pursue orders across our targeted markets and remain committed to disciplined execution, operational efficiency, and long-term shareholder value creation. We believe the actions we have taken over the last year provide a solid platform from where we move forward. Operator, we are now ready to open the line for questions.

You want to ask all your questions, Neil, or you want me to take it one by one?