Greetings, welcome to the CVD Equipment Corporation 2023 fourth quarter and full fiscal 2022 results conference call. 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 member of the CVD Board of Directors, and Richard Catalano, Vice President and Chief Financial Officer. 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 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 that 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 the company's 10-K for the year ended December 31, 2022. Actual results may differ materially from those described during the call. All forward-looking statements are made as of today, and we undertake no obligation to update any forward-looking statements based on the new circumstances or revised expectations. I would like to turn the call over to Emmanuel Lakios.
Thank you, Paul. Welcome to CVD Equipment Corporation's quarterly conference call. My name is Emmanuel Lakios, CEO and President, and I am pleased to be presenting to you today regarding our fourth quarter 2022 and our full fiscal year 2022 performance and important company developments and pertinent information related to our business. Your thoughts are important to us, and we look forward to your questions in our Q&A session. Now for our fourth quarter and 2022 results. We are pleased to be reporting a strong revenue growth for fiscal 2022, an increase of 57% over prior fiscal year. The fourth quarter revenue, while lower than our third quarter 2022, was 53% higher than our fourth quarter 2021. During the fourth quarter 2022, we recognized net income of $1.5 million.
For the full fiscal year, 2022, we recognized a net loss of $224,000. Both periods include the recognition of other income of $1.5 million for federal employee retention credit. The 2022 and fourth quarter operating performance is aligned with our strategy of business focus, revenue growth, and return to profitability. The timing of the demand of our products is dependent on many factors, such as our customers' market conditions, the acceptance of our products by our customers, and the general economic conditions. While our revenue and profitability will continue to fluctuate due to this timing of orders and shipments, we believe that we are on the right track to achieve consistent long-term profitability in the years ahead. 2022 was an exciting period for all the stakeholders of CVD Equipment.
The order rate for 2022 lends further support to our belief that we are on the right path. Our core strategy, which includes focusing on markets that support the electrification of everything, specifically silicon carbide, is fueling our present growth. The market segment focuses on high power electronics, which are used in the growing electric vehicle market. The end-use applications are electric motor power converters, power charging, and transmission. For 2022, we have received orders exceeding $33 million for our CVD Systems and Services segment, as compared to approximately $31 million for the same period, 2021. This is a 52% year-on-year increase in orders for the CVD segment. Our Q4, 2022 orders were $9.2 million. The 2022 orders included 24 additional units of our recently launched PVT-150 system for silicon carbide crystal growth.
All unit orders were from our initial alpha/beta customer and amounted to approximately $8.8 million. Ten of the 24 PVT-150 systems were ordered in the fourth quarter. The PVT-150 system is utilized to grow silicon carbide crystals, which are subsequently fabricated into silicon carbide wafers. In the fourth quarter, we had the initial launch of the PVT-150 to the broader base of silicon carbide crystal growth customers. In the fourth quarter, we were selected and received a system from a major aircraft engine manufacturer. Specifically, the order was for a production Chemical Vapor Infiltration system valued at approximately $3.7 million. As I stated earlier, this system will be used to manufacture ceramic matrix composite materials for aerospace gas turbine engine components.
We believe that this order is a tangible sign of the beginning of the aerospace market recovery, which traditionally has been a significant part of the CVD Equipment Corporation's business. The remainder of the 2022 orders were for our legacy Advanced R&D and FirstNano Systems SDC division products, as well as our non-core segments. Our SDC segment had increased sales over prior year of approximately 35%. That reflects a higher demand for our gas and liquid control system products. SDC is both an enabling captive supplier to the CVD Equipment Group, as well as a merchant supplier to the microelectronics industrial markets. Our Tantaline and MesoScribe, which we deem as non-core product lines, were profitable in 2022. Supply chain issues relative to both inflation and lead times continued to negatively impact our revenue timing and profitability for all our segments of the company.
In 2022, we installed additional machine centers and added capacity to our Central Islip facility to increase our system output and to continue to drive towards increased operational self-reliance. The management of our product lead times, along with the precise control of our equipment, has been a competitive advantage for us. I would like to turn the call over to our CFO, Rich Catalano, who will provide you our fourth quarter and 2022 financial summary.
Thank you, Manny, and good afternoon. Our revenue for the fourth quarter of 2022 was $7.2 million. This compares to $4.7 million in the prior year fourth quarter. That represents an increase of $2.5 million or 53%. This increase in our revenue was primarily attributable to our PVT-150 product line, which represented approximately $2.2 million or 30% of our revenues in the fourth quarter as compared to no such revenues in the prior year fourth quarter. Our operating loss for the fourth quarter was $221,000. This was an improvement over the prior year improvement of approximately $800,000.
This improvement in our operating results was driven by the increased revenue of $2.5 million that resulted in increased gross profit of $1.2 million. That was offset somewhat by an increase in operating expenses of approximately $0.4 million. Our gross profit percentage was 28% in the fourth quarter as in this fourth quarter, as compared to 16% in the prior year fourth quarter. This improvement on gross profit was primarily the result of leveraging our fixed cost over higher sales levels as well as an improved product mix. These benefits were offset somewhat by increased material cost and material components as well as compensation cost. The increase in our operating expenses, principally due to certain higher, employee-related costs to support the growth of our business.
That's including in marketing as well as some general increase in our personnel cost overall. As Manny mentioned, in the fourth quarter of 2022, we completed our analysis of whether the company was entitled to an employee retention credit, and we determined that for two quarters in 2021, we were entitled to a credit of $1.5 million, and that was recorded as a not operating income item in the fourth quarter. You know, based on the recognition of that ERC credit, our net income was $1.5 million or about $0.23 per share for both basic and diluted. Our fourth quarter of this year also benefited from interest income of $88,000 and a foreign exchange gain on our intercompany loan with our Denmark subsidiary of about $155,000.
Overall, our net loss for the quarter was $1.2 million. Our net loss for the fourth quarter of 2021, I should say, was $1.2 million or $0.18 per share. Just turning to the full year of 2022 briefly, the revenue was $25.8 million. This compares to $16.7 million in the same period of 2021. That's an increase of $9.4 million or 57%. Similar to the fourth quarter, this increase in revenue was attributable to our PVT-150 product line, which represented approximately $7.5 million or 29% of our revenue in 2022. Again, we had no such revenues in 2021.
The operating loss for fiscal 2022 overall for the full year was $1.8 million. This is represents an improvement of $2.8 million when we compare it to the loss we experienced in 2021 of $4.7 million. These improvements, again, in operating results, was principally related, of course, to the increased revenue of 57% on $9.4 million. That resulted in increased gross profit of $3.6 million. We also had an offsetting operating expense increase of approximately $700,000. Our gross profit for the full fiscal year was 26%. This compares to 9%. Again, the improvement is related to the fact that we had much higher sales levels and allowed us to spread our overhead cost.
We also had some increase, revenue operating expenses. We did have some, like I mentioned, for the quarter, we had some increases as we grew the business, including marketing and general increase in our personnel cost. We did have a one-time severance charge of approximately $134,000. These increases were offset. We did have some reductions that were favorable. In July 2021, we did sell our building, another building we had here in Central Islip. The reduction in the operating cost for that building benefited operating expenses by approximately $600,000, and we also had lower professional fees of about $300,000 for the full year. As previously mentioned, the year also benefited from the recognition of the employee retention credit.
I would mention that in the prior year, we did have two one-time benefits. We had a benefit of $6.9 million from the sale of a building, and we had $2.4 million from forgiveness of our PPP loan. That obviously helped the bottom line. Overall, for the net income for 2022, net loss, I should say, for 2022 was $224,000 or $0.03 per share, the loss. Again, that includes the $1.5 million. Net income for the prior year was $4.8 million or $0.71 earnings per share. Keep in mind, there were those two non-operating gains that totaled $9.3 million. Turning to our backlog. Our backlog at December 31st, 2022 was $17.8 million.
This compares to $10.4 at the beginning of the year, and this represents an increase of 7.4%. Our backlog consists principally of remaining performance obligations that we have on our contracts in progress, about $16.2 million, and the balance of $1.6 million represents unfulfilled purchase orders that we've received. Turning to our balance sheet. Our cash and cash equivalents at December 31st was $14.4 million, as compared to $16.7 million in the prior year. This was a decrease of $2.3 million, very little movement from operations. That $2.3 million was principally the payoff of our mortgage on our Central Islip facility. Also, we had capital expenditures of about $700,000.
Our working capital at the end of this year is $15.5, and this compares to $16.7 at December 31st, 2021. Just some closing notes. We are unable to predict the impact of the current economic and geopolitical uncertainties that will have on our financial position or future results of operations and cash flows. Our return to consistent profitability will be dependent upon other things, the receipt of new equipment orders, our ability to mitigate the impact of supply chain disruptions and the inflationary pressures as we manage, as well as managing our planned capital expenditures and our operating expenses. In addition, our revenues and orders have historically fluctuated based on changes in order rate as well as factors in our manufacturing process that impacts the timing of our revenue recognition.
Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter. After considering all these factors, we believe our cash and cash equivalents and our projected cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next 12 months. We will continue to assess our operations and take actions anticipated to maintain our operating cash to support our working capital needs. I'll now turn it back over to Manny.
Rich, thank you for your presentation. In summary, the fourth quarter and full fiscal year results for 2022 reflect the actions we took back since 2021 to reorganize, focus on everything we do and those who we serve. Our focus remains on our customer markets, our employees and our shareholders, and the pursuit of growth and return to consistent profitability. We look forward to continue to build on our success in the year ahead and continue to be cautiously optimistic. Your comments and questions are important to us. At the close of our presentation, I would like to open the floor to your questions.
Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Brett Rice with Janney Montgomery Scott. Please proceed with your question.
Hi, Manny. Hi, Rich.
Hey, Brett. How are you? Good to hear from you.
Good, good. Another good respectable quarter.
Thank you.
The cash from the third quarter to fourth quarter was up two and a half million. You know, half of it was a reduction in working capital. The other half was that, you know, positive cash flow generation?
Yeah. Hi, Brett. It's Rich. Yeah.
Hi.
You know, our cash flow does fluctuate, you know, depending on as we complete, you know, contracts. You know, there'll be payments toward the end of the contract. Also, upon the receipt of contracts, we typically receive a down payment for a certain percentage of the contract price. You will see some fluctuations, you know, in our cash balance from period to period.
Right. Now, the whole, you know, potential, credit contraction, you know, that may, unfold with the banks, it's basically a non-event for us because we really are not drawing on, any, bank lines of credit. You know, we're in a, you know, commanding cash position. Is that a fair statement?
You know, as of this point, you know, we have very little debt, after we paid off our mortgage loan, last few during the year, during this year, I should say in 2022. We just took out one small equipment loan for about $400,000. As at this point, you know, we're not relying on credit lines and the like. You know, we're working with the working capital and the cash balances that we have.
Right. The supply chain issues, they seem to be abating?
They're, they're being managed, Brett. We still have day-to-day, hand-to-hand combat with some of our suppliers, but we've been able to manage through that process in 2022. I can't say that it's abated, but we've taken actions to reduce the impact, both on inflationary and supply chain delays. Doesn't mean that, you know, we'll continue. I think we all know there's quite a bit of inflationary pressure out there.
Right. I'll drop back in queue. Thank you.
Thank you, Brett.
Thank you, Brett.
Thank you. Our next question is from John Gruber, private investor. Please proceed with your question.
Good afternoon. Yes. On the PVT-150, what's the outlook and what's the gross margin profile of that product versus, you know, the corporate average? Yeah, we'll just start with that question.
Of course. Hey, John, how are you? Glad you're on the call. This is Manny. First the 150, one of the major differences on the 150, the PVT 150 versus some of the more what we would term to be legacy products is that the 150 is a make to order versus a design make to order. By DNA that the gross margins are improved greatly on the PVT 150 products in that you are not engineering each and every one of the tools and charging the cost of goods sold line with that engineering cost. You will inherently see better gross margins on the make to orders versus the design make to order.
you know, with that said, we typically don't give out, specifically for our customers' sake, our gross margins are. We would anticipate that the contribution margin on increased sales on that should be 50% plus, as we increase the order rate for the PVT-150s.
50% plus, that'd be good. Where do we stand on getting new orders, new nameplates for the PVT-150? And what's your what progress have you made with the big boys in, you know, in the boule?
Sure.
silicon carbide business?
Sure. you know, you're you've been doing this for a while, to answer your question is, you know, we follow a pretty regimented PLC process, product life cycle. We developed a product, we shipped the first one back in 2011. We productized it starting in December of 2021, we started shipping in July of 2022. Typically, you ship one or two of them as alphas and betas. We ended up shipping 20 of them last year, alphas and betas, that I think are performing well in the installed base. As we said, we have one customer for the alphas and betas. We subsequently received an order for 10 more production tools.
The only differences on those are documentation control, reduction in workflows in the manufacturing shop, and we just term them alphas, betas, and production systems. You really can't tell the difference by looking at them. We launched the product officially this quarter, and we started to engage on different segments of the vertical integration chains. What I mean by that is you have the boule manufacturer, boule wafer manufacturers. That's all they do, sell wafers. They're our first entree into that space. There are a couple emerging ones, and there's one established. You have the folks that make their own equipment and make their own boules and make their own wafers. You have the fully integrated, the fully integrated would be the onsemi, the Wolfspeed, STMicroelectronics, II-VI Incorporated.
They, for the most part, make their own equipment, grow their boules, make their wafers, and also make devices. Our primary attack was with our first customer on the boule wafer. We launched the product literally in the January, February timeframe, and we've been going to conferences, and we're starting now to be recognized, as a provider of equipment to the crystal boule growth folks. It's gonna take a bit of time for us to get some traction and adoption. Where I would say with that is we're providing quotations and presentations now, to several potential customers.
At year-end, you know, at year-end of this calendar year-end, how many new customers do you think you could add for the PVT product for the boule?
In addition to serving the existing customer, because all customers are key, we are objective, and sales has an objective to penetrate two additional accounts.
Thank you very much. Thank you.
Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.
Well, we appreciate the attendance on the call and the support, and the loyalty from our shareholders and some of our employees who are also on the call. We again are cautiously optimistic. We have come from a position where we have grown as a team since 2021, grown the bookings, revenue, improved the gross margin line, operating profit line, and have shored up the balance sheet in that period of time. We continue to be cautiously optimistic and conservative as we move forward. We look forward to a successful 2023. Again, we appreciate your attendance and support. Thank you.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.