Management launched a comprehensive transformation strategy in Q4 2025 to address continued volatility in order rates and a decline in CVD Equipment division bookings.

The company is transitioning from a vertically integrated fabrication model to an outsourced model for certain components to reduce fixed costs and improve scalability.

A workforce reduction completed in Q4 is expected to rightsize the organization and reduce annual operating costs by approximately $1.8 million starting in 2026.

The sales strategy is being revised to leverage external distributors and representatives to complement the internal sales organization.

Bookings remain pressured by softer demand, tariff-related uncertainties, reduced U.S. government spending for universities, and slow adoption in specific end markets.

Strategic focus remains on high-growth advanced materials markets, specifically aerospace, defense, and silicon carbide for high-power electronics.

Management expects the sale of the SDC business to Atlas Copco Group to close in Q2 2026, providing approximately $15 million in net cash proceeds.

The company intends to initially invest the transaction proceeds into U.S. Treasury securities to strengthen the balance sheet and provide financial flexibility.

Return to consistent profitability is contingent upon improved equipment order flow, disciplined cost management, and successful execution of the transformation plan.

Current cash positions and projected flows are deemed sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

The Saugerties, New York facility will be retained and leased to Atlas Copco for an initial 2-year term following the SDC divestiture.

Entered a definitive agreement to sell the SDC business for approximately $16.9 million in cash to sharpen focus on the core CVD business.

Recorded a non-cash impairment charge of $163,000 in Q4 related to equipment and software rendered obsolete by the shift to outsourced fabrication.

Full-year gross margin improved to 28.3% primarily due to the absence of a $1.6 million inventory write-down charge taken in the prior fiscal year.

Backlog decreased to $6.6 million at year-end 2025, down from $19.4 million at the end of 2024, reflecting the challenging booking environment.

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Management stated the Board is evaluating strategic alternatives to increase shareholder value but does not have a material path or specific target to highlight yet.

Ideal acquisition targets would feature non-lumpy revenue streams and strong value in recurring spares and service segments.

Management noted that a special dividend is not currently on the table, as the company prioritizes utilizing funds for business growth and maintaining a conservative balance sheet.

Approximately 78% of recent orders have come from the aerospace and defense sectors, including materials for gas turbine engines and ceramic materials for hypersonics.

Management expects defense-related advanced materials to remain a primary driver of future orders and revenue.

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