q2 2016 corporate overview - cvd equipment …...projections to 2021. j bone joint surg am. 2014,...

enabling tomorrow’s technologies™enabling tomorrow’s technologies™June 2016 | © 2016 CVD Equipment Corporation | All rights reserved

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Q2 2016 Corporate OverviewNASDAQ: CVV

enabling tomorrow’s technologies™enabling tomorrow’s technologies™enabling tomorrow’s technologies™June 2016 | © 2016 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, NY134,500 ft2 facility

Application Lab – Central Islip, NY6,000 ft2 facility inside headquarters

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

Facilities156,500 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 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


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June 2016 | © 2016 CVD Equipment Corporation | All rights reserved

AEROSPACE


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Leading Supplier of Next Generation Technology for the Aerospace IndustryReceived a $30 million order this quarter from a

major aviation component supplier to build fiber coating systems for their new high volume facility.

An initial CVD system was previously delivered to this customer in late 2015 and has since undergone testing and successful production at the customer’s facility.

Being selected to provide fiber coating equipment for this customer’s new high volume facility is a testament to our differentiated technology, and confirms CVD’s leading position as a key supplier of next generation technology for the aerospace industry.


June 2016 | © 2016 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

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45,000

50,000

2014 2034

Units

Retained Replacement Growth

Current Fleet

0%

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60%

80%

100%

120%

1994 2014 2034

Share of Fleets

Small Medium Large


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MEDICAL



®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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RESEARCH & DEVELOPMENT



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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

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# of publications


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2D Materials to the Next LevelTransition Metal Dichalcogenides

Early 2016 we entered into the next phase in the industrial partnership with Penn State University to advance 2D crystal device development

The National Science Foundation’s Materials Innovation Platform (MIP) recently announced that it has awarded Penn State University (PSU) $17.8M payable over five years

CVD will contribute through supply and development of equipment required for synthesizing the 2D materials at wafer scale

This will help keep CVD Equipment Corporation at the forefront of this emerging market

The promise of emerging 2D materials, including graphene, boron nitride, and transition metal dichalcogenides, for revolutionizing the semiconductor and electronic device industries is reinforced by this platform award from the National Science Foundation

“We are pleased to continue to benefit from the industrial perspective and specialized equipment manufacturing expertise that CVD Equipment Corporation brings aspart of our ongoing collaboration.”

Joan Redwing Professor of Materials Science and Engineering, Chemical Engineering and Electrical Engineering


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2D MaterialsTransition Metal Dichalcogenides

We offer systems configured for 2D material synthesis through our FirstNano® product line

SEM of TMD crystals producedon FirstNano® EasyTube® system


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CMOS, PV, MEMS, and NEMS Applications Enabled by CVD Technology

MULTI-TUBE HORIZONTAL FURNACE SYSTEMSEasyTube® 6000 Series

The EasyTube® 6000 series multi-tube horizontal furnace systems are automatically controlled research units for batch processing of up to 100 wafers per run per tube, with up to four separately configured process tubes.

PROCESSES FEATURES

AnnealingOxidationLPCVDDopant Diffusion

Mounting ChoicesAtmospheric or Low PressureCantilevered Loading SystemCascade Temperature ControlInnovative Modular Platform



®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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FINANCIAL INFORMATIONThrough Q2 2016

$


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CVD Equipment Corporation and SubsidiariesComparison of Consolidated Statements of Operations

(in thousands)

Three Months Ended June 30 Six Months Ended June 30

2016 2015 2016 2015

Revenue $3,744 10,434 $8,747 20,127

Gross profit 494 4,157 2,027 7,917

Operating expenses 1,475 2,640 3,540 5,193

Operating (loss)/income (980) 1,517 (1,513) 2,724

Net (loss)/income (496) 1,335 (833) 2,003

Diluted earnings per share ($0.08) $0.21 ($0.13) $0.32


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CVD Equipment Corporation and SubsidiariesCondensed Consolidated Balance Sheets

(in thousands)

June 30, 2016 December 31, 2015

Assets

Current assets:

Cash and cash equivalents $14,037 $13,073

Accounts Receivable, net 7,771 3,091

Costs and estimated earnings in excess of

billings on contracts in progress 2,860 4,635

Inventories 3,085 2,987

Restricted cash -- 200

Deferred Taxes 822 398

Other current assets 28 167

Total current assets 28,603 24,551

Property, plant and equipment, net 14,455 14,828

Deferred taxes 1,816 1,607

Other assets 75 86

Intangible assets 51 60

Total assets $45,000 $41,132

June 30, 2016 December 31, 2015

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $348 $308

Accrued expenses and other current liabilities 2,747 3,446

Current portion of long-term debt 370 580

Billings in excess of costs and estimated

earnings on contracts in progress 5,193 --

Deferred revenue 27 308

Total current liabilities 8,685 4,642

Long-term debt 3,115 3,265

Total liabilities 11,800 7,907

Total stockholders' equity 33,200 33,225

Total liabilities and stockholders' equity $45,000 $41,132



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Revenue USD Mil Gross Margin %

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


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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

q2 2016 corporate overview - cvd equipment …...projections to 2021. j bone joint surg am. 2014,...

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