Greetings, and welcome to CVD Equipment 2021 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. We will begin with some prepared remarks followed by a question-and-answer session. Presenting on the call today will be Emmanuel Lakios, President and CEO; and Thomas McNeill, Chief Financial Officer. We have posted our earnings press 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 contain 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, 2020. 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 revise expectations. Now, I would like to turn the call over to Manny.

Thank you. Welcome to CVD Equipment Corporation's quarterly conference call. My name is Emmanuel Lakios, CEO and President. And I'm pleased to be presenting to you today regarding important company developments and pertinent information related to our business. As we will be providing a subset of information your thoughts are important to us. We request that you wait to ask your questions at the end during our question-and-answer session. I would like to introduce our CFO, Mr. Thomas McNeill, who will provide you our financial first quarter 2021 summary.

Thank you, Manny. As a result of the COVID-19 pandemic CVD’s new water bookings substantially decrease commencing in the first quarter of 2020, which reduce revenues in subsequent quarters resulting in our first quarter 2021 revenue of $3.4 million as compared to $6 million, which is the pre COVID-19 pandemic era in the first quarter of 2020, a decrease of $2.6 million or 44.3%. This reduction in sales, and the resultant lower gross profit negatively affected our net income in the first quarter of 2021. Our net loss for the first quarter of 2021 was $1.5 million or $0.23 per diluted share, as compared to a net income of $1.7 million or $0.25 per diluted share in the first quarter of 2020. Let me note that during the first quarter of 2020 CVD was favorably impacted by the CARES Act, which allowed for the carry back of NOLs and resulted in CVD recognizing $1.5 million of an income tax benefits. As compared to the fourth quarter of 2020, CVD’s revenue in the first quarter of 2021 increased $200,000 to $3.4 million and the net loss decreased by $200,000 as compared to the net loss in the fourth quarter of $1.7 million and that $1.7 million is exclusive of the impairment charges of $3.6 million related to the CVD Tantaline product line. The company's backlog at March 31, 2021 improved by $300,000 to $6 million as compared to $5.7 million at December 31, 2020. It's since the first quarter of 2020 the company continues to experience significant negative effects due to COVID-19 pandemic including reductions of new orders as I mentioned before. However, the company's water activity has improved both in the quarter ended March 31, 2021, and also into Q2 2021. And its longer-term improvements are expected to be benefited…

Tom, thank you for your presentation and insight. As we completed our first quarter, we are cautiously optimistic that the 2020 COVID pandemic is forecasted to be contained and the effects of it will eventually wane. We have sign that the worst is over for a served markets. The damage done to the global economy cannot be monetized. Our business was not immune to this COVID pandemic. We have been set back in sync with our major market, aerospace, specifically in the area of advanced material gas turbine engine components. The impact of global travel and cascading effect to aerospace is astounding and the timing of the recovery is uncertain. But what is certain is that global air travel will come back eventually. CVD Equipment will be poised and ready to respond to the demands for new equipment and services. We continue to receive customer input and industry news reports supporting a beginning of recovery to what would be our order rate in 2022. Our other markets such as carbon-based products, and our legacy products serving the academia and research markets are showing signs of recovery. As funding is becoming available and as University Labs reopened after being shuttered during the pandemic. Even with the signs of recovery, we remain cautious in our planning. The sale of the 555 building is on plan for closing in the next months. We will use the provided capital wisely for the sustainability and growth of the company. Depending on the order rate, we will continue to evaluate our infrastructure cost model and take thoughtful measures to reduce fixed expenses in all areas. I would like to spend some time on our product lines. The equipment group we received in Q1 March, FirstNano System legacy products orders. Our spare parts and service orders also…

Yes, sir. [Operator Instructions] Our first question today is from Brett Reiss of Janney Montgomery Scott. Please proceed with your question.

Hi, Manny, hi, Jim. Can you hear me?

Very well. So Brett, it would not be a meeting without you asking a question. Good afternoon.

There you go, good afternoon. I'm just wondering, have you, do you sit down, do you get your sales people with your engineering talent that you have to kind of brainstorm to see, if you can find with the skill sets, the company has, some products that you can sell without having to kind of just sit back and wait passively for aerospace to recover?

Okay, Brett, if that's the question, let me answer that because it is part of our new philosophy. We do not wait for the phone to ring. This week, I actually was at a leading company in aerospace, which we won't discuss the name and not in searching, but in response to customer satisfaction and product roadmapping and technology roadmapping, we’ve presently completed our strategic planning process, we’ll give the audience an opportunity to see some of those elements to the extent, we can supply those during our July shareholder meeting and give you a glimpse of our focus going forward. But we've spent the last four months working on, planning our strategic planning. Many of the actions that we've taken, both on the cost side are not a precipitous across the board cuts but what I would say a thoughtful outcome of our planning process. So yes, we have a tremendous amount of communication within the organization today. Everybody has their hands on an oar to move the boat forward.

Right, right. What was the employee headcount, at the end of the year, and what is it now at the end of this first quarter?

Yes, we’re right around 120 employees give or take, what it was at the end of the year, I think maybe about three, net three down in that.

Right, right and if business really snaps back with the amount and mix of employees, you think you'll be able to manage the business, if hopefully order flow comes back?

We have the technical and engineering talent on staff, the variable labor would be primarily in our supply chain. There we're applying quite a bit of focus on how do we position ourselves more for a variable expense and leveraging the manufacturing that is outside of CVD Proper. That would be I mean, I say the challenge, but that would be the area of focus for us. If the -- as you say the business snaps back and it's very elastic.

Right. And I mean, you went into it somewhat. But when you say order activity has improved, can you go into a little bit more specificity of what that means?

I can give you some insight that's not typically something that we do, we were approximately 40% to 50%, I'm looking at the numbers here, I can't do the quick math, but about 50% higher in orders in Q1 over Q4. But obviously 2020 Q2, Q3, Q4 on an average were very weak due to the COVID. So we’re seeing some level of recovery, we’re cautious, and we're cautious in our comments and statements. We’re seeing increased activity in aerospace spare parts demand for quotations and also the order rate increase. That's an indication that the equipment is starting to light up again. During that period of time, many of our sites or production sites were turned off.

Right, one last one, and I'll drop back in queue. In the past, the company would say that there was a great market opportunity for coatings with medical products. And nothing seems to have materialized there, why is that and is that an area of opportunity for us?

The medical industry, whether it’s tantalum for prosthetics, for implants, that is ball sockets, which is an area for our product line. That's a very specialized area. There are secondary competitors to us, not specifically people that provide tantalum deposition, but there's titanium. There are other 3D additive manufacturing techniques for building up these components. Some of those are entrenched technologies that it's a small tugboat trying to turn the Eisenhower, it’s a very sizeable feat, and it's not a near-term event. I cannot say to you today that that is on my strategic roadmap as a large growth area. We’ll continue to sell tantalum deposition and other material deposition systems to the medical, but it’s not, it is not one of the top three applications for us right now.

Right. And if you were a betting man, would you bet the buyer of the building closes May 23, or looks for a 60-day extension?

Well, we're not better but it will close. They’re strong, reputable Long Island Company and we have every indication that will close.

But we would not venture into the deal. Brett, if we thought that there was an indication that we would not close. And I think Tom's comment is accurate that we clearly not a better, quite frankly and I definitely don't bet with other people's money, which is our shareholders money. So we have confidence, and there is no indication that it won't close in the next few months.

Right, right. All right. I'm going to drop back. Thank you for allowing me to ask questions as you always do.

Thank you, sir.

[Operator Instructions] Our next question is from [Morton Howard], a Private Investor. Please proceed with your question.

Yes, my question is, there's a lot of hope. So that health product, the Stony Brook Labs, you said it's nothing, nothing has happened to report. Why not, I mean, they're working presumably checking it out. Do they have some type of thing that will decide whether it's a viable product or not in the next quarter or so?

Hi, Morton, how are you? We chatted last time as well and let me give you and when I say there's nothing notable, it doesn’t mean that we don't have some ongoing activities in that area. At this point, we’re looking at options that are available to us. We have continued to work on the technology and we’re looking for some external funding through other sources, through research sources. So we have not had a setback. And we’re in a probably what I would term in a product development terminology, we're in a gate review of the technology, and that may take us a quarter or two. But again, what we don't want to do is give you any misconceptions that next quarter or a year from now that this will be a substantial element of our business.

Thank you.

Thank you, sir.

Why don’t you give it one more poll and…?

[Operator Instructions] There appears to be no questions, no further questions at this time.

Okay, Brock, if there are no additional questions. We'd like to adjourn today's meeting and we look forward to speaking to everybody giving you some more insight on our company and our plans in our July 15 Annual Shareholders Meeting.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.