CVD Equipment (CVV) Q2 Earnings Increase Y/Y, Gross Margin Down

Core Insights - CVD Equipment Corporation reported a narrower loss per share of 11 cents in Q2 2024 compared to a loss of 16 cents in the same quarter last year [1] Revenue Details - The company registered revenues of $6.3 million in Q2 2024, reflecting a year-over-year increase of 25.2% [2] - Revenue growth was primarily driven by higher revenues from the CVD Equipment segment and an increase in the SDC segment, although this was partially offset by a decline in the CVD Materials segment [2] - Revenues from one aerospace customer accounted for 35.2% of total revenues and 54.3% of CVD Equipment segment revenues for the three months ended June 30, 2024 [3] - CVD Equipment's backlog increased to $24 million as of June 30, 2024, up from $18.4 million at the end of December 31, 2023 [3] Segment Performance - CVD Equipment segment revenues were $4.1 million, up 31% year-over-year, mainly due to increased revenues from aerospace contracts [4] - SDC segment revenues reached $2.3 million, a year-over-year increase of 28.9%, driven by higher demand for gas and chemical delivery system products [5] - CVD Materials segment revenues were only $0.1 million, down 83.9% year-over-year, primarily due to the disposition of Tantaline and the wind-down of MesoScribe's operations [5] Gross Margin and Operating Expenses - Gross profit for CVD Equipment increased by 15.9% to $1.6 million, but gross margin contracted by 202 basis points to 25.4% [6] - Total adjusted operating expenses rose by 6.8% year-over-year to $2.5 million, with selling expenses decreasing slightly, while R&D and general administrative expenses increased [7] Profitability Metrics - Adjusted operating loss was $0.89 million, an improvement from the $0.96 million loss in the same period last year [8] - The net loss for Q2 2024 was $0.8 million, compared to a net loss of $1.1 million in the year-ago quarter [8] Liquidity and Debt Management - The company ended Q2 2024 with cash and cash equivalents of $10 million, down from $11.9 million at the end of Q1 2024 [9] - Total debt decreased to $0.31 million from $0.33 million at the end of Q1 2024 [9] - Cumulative net cash used in operating activities was $2 million, an improvement from $3.3 million a year ago [9] Overall Assessment - CVD Equipment's Q2 2024 results showed encouraging top-line and bottom-line performance, with robust revenues and a higher backlog [10] - The recent shipment of a PVT 200 system is seen as a positive indicator for the company's future prospects [10] - However, the decline in revenues from the CVD Materials segment and the contraction in gross margins are noted as areas of concern [11]