Sono-Tek Reports Increased Sales and Strong Backlog for Third Quarter Fiscal 2022 and Continues to Expect Record Annual Sales for FY2022
Sono-Tek Corporation (SOTK) reported Q3 fiscal 2022 sales of $4.4 million, up 15% year-over-year. Gross profit rose 12% to $2.16 million, with a gross margin of 48.9%. Backlog reached a record $6.5 million, a 69% increase from the previous year. Operating income increased 10% to $491,000, with net income up 17.5% to $376,000. The company anticipates double-digit sales growth for Q4 and FY2022, expecting its highest annual sales in corporate history.
- Q3 net sales increased 15% to $4.4M.
- Record backlog of $6.5M, up 69% year-over-year.
- Operating income up 10% to $491,000.
- Net income increased 17.5% to $376,000.
- Gross margin decreased to 48.9% from 50.5% due to product mix changes.
Q3 Sales of
MILTON, N.Y., Jan. 12, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire -- 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-month periods of fiscal year 2022, ended November 30, 2021.
Third Quarter Fiscal 2022 Highlights (compared with the third quarter of fiscal 2021 unless otherwise noted).
- Net sales increased
15% to$4,419,000 , driven by strong sales to Asia for medical device coating machines and clean energy coating systems. - Gross Profit increased
12% to$2,159,000 due to the increase in sales. - Gross Margin was
48.9% compared with50.5% for the prior year period due to changes in product mix. - Operating income increased
10% to$491,000 due to the increase in gross profit, partially offset by increases in operating expenses. - Income before taxes increased
9% to$493,000. - Backlog on November 30, 2021 reached another record high of
$6,505,000 , an increase of3% compared with backlog of$6,332,000 on August 31, 2021 (the end of the fiscal Q2) and increased69% compared to backlog of$3,851,000 on February 28, 2021 (the end of fiscal year 2021).
Nine Month Fiscal 2022 Highlights (compared with the first nine months of fiscal 2021 unless otherwise noted)
- Net Sales increased
13% to$12,134,000 , primarily driven by sales of several recently developed new products for the medical market as well as continued expansion of Sono-Tek systems used in the clean energy sector. - Gross Profit increased
18% to$6,057,000 due to higher sales and a favorable product mix. - Gross Margin expanded 230 basis points to
49.9% primarily due to a favorable product mix and lower than expected warranty and installation costs. - Operating Income increased
54% to$1,282,000 due to the increase in gross profit, partially offset by increases in operating expenses. - Income before taxes increased
50% to$1,295,000 , excluding the benefit from PPP loan forgiveness of$1.0 million . - As of November 30, 2021, the Company had no outstanding debt.
- Cash and marketable securities were
$10,184,000 on November 30, 2021, an increase of$1,537,000 from February 28, 2021, nearly half of which was due to an increase in customer deposits of$729,000 , bringing total deposits to$1,896,000 at November 30, 2021. The increase in customer deposits is primarily due to our record backlog and the growing percentage of orders for costly, complex systems in the backlog.
Guidance
- For the fourth quarter of FY2022, Sono-Tek expects double digit sales growth over the comparable period of the prior fiscal year.
- Sono-Tek anticipates double digit sales growth for FY2022, and continues to expect the highest annual sales in corporate history for the fiscal year ending February 28, 2022.
Dr. Christopher L. Coccio, Chairman and CEO, commented, “Sono-Tek had an excellent third quarter with sales and net income growth of
“We ended the third quarter with
“Sono-Tek’s multi-year financial gains stem from the strategic shift in the Company’s business model that was initiated several years ago, expanding its product line to provide higher value complete machine solutions and larger subsystems to original equipment manufacturers (“OEMs”). These product advancements are supported by a high level of application engineering expertise from our specialized staff, in combination with the Company’s globally located process development labs. Looking ahead, we believe that the gains from this shift will continue to be realized as we continue to invest significant resources to further enhance our market diversity with new and expanded applications for Sono-Tek’s unique ultrasonic coating systems,” concluded Dr. Coccio.
Year-to-Date Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
($ in thousands)
| Nine Months Ended November 30, | Change | ||||||
| 2021 | 2020 | $ | % | ||||
| Net Sales | $ 12,134 | $ 10,736 | 1,398 | | |||
| Gross Profit | $ 6,057 | $ 5,112 | 945 | | |||
| Gross Margin | | | |||||
| Operating Income | $ 1,282 | $ 832 | 450 | | |||
| Operating Margin | | | |||||
| Net Income | $ 1,987 | $ 666 | 1,321 | | |||
| Net Margin | | | |||||
Third Quarter Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
($ in thousands)
| Three Months Ended November 30, | Change | ||||||
| 2021 | 2020 | $ | % | ||||
| Net Sales | $ 4,419 | $ 3,827 | 592 | | |||
| Gross Profit | $ 2,159 | $ 1,931 | 228 | | |||
| Gross Margin | | | |||||
| Operating Income | $ 491 | $ 447 | 44 | | |||
| Operating Margin | | | |||||
| Net Income | $ 376 | $ 320 | 56 | | |||
| Net Margin | | | |||||
Third Quarter FY2022 Financial Overview
Fiscal third quarter net sales were
Sales of multi-axis coating systems were strong, increasing
Integrated coatings systems sales decreased by
The micro-electronics market also dipped in the third quarter. However, this market sector is expected to rebound in the current fourth quarter due to the planned delivery of a large six-axis robot for the semiconductor industry that is scheduled to ship by the end of Sono-Tek’s fiscal year in February.
In the third quarter of fiscal 2022, approximately
Strong sales in Q3 fiscal 2022 were primarily driven from sales to APAC, reflecting the continuing transition of several countries emerging from COVID-19 lockdowns to bring their manufacturing operations back online. APAC shipments during the third quarter included two significant fuel cell membrane coating systems that were sold to different customers in South Korea that together totaled over
At quarter end, backlog was a record high of
For the third quarter of fiscal 2022, Gross Profit increased
Operating income increased
Net income for the third quarter was
Balance Sheet and Cash Flow Overview
Cash and cash equivalents and short-term investments at November 30, 2021 were
Capital expenditures in the third quarter totaled
At November 30, 2021, the Company had no debt on its balance sheet.
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; the duration and scope of the COVID-19 pandemic; the extent and duration of the pandemic’s adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; our ability to sell and provide our services and products, including as a result of continued pandemic related travel restrictions, mandatory business closures, and stay-at home or similar orders; any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations resulting from the pandemic; the ability of our customers and suppliers to continue their operations as result of the pandemic, which could result in terminations of contracts, losses of revenue; the continued recovery of the Microelectronics, Medical and Alternative Energy markets following COVID-19 related slowdowns; and further adverse effects to our supply chain; maintenance of increased order backlog, including effects of any COVID-19 related cancellations; the imposition of tariffs; the continued strong sales of the multi-axis coatings systems; 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, | ||||||||||
| 2021 | February 28, | |||||||||
| (Unaudited) | 2021 | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 6,833,804 | $ | 4,084,078 | ||||||
| Marketable securities | 3,349,962 | 4,563,470 | ||||||||
| Accounts receivable (less allowance of | 1,563,460 | 1,757,802 | ||||||||
| Inventories, net | 2,799,763 | 2,611,106 | ||||||||
| Prepaid expenses and other current assets | 139,856 | 151,316 | ||||||||
| Total current assets | 14,686,845 | 13,167,772 | ||||||||
| Land | 250,000 | 250,000 | ||||||||
| Buildings, net | 1,501,369 | 1,575,135 | ||||||||
| Equipment, furnishings and building improvements, net | 1,114,606 | 1,075,190 | ||||||||
| Intangible assets, net | 80,875 | 95,456 | ||||||||
| Deferred tax asset | 236,120 | 259,838 | ||||||||
| TOTAL ASSETS | $ | 17,869,815 | $ | 16,423,391 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 876,283 | $ | 1,294,483 | ||||||
| Accrued expenses | 1,733,451 | 1,750,916 | ||||||||
| Customer deposits | 1,895,671 | 1,166,541 | ||||||||
| Income taxes payable | 142,517 | 53,567 | ||||||||
| Total current liabilities | 4,647,922 | 4,265,507 | ||||||||
| Deferred tax liability | 183,011 | 205,562 | ||||||||
| Long term debt, less current maturities | - | 1,001,640 | ||||||||
| Total liabilities | 4,830,933 | 5,472,709 | ||||||||
| Stockholders’ Equity | ||||||||||
| Common stock, $.01 par value; 25,000,000 shares authorized, 15,699,719 and 15,452,656 shares issued and outstanding, respectively | 156,997 | 154,527 | ||||||||
| Additional paid-in capital | 9,163,979 | 9,064,994 | ||||||||
| Accumulated earnings | 3,717,906 | 1,731,161 | ||||||||
| Total stockholders’ equity | 13,038,882 | 10,950,682 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 17,869,815 | $ | 16,423,391 | ||||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Nine Months Ended November 30, | Three Months Ended November 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Sales | $ | 12,134,336 | $ | 10,736,327 | $ | 4,419,401 | $ | 3,827,142 | ||||||||
| Cost of Goods Sold | 6,077,645 | 5,624,002 | 2,260,874 | 1,896,516 | ||||||||||||
| Gross Profit | 6,056,691 | 5,112,325 | 2,158,527 | 1,930,626 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and product development costs | 1,243,513 | 1,241,739 | 417,300 | 406,799 | ||||||||||||
| Marketing and selling expenses | 2,349,607 | 2,154,956 | 845,362 | 765,969 | ||||||||||||
| General and administrative costs | 1,181,502 | 883,384 | 405,280 | 311,130 | ||||||||||||
| Total Operating Expenses | 4,774,622 | 4,280,079 | 1,667,942 | 1,483,898 | ||||||||||||
| Operating Income | 1,282,069 | 832,246 | 490,585 | 446,728 | ||||||||||||
| Interest Expense | - | (23,949 | ) | - | (6,245 | ) | ||||||||||
| Interest and Dividend Income | 13,367 | 26,953 | 2,367 | 1,470 | ||||||||||||
| Other Income | - | 30,343 | - | 10,824 | ||||||||||||
| Paycheck Protection Program Loan Forgiveness | 1,005,372 | - | - | - | ||||||||||||
| Income Before Income Taxes | 2,300,808 | 865,593 | 492,952 | 452,777 | ||||||||||||
| Income Tax Expense | 314,063 | 199,424 | 116,783 | 132,299 | ||||||||||||
| Net Income | $ | 1,986,745 | $ | 666,169 | $ | 376,169 | $ | 320,478 | ||||||||
| Basic Earnings Per Share | $ | 0.13 | $ | 0.04 | $ | 0.02 | $ | 0.02 | ||||||||
| Diluted Earnings Per Share | $ | 0.13 | $ | 0.04 | $ | 0.02 | $ | 0.02 | ||||||||
| Weighted Average Shares - Basic | 15,541,247 | 15,420,787 | 15,622,721 | 15,440,673 | ||||||||||||
| Weighted Average Shares - Diluted | 15,572,424 | 15,547,604 | 15,654,936 | 15,583,089 | ||||||||||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Unaudited | ||||||||
| Nine Months Ended November 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ | 1,986,745 | $ | 666,169 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 333,729 | 350,043 | ||||||
| Stock based compensation expense | 92,680 | 26,973 | ||||||
| Inventory reserve | (3,919 | ) | 54,000 | |||||
| Paycheck Protection Program Loan Forgiveness | (1,005,372) | - | ||||||
| Deferred tax expense | 23,718 | (89,304) | ||||||
| Decrease (Increase) in: | ||||||||
| Accounts receivable | 194,342 | (744,282) | ||||||
| Inventories | (184,738 | ) | (119,211) | |||||
| Prepaid expenses and other current assets | 11,460 | 27,071 | ||||||
| (Decrease) Increase in: | ||||||||
| Accounts payable and accrued expenses | (431,934 | ) | 193,317 | |||||
| Customer deposits | 729,130 | 133,423 | ||||||
| Income taxes payable | 66,400 | 214,725 | ||||||
| Net Cash Provided by Operating Activities | 1,812,241 | 712,924 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment, furnishings and leasehold improvements | (284,798 | ) | (327,180 | ) | ||||
| Capital expenditure grant proceeds | - | 100,000 | ||||||
| Sale of marketable securities | 1,213,508 | 993,724 | ||||||
| Net Cash Provided by Investing Activities | 928,710 | 766,544 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of stock options | 8,775 | - | ||||||
| Proceeds from note payable | - | 1,001,640 | ||||||
| Repayment of long term debt | - | (126,650 | ) | |||||
| Net Cash Provided by Financing Activities | 8,775 | 874,990 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,749,726 | 2,354,458 | ||||||
| CASH AND CASH EQUIVALENTS | ||||||||
| Beginning of period | 4,084,078 | 3,659,551 | ||||||
| End of period | $ | 6,833,804 | $ | 6,014,009 | ||||
| SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||||||||
| Interest paid | $ | - | $ | 20,573 | ||||
| Income Taxes Paid | $ | 224,002 | $ | 74,004 | ||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
PRODUCT, MARKET, AND GEOGRAPHIC SALES
(Unaudited)
Product Sales
| Three Months Ended November 30, | Change | Nine Months Ended November 31, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| Fluxing Systems | $ | 104,000 | $ | 242,000 | (138,000 | ) | ( | ) | $ | 579,000 | $ | 680,000 | (101,000) | ( | ) | |||||||||||||||||
| Integrated Coating Systems | 60,000 | 1,071,000 | (1,011,000 | ) | ( | ) | 780,000 | 2,920,000 | (2,140,000) | ( | ) | |||||||||||||||||||||
| Multi-Axis Coating Systems | 2,721,000 | 1,249,000 | 1,472,000 | | 6,692,000 | 4,147,000 | 2,545,000 | | ||||||||||||||||||||||||
| OEM Systems | 637,000 | 523,000 | 114,000 | | 1,808,000 | 1,177,000 | 631,000 | | ||||||||||||||||||||||||
| Other | 897,000 | 742,000 | 155,000 | | 2,275,000 | 1,812,000 | 463,000 | | ||||||||||||||||||||||||
| TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | | ||||||||||||||||||||
Market Sales
| Three Months Ended November 30, | Change | Nine Months Ended November 30, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| Electronics/Microelectronics | $ | 898,000 | $ | 1,455,000 | (557,000) | ( | ) | $ | 4,605,000 | $ | 4,504,000 | 101,000 | | |||||||||||||||||||
| Medical | 1,604,000 | 831,000 | 773,000 | | 3,418,000 | 2,484,000 | 934,000 | | ||||||||||||||||||||||||
| Alternative Energy | 1,459,000 | 783,000 | 676,000 | | 2,848,000 | 2,004,000 | 844,000 | | ||||||||||||||||||||||||
| Emerging R&D and Other | 256,000 | 207,000 | 49,000 | | 691,000 | 723,000 | (32,000 | ) | ( | |||||||||||||||||||||||
| Industrial | 202,000 | 551,000 | (349,000) | ( | 572,000 | 1,021,000 | (449,000) | ( | ) | |||||||||||||||||||||||
| TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | | ||||||||||||||||||||
Geographic Sales
| Three Months Ended November 30, | Change | Nine Months Ended November 30, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| U.S. & Canada | $ | 988,000 | $ | 1,165,000 | (177,000) | ( | ) | $ | 3,769,000 | $ | 4,076,000 | (307,000) | ( | ) | ||||||||||||||||||
| Asia Pacific (APAC) | 1,901,000 | 1,039,000 | 862,000 | | 4,754,000 | 3,416,000 | 1,338,000 | | ||||||||||||||||||||||||
| Europe, Middle East, Asia (EMEA) | 1,287,000 | 1,216,000 | 71,000 | | 2,723,000 | 2,414,000 | 309,000 | | ||||||||||||||||||||||||
| Latin America | 243,000 | 407,000 | (164,000 | ) | ( | ) | 888,000 | 830,000 | 58,000 | | ||||||||||||||||||||||
| TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | | ||||||||||||||||||||
FAQ
What are Sono-Tek's sales results for Q3 fiscal 2022?
How much did Sono-Tek's backlog increase in Q3 fiscal 2022?
What is Sono-Tek's guidance for Q4 and FY2022?
What was Sono-Tek's net income for Q3 fiscal 2022?
