Greeting and welcome to the CVD Equipment’s Second Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Ms. Rhonda Bennetto [ph]. Thank you. You may begin.

Thank you, Stacy. Good afternoon, everyone and thank you for joining us today for our second quarter 2018 earnings conference call. We will begin with some prepared remarks followed by a question-and-answer session. Presenting on the call today will be Len Rosenbaum, President and CEO; and Glen Charles, CFO. As a reminder, today’s call is being recorded. Additionally, we have posted our earnings release and call replay information to the Investor Relations section of our Website at www.cvdequipment.com. Before I begin, I’d like to remind you that many of the comments made on today’s call are forward-looking statements, including those related to future financial performance, market growth, total available market, demand for our products and general business conditions and outlook. These forward-looking statements are based on certain assumptions, expectations and projections, and are subject to a number of risks and uncertainties described in our press release and in our filings with the SEC including, but not limited to, the risk factors section of our 10-K for the year ended December 31, 2017. Actual results may differ materially from those described during this call. In addition, all forward-looking statements are made as of today and we undertake no obligation to update any forward-looking statements based on new circumstances or revised expectations. Now, I would like to turn the call over to Len. Len?

Good afternoon, everyone, and thank you for joining our second quarter 2018 earnings call. Today I would like to update you on the progress we are making towards achieving our strategic goals to take CVD to the next level. Following that, Glen will walk you through a summary of our financial results, and then we will take questions. During the second quarter, we continued our mission to develop and enable the commercialization of next generation technologies by incorporating our technology into equipment built for customer applications. Our endeavors in LED materials, medical coatings, carbon composites and aerospace are just some of the areas we have been working on. We have continued to make a significant investment in our CVD materials business. While the permitting process is difficult, we are committed to having the facility up and running as quick as possible. Orders for materials increased in the second quarter from existing and new customers. In the past month, we filed three provisional patent application for our Tantaline corrosion resistant coatings for treatment of specialty metals in demanding applications. In the past corrosion resistant coatings on Hastelloy for example had poor adhesion and hence less than optimum corrosion resistant results. Our new proprietary method is shown in testing to have resolved the adhesion problem and has significantly improved corrosion resistance. The improved Tantalum coating we can put on these specialty metals is better for one; biocompatibility and osteo-conductivity in medical applications, and two, in the handling of corrosive, chemicals, oil, gas and pharmaceuticals. This further promotes the reason for our investment in CVD materials to accelerate our growth, meet customer material requirements and broaden our offerings. We also remain committed to R&D to further our growth strategy. We are preparing to file a provisional patent on carbon composites in applications in areas such as aerospace, medical MEMs, and filtration. Investments in our application laboratory and CVD materials will continue to drive us forward regardless of quarterly revenue fluctuations. We believe that expansion and innovation in key markets like aerospace, medical, MEMs and semiconductors is the key to securing our growth over the long term. In summary, as anticipated, our large aviation projects are largely completed. We will continue to invest in expansion and innovation even during pauses in larger orders. This will strengthen and secure our competitive position and open up new opportunities in the markets we serve. We will continue to drive towards increased, yet stable revenue, productivity and profitability over the long-term. In closing, please review a new presentation that is posted on our website to gain further insight into new applications of products we are starting to offer. And with that, I will turn the call over to Glen. Glen?

Thank you, Len. The second quarter was a transitional quarter for CVD. With the completion of a large aviation component project, we accelerated our efforts to bring the new materials facility online. We believe the effort and investments we are making now will establish a solid foundation for the company's long-term growth. Towards the end of the quarter, we began to streamline our operations to more closely reflect current revenue levels. Revenue for the quarter was $6.4 million compared to $10.8 million last year and $9.2 million last quarter. The decrease this quarter was primarily due to the completion of orders from large aviation components supplier. We continue to work with our core customers, attract new customers, and diversify our revenue streams to help smooth out the lumpy nature of these larger orders. The reduction in revenue, coupled with maintaining production and engineering staff levels, and to a lesser extent the cost of some job exceeding prior period estimates resulted in a gross margin for the quarter of 17.3% compared to 40.7% last year and 41.1% last quarter. We expect margins to increase over the coming quarters, as we streamline our operations. Total operating expenses decreased sequentially to $2.5 million from $2.9 million. Both selling and shipping and general administrative expenses decreased as a result of staff reductions in those areas. Second quarter net loss was $1.3 million compared with income of $1.3 million in the same period last year and income of $600,000 last quarter. Loss per share for the quarter was $0.21 compared to earnings of $0.20 last year, and $0.09 last quarter. Working capital for the quarter decreased to $20.9 million. Cash and cash equivalents were $15.4 million compared to $13.1 million at the end of last quarter. We collected a substantial amount of last quarter’s receivables at the beginning of this quarter, and net accounts receivable decreased to $2.7 million from $9 million at the end of last quarter. As in the past, our equipment manufacturing business can be very uneven. Our quotation levels are high and we feel confident future order increases will follow. Management is confident that CVD's current cash position is sufficient to bring the new material segment of our business online, and the expansion of our facilities will allow us to commercialize new technologies that are being developed at CVD. This will widen our product range to meet new application demands and provide opportunities for long-term growth. With that, I’ll turn the call over to the operator for questions.

Thank you. [Operator Instructions] Our first question comes from [Louis Moser with Mayfax Investors] [ph]. Please go ahead.

Hi, I was just wondering you mentioned long term profitability and so forth. Can you give us an idea as to what do you mean by that?

We’ve always operated the company for the long term, not the short term quarter-to-quarter. And if you take a look at our history, we’ve been growing this company for 35 years and we continue – expect to continue growing it in the future in a similar manner. We do have a very severe lumpiness at times with equipment orders. It’s been this way in the past; it’s presently at that position also. We expect that – that will also change and become significant again in the future. The materials business, we expect will help even out some of this lumpiness and it will also give us a better profit margin going forward as we are unique in some of the applications that we are going to be offered.

Okay. Thank you.

Our next question comes from Brett Reiss with Janney Montgomery Scott. Please go ahead.

Good afternoon, Len, hi Glen.

Good afternoon.

Good afternoon, Brett.

The large aerospace customer, have they definitively gone with somebody else?

Not that I know of.

Okay, and do you know from your people on the ground that if they don't go with someone else, are they going to suffer supply chain disruption you know if they don't get the service from someone else, or…

I read recently in some articles about their - published articles about their being behind in deliveries already.

You are assuming it’s just dead in the water, you not getting repeat business from them, or can we be pleasantly surprised in the future.

We have always been pleasantly surprised in the past.

Okay. Now the 6.4 million in sales, was any of that contributed by working down the residual backlog from the aerospace customer?

Yes, it was. Approximately 68% of that 6.4 was residual from the large aerospace customer.

Okay, so without that the old legacy business was only like 2.4 million I guess.

Yes.

Okay, I thought from prior call that, that kind of business was going to be more at a run rate of 5 million, 6 million a quarter and you thought you could grow that 10% of 15% and you know I’m not talking about the materials, you know the new materials business you’re trying to build, just the old legacy business. So this was a really soft quarter and in that regard, and you know why, why?

Well that's an annualized run rate, okay. And as we’ve mentioned and you're all aware of, this is a lumpy business. So where we are at right now and tomorrow we can get an order that can significantly change things. So it’s whenever these orders occur, that they happen, it could happen any time.

Right, right. Now you mentioned that the new facility you are going to have it up it running as soon as possible. Can you be a little bit more definitive on that?

No, we’ve been optimistic that we could've gotten it up in running by now, but it hasn’t happened. The permitting process is atrocious, we’re pressing as hard as we can on it. We have customers that want to see us operating. When it’s going to happen, I’m hoping at this point it will be fourth or first quarter, where we can start operating in there. It’s going to take us another six month to a year to fully functionalize that facility once we get in there.

Because you’re not in there, are we losing a potential business?

Yes

Is it lost forever or just deferred?

It’s primarily deferred because nobody can offer what we’re offering.

Okay.

Or if they are offering, it’s failing their quality control.

Right. I’ve got other questions, but out of respect for other callers, I’m going to step back in queue.

Thank you. Our next question comes from Morton Howard with Bryn Mawr Trust. Please go ahead. Morton, your line is live. Okay, we’ll take the next question. Our next question comes from Joe Furst with Furst Associates. Please go ahead.

Thank you. My question was answered by the previous questioner.

Thank you. There are no further questions. I would like to turn the call over to management for closing comment.

Thank you everyone for attending our earnings call conference, and I look forward to speaking with you again next quarter. Have a good day, thank you.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.