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SOTK Sono Tek Corporation

4.23
-0.21 (-4.73%)
21 Dec 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Sono Tek Corporation NASDAQ:SOTK NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.21 -4.73% 4.23 3.73 5.75 4.4035 4.20 4.38 17,791 05:00:12

Sono-Tek Reports Fiscal Second Quarter and First Half 2025 Financial Results, Record Backlog and Provides Revenue Guidance

15/10/2024 12:00pm

GlobeNewswire Inc.


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Sono-Tek Corporation (Nasdaq: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for the second quarter and first half of fiscal year 2025, ended August 31, 2024.

Second Quarter and First Half Fiscal 2025 Highlights

  • Net Sales for the quarter decreased by 8% or $477,000 to $5,162,000 compared to the second quarter of fiscal 2024, which saw elevated sales due to the resolution of supply chain challenges, which had previously impacted the Company’s operations. Second quarter revenue increased 3% sequentially to $5.2 million, meeting quarterly guidance of 2%-5% growth, driven by strong shipments to the clean energy and electronics markets.
  • Record first half fiscal 2025 revenue increased by 10% year over year to $10.2 million compared to $9.2 million.
  • First half fiscal 2025 gross profit increased 9% year over year to $5.0 million compared with $4.6 million.
  • First half fiscal 2025 net income increased 13% year over year to $672 thousand, or $0.04 per share, compared with $595 thousand, or $0.04 per share.
  • As of August 31, 2024, cash, cash equivalents and marketable securities totaled $11.6 million with no outstanding debt.

Backlog and Expected Revenue Growth for Fiscal Year 2025

  • Total equipment and service-related backlog increased 7% year over year and 50% sequentially to a record $11.7 million, compared to $10.9 million at the end of Q2 FY2024, and $7.8 million at the end of Q1 FY2025.
  • Continued revenue growth is expected for the full fiscal year 2025, ending February 28, 2025.

“Sono-Tek continued its fiscal year with solid sales momentum and profitability and is looking forward to a strong second half with increasing orders from the green energy sector combined with strength in the semiconductor/electronics markets. Additionally, we are aggressively moving forward on full production systems with the potential for multiple repeat orders this year,” according to Dr. Christopher L Coccio, Executive Chairman.

Steve Harshbarger, CEO & President of Sono-Tek, remarked, “Our growth strategies are continuing to gain momentum as our customers move from R&D and pilot machines to our complex large-scale production systems with significantly higher Average Selling Prices (ASP). We are excited by our broadened addressable market and believe we can continue to grow sales on a larger scale. Our move into the clean energy sector is showing transformative results in next-gen solar cells, fuel cells, green hydrogen generation, and carbon capture applications. Additionally, we remain excited about our prospects for attracting additional high-volume, high-ASP production system orders in fiscal year 2025. With strong sales momentum, continued profitability and record backlog bolstered by our solid balance sheet, we remain focused on continued execution and look forward to building on our record first half revenues.”

Second Quarter Fiscal 2025 Results

(Narrative compares with prior-year period unless otherwise noted) ($ in thousands)  

 Three Months Ended August 31,   Change
  2024   2023  $ %
Net Sales$5,162  $5,639       (477) (8%)
Gross Profit$2,516  $2,801           (285) (10%)
Gross Margin 49%  50%    
        
Operating Income$286  $566  (280) (49%)
Operating Margin 6%  10%    
        
Net Income$341  $541            (200) (37%)
Net Margin 7%  10%    
            

Second Quarter Fiscal 2025 Product and Market Sales Overview

Net Sales for the quarter decreased by 8% or $477,000 to $5,162,000 compared to the second quarter of fiscal 2024 which reflected a strong recovery from supply chain constraints.  Net sales increased 3% sequentially to $5.2 million in the second quarter of fiscal 2025. The increase was primarily driven by increased demand for Integrated Coating systems which are commonly used for high volume production platforms in the clean energy sector.  

  • Integrated Coating System sales accelerated significantly from growing market acceptance of the new PLC based platform systems developed under Sono-Tek’s Altair program. During the second quarter, two high ASP systems using the Altair developed capabilities shipped to a large solar company valued at $1,460,000.
  • Fluxing system sales dipped this quarter with softening activity from the printed circuit board sector, although quoting activity remains strong for these products with recent significant distributor changes.
  • OEM sales dipped as well due to many OEM partners having previously built-up excess inventory to combat supply chain concerns and partially due to a reduction in sales of our China based OEM partners products due to China’s struggling economy.

Sales to the Alternative/Clean Energy market grew 37% and were positively impacted by significant government investments and a growing number of Sono-Tek’s customers transitioning from R&D systems to production scale systems that carry much higher ASPs. Sono-Tek platforms are used in the manufacturing of advanced solar cells and for critical membranes used in carbon capture, green hydrogen generation and fuel cell applications.

Electronics market sales increased 51% influenced by the shipment of two systems of a newly developed coating system with wafer shuttling capabilities for the semiconductor market.

Medical sales were down 77%, primarily driven by lower demand for stent and balloon coating systems. However, based on current backlog and order activity, the Company expects balloon coating system sales to recover in the second half of the year. In contrast, stent coating system sales are likely to remain subdued as several customers in this market have reported slower business activity.

Industrial sales declined by 30% partially influenced by a float glass coating system that shipped in the prior fiscal year and did not repeat in the current fiscal year.

Second Quarter FY 2025 Financial Overview

The three-month periods ended August 31, 2024 and 2023 are referred to as the second quarter of fiscal 2025 and fiscal 2024, respectively.

Revenue for the second quarter of fiscal 2025 was $5.2 million, compared to $5.6 million for the second quarter of fiscal 2024, in line with quarterly guidance and reflecting elevated sales in the second quarter of fiscal 2024 as supply chain issues alleviated.

Gross profit was $2.5 million, compared with $2.8 million for the second quarter of fiscal 2024. The gross profit percentage was 49% compared with 50% for the prior year period, primarily due to product mix, inclusive of a decrease in OEM systems sales which typically have high profit margins, and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024 as an outcome of the completion of several successful R&D endeavors. During the quarter, the decrease in gross profit was partially offset by favorable warranty expense reserves.

Operating expenses were $2.2 million for the second quarter of each fiscal 2025 and 2024.

Research and product development costs decreased 12% year over year to $696 thousand due to a decrease in salary associated with the departure of a senior engineer, a decrease in research and development materials and the reallocation and recharacterization of specific labor expenses from the engineering department to cost of goods sold that started in the fourth quarter of fiscal year 2024 as an outcome of the completion of several successful R&D endeavors.

Marketing and selling expenses increased 5% year over year to $988 thousand primarily due to increases in commissions, travel and trade show expenses, partially offset by a decrease in salary expenses. General and Administrative expenses increased 9% year over year to $546 thousand primarily due to increased salaries, legal and audit fees and other corporate expenses.

Operating income was $286 thousand compared to $566 thousand in the prior year period, primarily due to the decrease in revenue and gross profit. Operating margin for the quarter was 6% compared to 10% in the prior year period.

Net income was $341 thousand, or $0.02 per share, compared with $541 thousand, or $0.03 per share, for the second quarter of fiscal 2024, primarily due to a decrease in gross profit.

Diluted weighted average shares outstanding were 15,768,251 million compared to 15,773,665 for the prior year period.

First Half Fiscal Year 2025 Overview(Narrative compares with prior-year period unless otherwise noted) ($ in thousands)

 Six Months Ended August 31,   Change
  2024   2023  $ %
Net Sales$10,193  $       9,242        951 10%
Gross Profit$4,971  $4,578  393 9%
Gross Margin 49%  50%    
        
Operating Income$524  $474  50 11%
Operating Margin 5%  5%    
        
Net Income$672  $595  77 13%
Net Margin 7%  6%    
            

Total sales increased by 10% to $10.2 million in the first half of fiscal 2025 compared to $9.2 million for the first half of fiscal 2024, strongly impacted by increased sales from the Alternative Energy Market due to the shipment of three high ASP systems to a large solar company totaling $2,190,000.

Gross profit increased 9% to $5.0 million for the first half of fiscal 2025 compared with $4.6 million in the first half of fiscal 2024. The gross profit margin was 49% compared with 50% for the prior year period.

Operating income increased 11% to $524 thousand compared with $474 for the first half of fiscal 2024. Operating margin for the first half of fiscal 2024 was nearly even at 5% compared with 5% in the first half of fiscal 2024.

Net income increased 13% to $672 thousand, or $0.04 per share, for the first half of fiscal 2025 compared with $595 thousand, or $0.04 per share, for the first half of fiscal 2024.

Diluted weighted average shares outstanding were 15,771,472 compared to 15,775,032 for the prior year period.

Balance Sheet and Cash Flow Overview

At August 31, 2024, cash, cash equivalents and marketable securities totaled $11.6 million, with no debt, and stockholders’ equity was $17.0 million.

Capital expenditures in the first half of fiscal 2025 were $191,000, which were invested in ongoing upgrades to the Sono-Tek’s manufacturing facilities. Sono-Tek anticipates capital expenditures will total approximately $460,000 in fiscal year 2025.

Conference Call Information

Sono-Tek will hold a conference call to discuss its second quarter and first half of fiscal year 2025 financial results today, Tuesday, October 15, 2024 at 10:00 am ET. To participate, please call 1-844-481-2752 at least 10 minutes prior to the start of the call and ask to join the Sono-Tek call.

A simultaneous webcast of the call may be accessed through the Company's website, Events & Presentations | Sono-Tek or at https://event.choruscall.com/mediaframe/webcast.html?webcastid=Es5mXgrt

A replay of the call will be available at 1-877-344-7529, access code # 4946283, through October 22, 2024. A replay of the call will also be available on the Company’s website for one year at www.sono-tek.com.

About Sono-Tek

Sono-Tek Corporation is a global leader in the design and manufacture of ultrasonic coating systems that are shaping industries and driving innovation worldwide.  Our ultrasonic coating systems are used to apply thin films onto parts used in diverse industries including microelectronics, alternative energy, medical devices, advanced industrial manufacturing, and research and development sectors worldwide.  Sono-Tek's inroads into the clean energy sector are showing transformative results in next-gen solar cells, fuel cells, green hydrogen generation, and carbon capture applications. 

Our product line is rapidly evolving, transitioning from R&D to high-volume production machines with significantly higher average selling prices, showcasing our market leadership and adaptability. Our comprehensive suite of thin film coating solutions and application consulting services are expected to generate unparalleled results for our clients and help some of the world's most promising companies achieve technological breakthroughs and bring them to the market. The Company strategically delivers its products to customers through a network of direct sales personnel, carefully chosen independent distributors, and experienced sales representatives, ensuring efficient market reach across diverse sectors around the globe.

The Company’s solutions are environmentally friendly, efficient and highly reliable, and enable dramatic reductions in overspray, savings in raw material, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions.

Sono-Tek’s growth strategy is focused on leveraging its innovative technologies, proprietary know-how, unique talent and experience, and global reach to further develop thin film coating technologies that enable better outcomes for its customers’ products and processes. For further information, visit www.sono-tek.com.

Safe Harbor Statement

This news release contains forward looking statements regarding future events and the future performance of Sono-Tek Corporation that involve risks and uncertainties that could cause actual results to differ materially. These “forward-looking statements’ are based on currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events could turn out to be significantly different from our expectations and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions, including political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; continued private and public funding for the clean energy sector and continued strong demand for Sono-Tek’s suite of thin film coating solutions and application consulting services in the clean energy and other markets; maintenance of order backlog; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; consummation of order proposals; completion of large orders on schedule and on budget; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems; and realization of quarterly and annual revenues within the forecasted range of sales guidance. We undertake no obligation to update any forward-looking statement.

For more information:

Sono-Tek Corp. Stephen J. BagleyChief Financial OfficerPh: (845) 795-2020info@sono-tek.com

Investor RelationsKirin SmithPCG Advisory, Inc.ksmith@pcgadvisory.com

-FINANCIAL TABLES FOLLOW -

SONO-TEK CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)

  August 31,2024  February 29,2024 
  (Unaudited)    
ASSETS        
         
Current Assets:        
Cash and cash equivalents $5,852,801  $2,134,786 
Marketable securities  5,766,176   9,711,351 
Accounts receivable (less allowance of $12,225)  1,879,464   1,470,711 
Inventories  4,829,901   5,221,980 
Prepaid expenses and other current assets  174,225   207,738 
Total current assets  18,502,567   18,746,566 
         
Land  250,000   250,000 
Buildings, equipment, furnishings and leasehold improvements, net  2,691,523   2,832,156 
Intangible assets, net  42,476   47,566 
Deferred tax asset  1,429,271   1,255,977 
         
TOTAL ASSETS $22,915,837  $23,132,265 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities:        
Accounts payable $691,000  $1,049,742 
Accrued expenses  1,543,869   1,739,478 
Customer deposits  3,225,273   3,419,706 
Income taxes payable  96,395   414,807 
Total current liabilities  5,556,537   6,623,733 
         
Deferred tax liability  311,750   229,534 
Total liabilities  5,868,287   6,853,267 
         
Stockholders’ Equity        
Common stock, $.01 par value; 25,000,000 shares authorized, 15,751,153 and 15,750,880 shares issued and outstanding as of August 31, 2024 and February 29, 2024, respectively  157,512   157,509 
Additional paid-in capital  9,867,414   9,770,387 
Accumulated earnings  7,022,624   6,351,102 
Total stockholders’ equity  17,047,550   16,278,998 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $22,915,837  $23,132,265 
         

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)

  Six Months EndedAugust 31,  Three Months EndedAugust 31, 
  2024  2023  2024  2023 
             
Net Sales $10,192,820  $9,242,135  $5,161,782  $5,639,117 
Cost of Goods Sold  5,222,236   4,664,335   2,645,685   2,838,549 
Gross Profit  4,970,584   4,577,800   2,516,097   2,800,568 
                 
Operating Expenses                
Research and product development costs  1,427,303   1,445,699   695,873   789,261 
Marketing and selling expenses  1,885,608   1,745,310   988,418   944,526 
General and administrative costs  1,133,387   912,549   545,816   500,923 
Total Operating Expenses  4,446,298   4,103,558   2,230,107   2,234,710 
                 
Operating Income  524,286   474,242   285,990   565,858 
                 
Interest and Dividend Income  227,730   230,283   85,076   124,293 
Net unrealized gain/(loss) on marketable securities  53,941   10,855   43,580   (6,803)
                 
Income Before Income Taxes  805,957   715,380   414,646   683,348 
                 
Income Tax Expense  134,435   120,701   73,961   142,075 
                 
Net Income $671,522  $594,679  $340,685  $541,273 
                 
Basic Earnings Per Share $0.04  $0.04  $0.02  $0.03 
                 
Diluted Earnings Per Share $0.04  $0.04  $0.02  $0.03 
                 
Weighted Average Shares - Basic  15,750,895   15,742,571   15,750,910   15,743,069 
Weighted Average Shares - Diluted  15,771,472   15,775,032   15,768,251   15,773,665 
                 

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATIONPRODUCT, MARKET, AND GEOGRAPHIC SALES(Unaudited)

Product Sales

  Three Months Ended August 31,  Change Six Months Ended August 31,  Change
  2024  2023  $  % 2024  2023  $  %
Fluxing Systems $119,000  $204,000   (85,000  (42%) $253,000  $440,000   (187,000  (43%)
Integrated Coating Systems  2,023,000   853,000   1,170,000   137%  2,770,000   1,162,000   1,608,000   138%
Multi-Axis Coating Systems  1,931,000   2,923,000   (992,000  (34%)  4,595,000   4,686,000   (91,000  (2%)
OEM Systems  205,000   535,000   (330,000  (62%)  537,000   810,000   (273,000  (34%)
Spare Parts, Services and Other  884,000   1,124,000   (240,000  (21%)  2,038,000   2,144,000   (106,000  (5%)
TOTAL $5,162,000  $5,639,000   (477,000  (8%) $10,193,000  $9,242,000   951,000   10%

Market Sales

  Three Months Ended August 31,  Change Six Months Ended August 31,  Change
  2024  2023  $ % 2024  2023  $  %
Electronics/Microelectronics $1,477,000  $976,000   501,000   51% $3,045,000  $2,351,000   694,000   30%
Medical  402,000   1,728,000   (1,326,000  (77%)  1,259,000   2,111,000   (852,000  (40%)
Alternative/Clean Energy  2,498,000   1,819,000   679,000   37%  4,780,000   2,652,000   2,128,000   80%
Emerging R&D and Other  30,000   37,000   (7,000)  (19%)  41,000   163,000   (122,000)  (75%)
Industrial  755,000   1,079,000   (324,000  (30%)  1,068,000   1,965,000   (897,000  (46%)
TOTAL $5,162,000  $5,639,000   (477,000  (8%) $10,193,000  $9,242,000   951,000   10%

Geographic Sales

  Three Months Ended August 31,  Change Six Months Ended August 31,  Change
  2024  2023  $  % 2024  2023  $  %
U.S. & Canada $3,495,000  $3,199,000   296,000   9% $6,587,000  $5,567,000   1,020,000   18%
Asia Pacific (APAC)  368,000   538,000   (170,000  (32%)  880,000   1,109,000   (229,000  (21%)
Europe, Middle East, Asia (EMEA)  1,136,000   1,155,000   (19,000  (2%)  2,381,000   1,581,000   800,000   51%
Latin America  163,000   747,000   (584,000  (78%)  345,000   985,000   (640,000  (65%)
TOTAL $5,162,000  $5,639,000   (477,000)  (8%) $10,193,000  $9,242,000   951,000   10%

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