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    CVV
    Earnings call· Jun 2026(Q2 FY26)

    CVD EQUIPMENT Q2 FY26 earnings call CVV

    Aug 12, 2026 Source

    Executive summary

    CVD Equipment Q2 FY26 — SDC Divestiture Strengthens Balance Sheet Amidst Challenging Market

    CVD Equipment completed a transformative divestiture of its SDC business, resulting in a significantly strengthened balance sheet with $23.5 million in cash and no long-term debt. The company is now focused on its core Advanced Material Process Equipment Group, having also completed operational restructuring to align costs. Despite these strategic moves, the company faces a challenging market with declining revenue and order levels, exacerbated by broader economic uncertainty and a customer bankruptcy.

    Highlights

    5

    • Completed the sale of SDC business on April 1, 2026, significantly strengthening the balance sheet.

    • Ended the quarter with approximately $23.5 million in cash and cash equivalents and no long-term debt, up from $8.7 million at year-end 2025.

    • Stockholders' equity increased to approximately $36 million as of June 30, 2026, from $24.7 million at year-end.

    • Gross margin improved to 16.8% in Q2 FY26 from 14.1% in Q2 FY25, driven by a higher proportion of non-system revenues.

    • Operational restructuring initiatives substantially completed, expected to materially reduce fixed operating costs.

    Concerns

    5

    • Revenue from continuing operations declined by approximately 43% to $2 million in Q2 FY26 from $3.4 million in Q2 FY25.

    • Orders during the quarter totaled approximately $1.2 million, with backlog at $3.9 million, reflecting weaker bookings.

    • Net loss from continuing operations was approximately $1.4 million, or $0.20 per share, in Q2 FY26.

    • A customer associated with an $0.8 million system order received in Q2 filed for Chapter 11 bankruptcy, potentially impacting the order and backlog.

    • Customer order levels continue to be adversely affected by broader economic and geopolitical uncertainty.

    Operational metrics

    13
    Cash and cash equivalents
    $23.5 millionup from $8.7 million at December 31, 2025
    Q2 FY26

    Significantly strengthened balance sheet after SDC divestiture.

    Stockholders' equity
    $36 millionup from $24.7 million at year-end
    Q2 FY26

    Increased following the SDC divestiture.

    Net income from discontinued operations
    $13.9 million
    Q2 FY26

    Represents the gain on the divestiture of SDC, net of transaction expenses and income tax expense.

    Total gain on SDC divestiture
    $13.5 million
    Q2 FY26

    Including transaction costs recorded in Q1.

    Total income
    $12.6 million
    Q2 FY26

    Including net income from discontinued operations.

    Total income per share
    $1.81
    Q2 FY26

    Basic and diluted.

    Net loss from continuing operations
    $1.4 millionvs $1.3 million in Q2 FY25
    Q2 FY26

    After interest income and other items.

    Net loss from continuing operations per share
    $0.20vs $0.19 in Q2 FY25
    Q2 FY26

    Basic and diluted.

    Gross profit
    $329,000vs $481,000 in Q2 FY25
    Q2 FY26

    From continuing operations.

    Gross margin
    16.8%vs 14.1% in Q2 FY25
    Q2 FY26

    From continuing operations.

    Operating loss from continuing operations
    $1.6 million
    Q2 FY26

    For the quarter.

    Escrow balance
    $900,000
    Q2 FY26

    Held in escrow following the SDC divestiture.

    Revenue
    $2 milliondown 43% from $3.4 million in Q2 FY25
    Q2 FY26

    From continuing operations. Primarily reflects lower system revenue resulting from weaker bookings experienced during 2025 and H1 2026.

    Industry KPIs

    5
    MetricValueDetails
    Backlog order book$3.9 millionUSD
    Ai data center revenueSilicon carbide plays a role in data centersdirectional
    Services installed baseUptickdirectional
    Bookings net order intake$1.2 millionUSD
    End market segment revenue mixAerospace: uptick in consumables and spare partsdirectional

    Orderbook & backlog

    2
    Orders$1.2 millionQ2 FY26

    Reflects weaker bookings experienced during 2025 and H1 2026.

    Backlog$3.9 millionJune 30, 2026

    Includes an $0.8 million system order from a customer who filed for Chapter 11 bankruptcy, potential impact being evaluated.

    Deals & partnerships

    1
    SDC businessSale of SDC business to strengthen balance sheet and focus on core Advanced Material Process Equipment Group.Total gain on divestiture was approximately $13.5 millionnot stated

    The sale of the SDC business was completed on April 1, 2026. The results of SDC are reported as discontinued operations. $900,000 is being held in escrow related to the transaction.

    Risks & headwinds

    5
    Broader economic and geopolitical uncertaintyOngoing

    Adversely affected customer order levels.

    Mitigation: Maintaining disciplined approach to capital allocation and expense control; operational restructuring.

    Customer bankruptcy impacting orderImmediate impact on Q2 FY26 backlog and future financial results.

    A customer associated with an $0.8 million system order received in Q2 filed a prepackaged Chapter 11 bankruptcy proceeding.

    Mitigation: Evaluating the potential impact on the order, backlog, financial results, financial position, and cash flows.

    Saturated silicon carbide boule growth marketLonger period of time

    Market is saturated by Chinese suppliers, Onsemi, Wolfspeed, and Coherent.

    Mitigation: Continuing characterization of equipment; exploring potential for PVT in other growth technologies.

    Delayed university funding for researchOngoing impact from past delays

    Caused by government shutdown, leading to delayed funding for prospects and requiring re-quoting/resubmission.

    Mitigation: Awaiting shifts in federal government funding priorities for universities.

    New aerospace products not yet fully installed/adoptedNear to medium term

    Many new products launched in the aerospace market have not been installed and commissioned to date yet.

    Mitigation: Need for installation and adoption to potentially enjoy future orders.

    What to watch in Q3 FY26

    4

    Impact of customer bankruptcy on backlog

    Next quarter
    Current$0.8 million system order from customer who filed Chapter 11
    TargetClarification on impact to order and backlog

    Why it matters

    This order represents a significant portion of the current $3.9 million backlog and its status will directly affect future revenue recognition.

    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 position and cash flows.

    Q&A highlights

    5

    Given heavy CapEx from major engine OEMs for CMC components, what is the timing and sizing of potential follow-on orders for CVD Equipment in aerospace?

    Manny Lakios noted a pickup in gas turbine engine production using CMC materials, where CVD has an installed base and tools being installed/commissioned. They are seeing an uptick in consumables and spare parts from this segment, which have good gross margins. New aerospace products are still in the installation phase.

    “We have seen an uptick in our consumables and spare parts from the aerospace segment. And as Rich indicated earlier, those are typically proprietary parts that are very reasonable gross margins.”

    asked by Neil Cataldi · answered by Emmanuel Lakios

    2 min read6 chapters

    Detailed Narrative

    01

    SDC Divestiture and Financial Transformation

    The company completed the sale of its SDC business on April 1, 2026, a significant milestone that strengthened its balance sheet. This transaction resulted in approximately $23.5 million in cash and cash equivalents and no long-term debt, a substantial increase from $8.7 million at December 31, 2025. Stockholders' equity also rose to $36 million as of June 30, 2026, from $24.7 million at year-end. The total gain on the divestiture, including transaction costs, was approximately $13.5 million.

    02

    Operational Restructuring and Cost Control

    CVD Equipment has substantially completed operational restructuring initiatives initiated last year. These efforts were designed to align the company's cost structure with current business activity levels, improve operating efficiency, and better position the company for improved market conditions. Management expects these actions to materially reduce fixed operating costs going forward⏳, contributing to a more streamlined and responsive organization.

    03

    Challenging Market Conditions and Order Flow

    Customer order levels continue to be adversely affected by broader economic and geopolitical uncertainty🌐. The company reported Q2 FY26 revenue from continuing operations of $2 million, a 43% decline from $3.4 million in the prior year. Orders during the quarter totaled $1.2 million, with backlog at $3.9 million, reflecting weaker bookings. Management is actively pursuing opportunities but acknowledges the need for macroeconomic shifts to drive order flow.

    04

    Aerospace Segment Performance

    The aerospace segment is experiencing a pickup in the production of gas turbine engines that utilize ceramic matrix composite (CMC) materials. CVD Equipment has an installed base and several tools in the installation and commissioning phase within this market. This activity has led to an uptick in consumables and spare parts, which typically yield high gross margins. However, new products launched for the aerospace market are still awaiting full installation and adoption.

    05

    PVT and Silicon Carbide Market

    On the PVT side of the business, which produces quality boules for silicon carbide wafers, the company notes that the boule growth market is currently saturated. Key players in this saturated market include Chinese suppliers, Onsemi, Wolfspeed, and Coherent. While silicon carbide plays a role in data centers, CVD Equipment has no significant commercial advancements to report for PVT at this time, despite ongoing characterization of its equipment.

    06

    University Funding and Government Impact

    University funding, particularly federal government funding for research, is a critical driver for CVD Equipment's FirstNano product lines. Past government shutdowns have caused inefficiencies and substantial delays in funding for some prospects, necessitating re-quoting and resubmission of funding requests. A shift in government priorities towards higher university research funding would be a positive catalyst for the company and other equipment suppliers.

    AI-generated summary of the company’s earnings call. Not investment advice.