CVV - Earnings call transcript Q1 2019 | CVD Equipment Corporation

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Operator

Greetings, and welcome to CVD Equipment's 2019 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

We will begin with some prepared remarks followed by a question-and-answer session. today McNeill, Len Chief call CEO; President the Tom and Financial on will Rosenbaum, be and Presenting Officer.

website Relations We release have of Investor and press our section call replay posted information to our at www.cvdequipment.com. earnings the

These our I conditions market many the risks statements that and expectations during market, growth, and uncertainties forward-looking XX, XXXX. are are statements total the this subject the comments remind limited to to described a may and filings related for call section of including results our today's Actual Risk in available I'd those on to products number on future based SEC, release for materially of Before business of press certain begin, the ended but from projections forward-looking XX-K and you outlook. and like those not and general call. made financial are to demand performance, year our December with differ including described in Factors assumptions, our

addition, today, obligation and made forward-looking revised we as circumstances expectations. all of statements or no update any to are undertake forward-looking In on based new statements

turn I Now over to to call Len. would the like

Leonard Rosenbaum

joining everyone, you afternoon, thank earnings for and call. Good our

year difficult second half net of first decreased CVD. revenue a of the As loss as result XXXX was and of XXXX, XXXX we previously mentioned, order a And the a of in for quarter reported $X.X levels. million low

that XXXX, focus facility the million purchased its building the compared in with is flow house for to has as Company now in off and has however, Further, of on of receipt new the In of improvement Materials. first accelerated materials The CVD $X.X materials XXXX, remainder to the the during to $XX order started Company sight. million, orders of quarter we XXXX. anticipate opening the year the amounting the approximately business

as well invested in the expenses. first as building XXXX $X.X improvements $XXX,XXX other additional million the machinery quarter and XXXX, an of materials-related in Company During and

operations our at have new showcase operations facility to our materials marketing we coming XXXX the started materials investment and online CVD continued our the Materials, and during customers. of existing and the enhancing With in efforts to third quarter new are

underway MesoScribe California costs. the on new York to our complete with of are operations facility we to in The improvements and enhances from in to our materials MesoScribe execute to July into of consolidating move Additionally, ability our and integration operations the be completed reduce materials facility XXXX. expect operational New

research Air first received the innovation Force. During the from I business MesoScribe U.S. quarter, small awards two Phase

advanced The to is flux development first to related the hypersonic of award testing. system sensors temperature support and flight heat

technology need second the a base. our deposit our operations revenue award over for develop to grows further Direct during pharma, Materials diversifies masking materials offerings, ago expands materials two medical, strategy applications. other applications; CVD a eliminate materials, carbon for our subsidiary utilizing business provide, manufacturing substrate to aero metallic customer and medical MesoScribe's through Write for engine CVD's on turbine subsidiary embarked applications; abilities aerospace subsidiary for through aperture for years MesoScribe coatings, one, two, The for applications is materials oil port material, industrial The gas expansion of defense, through deposition. and our corrosion-resistant and proprietary CVD for capability electronic and and Tantaline product and development medical sensors coatings three, to system enhance coatings using equipment defense, composite our aerospace, and our system, ceramic printing coatings and The and our into

reduce risk the our and coatings markets results. to corrosion-resistant in uneven levels aerospace defense growth We are tapping into flatten of and high-margin medical,

over call CFO, I that, quarterly to QX to turn We would returning results by With the XXXX. Tom our committed like to McNeill. profitable are to

Thomas McNeill

Thank $X.X share to of $X.XX and compared or diluted a XXXX. or $X.X first Len. compared of to in our decrease XX%, million the diluted revenue you, per as income XXXX, as or $X.X our million per million million $XXX,XXX net quarter, $X.X share net $X.XX was In in loss was

Our during $X.X the in compared quarter equipment XXXX. which attributable our or the our aerospace revenue XX.X% approximately completion million represented orders of revenue large decrease primarily revenue received, quarter this was now of or $XXX,XXX of approximately as to XX% to

XXXX, and at of million. to the of million, the our During level is the in to March one two continue orders XXXX, will affect received from half approximately revenue first we backlog The XX, of approximately customers second quarter, new new our in next $X however, $X.X order received quarters. orders levels

XX, the the to the profitability of million decreased XX, to a was XX, the our December XXXX, Our XX, revenue our building. cash quarter. liquidity, $X capital December With other XXXX, capital $X.X receivable, things, during capital at our respect $XX.X essentially levels machinery million approximately operating XXXX, March and improvements and quarter investment planned XX, the debt million on compared orders, operation; million to approximately Working materials of to and and the of sales related new unchanged. continued at from primarily managing to $X.X respect and at operating as decrease the the the expenses. depends XXXX, payments upon, and resulting payments was March of This which attributable $X.X for to ramp-up our and higher compared at million. $XX.X among $XX.X primarily to $XXX,XXX, business loss. receipt result collections $XX.X million XXXX, Materials Materials equivalents With of expenditures March was were of cash as at equipment in CVD end XXXX, December of normal return million at XX, includes decrease overall invested working reduced in XXXX, XX, service building to of the CVD decrease $XXX,XXX million of March cash

profitability decrease rates will losses return expected order company to operating by aligning next our our measures to to is cash during believe to cost QX we and while net our expenses XXXX. the positioning quarter, containment to reduce cash usage the While a continued

believe our cash the As our requirements back turn positions, expenditure sufficient capital equivalents to your operations from cash flow for and months. will be next the working I'll the operator such, cash now capital to meet call we XX and questions. for

Operator

with Reiss Thank we you. conducting Please At question-and-answer question. time, the question first [Operator Janney Scott. will Our be line this comes Montgomery of with the proceed Instructions] from your session. Brett

Brett Reiss

Hi, are Leon. doing? Hi, How you Tom.

Leonard Rosenbaum

Good afternoon.

Thomas McNeill

you? are How Hi.

Brett Reiss

other I've work for able in respect back to got Would you of a I ask be number then the I callers? will that Can guys? a come out questions. of for And of them? couple queue

Leonard Rosenbaum

us. for Works

Brett Reiss

Great.

going give take materials me of opinion business, these ultimately what you key some the key then tires teams to or of in times you at can our engineering to On in the and customers, the your that look – the have money decision-makers put you that us sense leaders expect it's kick orders give lead pocket?

Leonard Rosenbaum

online, They're new orders. have have to waiting we kicked get the for and okay, already some do Some tires. facility the

Brett Reiss

Are we in said is still – you the facility sight. new

When there and we for You've in the use prior, you're third quarter are running? and up of shooting XXXX.

Leonard Rosenbaum

in equipment in, brought speak. moving We're week. think, as were past the I the The gases we

there quarter in operations in equipment and testing quarter. the third sometime of the during start be to expect latter We part this

Brett Reiss

the new you lease-up can a on give The of that? space, report us progress

Leonard Rosenbaum

report that, And hopefully, we've something positive it. for been permits proper the and shortly. have we'll We showing

Brett Reiss

and to going payments? of the the accomplish mortgage new If running? give what you are the than the you with what accomplish look up are some your lease-up from us space, when What like? more look you cover sense lease-up want Will the of can economics to that like does rent things

Leonard Rosenbaum

the rents market our Well, the okay, rate, at to and that building. in new it accretive to we we're looking are at, expect be needs

not I'd comment. really Beyond that, rather

Brett Reiss

the that need reached new the end on new spend building quarter The CapEx top first you in have on the the is XXXX, on $X.X of – what you the $XXX,XXX we million spent to building? Okay. of from for that

Leonard Rosenbaum

I Materials. by not, over the years three, the the five to building sales a gets of Hopefully more four, be the expanded Tantaline, okay? next MesoScribe further needs as for and CVD hope spending lot

Brett Reiss

Okay.

that – aerospace any business dead, large Is water? customer, is that them? the Now recurring dead, absolutely dead the in for

Leonard Rosenbaum

words the I've always cautiously used optimistic.

Brett Reiss

to that aerocraft that manufacturer? them to composite probe that your was enough are The I this to bit can aircraft knowledge, sold engine large coming Look, volumes flow, little the equipment for that more? cover a the handle facilities out you'd the of

Leonard Rosenbaum

Long don't something answer. is but I that's them, term, it have believe would for that to they

Brett Reiss

that machines? machines you life what's sell The a Right. do the these have – they useful – of did shelf them,

Leonard Rosenbaum

that'll and maintenance et repair years. proper cetera, be XX, and With XX

Brett Reiss

any To ordered knowledge, they comparable other vendor? Okay. have equipment your from

Leonard Rosenbaum

Not No. to my direct knowledge.

Brett Reiss

callers, Okay. for quite I’m ask I to other have so Thank going respect you – far. other to drop back. questions

Operator

Montgomery the proceed Scott. follow-up a question. have do Brett We Instructions] your [Operator Reiss Janney question line from of you. with with coming Thank Please

Brett Reiss

us this Gentlemen, order On stuck potential me size, sense to Heuer, that here. with you scope from flow Yes. XX, of Nanosystems] and that [First looks could give relationship? of some TAG the business you're like April can

Leonard Rosenbaum

an not order. operation an at of an announcement the site. customer It was the of it's actual equipment Well,

Brett Reiss

that order us is some might potential what Okay. of Force, give respect that magnitude MesoScribe color to be? business the you With Air the with on of and can the what

Leonard Rosenbaum

please? repeat you question, Brett, the Can

Brett Reiss

the XX Air the the from April MesoScribe got Yes, Force... of announcement that order

Leonard Rosenbaum

the through MesoScribe of you're that further they're is had a materials And new it's already got continuation the for There we and seeing This become in way the We on. is contracts some its believe, year fourth producing two capability, was Right later now, just quarter proving last Actually, also capable what of, the defense – may I also. feasibility starting beginnings we technology production market. work one, but certain and is aerospace of third contracts. what of capabilities. that SBIR three. of to announced

Brett Reiss

the going? give you fluid the us – an is reactors. on for filed of Could How novel that Okay. patent you update a

Leonard Rosenbaum

going the It's well in very lab.

to further that with next We're for It's new in the industry forward. move it. expect a further partner it forward potential technology. years, to looking We with year, help the somebody move medical over very two

Brett Reiss

any for your the to cartridge? Okay. ties I update intentions that... And So you, membrane oxygenator was that on going – ask does

Leonard Rosenbaum

fluid the reactor. is that Well,

Brett Reiss

Okay. All right.

some of in stock made January number was at to who $X.XX. of Now a members say you purchases Are the the CVD market liberty non-open at Board seller?

Leonard Rosenbaum

of further. not this, I it mean into can I'm look cognizant Brett. I

Thomas McNeill

think restricted referring of as a grant you compensation. of might to Board be stock I part

Brett Reiss

not – All Okay. so it right, okay... was

Thomas McNeill

find. you'll I If what that's you think that, at look

Brett Reiss

Okay.

down a It with stock on comfort nice a all It's fortuitous would not the confidence that of give of be to to buying here. going some insight what's just kind on have Okay. question, shareholders we here, see comment.

Now think will the burn be year, do it for quarter? this And cash the Tom? was coming you what what

Thomas McNeill

for cash operating the operating – offset quarter of about And $XXX,XXX. to the loss for Brett, the was the loss QX down collections cash Yes. the receivables. December, was compared basically, by

about that's and So about change loss $X our reduced and million receivables were what operating cash by.

And so was cash quarter, for flat. the

the our towards cost that. impacts With improvement of XXXX. order containment of factors But measures, a obviously are profitable positioning the to play, in working we're by with working but in variety continued there's we QX towards flow, be company

Brett Reiss

you Will budgets? you QX to at reach cash breakeven internal XXXX look flow prior your when

Thomas McNeill

on flows. say of that. can let those we And the stand we'll progression out, what see the think is come I towards We'll based continued results themselves. order progression when for

Brett Reiss

Right.

Thomas McNeill

is the key in the the company on think just XXXX. I towards profitability driving focus But

Brett Reiss

Right. Right.

X, Now when at orders. year-end figures April $X announced new that on million you had of time, order you the had flows, said you on

million. $X.X you have Now

So week May, we've million in first basically in gotten orders...? April another of $X.X and the

Thomas McNeill

QX. of think of at about quarter, orders within number the in the March Look, final end approximately the we No. total orders January the million. $X we just $X.X execution million the XX, those I year, had again in to When of came completed

Brett Reiss

right. Right,

Thomas McNeill

an just adjustment approximate number. that to it's But

Brett Reiss

Okay.

you cliff. bit? been a off it's that large is quarter, Len, it's – this rate always legacy used legacy fallen business old know, a you Can customer, the million to Now be? But before or with lumpy. $XX to just like million it say little the we what industrial businesses, year. have was run And seems a lumpy involved it just for aerospace not to $X I the got That around talk

Leonard Rosenbaum

where not to back we get It we little time Well, off to takes a basically, cliff. bit of it fell It's lumpy. is a were. where

the helps I that think that year, rest quarter suspect be we'll capable the in it's And show first the sort of of magnitude. that being of done. we

Brett Reiss

Right, appreciate answering All for questions. gentlemen. Thank I my right. you all it. right,

Leonard Rosenbaum

welcome. You’re

Operator

you. Thank

Private next a question with of the question. Investor. from Our Morton], your proceed Please comes [Howard line

Unidentified Analyst

Hi. Can me? you hear

Leonard Rosenbaum

can. we Yes,

Unidentified Analyst

outgrow What talking have Okay. Brett the had would Several bought, cyclical years without were lot it by of was million the felt also you would – Tantaline. but of happened? $XXX ago, at not over you what you Tantaline, or areas even to hoping this a that figure about, why which hoped what just business, just I'm the to the out different for growth about that not do regular building trying we old we sort potential Is is for in knowing aerospace, time business.

that's me. Where the So fade? the to did you. mystery dream Thank

Leonard Rosenbaum

was equipment aerospace through large there. we we business period up over that got took it's more but sidetracked was equipment, will eat with of now issues a which it. lot own company, by Well, ordered it's drop-off, The than It issue back its expected had of to And still time. we the while get the at significantly a one-time. the a which

Unidentified Analyst

you have so for follow-on years, expert didn't you were that. to or People my is comment sell. this you Well, to at because came

at you were because So the aerospace you company came good to something.

you have capability? seems it Do that you apparently, sell. have to Now

Leonard Rosenbaum

sold always doors, we every we okay? going They and knocking than fashion to a that. just It's in we still Well, And still us different day. that on just out come do sold.

Unidentified Analyst

Okay. a lot than do, Well, future to say, yourself hope your too. let's better and your And I is luck you wish current. needless

on. carry So

Leonard Rosenbaum

Thank you.

Operator

[Operator of question-and-answer comments. end like our additional the gentlemen, Mr. Rosenbaum we for floor to back have to any would the reached I concluding turn Instructions] Ladies or and session.

Leonard Rosenbaum

Thank you. call, speaking forward you and for with Thank you I joining call. the at our next look conference to

Operator

gentlemen, and lines you thank conclude We for Ladies at may disconnect does today's this teleconference. your time. you and participation, this your

CVD Equipment (CVV) 11 May 192019 Q1 Earnings call transcript