Sono-Tek Reports Strong Growth in Sales, Profitability and Backlog for Second Quarter Fiscal 2022; Expects Double-Digit Growth and Record Sales for FY 2022
Sono-Tek Corporation (NASDAQ: SOTK) reported impressive Q2 FY2022 results with net sales reaching $4.07 million, a 17% increase year-over-year. Net income soared 93% to $344,000, while backlog surged 64% to a record $6.33 million. Operating income also rose significantly by 123% to $449,000, reflecting strong sales in the semiconductor and diagnostic coating markets, particularly in China. Gross profit saw a 28% increase, resulting in a gross margin of 51%. The company anticipates continued double-digit sales growth for the upcoming quarters.
- Net sales increased 17% to $4.07 million.
- Net income rose 93% to $344,000.
- Backlog surged 64% to $6.33 million.
- Operating income increased 123% to $449,000.
- Gross profit up 28% with a gross margin of 51%.
- Guidance anticipates double-digit sales growth for upcoming quarters.
- None.
Q2 Sales Up
MILTON, NY, Oct. 13, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- 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 periods of fiscal year 2022, ended August 31, 2021.
Second Quarter FY2022 Financial Highlights:
(Compared with prior-year period unless otherwise noted)
- Net sales were
$4,070,000 , up17% or$589,000 , driven by increased sales of OEM systems to the China market. - Gross Profit increased
28% to$2,074,000 due to higher sales and product mix. - Gross Margin expanded 440 basis points to
51.0% primarily due to product mix. - Operating income increased
123% to$449,000 , compared to$201,000. - Net income was
$344,000 , an increase of93% . - Backlog reached a record high of
$6,332,000 , an increase of45% compared with backlog of$4,380,000 on May 31, 2021 (the end of the fiscal Q1) and increased64% compared to backlog of$3,851,000 on February 28, 2021 (the end of fiscal 2021). - Uplisted to Nasdaq Capital Market on August 27, 2021.
First Half Fiscal 2022 Highlights
(Compared with prior-year period unless otherwise noted)
- Net Sales were
$7,715,000 , an increase of12% , primarily driven by strength in the semiconductor and electronic diagnostic coating markets. - Gross Profit increased
23% to$3,898,000 due to higher sales and product mix. - Gross Margin expanded 440 basis points to
50.5% primarily due to product mix and lower than expected warranty and installation costs. - Operating Income increased
105% to$791,000 due to increases in gross profit, partially offset by increases in operating expenses. - Income before taxes increased
94% to$802,000 , excluding the benefit from PPP loan forgiveness of$1.0 million . - As of August 31, 2021, the Company had no outstanding debt.
Guidance
- Sales Growth Guidance for the third and fourth quarters of FY2022 is for double digit increases over the comparable periods of last year.
- Sono-Tek continues to expect the highest annual sales in corporate history for fiscal year 2022, ending February 28, 2022.
Dr. Christopher L. Coccio, Chairman and CEO, commented, “Sono-Tek had another strong performance in the second quarter of fiscal 2022. Net sales increased
“The outlook is strong as well. We expect double-digit sales increases for both the third and fourth quarters of the fiscal year based on the strength of our backlog. We expect this growth to generate the highest annual sales in corporate history for the year ending in February 2022. We’re very excited about this expanded revenue which reflects the success of our strategic shift to provide higher value, complete machine solutions and larger subsystems to OEMs. Our continued positive trajectory undoubtedly facilitated the uplisting of our common stock to the Nasdaq Capital Market during the second quarter. SOTK began trading on Nasdaq on August 27th, and we rang the closing bell a few days later to mark the achievement of this important milestone,” concluded Dr. Coccio.
Year-to-Date Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
| Six Months Ended August 31, | Change | |||
| 2021 | 2020 | $ | % | |
| Net Sales | $ 7,715,000 | $ 6,909,000 | 806,000 | |
| Gross Profit | 3,898,000 | 3,182,000 | 716,000 | |
| Gross Margin | ||||
| Operating Income | $ 791,000 | $ 386,000 | 405,000 | |
| Operating Margin | ||||
| Net Income | $ 1,611,000 | $ 346,000 | 1,265,000 | |
| Net Margin | ||||
| Diluted Earnings Per Share | $ 0.10 | $ 0.02 | ||
| Weighted Average Shares - Diluted | 15,614,000 | 15,531,000 | ||
Second Quarter Fiscal 2021 Results (Narrative compares with prior-year period unless otherwise noted)
| Three Months Ended August 31, | Change | |||
| 2021 | 2020 | $ | % | |
| Net Sales | $ 4,070,000 | $ 3,481,000 | 589,000 | |
| Gross Profit | 2,074,000 | 1,621,000 | 453,000 | |
| Gross Margin | ||||
| Operating Income | $ 449,000 | $ 201,000 | 248,000 | |
| Operating Margin | ||||
| Net Income | $ 344,000 | $ 178,000 | 166,000 | |
| Net Margin | ||||
| Diluted Earnings Per Share | ||||
| Weighted Average Shares - Diluted | 15,602,000 | 15,533,000 | ||
Second Quarter FY2022 Financial Overview
Fiscal second quarter net sales were
In the second quarter of fiscal 2022, approximately
Backlog reached a record high of
For the second quarter of fiscal 2022, the gross profit margin was
Operating income increased
Net income for the second quarter was
Balance Sheet and Cash Flow Overview
Cash and cash equivalents and short-term investments at August 31, 2021 were
Capital expenditures in the second quarter totaled
At August 31, 2021, the Company had no debt on its balance sheet.
Conference Call Information
The Company will hold a conference call to discuss its second quarter fiscal year 2022 financial results today, Wednesday, October 13th, 2021 at 11:00am EST. To participate in the call, please dial 1 (877) 270-2148 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, https://www.sono-tek.com/about-us/investors/events-presentations/
A replay of the call will be available at 1 (877) 344-7529, access code 10160904, through October 20, 2021.
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 microscopic coating technologies that enable better outcomes for its customers’ products and processes.
For further information, visit www.sono-tek.com.
Safe Harbor Statement
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news releases, and other written and oral statements. 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; 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; 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; 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 forecasted range of sales guidance. We refer you to documents that the company files with the Securities and Exchange Commission, which includes Form 10-K and Form 10-Qs containing additional important information.
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
Financial Tables Follow
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| August 31, | |||||||||
| 2021 | February 28, | ||||||||
| (Unaudited) | 2021 | ||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and cash equivalents | $ | 6,143,106 | $ | 4,084,078 | |||||
| Marketable securities | 3,554,124 | 4,563,470 | |||||||
| Accounts receivable (less allowance of | 1,482,334 | 1,757,802 | |||||||
| Inventories, net | 2,923,855 | 2,611,106 | |||||||
| Prepaid expenses and other current assets | 124,214 | 151,316 | |||||||
| Total current assets | 14,227,633 | 13,167,772 | |||||||
| Land | 250,000 | 250,000 | |||||||
| Buildings, net | 1,525,958 | 1,575,135 | |||||||
| Equipment, furnishings and building improvements, net | 1,057,084 | 1,075,190 | |||||||
| Intangible assets, net | 85,736 | 95,456 | |||||||
| Deferred tax asset | 236,120 | 259,838 | |||||||
| TOTAL ASSETS | $ | 17,382,531 | $ | 16,423,391 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 1,080,255 | $ | 1,294,483 | |||||
| Accrued expenses | 1,398,318 | 1,750,916 | |||||||
| Customer deposits | 1,916,784 | 1,166,541 | |||||||
| Income taxes payable | 202,188 | 53,567 | |||||||
| Total current liabilities | 4,597,545 | 4,265,507 | |||||||
| Deferred tax liability | 183,011 | 205,562 | |||||||
| Long term debt, less current maturities | - | 1,001,640 | |||||||
| Total liabilities | 4,780,556 | 5,472,709 | |||||||
| Stockholders’ Equity | |||||||||
| Common stock, $.01 par value; 25,000,000 shares authorized, 15,531,285 and 15,452,656 shares issued and outstanding, respectively | 155,313 | 154,527 | |||||||
| Additional paid-in capital | 9,104,925 | 9,064,994 | |||||||
| Accumulated earnings | 3,341,737 | 1,731,161 | |||||||
| Total stockholders’ equity | 12,601,975 | 10,950,682 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 17,382,531 | $ | 16,423,391 | |||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Six Months Ended August 31, | Three Months Ended August 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Sales | $ | 7,714,935 | $ | 6,909,185 | $ | 4,070,467 | $ | 3,480,641 | ||||||||
| Cost of Goods Sold | 3,816,771 | 3,727,486 | 1,996,468 | 1,859,675 | ||||||||||||
| Gross Profit | 3,898,164 | 3,181,699 | 2,073,999 | 1,620,966 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and product development costs | 826,213 | 834,940 | 412,397 | 423,516 | ||||||||||||
| Marketing and selling expenses | 1,504,245 | 1,388,987 | 739,603 | 682,270 | ||||||||||||
| General and administrative costs | 776,222 | 572,254 | 473,423 | 313,852 | ||||||||||||
| Total Operating Expenses | 3,106,680 | 2,796,181 | 1,625,423 | 1,419,638 | ||||||||||||
| Operating Income | 791,484 | 385,518 | 448,576 | 201,328 | ||||||||||||
| Interest Expense | - | (17,704 | ) | - | (9,287 | ) | ||||||||||
| Interest and Dividend Income | 11,000 | 25,483 | 7,640 | 2,837 | ||||||||||||
| Other Income | - | 19,519 | - | 8,084 | ||||||||||||
| Paycheck Protection Program Loan Forgiveness | 1,005,372 | - | - | - | ||||||||||||
| Income Before Income Taxes | 1,807,856 | 412,816 | 456,216 | 202,962 | ||||||||||||
| Income Tax Expense | 197,280 | 67,125 | 112,392 | 25,199 | ||||||||||||
| Net Income | $ | 1,610,576 | $ | 345,691 | $ | 343,824 | $ | 177,763 | ||||||||
| Basic Earnings Per Share | $ | 0.10 | $ | 0.02 | $ | 0.02 | $ | 0.01 | ||||||||
| Diluted Earnings Per Share | $ | 0.10 | $ | 0.02 | $ | 0.02 | $ | 0.01 | ||||||||
| Weighted Average Shares - Basic | 15,500,952 | 15,410,952 | 15,507,484 | 15,424,126 | ||||||||||||
| Weighted Average Shares - Diluted | 15,613,930 | 15,530,910 | 15,602,359 | 15,533,010 | ||||||||||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Unaudited | ||||||||
| Six Months Ended August 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ | 1,610,576 | $ | 345,691 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 224,233 | 214,280 | ||||||
| Stock based compensation expense | 40,717 | 16,003 | ||||||
| Inventory reserve | (24,919 | ) | 36,000 | |||||
| Paycheck Protection Program Loan Forgiveness | (1,005,372) | - | ||||||
| Deferred tax expense | 1,167 | - | ||||||
| Decrease (Increase) in: | ||||||||
| Accounts receivable | 275,468 | (418,947) | ||||||
| Inventories | (287,830 | ) | (116,157) | |||||
| Prepaid expenses and other current assets | 27,101 | 58,863 | ||||||
| (Decrease) Increase in: | ||||||||
| Accounts payable and accrued expenses | (563,094 | ) | (250,099) | |||||
| Customer deposits | 750,243 | (660,588) | ||||||
| Income taxes payable | 148,622 | (6,878) | ||||||
| Net Cash Provided by (Used in) Operating Activities | 1,196,912 | (781,832) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment, furnishings and leasehold improvements | (147,230 | ) | (290,347 | ) | ||||
| Capital expenditure grant proceeds | - | 100,000 | ||||||
| Sale (purchase) of marketable securities | 1,009,346 | 366,639 | ||||||
| Net Cash Provided by Investing Activities | 862,116 | 176,292 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from note payable | - | 1,001,640 | ||||||
| Repayment of long term debt | - | (84,040 | ) | |||||
| Net Cash Provided by Financing Activities | - | 917,600 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,059,028 | 312,060 | ||||||
| CASH AND CASH EQUIVALENTS | ||||||||
| Beginning of period | 4,084,078 | 3,659,551 | ||||||
| End of period | $ | 6,143,106 | $ | 3,971,611 | ||||
| SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||||||||
| Interest paid | $ | - | $ | 13,972 | ||||
| Income Taxes Paid | $ | 47,488 | $ | 74,004 | ||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
ADDITIONAL INFORMATION -- PRODUCT, MARKET AND GEOGRAPHIC SALES
(unaudited)
Product Sales
| Three Months Ended August 31, | Change | Six Months Ended August 31, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| Fluxing Systems | $ | 117,000 | $ | 94,000 | 23,000 | $ | 476,000 | $ | 438,000 | 38,000 | ||||||||||||||||||||||
| Integrated Coating Systems | 565,000 | 673,000 | (108,000 | ) | ( | ) | 720,000 | 1,849,000 | (1,129,000) | ( | ) | |||||||||||||||||||||
| Multi-Axis Coating Systems | 1,891,000 | 1,985,000 | (94,000 | ) | ( | 3,970,000 | 2,898,000 | 1,072,000 | ||||||||||||||||||||||||
| OEM Systems | 845,000 | 232,000 | 613,000 | 1,171,000 | 654,000 | 517,000 | ||||||||||||||||||||||||||
| Other | 652,000 | 497,000 | 155,000 | 1,378,000 | 1,070,000 | 308,000 | ||||||||||||||||||||||||||
| TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | $ | 7,715,000 | $ | 6,909,000 | 806,000 | ||||||||||||||||||||||
Market Sales
| Three Months Ended August 31, | Change | Six Months Ended August 31, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| Electronics/Microelectronics | $ | 1,448,000 | $ | 811,000 | 637,000 | $ | 3,707,000 | $ | 3,051,000 | 656,000 | ||||||||||||||||||||||
| Medical | 1,097,000 | 961,000 | 136,000 | 1,814,000 | 1,653,000 | 161,000 | ) | |||||||||||||||||||||||||
| Alternative Energy | 957,000 | 826,000 | 131,000 | 1,389,000 | 1,221,000 | 168,000 | ||||||||||||||||||||||||||
| Emerging R&D and Other | 269,000 | 479,000 | (210,000) | ( | ) | 435,000 | 516,000 | (81,000 | ) | ( | ||||||||||||||||||||||
| Industrial | 299,000 | 404,000 | (105,000) | ( | 370,000 | 468,000 | (98,000) | ( | ) | |||||||||||||||||||||||
| TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | $ | 7,715,000 | $ | 6,909,000 | 806,000 | ||||||||||||||||||||||
Geographic Sales
| Three Months Ended August 31, | Change | Six Months Ended August 31, | Change | |||||||||||||||||||||||||||||
| 2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
| U.S. & Canada | $ | 1,553,000 | $ | 2,156,000 | (603,000) | ( | ) | $ | 2,781,000 | $ | 2,911,000 | (130,000) | ( | ) | ||||||||||||||||||
| Asia Pacific (APAC) | 1,631,000 | 455,000 | 1,176,000 | 2,853,000 | 2,377,000 | 476,000 | ||||||||||||||||||||||||||
| Europe, Middle East, Asia (EMEA) | 593,000 | 767,000 | (174,000 | ) | ( | ) | 1,436,000 | 1,198,000 | 238,000 | |||||||||||||||||||||||
| Latin America | 293,000 | 103,000 | 190,000 | 645,000 | 423,000 | 222,000 | ||||||||||||||||||||||||||
| TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | $ | 7,715,000 | $ | 6,909,000 | 806,000 | ||||||||||||||||||||||
FAQ
What were Sono-Tek's Q2 FY2022 earnings results?
What is Sono-Tek's sales growth outlook for FY2022?
How much did Sono-Tek's backlog increase in Q2 FY2022?
What drove Sono-Tek's sales increase in the latest quarter?
