q3 2015 corporate overview - cvd equipment corporation · nanomaterials, superconducting materials,...

enabling tomorrow’s technologies™enabling tomorrow’s technologies™November 2015 | © 2015 CVD Equipment Corporation | All rights reserved

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Q3 2015 Corporate OverviewNASDAQ: CVV

enabling tomorrow’s technologies™enabling tomorrow’s technologies™enabling tomorrow’s technologies™November 2015 | © 2015 CVD Equipment Corporation | All rights reserved

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enabling tomorrow’s technologies™enabling tomorrow’s technologies™enabling tomorrow’s technologies™

Safe Harbor Statement

Certain statements in the following presentation relate to future results that are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to those noted in our forms 10-K, 10-Q, and other filings with the SEC.

This presentation includes historical and forward-looking proforma information. The Company assumes no responsibility to update the information contained in this presentation.


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CVD Equipment Corporation at a Glance

Founded in 1982

Provider of industry leading chemical vapor deposition equipment

Headquarters in Long Island, New York

Additional facility in Saugerties, New York

Worldwide network of sales representatives

~200 employees


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Facilities

Headquarters – Central Islip, NY130,000 ft2 facility

Application Lab – Central Islip, NY6,000 ft2 facility

SDC Division – Saugerties, NY22,000 ft2 facility with 4,000 ft2 cleanrooms


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Company HistoryLeveraging know-how and expanding customer base to accelerate growth

1982

1999

2001

2002

2005

2006

2013

ResearchInternational

Conceptronic

Facilities152,000 ft2

Company owned

ApplicationLab opens


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Our Company and Product Lines

R&D products for processing graphene, carbon

nanotubes, semiconducting nanowires, 2D materials,

and thin films for research laboratories

Design, develop and manufacture process

equipment solutions for pilot and production

applications

Ultra high purity (UHP) gas and chemical delivery systems for high-tech fabrication processes

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Our Core CompetenciesDesign, develop and manufacture: custom and standard Chemical Vapor Deposition systems

Recognized leader: a key equipment provider to industry; blue-chip companies; innovative start-ups; leading university, industrial and government research laboratories for over 33 years

Proprietary edge: a significant library of homegrown solutions and know-how for intricate processes across a broad range of applications in aerospace, medical, semiconductor, solar, glass coating, nanomaterials, superconducting materials, etc

Vertically integrated: internal design and manufacturing capability enables rapid system development. We procure raw materials & components and deliver finished systems

Turnkey systems: includes instrumentation, process control software, gas delivery, process chambers, vacuum systems, and exhaust abatement equipment

Application laboratory: product and material development


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Our Customers are InnovatorsWe create research and development systems for university, government and industrial research laboratories


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Our Customers are Market LeadersWe deliver innovation and expertise to major technology corporations and Fortune 500 companies


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What is CVD? Chemical Vapor Deposition

Chemical Vapor Deposition is the controlled decomposition of gases used to deposit a material onto a surface

Requires multidisciplinary engineering: process chamber design, temperature control, gas and vapor flow, pressure control, and automation to achieve the desired deposit

The Chemical Vapor Deposition process has proven itself to be robust, economical and scalable over many years in semiconductor manufacturing. For 33 years we have been successfully applying this technology to other industries

= Chemistry + Temperature + Pressure Control


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We Master the Technology Life CycleWe help guide our customers from research to profitability


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We Adapt to Global Market Trends

AerospaceAging fleet and increased demand for flights will require >30,000 new commercial aircraft over the next 20 years

MedicalUS market for knee replacements expected

to reach 3.48M units per year by 2030

Research Multi-million dollar government grants in 2015 for graphene, 2D materials and other nano-material development


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We Align Business Operations to Major Market Opportunities

Aerospace Initial production phase, anticipated to be multi-year, multi-unit program

Medical Multi-unit production phase

Research Investment Industrial partnership in NSF funded consortium


November 2015 | © 2015 CVD Equipment Corporation All rights reserved

™Aerospace ApplicationsTaking Off* Aging fleet and increased

demand will drive the need for >30,000 new commercial aircraft over the next 20 years

Fuel costs account for over 30% of the operating cost for an airline

Weight reduction and increased engine efficiency are the key drivers for deployment of new materials

Latest generation of aircraft contain as much as 53% composite materials by weight

Many new materials require specialty coatings made by Chemical Vapor Deposition

CVD Equipment Corporation delivered several multi-million production system in FY2014 and 2015 driven by the new material requirements in the Aerospace Industry

*Boeing, Current Market Outlook 2015-2034. (2015). Retrieved August 12, 2015 from http://www.boeing.com/resources/boeingdotcom/commercial/about-our-market/assets/downloads/Boeing_Current_Market_Outlook_2015.pdf


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Commercial Aircraft Market Outlook*

The estimated world market value increased from $4.8 trillion in 2013 to $5.6 trillion in 2014. Demand for new aircraft and improved fuel economy are key drivers for developing new materials and coatings. A 10-20% increase in fuel efficiency is driving this market.

*Boeing, Current Market Outlook 2015-2034. (2015). Retrieved August 12, 2015 from http://www.boeing.com/resources/boeingdotcom/commercial/about-our-market/assets/downloads/Boeing_Current_Market_Outlook_2015.pdf

Airlines Focusing on efficiency and flexibility Older, less efficient airplanes replaced with more efficient, newer generation airplanes

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

2014 2034

Units

Retained Replacement Growth

Current Fleet

0%

20%

40%

60%

80%

100%

120%

1994 2014 2034

Share of Fleets

Small Medium Large



™Medical Device Manufacturing Market Medical device coatings are

widely used to augment product surface function and to improve performance

Economic downturn in late 2000’s did not slow demand for total joint arthroplasty*

Expansion of U.S. healthcare spending between 2011 and 2021, from $2.7 trillion to $4.8 trillion, is anticipated to fuel the future demand for arthroplasty*

The global medical device coatings market is predicted to rise from US$6.6 billion in 2013 to US$10.9 billion in 2020, with a compound annual growth rate (CAGR) of 7.40%**

*Kurtz S, Ong K, Lau E, et al. Impact of the Economic Downturn on Total Joint Replacement Demand in the United States, Updated Projections to 2021. J Bone Joint Surg Am. 2014, 96A(8), 624.

**Nachiket Ghumare, Medical Device Coatings Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2020, Transparency Market Research


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Medical Device Manufacturing Market Knee & Hip Replacements in the US*Current status 800,000 per year

Future projection 1,500,000 by 2020

Production scale CVD coating equipment

*Kurtz S, Ong K, Lau E, et al. Impact of the Economic Downturn on Total Joint Replacement Demand in the United States, Updated Projections to 2021. J Bone Joint Surg Am. 2014, 96A(8), 624.

Primary Hip Arthroplasty

Primary Knee Arthroplasty

Annual Number of Procedures in the US



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Nanomaterials & Applications Graphene

Microprocessors & Integrated Circuits

Large Flat and Curved Displays

Filtration

Carbon Nanotubes

Batteries

Capacitors

Advanced Composites

Thin Films and Nanowires

Solar

Semiconductors

Batteries

Transition Metal Dichalcogenides

Semiconductors

Optoelectronic Devices

Flexible Electronics

Large thin curved panel

displays

Batteries

Vertically aligned silicon

nanowires

Computer components

Semiconductordevices

Randomly aligned silicon

nanowires


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Research Market*Targeted market segments:• Universities

• Industrial R&D

• Technology Incubators

• Startups and Joint Business Ventures

Commercialization

Exploration

Discovery

InfrastructureCVD IP leveraged to bridge the

gap for commercial scale up

Basic manufacturing

research

Proof of concept

Production in

laboratory

Capacity to produce

prototype

Capacity in

productionenvironment

Demonstration of production

rates

Funding/Investment

High

Low

Government and Universities

IndustriesGAP

Manufacturing-innovation process

*U.S. Government Accountability Office, NANOMANUFACTURING AND U.S. COMPETITIVENESS:Challenges and Opportunities. (May 20, 2014) Retrieved August 12, 2015, from http://www.gao.gov/products/GAO-14-618T


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2D MaterialsTransition Metal Dichalcogenides

New 2D materials show promise for disruptive technologies Early R&D proof of principle phase 2D Transition Metal Dichalcogenides (TMDs), are rapidly

gaining popularity – MoS2, WSe2, etc Applications include:

High speed electronics and optoelectronics Flexible devices Next generation solar cells Touch screen display panels

Chemical vapor deposition is the method of choice for controlled growth of these crystal structures

The increasing number of research publications is a leading indicator of available funds and equipment demand

*Number of academic publications featuring chemical vapor deposition of TMDs.

Currently >10 publications per month

*Data from Web of Science, Thomson Reuters Corporation

0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014

# of publications


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NSF funded industrial partnership with Penn State University for the development and commercialization of TMDs

Helps keep CVD Equip. Corp at the forefront of this emerging market

We will continue to participate in this collaboration through 2016 CVD Equipment Corporation will play a role as an industrial partner by providing new

equipment platforms


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We offer new products for 2D material synthesis through our FirstNanoTM product line

SEM of TMD crystals producedon FirstNano™ TMD system



™IP DevelopmentsOngoing research in CVD’s application laboratory

Proprietary patent pending technologies for:

300 mm size high quality graphene films

3-10X increase in production capacity at a lower cost for high quality graphene on Cu foil

10-100X increase in production capacity at a lower cost for graphene on Cu foil roll

5-10X increase in production capacity for vertically aligned mm long CNTs

5-10X increase in production capacity for SiNWs



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Technology DevelopmentsContinuous improvement through product and live process development

Material handling and automation

Fibers

Porous materials

3D shaped parts

Wafers, foils, tapes, etc.

Advanced control systems for temperature, pressure, and precursor flow

Gas delivery and exhaust abatement solutions for a growing range of industrial processes

Control software and safety systems

Patent pending reactor designs for next generation 1D and 2D nanomaterials, including graphene, carbon nanotubes, silicon nanowires, etc.



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Vertically Integrated Capabilities Vertically integrated design and

manufacturing enables rapid system development

We procure raw materials & components and deliver finished systems

We leverage a network of industry leading suppliers and contractors as required

Provide turnkey systems including instrumentation, process control software, gas handling, and exhaust abatement

33 + years of experience in design, engineering, and manufacturing of chemical vapor deposition equipment

Application laboratory to support process, equipment, and material development

• Installation and performance testing

• After-sales customer support

• Integrated system design, engineering, and manufacturing

• Quartzware design and fabrication

• Fully equipped machine shop


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Three and Nine Months Ended September 30, 2015(in thousands except per share information)

Reconciliation of GAAP to Non-GAPP Financial Data(In thousands, except per share data)

(Unaudited)

Three Months Ended September 30 Nine Months Ended September 30

2015 2014 2015 2014

Revenue, as reported $ 10,646 8,867 $ 30,772 19,360

Gross profit, as reported 4,125 3,309 12,042 7,328

Operating expenses, as reported 3,255 2,097 8,448 6,007

Adjustments

Nonrecurring loss and legal fees on litigation settlement 1,160 1,550

Non-GAAP operating expenses 2,095 2,097 6,898 6,007

Non-GAAP operating income 2,030 1,212 5,144 1,321

Net income as reported 811 858 2,814 792

Adjustments, net of tax

Nonrecurring loss and legal fees on litigation settlement 1,160 1,550

Non-GAAP income, net of tax 1,971 858 4,364 792

Diluted earnings per share, as reported $0.13 $0.14 $0.45 $0.13

Add back:

Per share impact of Non-GAAP adjustment, net of tax 0.19 0.24

Non-GAAP per share earnings 0.32 0.14 0.69 0.13


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CVD Equipment Corporation and SubsidiariesCondensed Consolidated Balance Sheets

(In thousands)(Unaudited)

September 30, 2015 December 31, 2014

Assets

Current assets:

Cash and cash equivalents $13,269 $11,967

Accounts Receivable, net 5,054 6,463

Costs and estimated earnings in excess of

billings on contracts in progress 2,512 2,499

Inventories 3,647 4,842

Restricted cash 200 200

Deferred Taxes 2,099 2,888

Other current assets 104 195

Total current assets 26,885 29,053

Property, plant and equipment, net 14,975 15,415

Deferred taxes 1,360 750

Restricted cash --- 200

Other assets 95 83

Intangible assets 60 56

Total assets $43,375 $45,557

September 30, 2015 December 31, 2014

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $1,838 $1,683

Accrued expenses and other current liabilities 3,883 3,297

Current portion of long-term debt 685 720

Billings in excess of costs and estimated

earnings on contracts in progress 753 1,328

Deferred revenue 235 489

Accrued litigation settlement --- 4,925

Total current liabilities 7,394 12,442

Long-term debt 3,341 3,846

Total liabilities 10,735 16,288

Total stockholders' equity 32,640 29,269

Total liabilities and stockholders' equity $43,375 $45,557



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Financial Trends

Increasing revenue driven by large scale production orders

Discipline on gross margin

Well capitalized / solid balance sheet

Pipeline of opportunities with existing and new customers

Higher HighsHigher Lows

Discipline on Gross Margin

*TTM ending 9/30/2015


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SummaryCVD Equipment Corporation continues to expand capabilities in:

Equipment designProcess developmentMaterials applicationsIP developmentManufacturing

CVD Equipment Corporation continues to support process and material development opportunities to advance the state-of-the-art

CVD Equipment Corporation continues to lead in the development of research, pilot, and production equipment to support the generation of new products

q3 2015 corporate overview - cvd equipment corporation · nanomaterials, superconducting materials,...

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