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CVD Equipment Stock Up Post Q3 Earnings on Revenue and Profit Growth
CVVCVD(CVV) ZACKS·2024-11-15 16:15

Core Viewpoint - CVD Equipment Corporation reported strong revenue growth in Q3 2024, driven by increased demand in aerospace and defense sectors, despite facing challenges in inventory and market dynamics [2][8]. Financial Performance - Revenues for Q3 2024 reached 8.2million,markinga31.48.2 million, marking a 31.4% increase year over year [2]. - Gross profit improved to 1.8 million, a 14.8% increase from the previous year, although gross margin declined to 22.4% from 25.6% due to a 1millioninventorycharge[3].−Thecompanyachievedanetincomeof1 million inventory charge [3]. - The company achieved a net income of 0.2 million, or 0.03perdilutedshare,comparedtoanetlossof0.03 per diluted share, compared to a net loss of 0.8 million, or 0.11pershare,ayearearlier[3].BacklogandBookings−ThebacklogasofSeptember30,2024,was0.11 per share, a year earlier [3]. Backlog and Bookings - The backlog as of September 30, 2024, was 19.8 million, down from 24milliononJune30,2024,butupfrom24 million on June 30, 2024, but up from 18.4 million on December 31, 2023 [4]. - Total bookings for the quarter were 4.1million,slightlylowerthanthe4.1 million, slightly lower than the 4.4 million recorded in the same quarter last year [4]. Segment Performance - CVD Equipment segment revenues rose 18.5% to 5.7million,accountingfor69.35.7 million, accounting for 69.3% of total revenues, driven by aerospace contract activities [5]. - SDC segment revenues grew 27.5% year over year to 2 million, representing 22.6% of total revenues, due to increased demand for gas delivery systems [5]. - CVD Materials segment revenues surged 634.4% year over year to 0.7million,drivenbyfinalsalestoanaerospacecompany[6].ManagementInsights−CEOEmmanuelLakioshighlightedthestrategicimportanceofthefirstshipmentofthePVT200systemfor200mmsiliconcarbidewaferproduction,reflectingindustrytrends[7].−Managementnotedongoinggrowthinaerospaceanddefensemarkets,supportedbya0.7 million, driven by final sales to an aerospace company [6]. Management Insights - CEO Emmanuel Lakios highlighted the strategic importance of the first shipment of the PVT200 system for 200mm silicon carbide wafer production, reflecting industry trends [7]. - Management noted ongoing growth in aerospace and defense markets, supported by a 3.5 million order for CVI/CVI3500 systems [7]. - The company is focused on improving profitability and customer engagement despite challenges from inventory adjustments and market shifts [7]. Market Dynamics - The quarter benefited from increased demand in aerospace and defense, particularly for Ceramic Matrix Composites, which are essential for reducing fuel consumption in jet engines [8]. - Challenges included overcapacity and declining prices in the silicon carbide market, impacting PVT150 systems [8]. Future Outlook - Management did not provide explicit financial guidance but expressed confidence in sustaining operations over the next 12 months, supported by a cash balance of 10 million and a backlog of orders [9]. - The company acknowledged potential revenue fluctuations due to variable order timing and emerging market dynamics [9]. - CVD Equipment emphasized disciplined cost management and focused R&D investment to support future growth, particularly in expanding its silicon carbide product portfolio [10]. Other Developments - During the quarter, CVD Equipment finalized the wind-down of its MesoScribe subsidiary, recognizing a 0.6 million gain from the sale of equipment, aligning with a strategy to focus on high-growth markets [11].