Shares of CVD Equipment Corporation (CVV Quick QuoteCVV - Free Report) have lost 6.7% since the company reported its earnings for the quarter ended Sept. 30, 2025, lagging the S&P 500 Index’s 1.9% gain over the same period. Over the past month, the stock lost 20.1% against the S&P 500’s 3.5% rise.

CVV’s Earnings Snapshot

In the third quarter of 2025, CVD Equipment generated revenues of $7.4 million, down 9.6% from $8.2 million a year earlier. Yet gross profit improved 37.2% to $2.4 million from $1.8 million, lifting gross margin to 32.7% from 21.5%, as a more profitable contract mix offset the revenue decline. Quarterly net income jumped 89.2% to $0.4 million, or $0.06 per diluted share, compared with $0.2 million, or $0.03 per share, in the prior-year period.

By segment, the CVD Equipment division revenues were essentially flat year over year at $5.7 million, but its contribution rose thanks to better margins and the recognition of $1 million of revenues tied to a contract modification that changed the timing of when revenue could be booked. The SDC ultra-high-purity gas and chemical delivery business saw revenue slip 7.3% to $1.9 million from $2 million on fewer contracts in progress, and its profitability was pressured by a one-time certification charge of about $0.1 million. MesoScribe, which has ceased operations, contributed only a negligible amount versus $0.7 million a year ago.

CVD Equipment’s Other Key Business Metrics

Order intake was notably weaker. Third-quarter 2025 bookings totaled about $2.2 million compared with $4.1 million recorded in the year-ago period, reflecting softer demand and timing issues in CVD Equipment’s growth markets.

Year-to-date bookings through Sept. 30, 2025, fell to $9.5 million from $21 million a year earlier. As backlog converted to shipments, the order book declined to $8 million at quarter-end from $13.2 million as of June 30, 2025, consisting of $6.8 million related to system contracts, with the balance in non-system orders.

On the balance-sheet front, CVV ended the quarter with $8.4 million in cash and cash equivalents, down from $12.6 million at year-end 2024, primarily due to working-capital swings, including higher contract assets and lower contract liabilities as projects progressed. Working capital improved to $14.6 million as of Sept. 30, 2025, from $13.8 million at Dec. 31, 2024, and management reiterated that existing cash plus expected operating cash flows should be sufficient to fund the business for at least the next 12 months.

CVV’s Management Commentary and Strategic Actions

Management framed the quarter in the context of a challenging demand environment. CEO Emmanuel Lakios highlighted external headwinds, including uncertainty around proposed tariffs, reduced U.S. government funding for universities and the effects of the U.S. government shutdown on research-related orders, as well as slower-than-hoped product adoption in some target markets.

In response, the board approved a comprehensive transformation strategy for the CVD Equipment division. The company plans to shift from a vertically integrated fabrication model toward greater outsourcing of certain components, reduce headcount in the CVD Equipment business and supplement its internal sales force with distributors and external representatives. These measures are expected to lower annual operating costs by about $2 million beginning in 2026. The SDC division will not be affected by these workforce actions.

Management emphasized that CVD Equipment will focus on its core strengths — engineering design, assembly, test, installation and customer service — while exploring strategic alternatives for non-core businesses or product lines, including potential asset sales or divestitures. The company also acknowledged that the transformation could lead to non-cash impairment charges if certain long-lived assets are sold below book value.

Factors Influencing CVD Equipment’s Performance

The better gross margin stemmed largely from the mix. Within the CVD Equipment segment, more profitable system contracts and non-system sales lifted margins, and the contract modification mentioned earlier concentrated roughly $0.6 million of incremental gross profit in the quarter. Conversely, the SDC segment’s one-time certification expense diluted its otherwise solid contribution.

Externally, macroeconomic and policy-related factors weighed on near-term bookings. Management cited uncertainty around tariffs, geopolitical risks, and the government shutdown as factors that may delay or reduce orders from both industrial and research customers. Despite these pressures, CVV continues to target structurally attractive niches such as aerospace and defense ceramic matrix composite materials, high-power silicon carbide electronics, EV battery materials and industrial silicon carbide (SiC) coatings.

CVV’s Guidance and Outlook

CVD Equipment did not issue formal quantitative guidance for the remainder of 2025 or 2026. Instead, management tied the path back to consistent profitability to several qualitative drivers — securing new equipment orders, executing the cost-reduction and outsourcing plan and maintaining discipline over capital spending. They reiterated confidence that the company’s cash position and projected operating cash flows should cover working-capital and capex needs over at least the coming year, but acknowledged that order timing could continue to cause volatility in quarterly results.

CVV anticipates approximately $0.1 million in severance and related charges as the workforce reduction is implemented and has warned that non-cash impairment charges could occur if long-lived assets are ultimately sold below book value.

CVD Equipment’s Other Developments

Beyond the restructuring, CVD Equipment highlighted a notable win in the SiC market — in October 2025, it received an order from Stony Brook University for two PVT150 physical vapor transport systems for the new onsemi Silicon Carbide Crystal Growth Center. The systems will support research into SiC crystal growth and other wide-band-gap materials, reinforcing CVV’s positioning in high-power electronics and AI-related applications. The company is also continuing development of its 200-mm PVT200 system, which is being evaluated for SiC and potentially aluminum nitride crystal growth.

No acquisitions or divestitures were completed during the quarter, though management’s exploration of strategic alternatives could lead to portfolio changes over time.