Sono-Tek Reports 59% Increase in Q3 Fiscal 2024 Net Sales to Record $5.7 Million and Provides Sales Guidance for Fiscal Year 2024
- Record net sales of $5.7 million for the third quarter of fiscal year 2024, a 59% increase from the third quarter of fiscal 2023
- Gross profit increased by 60% to $2.9 million, with a steady gross margin of 51%
- Operating income increased 600% to $721,000
- Backlog at quarter end remained strong at $10.4 million, a year-over-year increase of 96%
- Expected revenue growth of approximately 30% for the full fiscal year ending February 29, 2024
- None.
Insights
The Q3 financial results of Sono-Tek Corporation indicate a substantial year-over-year growth in net sales and gross profit, with a remarkable 96% increase in backlog. The reported 59% increase in net sales, primarily driven by the alternative/clean energy and medical markets, suggests a strong demand for the company's ultrasonic coating systems. The maintained gross margin of 51% alongside the 600% increase in operating income reflects efficient cost management despite scaling operations.
From an investment standpoint, the company's financial health appears strong with no outstanding debt and a solid cash position of $12.6 million. The projected ~30% revenue growth for FY 2024 signals confidence in the company's future performance. However, investors should consider the potential impact of the decreased PCB Fluxing sales and the dip in Asia Pacific sales, particularly in China, which could indicate market-specific challenges or a broader sector slowdown.
The significant growth in Sono-Tek's backlog, especially from the alternative/clean energy sector, aligns with global trends towards sustainable technologies. The transition of customers from R&D systems to production scale systems, which carry higher average selling prices, is indicative of the sector's maturation and could represent a stable revenue stream for Sono-Tek. The company's strategic positioning in markets with high growth potential like clean energy and medical devices is likely to drive investor interest and positively influence market perceptions.
However, the decrease in sales to China and the performance dip in PCB Fluxing sales may suggest the need for market diversification or product innovation to mitigate regional and segment-specific risks. The onshoring trend and U.S. government initiatives in clean energy are also favorable tailwinds that could bolster the company's domestic market share.
The high interest rate environment, as reflected in the increased interest and dividend income, is a macroeconomic factor that investors must consider. While it has benefited Sono-Tek's financials in the short term, rising rates could potentially increase borrowing costs in the future, affecting new investments or expansion plans. Additionally, the current global economic outlook, with potential headwinds such as trade tensions and supply chain disruptions, could influence Sono-Tek's international sales and operational costs, impacting future profitability and growth trajectories.
Investors should also monitor the company's capital expenditures, which are projected to total approximately $750,000 for FY 2024. These investments in manufacturing facilities are crucial for sustaining growth but must be balanced against the need to maintain liquidity in an uncertain economic climate.
- Q3 Backlog Increased
- Projects ~
MILTON, N.Y., Jan. 16, 2024 (GLOBE NEWSWIRE) -- Sono-Tek Corporation (Nasdaq: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for the third quarter and first nine months of fiscal year 2024, ended November 30, 2023.
Third Quarter Fiscal 2024 Highlights (compared with the third quarter of fiscal 2023 unless otherwise noted). The three-month periods ended November 30, 2023 and 2022 are referred to as the third quarter of fiscal 2024 and fiscal 2023, respectively.
- Net Sales increased to a record
$5,690,000 , driven by strong shipments to the Alternative/Clean Energy and Medical markets. Net Sales increased59% compared to$3,586,000 for the third quarter of fiscal 2023. - Gross Profit increased
60% to$2,926,000 and Gross Margin remained steady at51% . - Operating income increased
600% to$721,000 from$103,000 , primarily due to the increase in gross profit partially offset by increases in operating expenses. - Income before taxes increased
569% to$890,000 from$133,000 , fueled by positive operating leverage from the strong increase in quarterly sales. - As of November 30, 2023, the Company had no outstanding debt and cash, cash equivalents and marketable securities totaling
$12.6 million . - Despite record sales, backlog at quarter end remained strong at
$10,439,000 , a year-over-year increase of96% and roughly even with the record high backlog of the previous quarter. - Revenue growth of approximately
30% is expected for the full fiscal year ending February 29, 2024, a record high and a result of increasing shipments from Sono-Tek’s strong backlog and projected new and [repeat or reoccurring?] orders.
“Sono-Tek reported its strongest quarter ever for the third quarter of FY2024 ended November 30th,” said Dr. Christopher L. Coccio, Executive Chairman. “Significant improvements in our supply chain enabled us to ship both new orders and from backlog, resulting in record net sales of
“Operating Income increased over 6-fold to
“Backlog remained high despite the record sales and nearly doubled from a year ago to
“We recently increased our projections for the full fiscal year ending February 29, 2024, and now expect net sales to grow approximately
| Third Quarter Fiscal 2024 Results | ||||||||||||
| ($ in thousands) | ||||||||||||
| Three Months Ended November 30, | Change | |||||||||||
| 2023 | 2022 | $ | % | |||||||||
| Net Sales | $ | 5,690 | $ | 3,586 | 2,104 | |||||||
| Gross Profit | $ | 2,926 | $ | 1,824 | 1,002 | |||||||
| Gross Margin | 51 | % | 51 | % | ||||||||
| Operating Income | $ | 721 | $ | 103 | ||||||||
| Operating Margin | 13 | % | 3 | % | ||||||||
| Net Income | $ | 690 | $ | 105 | ||||||||
| Net Margin | 12 | % | 3 | % | ||||||||
| Nine Month Fiscal 2024 Results | ||||||||||||
| ($ in thousands) | ||||||||||||
| Nine Months Ended November 30, | Change | |||||||||||
| 2023 | 2022 | $ | % | |||||||||
| Net Sales | $ | 14,932 | $ | 11,401 | 3,531 | |||||||
| Gross Profit | $ | 7,504 | $ | 5,827 | 1,677 | |||||||
| Gross Margin | 50 | % | 51 | % | ||||||||
| Operating Income | $ | 1,195 | $ | 662 | 533 | |||||||
| Operating Margin | 8 | % | 6 | % | ||||||||
| Net Income | $ | 1,285 | $ | 573 | 712 | |||||||
| Net Margin | 9 | % | 5 | % | ||||||||
Third Quarter Fiscal 2024 Sales Overview
Net sales increased
Sales to the Alternative/Clean Energy market grew
Approximately
Backlog on November 30, 2023 was
Third Quarter FY 2024 Financial Overview
Gross profit was
Operating expenses were
Research and product development costs increased
Marketing and selling expenses increased
General and Administrative expenses increased
Operating income increased
Interest income, dividend income and unrealized gain on marketable securities increased to
Net income increased
First Nine Months FY 2024 Overview
Net sales increased by
Operating income increased
Balance Sheet and Cash Flow Overview
At November 30, 2023, cash, cash equivalents and marketable securities totaled
At November 30, 2023, the Company had received approximately
Capital expenditures in the third quarter of fiscal 2024 were
About Sono-Tek
Sono-Tek Corporation is the leading developer and manufacturer of ultrasonic coating systems for applying precise, thin film coatings to protect, strengthen or smooth surfaces on parts and components for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive.
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; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; residual effects from COVID-19 pandemic; maintenance of increased order backlog and timely completion and shipment of related product; 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; maintenance of increased order backlog; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; 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, contact:
Stephen J. Bagley
Chief Financial Officer
Sono-Tek Corporation
info@sono-tek.com
Investor Relations:
Stephanie Prince
PCG Advisory
(646) 863-6341
sprince@pcgadvisory.com
| SONO-TEK CORPORATION | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| November 30, 2023 | February 28, | ||||||||
| (Unaudited) | 2023 | ||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and cash equivalents | $ | 2,981,931 | $ | 3,354,601 | |||||
| Marketable securities | 9,609,444 | 8,090,000 | |||||||
| Accounts receivable (less allowance of | 1,762,309 | 1,633,866 | |||||||
| Inventories | 4,252,550 | 3,242,909 | |||||||
| Prepaid expenses and other current assets | 81,785 | 254,046 | |||||||
| Total current assets | 18,688,019 | 16,575,422 | |||||||
| Land | 250,000 | 250,000 | |||||||
| Building, equipment, furnishings and leasehold improvements, net | 2,850,100 | 2,624,996 | |||||||
| Intangible assets, net | 51,674 | 57,202 | |||||||
| Deferred tax asset | 842,010 | 667,098 | |||||||
| TOTAL ASSETS | $ | 22,681,803 | $ | 20,174,718 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 1,504,382 | $ | 810,863 | |||||
| Accrued expenses | 1,720,020 | 1,427,446 | |||||||
| Customer deposits | 3,143,009 | 2,838,165 | |||||||
| Income taxes payable | 248,152 | 381,421 | |||||||
| Total current liabilities | 6,615,563 | 5,457,895 | |||||||
| Deferred tax liability | 82,865 | ||||||||
| Total Liabilities | 6,615,563 | 5,540,760 | |||||||
| Stockholders’ Equity | |||||||||
| Common stock, $.01 par value; 25,000,000 shares authorized, 15,745,206 | |||||||||
| and 15,742,073 issued and outstanding, respectively | 157,452 | 157,421 | |||||||
| Additional paid-in capital | 9,714,301 | 9,566,898 | |||||||
| Accumulated earnings | 6,194,487 | 4,909,639 | |||||||
| Total stockholders’ equity | 16,066,240 | 14,633,958 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 22,681,803 | $ | 20,174,718 | |||||
| See notes to unaudited condensed consolidated financial statements. | |||||||||
| SONO-TEK CORPORATION | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| Nine Months Ended November 30, | Three Months Ended November, 30 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Sales | $ | 14,932,157 | $ | 11,401,029 | $ | 5,690,022 | $ | 3,586,165 | ||||||||
| Cost of Goods Sold | 7,428,348 | 5,574,035 | 2,764,013 | 1,761,797 | ||||||||||||
| Gross Profit | 7,503,809 | 5,826,994 | 2,926,009 | 1,824,368 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and product development | 2,221,712 | 1,543,310 | 776,013 | 520,187 | ||||||||||||
| Marketing and selling | 2,700,327 | 2,359,430 | 955,017 | 792,710 | ||||||||||||
| General and administrative | 1,387,006 | 1,262,670 | 474,457 | 407,990 | ||||||||||||
| Total Operating Expenses | 6,309,045 | 5,165,410 | 2,205,487 | 1,720,887 | ||||||||||||
| Operating Income | 1,194,764 | 661,584 | 720,522 | 103,481 | ||||||||||||
| Interest and Dividend Income | 379,949 | 64,725 | 149,666 | 38,803 | ||||||||||||
| Net unrealized gain/(loss) on marketable | ||||||||||||||||
| securities | 31,031 | (40,256 | ) | 20,176 | (9,231 | ) | ||||||||||
| Income before Income Taxes | 1,605,744 | 686,053 | 890,364 | 133,053 | ||||||||||||
| Income Tax Expense | 320,896 | 113,396 | 200,195 | 28,155 | ||||||||||||
| Net Income | $ | 1,284,848 | $ | 572,657 | $ | 690,169 | $ | 104,898 | ||||||||
| Basic Earnings Per Share | $ | 0.08 | $ | 0.04 | $ | 0.04 | $ | 0.01 | ||||||||
| Diluted Earnings Per Share | $ | 0.08 | $ | 0.04 | $ | 0.04 | $ | 0.01 | ||||||||
| Weighted Average Shares – Basic | 15,743,224 | 15,733,284 | 15,744,543 | 15,738,180 | ||||||||||||
| Weighted Average Shares – Diluted | 15,775,675 | 15,764,351 | 15,776,972 | 15,773,370 | ||||||||||||
| See notes to unaudited condensed consolidated financial statements. | ||||||||||||||||
| Product Sales: | ||||||||||||||||||||||||||||||
| Three Months Ended November 30, | Change | Nine Months Ended November 30, | Change | |||||||||||||||||||||||||||
| 2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||||||||||||||||||
| Fluxing Systems | $ | 62,000 | $ | 252,000 | $ | (190,000 | ) | -75 | % | $ | 503,000 | $ | 960,000 | $ | (457,000 | ) | -48 | % | ||||||||||||
| Integrated Coating Systems | 1,418,000 | 193,000 | 1,225,000 | 635 | % | 2,579,000 | 787,000 | 1,792,000 | 228 | % | ||||||||||||||||||||
| Multi-Axis Coating Systems | 2,962,000 | 1,493,000 | 1,469,000 | 98 | % | 7,648,000 | 4,962,000 | 2,686,000 | 54 | % | ||||||||||||||||||||
| OEM Systems | 268,000 | 503,000 | (235,000 | ) | -47 | % | 1,078,000 | 1,819,000 | (741,000 | ) | -41 | % | ||||||||||||||||||
| Spare Parts, Services and Other | 980,000 | 1,145,000 | (165,000 | ) | -14 | % | 3,124,000 | 2,873,000 | 251,000 | 9 | % | |||||||||||||||||||
| TOTAL | $ | 5,690,000 | $ | 3,586,000 | $ | 2,104,000 | 59 | % | $ | 14,932,000 | $ | 11,401,000 | $ | 3,531,000 | 31 | % | ||||||||||||||
| Market Sales: | ||||||||||||||||||||||||||||||
| Three Months Ended November 30, | Change | Nine Months Ended November 30, | Change | |||||||||||||||||||||||||||
| 2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||||||||||||||||||
| Electronics/Microelectronics | $ | 1,374,000 | $ | 1,307,000 | $ | 67,000 | 5 | % | $ | 3,724,000 | $ | 4,316,000 | $ | (592,000 | ) | -14 | % | |||||||||||||
| Medical | 1,340,000 | 877,000 | 463,000 | 53 | % | 3,452,000 | 3,350,000 | 102,000 | 3 | % | ||||||||||||||||||||
| Alternative Energy | 2,083,000 | 720,000 | 1,363,000 | 189 | % | 4,735,000 | 2,027,000 | 2,708,000 | 134 | % | ||||||||||||||||||||
| Emerging R&D and Other | 152,000 | 102,000 | 50,000 | 49 | % | 315,000 | 322,000 | (7,000 | ) | -2 | % | |||||||||||||||||||
| Industrial | 741,000 | 580,000 | 161,000 | 28 | % | 2,706,000 | 1,386,000 | 1,320,000 | 95 | % | ||||||||||||||||||||
| TOTAL | $ | 5,690,000 | $ | 3,586,000 | $ | 2,104,000 | 59 | % | $ | 14,932,000 | $ | 11,401,000 | $ | 3,531,000 | 31 | % | ||||||||||||||
| Geographic Sales: | ||||||||||||||||||||||||||||||
| Three Months Ended November 30, | Change | Nine Months Ended November 30, | Change | |||||||||||||||||||||||||||
| 2023 | 2022 | $ | % | 2023 | 2021 | $ | % | |||||||||||||||||||||||
| U.S. & Canada | $ | 3,421,000 | $ | 1,585,000 | $ | 1,836,000 | 116 | % | $ | 8,988,000 | $ | 5,176,000 | $ | 3,812,000 | 74 | % | ||||||||||||||
| Asia Pacific (APAC) | 681,000 | 834,000 | (153,000 | ) | -18 | % | 1,790,000 | 2,367,000 | (577,000 | ) | -24 | % | ||||||||||||||||||
| Europe, Middle East, Asia (EMEA) | 1,476,000 | 731,000 | 745,000 | 102 | % | 3,057,000 | 2,557,000 | 500,000 | 20 | % | ||||||||||||||||||||
| Latin America | 112,000 | 436,000 | (324,000 | ) | -74 | % | 1,097,000 | 1,301,000 | (204,000 | ) | -16 | % | ||||||||||||||||||
| TOTAL | $ | 5,690,000 | $ | 3,586,000 | $ | 2,104,000 | 59 | % | $ | 14,932,000 | $ | 11,401,000 | $ | 3,531,000 | 31 | % | ||||||||||||||
FAQ
What was Sono-Tek Corporation's net sales for the third quarter of fiscal year 2024?
What was the increase in gross profit for Sono-Tek Corporation in the third quarter of fiscal year 2024?
What was the operating income increase for Sono-Tek Corporation in the third quarter of fiscal year 2024?
What was the backlog at quarter end for Sono-Tek Corporation in the third quarter of fiscal year 2024?
What is the expected revenue growth for Sono-Tek Corporation for the full fiscal year ending February 29, 2024?
