CVV - Earnings call transcript Q4 2021 | CVD Equipment Corporation

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Operator

Greetings, and welcome to the CVD Equipment 2021 Fourth Quarter and Year-End Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

We will begin with some prepared remarks followed by a question-and-answer session. Presenting on the call today will be Emmanuel Lakios, President and CEO and member of the CVD Board of Directors; and Thomas McNeill, Executive Vice President and Chief Financial Officer.

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

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

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

turn Now call I'd Manny. over to the like to

Emmanuel Lakios

Kyle. call. conference information and President, presenting our Thank XXXX regarding Corporation our CEO My business. related I’m our name to to pleased you, Equipment and and Manny pertinent to company be developments Lakios, today and CVD quarterly to Welcome you important is performance

information, was will reorganization focus the thoughts conference and profitability we on in our a end substantive session. questions We your to transition, providing be us. of are important at question-and-answer the path to call year look forward of As XXXX to your providing and growth.

The in strategic focused million, company. of first a booked in the as electric demand compared In We viability product and multiple systems are the serving from and pleased XXXX our profitability our of year of to growth the XXXX, XXXX. products systems an increase vehicles. $XX orders the of the increased had our prior group We this in the with XXXX XXXX. were interest maximizing performance obtained markets during orders period. up offerings, were optimizing and the in Equipment focus balance XX the spent for XX% X in XXX% of over whole half company and improvements shoring company market difficult We all future of XXXX. our sheet up

X completed battery The quarters systems for nanomaterial Recently, XXXX. delivery we are carbon-based cellular I both anode announced XXXX, silicon orders years. the Both second grow QX the additional planned mentioned coming of The and high-power technology. first in in According the strategic for market are being half second systems mid-XXXX. electronics. material research, these other in devices for markets and and the of of expected will discrete phone be one systems to and to development research battery for for XG

quarters XXXX. orders for markets, until battery fully end-use carbide the recovery continued that also to During installed recover first our orders X materials last over consumables of and market, nanomaterials, is received composite expect validate The the a aerospace the sign as in such our quarter base focus further growth aerospace which not of strategy we of we of the do recent XXXX, and advanced markets. growth -- for systems other aerospace This market. serve of silicon on

we building as in the QX and was headcount, cash MesoScribe cash line micro in completed $XX In on both The positive. from building provides approximately capital facility and additional consolidated providing working is XXXX. opportunities. Denmark in the which had was The flow into cash the certain consolidation in profitable future XXXX, of as performance product growth into the operational with into reduction was also Tantaline the division. moved of the first rightsized building our over of and Tantaline line, yielded million was in and all our employee SDC the our building our positive was into XXX XXX was consolidation and for operating Islip XXX New of was flow there improved in outcome Our its associated well located as operations a sale product July -- of building, with sale expenses XXX building Denmark. the year division York hand. XXX of XXXX The Central have The

revenue from due partially revenue rightsizing orders attributed Our the to equipment The our consolidation and the in the of down of by lower the in XXXX headcount reduction XXXX was our employee in to of pandemic. facilities. our COVID was XXXX impact mitigated

achieving and caused The recently hence sequential end expect and the yielding global the global this revenue XXXX, negative -- XXXX, In our and have trend production group, supply been instability in of geopolitical increases a further challenge CVD. the addressing profitability Ukraine issues This and of issues. have by chains. with the felt continue most material breakeven rate for experienced effect We increase these have pandemic a in and initiative. XXXX COVID through by The as seen uncertainty. to we all X supply will in more our and has run product well costs quarters commodity is in companies, profitability in been now chain product companies as be including Russia have delivery we

implemented have engagement network rigorous supplier suppliers. as well We our expanding as of

capability with XXXX, initiated to self-reliant. objective expand in also, internal a We the program have our to be manufacturing

issues. in XXX shift to and XXXX supply now financial assist McNeill, Thomas to Central on in addressing have longer-term CFO, I our that, to provide Islip a who ample summary. quarter will you our Mr. fourth accommodate manufacturing year-end would facility With chain introduce any like strategy our our We capacity

Thomas McNeill

ended XX, the or Included the XX.X%. $X.X of XXXX, the CVD's $X.X share year the per in was to the net Net or compared $X.XX was line. XX, and the the as company's for the quarter gain and an reduced on the loss net diluted of which for quarter net $X.X CVD to $X.X the operating to substantially XX, as Thank ended sale XX, December to pandemic, XXXX. income December of results, million for for effects you, operating by ended $X.X million, year loss the recognizing of ended XXXX other ended as XXX losses of Manny, operating $X.X share a diluted in quarter of or increased in first XX, the million fourth revenue quarter result -- the and carryback $X.X all. ended PPP of of in orders $X.X million commencing XX, Included income or in million benefit loss as $X.X loan XX, is December was in Sequentially, XXXX. the to operating year-end $X.XX quarter in the million XXXX. for revenue the CVD's the due an Tantaline COVID-XX ended sorry, December XXXX respect first operating revenues the and compared charge XXXX XXXX, to fourth of year December good loss was a $X.X as share million, December product $X.X With received ended year CVD CVD's an $X.X amount XXXX $X.X fourth for XX, $X.X and which quarter million a our Included XXXX loss XXXX, respectively. the was to product debt increase in new of diluted Tantaline CVD's in to as in the loss impacted an net or million $X.X $XXX,XXX XXXX $XXX,XXX. compared XXXX, line. third and third increase Net and operating was the afternoon, XXXX In loss resulted $X.XX loss of the a million of XXXX million favorably compared XXXX of the per loss XXXX. CARES December ended to the for was an XXXX, the December of subsequent in the tax is related million which quarter ended in year for XXXX, or for the per the extinguishment of XX, related compared for decreased $X.X the in $X.X in XX, X.X%. of operating fourth per quarter XX, And COVID-XX impairment XXXX. the Act, to December December to a $X.XX pandemic. million, of impairment fourth the was of year as of of of million on year of quarter $XX.X revenue quarter XXXX $XXX,XXX related company's year resulting was of in the quarters income of $X.X $XX.X allows XXXX, the quarter million million million decrease quarter A building the to gain income million compared respectively. amount in in XXXX, and $X.X CVD's fourth charge share December million diluted million million of

as as also manufacturing lead date, revenue delays mitigate other increased profit and suppliers XXXX chain as extend QX in help as This impacts. continuing supply potential to to well its well has the assessing material cost on times manufacturing in efficiencies. During commenced lead been as ability times margins reduced has CVD CVD's and increased and recognize delays future components manufacturing with well placing gross quarters mitigate orders impacted by as to impact try to certain manufacturing deliveries. and material costs may CVD the reduce

XX, or flexible CVD this mitigate XX, at The potential December to and million schedule December both material at delivery XX% XXXX, $X.X XXXX. company's addition, $XX.X manufacturing million -- its In utilizing by million, to improved $X.X increases. and is delays compares to in-house backlog delivery

ended and effect XXXX gas to million. continues the $X.X compares during million, sales, $X.X reduction ended quarters we industry the million achieved and new orders of in the amount crisis reduced of June, travel impact December This September aerospace and have $X we industry the at negative to due of facility position, the the engine to North research of we March are COVID-XX turbine While pleased XXXX. XXX favorably located quarter building July the to did as cash on announced, to XX, our in previously and and million of the debt XXX place, have $X.X XXXX. With sale in respect sale our this closed

million The balance at improved of $XX of and to growth $XX.X million, debt then sheet $X.X mortgage $XX.X us is paid proceeds and million, the the of XXXX, our price position, satisfied With we provides costs. December approximately our sales sustainable which bolster various cash XX, with approximately strategies. transaction-related net million

the million positive earnings at XXX approximately improved and December of equity our earnings of by result a retained As shareholder is on now a the $X.X CVD's the $X.X XXXX. retained overall gain sale building, and XX, million, we

liquidity, have we off respect no debt XXXX, debt in of the in remaining to mentioned, at prior paid result our million. Finally, the as X, the primarily as we building, of amount of as mortgage building $X.X on cash, XXX December the the $XX.X year XX, on such, million period. sale million With the to compared $X.X I our outstanding. increased XXXX, March to And XXX

in Our million XXXX, is period. working or capital as compared $X.X December the at increase $X.X million prior to of million year $XX.X XXX%. XX, was an This

addition, supply And supply year on and have the USA on may from the in discussed. In the chain uncertain XX, be predicted, length impact related profitability, cannot our The substantially ultimate potential impact highly the XXXX, to and during product we be negative $XXX,XXX spend profitability. million revenue and to impacts reduced we the as of longer-term have XX, while to CapEx are of further we COVID-XX line. and initiated year This ended our ceasing with December chain now our time impacts no the XX, XXXX, the ended year previously especially the December can there the assurance actions XXXX. factors ended impacts outbreak that December revenues during Tantaline our mitigate from the to $X.X

capital well supply aerospace Our dependent effects profitability managing the business improvement of the continued factors, CapEx discussed of cash receipt today. managing among filing lessening our expenditure equivalent working that next to be flow all filed believe capital was XX and as other orders, is return of in issues projected and our our chain XX-K the sufficient of and operating expenses. through Form as will we cash to market, XX of these our and months for efficiencies that positions planned ongoing to the cash the operational from and COVID-XX the new requirements upon operations things, Based and meet our on

turn At So or the CEO. like we call assess maintain this the the will to continue take actions I'd Manny, to operating point, current cash capital to operations needs. worsen, our environment continue working our anticipated and back to longer support our to over

Emmanuel Lakios

and of on presentation. we expected, we transition, everything year Tom, reorganization thank focus serve. you for who as we was do a and XXXX the summary, In those

of customers, Our our and shareholders focus growth consistent to remains on pursue return to employees, and profitability.

XXXX We are cautiously looking forward optimistic. and to are

Your to comments important questions are us. and

of close to open the presentation, the With our like questions. up floor we'd your to

Operator

from question Instructions] is first Martin Howard, Our private [Operator a investor.

Unidentified Speaker

I'm million interest have you excited. it? million love anything is sales, but this. some be us health $XX a money have a to better reason in some there's to stay where question glad million, is My can in is stock great a $XX give to or the conditions worth instead new $X product there enough alive, tolerate maybe of [indiscernible], something love Is see thing I the happening would of year that to and on reason you

Emmanuel Lakios

Okay.

very to at you love thank it's job to stock, having the Martin, tolerating and you thank least and the for you now at work up much, our stock. So

Unidentified Speaker

XX various for over Stockholder years. amounts

Emmanuel Lakios

Yes. power -- X we And growth we've the systems charging And you in for are releases devices my high-power markets. Last charging transmission X electric one to of things had is us. And and are areas year, received in as for presentation, in from application and great may Those vehicles our X used, focus customer. of carbide I is let on. transmission for in earlier electronics stated you that some and silicon of that power as -- electric electronics. me orders actually the for growth used speak high received that know, X public we as

electric last was improving of nanomaterial from our The other it an are evolutionary announced anode that order battery batteries. carbon where we -- year there had in the in that releases, the in itself. We and we material customer received are announced is they used a X that vehicle actually

for see that, obviously, that us, X market substantiated and are that's the also large by those and areas opportunities are read So growth we by we can news, research.

Martin, to several last I the still great that, addition over years fiber In large in the foothold. industry. a company a the did have for aerospace we mean telco job

And haul As impacted, by we know to were impacted industry COVID was were and the pandemic manufacturers Asia. the travel Europe, then travel therefore, as the or to that, that Airbus, well. long the Boeings

time. back So again, some our marketplace at the indicate will and news point research market come that, that in

transmission products used that for vehicle excited. orders We battery received electric with those So and we're year said, be last that energy charging. in and will

we're So with pleased those.

look as that, of think and far CVI, company, carbon both processes, nanotubes the carbon and for not a our we As carbon our our of tools. are device applications medical play. products not sale CVI that's I we've those type mentioned and We carbon for our earlier as big primarily at our that

gave of you we of that examples with do on. So I said, I a focus think areas couple that

Unidentified Speaker

next was for be over sort years. the on XX I and going your take truth material time. One the [powered] it's is Graphene there what is like some material, to last opinion to Or question, don't mean graphene of company? that? much the too to a Well,

Emmanuel Lakios

a demands technology see are I that, that. CNT spending for on And graphene. It's speak good a than harvest that. ways think still It's solution. to really looking more We larger I of time a without systems it's different lot a do we We on graphene. lot -- of a for there technology. sell can't in than

Operator

Brett [Operator next Reiss question with Scott. Instructions] from Our is Janney Montgomery

Brett Reiss

Tom, me? can hear Hi, Manny. Hi, you

Emmanuel Lakios

Yes, we can.

Brett Reiss

year-end. Good trends show sight profitability the orders and line in the of great. in on Great, backlog and increase of by the

which you, X that sold the you, I system another talk March me battery ask it -- nanomaterial XXth And me -- release to between systems an quarter, this system news and system you to to then deposition and research had to sciences, differences for you're you you customer. to like, Could the can that. the selling And atomic pilot production you Can layer non-engineer did you mentioned. old. just Institute. like a Georgia So -- then a X explain years last these to appreciate sold I you

Emmanuel Lakios

XX As if or you're X.

Brett Reiss

years old. X

Emmanuel Lakios

it's production to that that deposition same. the have the similar one to been Georgia But CVD -- do very Tech, best Tech higher pleased applications. we're announcement really quarter much universities very very it's a and about selected. a to tool volume technology R&D Georgia is volume process. the The really field the And for ALD are real just is tool of and spoke The -- a don't know system as you much need looks fourth X-year-old, to X a in in this application, is. then higher research just tool the The it's equipment we difference was system. Okay. for and another

Brett Reiss

is mean are knows just When going these in market I'm because electronic increase I market and -- the to share. add-on probing everybody areas. addressable mean vehicles I total

there you So [cynanode] that pushing, repeat process X-day any take, example, that we the give from us to Can customer? perhaps for Has orders additional of that look been that battery there? color forward so could customer. they're greater acceptance

Emmanuel Lakios

able tell that. you on mid marketplace. marketplace. that's the had it's we the to we're our best deliver all can with to I speak and to that can't can We get adoption schedule best their customers technology. on And I really would year. it committed probably as that in technology, in to provide them really say them up adoption traction -- And to to of doing the be this technology I my we're

Brett Reiss

Okay.

XG, be business a chemical and vapor area? orders there XG, of potential is what Is prospect system. -- a Or Now growth one-off? in this is plasma-enhanced for migration to the another deposition that that other are area seems world's to just this that's repeat to world going since the the

Emmanuel Lakios

speak emerging can't that. cluster a into different shifted carbon-based other to used platform beyond we've would that that In sell though, than tool applications. us Well, be in standard on is platform a which discrete products, we're platform The would really technology using And available devices application. XG that's to I to to be developing, that again, that our platform.

of it use case So to marketing multiple as this discrete capability on plan has these other that technology we potentially both specific applications well. within devices But for orders.

Brett Reiss

business chemical on? you embarking -- chemical anything I Is similar? the kind were just is go-to for firm very guys that like first a vapor almost deposition. -- plasma-enhanced of Is Is mean, it different? new this you're this Right. deposition, Or is vapor

Emmanuel Lakios

-- plasma-enhanced CVD history specific No, company -- systems. a is for cluster of the tool [pre-CVD] wafer-level system. is low production temperature This designed on has it But providing we production a -- a system a true tool have it's processing.

Brett Reiss

production to anything described, with product? proprietary to platform, cluster there which that new The is new the company you to respect

Emmanuel Lakios

therefore, I you about and is, there Yes, can't it. tell

Brett Reiss

good Okay. we've protective moat. if Well, got it that's because works, a Yes?

Emmanuel Lakios

Yes.

Brett Reiss

Great. of just Great. in some mentioned orders Manny, a aerospace, shoot. Okay. which into kind little more, bit more is green you consumer you've color that for Could that? us give on a materials gotten you go some

Emmanuel Lakios

that There then and reduction engine spare as turbine the you parts tools. and -- the that because lot reduction, they're gas getting travel, therefore, that order -- using pandemic is of of the projection then, now capacity you the don't capacity there's need the and consumables long-haul excess of therefore, a then orders, a start impact is start they obviously,

get use They So would capacity. their anticipate will some period that a they good time that we those is of hope all thing. and fully. that be There free

battery emerging silicon When of these additional are not add business some applications, to that, we're and point which at portion that of would some the electric with the quite also segments, carbide aviation they business this other material. both offset and happens, technology But vehicle Beyond we've our sure. capacity. the have

Brett Reiss

cash just And Tom. your burn is Okay. quarter? this for What was from probably operations this

Thomas McNeill

get on cash the I on that can quarter going burn, This to that I'm one, Brett. take back offline.

Brett Reiss

Okay.

morning, to saying you're you do worth? Okay. it in to now? it if building value And tomorrow sell free debt What's not now which could you What's right just what you're the market for get the it? now, clear, it. going I'm had But and you're

Emmanuel Lakios

think a be We hard-pressed to We number, assessment a I lot. would to we'd worth that. But that. an independent think to give you of it's have get do

Brett Reiss

is close sold other you for as $XX but maybe Well, one down right market, not pretty the just hot think worth the you're in the one block And a million. arguably in yes? pretty I much,

Emmanuel Lakios

can't value sounds Yes, I heard a that like what a fair But you the number give you. And yes, I on is. assessment. again,

Brett Reiss

an of of that's that acquisition for needed that terms along working you. monetizing But business Okay. your margin if in for if safety capital people you intrigues comes or

Emmanuel Lakios

consideration. that -- through minds as and for That's well, our up everything goes is

Brett Reiss

Yes.

Just one. -- your you what The morale can sales describe it? X of last force,

Emmanuel Lakios

They were XXX% year-on-year.

for that, booster not having that's organization, think force. sales I that entire been in organizations, think the morale sales just the I a

Brett Reiss

the aerospace of Things back seem right to possible very right. be XG. Right, with to batteries along and the then It's could and seem thick eventually EV humming come nicely. things you in be

thank and So you keep up. it

Emmanuel Lakios

that. Appreciate Brett. you, Thank

Thomas McNeill

question, to Brett, And QX cash just burn about $XXX,XXX. cash your decreased to QX,

Brett Reiss

Okay.

lot So to your next a that. more you for last -- Yes? mean, got than XX enough assertion months, got I cash runway year the you've to -- that

Thomas McNeill

Yes. forecast. on And order is requirement flow expenses. a to XX more on We well XX say our that The focus the based out what are for point, Brett. positioned We're XX time. that run the we of with to months enough and SEC compelled in period to have efficiencies you our that of and an XX don't good months anticipated operating that's

Emmanuel Lakios

you we up. Brett, that bringing And appreciate

Kyle? I clarification. take Thank question. think the more to you, going you. X Thank We're Tom.

Operator

Dan is private Our from question next a investor. Jones,

Unidentified Speaker

States in where of This chain that whether United where bit that that -- And looks you build Jones. -- abroad? materials terms be opportunity, out, equipment could on more interested in terms the capacity the supply provide is and how plays Anyway, little color what also you're silicon Dan your the Dan, not I'd in there. seeing if of a carbide

Emmanuel Lakios

on a to all initiatives, of States, again. and mean, thank But [IT] China we silicon news et big the clearly, the power semiconductor high circuits. cetera. you the shift a read to to you, grow I Part as battery the used physical I build think essentially the material bring electronics, the vapor there's let's -- focus, moment for back news, carbide itself. We We material, all systems said, silicon United transport Well, the integrated carbide. is that read --

is coating. the offering is not -- growth This the is those product a silicon that So our This are on on then that actual this application. really of today particular pools carbide then as cut and polished silicon silicon have wafers wafers. know, and are temperature carbide capacity silicon. And actual current made you a and current capacity than may into higher higher carbide --

Unidentified Speaker

Okay. Great. Are suppliers the there carbide equipment many other silicon merchant [goal]? for the crystal,

Emmanuel Lakios

are There lot carbide merchant suppliers. of aren't a A the There gobbled them of up merchant lot been of device wafers. manufacturers. silicon other suppliers have by

Unidentified Speaker

integrated in terms your the of it -- it device manufacturers in And vertically those product, is is or interest

A –Emmanuel Lakios

You can you going up-and-coming that in, they the and the have to that those focus. some can open – are space imagine that ones been to no, run our imagine merchants are primary have

Operator

the for call reached Lakios remarks. now turn of will And Manny question-and-answer have to end over session. the I closing the We

Emmanuel Lakios

the call thank Well, forward for best. the speak earlier. and today. the of Board for loyalty. I wish And you. Equipment, as CVD I and We being you all Stay appreciate And Okay. we we the you employees XXXX, look Directors. safe, to on the shareholder said thank all all

Operator

participation. Thank for today's concludes you this disconnect at conference, your time. This may and lines you your

CVD Equipment (CVV) 1 Apr 222021 Q4 Earnings call transcript