CVD(CVV) - 2025 Q1 - Quarterly Report

Part I - Financial Information Item 1 – Condensed Consolidated Financial Statements (Unaudited) The company achieved a net income of $360,000 in Q1 2025, a significant turnaround from a $1.5 million loss in Q1 2024, driven by a 69% revenue increase Condensed Consolidated Balance Sheets Total assets slightly decreased to $31.1 million while liabilities decreased more substantially, increasing stockholders' equity to $26.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,219 | $12,598 | | Contract assets | $5,180 | $2,226 | | Total current assets | $19,469 | $19,986 | | Total assets | $31,080 | $31,686 | | Liabilities & Equity | | | | Contract liabilities | $1,832 | $3,135 | | Total current liabilities | $4,929 | $6,137 | | Total liabilities | $5,088 | $6,318 | | Total stockholders' equity | $25,992 | $25,368 | Condensed Consolidated Statements of Operations The company posted a net income of $360,000 in Q1 2025, reversing a $1.5 million loss from Q1 2024, driven by a 69% revenue increase Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $8,316 | $4,922 | | Gross Profit | $2,695 | $797 | | Operating Income (Loss) | $269 | $(1,623) | | Net Income (Loss) | $360 | $(1,472) | | Diluted EPS | $0.05 | $(0.22) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $26.0 million at March 31, 2025, primarily due to net income and stock-based compensation Changes in Stockholders' Equity (in thousands) | Description | Q1 2025 | | :--- | :--- | | Balance at January 1, 2025 | $25,368 | | Net income | $360 | | Stock-based compensation | $264 | | Balance at March 31, 2025 | $25,992 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $2.3 million for Q1 2025, resulting in a quarter-end cash balance of $10.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,262) | $(2,043) | | Net cash used in investing activities | $(96) | $(70) | | Net cash used in financing activities | $(21) | $(19) | | Net decrease in cash | $(2,379) | $(2,132) | | Cash at end of period | $10,219 | $11,893 | Notes to Condensed Consolidated Financial Statements The notes detail revenue recognition policies, significant customer concentration, segment performance, and risks from tariffs and geopolitical conflicts - The company recognizes most of its revenue from custom system sales over time, using a cost-based input method that requires significant estimation of total project costs[23][24] - In Q1 2025, two customers accounted for 41.1% and 14.0% of total revenues, indicating significant customer concentration[41] - The company has three reportable segments: CVD Equipment, SDC, and MesoScribe, with the CVD Equipment segment generating the majority of revenue ($6.3M) and segment net income ($0.5M) in Q1 2025[55][59][60] - The company identifies risks from U.S. tariffs and geopolitical conflicts which could impact costs, gross margins, and the ability to procure raw materials[62][64] Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | | :--- | :--- | :--- | | CVD Equipment | $6,314 | $2,946 | | SDC | $2,142 | $1,932 | | MesoScribe | $22 | $59 | Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong revenue growth and margin improvement in Q1 2025, alongside lower bookings and a decreased order backlog - The company's core strategy is to focus on growth in aerospace, microelectronics, and industrial applications[71] - The order backlog decreased from $19.4 million at Dec 31, 2024, to $13.8 million at March 31, 2025, due to lower orders in the CVD Equipment segment[72][86] Q1 2025 Key Business Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $8.3M | $4.9M | | Gross Margin | 32.4% | 16.2% | | Bookings | $2.8M | $13.6M | | Backlog (at quarter end) | $13.8M | N/A | Results of Operations Revenue grew 69.0% to $8.3 million with gross margin expanding to 32.4%, leading to a significant turnaround in operating income - The CVD Equipment segment's revenue increased by $3.4 million (114.1%), driven by aerospace and industrial contracts, with one industrial customer representing 41.1% of total revenue[83][84] - The SDC segment's external revenue increased by a modest 3.5%, as customer demand remained consistent with the prior year[85] - The significant increase in gross profit was attributed to higher overall revenues, improved absorption of overhead, and better margins on contracts in progress[87] Comparison of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $8,316 | $4,922 | 69.0% | | Gross Profit | $2,695 | $797 | 238.1% | | Operating Income (Loss) | $269 | $(1,623) | N/A | | Net Income (Loss) | $360 | $(1,472) | N/A | Liquidity and Capital Resources Working capital increased to $14.5 million, and management believes its $10.2 million cash balance is sufficient for the next twelve months - Net cash used in operating activities for Q1 2025 was $2.3 million, primarily due to a $3.0 million increase in contract assets and a $1.3 million decrease in contract liabilities[95] - Management expresses confidence that existing cash and projected cash flow from operations will be sufficient to meet requirements for the next twelve months[98] Liquidity Position (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $10.2 | $12.6 | | Working Capital | $14.5 | $13.8 | Critical Accounting Estimates The company identifies revenue recognition and long-lived asset reviews as its critical accounting estimates due to significant judgment required - Revenue recognition is a critical estimate, as it relies on a cost-based input method that requires significant judgment in forecasting total project costs for long-term contracts[102][104] - The company acknowledges that inaccurate estimates of revenues, expenses, and progress toward completion on long-term contracts could materially affect results of operations and financial condition[105] Item 3 – Quantitative and Qualitative Disclosures About Market Risk The company states that this item is not applicable - No quantitative and qualitative disclosures about market risk were provided, as the item was marked 'Not applicable'[107] Item 4 – Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[110] - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[111] Part II - Other Information Item 1 – Legal Proceedings The company reported no legal proceedings during the period - The company reports that there are no legal proceedings[114] Item 1A - Risk Factors No material changes were reported to the risk factors disclosed in the company's latest Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[115] Other Items (2, 3, 4, 5) The company reported no unregistered equity sales, defaults on senior securities, or other material information for the period - Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), and Item 5 (Other Information) were all reported as 'None'[116][117] - Item 4 (Mine Safety Disclosures) was reported as 'Not applicable'[116] Item 6 – Exhibits The filing includes required CEO and CFO certifications and Inline XBRL data files - Key exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL files (101 series)[119]