Cvd Equipment Corporation (NASDAQ:CVV)

GBR Cvd Equipment Corporation (NASDAQ:CVV) ($11.79; $75.2 m market cap), a leading provider of chemical vapor deposition systems, announced Q3 2017 results:

• Sales of $10.8 million vs $4.8 million in the prior year

• Non-GAAP EPS of $0.25 vs a loss of $0.15 in the prior year

• Backlog of $20.3 million, down 36% from last year

Quotes from management:

“Building on the last two quarters, CVD delivered an exceptional quarter with record revenue and earnings,” said Leonard Rosenbaum, President and Chief Executive Officer. “Our focus on successfully meeting customer demand while maintaining operational excellence is fueling our growth and opening up new opportunities in adjacent markets. The recent addition of MesoScribe’s Direct Write™ plasma spray technology to our coating portfolio, together with the agreement to purchase an additional 180,000 sq. ft. manufacturing facility to accommodate future materials growth, is laying the foundation for CVD’s further expansion.”

Fourth Quarter 2011 Results

• Revenue for the three months ended December 31, 2011 was approximately $8,436,000 an increase of $3,313,000 or 65% over the $5,123,000 reached during the three months ended December 31, 2010.
• For the three months ended December 31, 2011, we achieved net earnings of approximately $1,075,000 or $0.18 per share basic and diluted compared to approximately $375,000 or $0.08 per share basic and diluted for the three months ended December 31, 2010.

During 2011, with our strengthened balance sheet, we were able to acquire a larger bank line of credit at a reduced interest rate; pay off various equipment loans and replace certain existing mortgages with term loans at a significantly lower interest rate; and purchase a new facility, that is almost twice the size of our current two facilities in Ronkonkoma, with a mortgage at an attractive interest rate.

Our backlog on December 31, 2011 was $16,198,000 an increase of $6,264,000 or 63% compared to $9,944,000 as of December 31, 2010. Timing for completion of order backlog varies depending on the product mix and can be as long as two years. Order backlog usually is a reasonable management tool to indicate future revenues and profits, however it does not provide an assurance of future achievement of revenues or profits as order cancellations or delays are possible. Backlog from quarter to quarter can vary based on the timing of order placements and shipments.

The increase in revenue and income is attributed to the conversion of backlog that started to increase in the second half of 2010. We continue to experience demand for our products that are needed in energy generation, energy storage, aerospace, medical, LEDs, graphene, nanowires and nanotubes. This creates a growing need for custom R&D and Production solutions using 1D, 2D and 3D nanotechnology and thin film coatings on glass, wafers and other substrates or materials.

Leonard Rosenbaum, President and Chief Executive Officer stated: “In 2011 we had major growth in both order levels and revenues. This growth stretched our Ronkonkoma manufacturing facility to its limit and restricted our ability to hire additional personnel to further increase our manufacturing capability. This constraint should be eliminated starting in Q3, 2012 since we recently closed on the purchase of a facility that is almost twice the size of the two facilities in Ronkonkoma that we currently occupy and will be selling. The monthly carrying charges for this significantly larger facility are less than the costs attributable to the two facilities we will be selling.

We will begin tracking the CVV ($5.50) story once again. The stock is clearly overvalued based on trailing financials, but the following news may indicate that the company is entering a new growth phase:

CVD Equipment Corporation (Nasdaq: CVV) announced that it received approximately

• $7.7 million in new orders during the three (3) months ending September 30, 2010
• $17 million in new orders for the nine (9) months ending September 30, 2010.

This surpasses the $2.3 and $7.8 million of new orders received during the three (3) and nine (9) months ending September 30, 2009 by 234% and 119% respectively. The orders received during this period also exceeded all January through September periods in the history of CVD.

Orders received by the CVD/FN division for the three (3) months ending September 30, 2010 increased by 374% and for the nine (9) months ending September 30, 2010 increased by 146% when compared to 2009 order levels. The CVD/FN division benefited from the increased interest in energy generation, energy savings, nanotechnology, semiconductor and MEMS fields as well as the increase in the availability of funds to purchase capital equipment. We anticipate this trend will continue to increase in future quarters.

The large demand for energy savings, energy generation materials and products needed to address rising energy and environmental costs creates a growing demand for manufacturing solutions using nanotechnology and thin film coatings on glass, wafers and other substrates. Using our Application Laboratory, we continue to perfect and expand the multiple areas where our process solutions can be applied. The solar, energy and nanotechnology markets offers us significant growth opportunities for technologies that deliver favorable cost benefits. These fields will benefit further from a renewed drive for energy savings and ecologically safe energy generation.

GeoTeam® Note: This company has a history of inconsistent operating results.

On April 2, 2009 The GeoTeam® announced it was taking a closer look at Cvd Equipment Corp.  We also commented that despite very positive commentary in the company's year end press release we were concerned about issues of financial consistency.  The Company's 2009 weak first quarter press release, released this morning, highlights this issue.  The GeoTeam®  will continue to monitor the Cvd Equipment  story, but will likely not establish a share position in until financial consistency can be established.  More details will be provided if warranted. 

The GeoTeam® is taking a closer look at CVV Due to:

•  Bullish commentary in their 2008 year end press release 
•  A 200% increase in the 2008 year end backlog.

At first glance the GeoTeam® did not pay much attention to CVV, as their year end EPS fell significantly.  However, a closer look reveals that year end sales increased 34%, while after four straight quarters of negative comparisons, fourth quarter EPS rose 148%.  These facts coupled with a strong backlog will prompt the GeoTeam® to delve into this story a little more.  Of prime concerns are the ability for CVV to deliver consistent EPS growth and the following comment from the fourth quarter release:

"Our backlog at any specific point in time however, is not necessarily indicative of actual revenues or earnings for any succeeding period due to possible customer changes in delivery schedules, cancellation of orders, and because backlog does not provide any assurance of a profit from those orders."

More details will be provided if warranted.