CVD Equipment (NASDAQ:CVV) reported lower second-quarter revenue from continuing operations as weaker bookings affected system sales, while the completed sale of its SDC business increased the company’s cash position and eliminated long-term debt.
President and Chief Executive Officer Emmanuel Lakios described the quarter as a “transformational period,” citing the April 1 sale of SDC and the substantial completion of an operational restructuring initiative begun last year. Following the divestiture, the company operates as a single reportable segment focused on advanced material processing equipment and related technologies.
Second-Quarter Results
Gross profit was approximately $329,000, compared with $481,000 a year earlier. Despite the lower gross-profit dollars, gross margin improved to 16.8% from 14.1%, which Catalano attributed primarily to a higher proportion of non-system revenue during the quarter.
The company recorded an operating loss from continuing operations of approximately $1.6 million. Its net loss from continuing operations was approximately $1.4 million, or $0.20 per basic and diluted share, compared with a $1.3 million loss, or $0.19 per share, in the prior-year quarter.
Results also included approximately $13.9 million of income from discontinued operations, reflecting the gain on the SDC divestiture after transaction expenses and income tax expense. Including transaction costs recorded during the first quarter, Catalano said the total gain on the divestiture was approximately $13.5 million.
Total second-quarter income was approximately $12.6 million, or $1.81 per basic and diluted share, compared with a net loss of $1.1 million in the second quarter of 2025.
Cash Position and Restructuring
The SDC sale strengthened CVD Equipment’s balance sheet, according to management. The company ended June with approximately $23.5 million in cash and cash equivalents, up from $8.7 million at Dec. 31, 2025. It also had $900,000 held in escrow related to the SDC transaction and no long-term debt.
Stockholders’ equity rose to approximately $36 million as of June 30, from $24.7 million at year-end.
Lakios said the operational restructuring was intended to align the company’s cost structure with current activity levels, improve efficiency and prepare the company to respond if market conditions improve. He said the actions are expected to materially reduce fixed operating costs going forward.
During the quarter, CVD Equipment received approximately $1.2 million in orders and ended June with a backlog of $3.9 million. After the quarter ended, however, the customer tied to a $0.8 million system order received during the second quarter filed a prepackaged Chapter 11 bankruptcy proceeding.
Catalano said unsecured trade creditors are expected to be unimpaired under the proposed plan, but CVD Equipment will evaluate the potential effect on the order, backlog, financial results, financial position and cash flows.
Market Conditions and Growth Opportunities
Management said customer order levels continue to be affected by economic and geopolitical uncertainty. Lakios identified university research funding, delays associated with government shutdown-related inefficiencies, aerospace equipment adoption and an oversupplied silicon carbide market as factors influencing demand.
He said university funding has historically supported the company’s FirstNano product line, which includes lower-average-selling-price equipment that can help seed demand for future production systems. He also said some prospective customers experienced substantial funding delays, requiring opportunities to be revisited, requoted or resubmitted for funding.
In aerospace, Lakios said production of gas turbine engines using ceramic matrix composite materials has increased. CVD Equipment has equipment installed or in installation and commissioning phases at customer sites, he said, and has seen an increase in aerospace consumables and spare-parts demand. Those parts are typically proprietary and carry “very reasonable gross margins,” according to Lakios.
However, he said new aerospace products must be installed, commissioned and adopted before they could lead to potential follow-on orders.
The company also sees potential opportunities in defense, though Lakios said management did not yet have sufficient information to quantify the possible demand or timing.
Silicon Carbide Update
On its physical vapor transport, or PVT, technology for silicon carbide boule growth, Lakios said the company’s equipment produces quality boules but is serving a market currently saturated with silicon carbide wafers. He said CVD Equipment continues to characterize its equipment through its arrangement with Stony Brook University, which continues to run boules on the company’s system.
Management said it had no new commercial developments to report for PVT technology. Lakios added that the technology could potentially be applied to other growth technologies, but said such possibilities remain uncertain.
Looking ahead, Lakios said the company will continue pursuing orders in its targeted markets while maintaining expense control and disciplined capital allocation.
About CVD Equipment (NASDAQ:CVV)
CVD Equipment Corporation (NASDAQ: CVV) designs, manufactures and markets custom vacuum deposition systems used to create thin-film coatings and advanced materials for semiconductor, optoelectronic and related industries. Established in 1992 and headquartered in the United States, the company leverages proprietary chemical vapor deposition (CVD), plasma-enhanced CVD, metal-organic CVD (MOCVD), atomic layer deposition (ALD) and physical vapor deposition (PVD) technologies to support both research and production applications.
The company’s product portfolio includes single- and multi-chamber reactors for the deposition of silicon, III-V compounds, metal oxides and other specialty materials, along with fluid-bed reactors for nanoparticle synthesis.
