CVD Equipment (NASDAQ:CVV) detailed a cost-reduction and portfolio-streamlining effort alongside weaker fourth-quarter results, highlighting a pending divestiture of its SDC business and a transformation initiative intended to make the remaining operations more scalable and less fixed-cost intensive.
Management outlines transformation plan and SDC divestiture
President and CEO Emmanuel Lakios said the company initiated a “transformation strategy during the fourth quarter designed to significantly reduce fixed operating costs, create a more agile organization, and better position the company to maximize shareholder value,” citing continued volatility in order rates and a decline in bookings within the CVD Equipment division.
In addition, Lakios said the company revised its sales approach by leveraging distributors and external representatives to complement its internal sales organization and has been exploring strategic alternatives for certain businesses and product lines, including potential asset sales or divestitures.
As part of that strategic review, Lakios pointed to a definitive agreement announced March 23, 2026, under which the company’s SDC business will be sold to Atlas Copco Group. Lakios said the purchase price is approximately $16.9 million in cash, subject to certain purchase price adjustments, and the transaction is expected to close during the second quarter of 2026, subject to customary closing conditions.
According to Lakios, the sale is intended to sharpen the company’s focus on its core CVD Equipment business in Central Islip, New York, while strengthening the balance sheet and adding financial flexibility. He said the company expects net cash proceeds after transaction expenses and taxes of approximately $15 million, with $900,000 held in escrow for post-closing adjustments and indemnification obligations. He added that CVD Equipment will retain ownership of its Saugerties, New York facility, which will be leased to Atlas Copco Group for an initial two-year term following closing.
Fourth-quarter revenue falls; bookings and backlog decline
Lakios reported fourth-quarter 2025 revenue of $5.0 million, down 33% from the prior-year period and down 33% sequentially from the third quarter.
Orders in the fourth quarter totaled $3.5 million, which Lakios said was driven primarily by demand in the SDC segment for gas delivery equipment and the receipt of two orders from Stony Brook University for two PVT150 units. For the full year, orders totaled $13.0 million versus $28.0 million in 2024, which Lakios attributed primarily to demand in the SDC business for gas delivery equipment and orders for spare parts and service for the CVD Equipment division.
Backlog at December 31, 2025 was $6.6 million, compared with $8.0 million at September 30, 2025 and $19.4 million at December 31, 2024.
Lakios said bookings continued to be pressured by several factors, including:
- Softer demand for products in the CVD Equipment division
- Tariff-related uncertainties
- Reduced U.S. government spending for universities
- Slower adoption of the company’s solutions in certain end markets
Even with those headwinds, Lakios said the company remained focused on targeted markets including aerospace, defense, and industrial applications, noting areas such as silicon carbide on graphite and silicon carbide used in high-power electronics and other emerging applications.
Profitability metrics and customer concentration
Executive Vice President and CFO Richard Catalano said fourth-quarter revenue of $5.0 million compared with $7.4 million in the fourth quarter of 2024, with the year-over-year decline “primarily driven by lower CVD systems revenue.” He added that revenue in the CVD equipment segment was concentrated among two key customers, which together represented approximately 53% of total fourth-quarter revenue.
Catalano said the SDC segment reported fourth-quarter revenue of $2.2 million, compared with $1.9 million in the prior-year quarter and $1.7 million in the third quarter of 2025.
Consolidated gross profit for the quarter was $1.1 million, for a gross margin of 22.2%, compared with gross profit of $2.0 million and a gross margin of 26.4% in the prior-year quarter. Catalano attributed the decline primarily to lower CVD revenue that resulted in higher unabsorbed overhead and a less favorable contract mix.
The company posted an operating loss of $1.3 million in the fourth quarter of 2025, versus operating income of $34,000 in the fourth quarter of 2024. Catalano said fourth-quarter 2025 results included a non-cash impairment charge of $163,000 related to certain equipment and capitalized software tied to the transition to outsourcing fabrication of certain components in the CVD business.
After interest income, Catalano reported a net loss of $1.3 million, or $0.18 per diluted share, compared with net income of $132,000, or $0.02 per diluted share, in the prior-year quarter.
Full-year results and liquidity update
For fiscal 2025, Catalano reported revenue of $25.8 million, compared with $26.9 million in fiscal 2024. He said the year-over-year decline was primarily due to lower SDC revenue and lower MesoScribe revenue as the company ceased that business, noting that MesoScribe ceased operations in 2024.
Catalano said that for the full year, revenue in the CVD Equipment segment was again concentrated among two key customers, which together represented 41% of total revenue. The SDC segment reported full-year revenue of $7.6 million, compared with $7.8 million in fiscal 2024.
Consolidated gross profit for fiscal 2025 was $7.3 million, or 28.3% of revenue, compared to $6.1 million, or 22.5% of revenue, in fiscal 2024. Catalano said the increase in gross profit was primarily due to improved gross margins in the CVD Equipment segment, mainly because the prior year included a $1.6 million charge to write down certain inventory to net realizable value, with no similar charge incurred in fiscal 2025. He added that the improvement was partially offset by lower gross profit in the SDC and MesoScribe segments due principally to lower revenues.
Operating loss for fiscal 2025 was $1.9 million, compared to an operating loss of $2.4 million in fiscal 2024. After interest income, net loss for the year was $1.6 million, or $0.23 per diluted share, compared to a net loss of $1.9 million, or $0.28 per diluted share, in fiscal 2024.
At December 31, 2025, Catalano said cash and cash equivalents were $8.7 million, compared to $12.6 million at December 31, 2024. Net cash used in operating activities during fiscal 2025 was $3.7 million, which he said was largely driven by working capital changes and contract timing related to milestone billings.
Working capital improved to $14.1 million at year-end 2025, compared to $13.8 million at the end of 2024, which Catalano said was due in part to the classification of approximately $0.5 million of fixed assets held for sale that were sold in early 2026.
Looking ahead, Catalano said a return to consistent profitability “will depend on improved equipment order flow, disciplined cost management, successful execution of our transformation plan, and continued control of capital expenditures.” He added that while quarterly results may continue to fluctuate based on order timing, management believes the current cash position and projected cash flows will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
Upon closing the SDC sale, Catalano said the company expects net cash proceeds excluding the $900,000 escrow amount of approximately $14 million, and it currently intends to initially invest those proceeds in U.S. Treasury securities.
Q&A: capital deployment, dividends, and defense exposure
During the question-and-answer portion, Brett Reiss of Janney Montgomery Scott asked about potential acquisitions and the engineering skill sets that might complement acquisition targets. Lakios said the talent pool and capabilities are “consistent with what the talent pool was… a year ago,” adding that the company retains “a full complement of resources in the engineering and technology group” supporting the main product line from Central Islip.
On capital deployment, Lakios said the board is evaluating opportunities and strategic alternatives to increase shareholder value but added, “at this point in time, we do not have something that is material or a path yet.” Asked about the pipeline and timing of potential opportunities, Lakios said the board has been looking at strategic alternatives for several quarters, but he did not provide additional specifics, saying he did not have anything to share “right now.”
Private investor Frank Giordano asked whether the company had considered paying a special dividend. Lakios said he did not believe a special dividend had been paid during his nine years with the company and that such an action is “not actively on the table” at this time.
Giordano also asked about exposure to military-related demand. Lakios said the company serves aerospace and defense and called it one of its key markets, stating that “about 78% of our revenue over the last several years of our orders has come from military and defense.” He cited applications including gas turbine engines and ceramic matrix composites and referenced an order shipped in 2025 for a research system used for ceramic materials for hypersonic applications. Lakios said he expects aerospace and defense-driven demand to continue “for the foreseeable future.”
In closing remarks, Lakios said the company’s priorities are “serving our customers, supporting our employees, and creating value for our shareholders, and returning the business to sustained profitability.”
About CVD Equipment (NASDAQ:CVV)
CVD Equipment Corporation (NASDAQ: CVV) designs, manufactures and markets custom vacuum deposition systems used to create thin-film coatings and advanced materials for semiconductor, optoelectronic and related industries. Established in 1992 and headquartered in the United States, the company leverages proprietary chemical vapor deposition (CVD), plasma-enhanced CVD, metal-organic CVD (MOCVD), atomic layer deposition (ALD) and physical vapor deposition (PVD) technologies to support both research and production applications.
The company’s product portfolio includes single- and multi-chamber reactors for the deposition of silicon, III-V compounds, metal oxides and other specialty materials, along with fluid-bed reactors for nanoparticle synthesis.
