• Strong backlog of $3,202,000
  • Achieved net income of $168,000, up 572%
  • Company expects second quarter revenues to increase over last year

MILTON, N.Y. - (NewMediaWire) - July 15, 2020 - Sono-Tek Corporation (OTCQX: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its first quarter of fiscal year 2021, ended May 31, 2020.

“In the first quarter of FY2021, we achieved our forecasted 20% plus revenue growth, along with a significant improvement in the bottom line. More importantly, we continued to invest in upfront resources in Engineering and Application Engineering.  Application Engineering especially has become an essential element in our growth strategy of pursuing larger, more complex ultrasonic coating systems. These orders increase our average revenue per order and provide for longer delivery times compared to our more typical orders.  We were pleased to be able to quickly shift our customers’ work with our Application Engineers and development labs to a virtual experience.

We experienced a significant sales increase in our Integrated Coating Systems this quarter, and these were shipped to the Electronics/Microelectronics and the Medical segments of our business. Globally, our sales to the Asia Pacific (APAC) region were strong, resulting in 78% of our sales originating from outside the United States and Canada compared to 56% in last year’s first quarter.

Due to both new orders and existing long delivery pre-Covid backlog this quarter, we are expecting second quarter revenues to increase over last year. Looking ahead,  we believe that the ongoing strength of our business, combined with continued expense control and our strong balance sheet, position Sono-Tek well for the future,” commented Dr. Christopher L. Coccio, Chairman and CEO.  

First Quarter Fiscal 2021 Review  

 Three Months Ended May 31,Change
 20202019$%
Net Sales$  3,429,000$  2,822,000607,00022%
Gross Profit1,561,0001,305,000256,00020%
  Gross Margin45.5%46.2%  
Operating Income$  184,000$  5,000179,0003580%
  Operating Margin5.4%0.2%  
Net Income$  168,000$  25,000143,000572%
  Net Margin4.9%0.9%  
Basic Earnings Per Share$0.01$0.00  
Diluted Earnings Per Share$0.01$0.00  
Weighted Average Shares -Basic15,398,00015,268,000  
Weighted Average Shares - Diluted15,437,00015,357,000  


Sales growth was driven by demand for Sono-Tek’s customized, highly engineered and high value integrated coating systems primarily for the Electronics / Microelectronics market in the first quarter of fiscal 2021. A significant customer took delivery of a system valued at over $700,000 in this market, and further orders from this customer are expected in the future. 

From a product sales perspective, Integrated Coating Systems revenues increased 197%. However, quarterly demand and revenue in any of the Market or Product baskets typically varies due to the size and timing of orders, so the multi-quarter totals at year-end are often more significant in reflecting overall Market and Product trends.

See the accompanying tables at the end of this release for a breakout of sales by Market and Product. 

In the first quarter of fiscal 2021, approximately 78% of sales originated outside of the United States and Canada compared with 56% in the prior year period.  Significantly, sales in the APAC region increased 297%, primarily led by several shipments to China, as manufacturing operations came back online following temporary COVID-19 shutdowns.

The change in product mix resulted in a slightly lower gross margin of 45.5%, and combined with tight expense control, resulted in a 572% increase in net income to $168,000 this quarter.

Balance Sheet and Cash Flow Overview

Sono-Tek has built a strong balance sheet with solid levels of cash and cash equivalents compared to a minimal level of debt.  Cash and cash equivalents and short-term investments at quarter-end were $8.3 million, up from $7.9 million at the end of fiscal 2020.  The increase was the result of the current period's net income and noncash charges and the proceeds of long term note payable partially offset by purchases of equipment and the repayment of long-term debt.

Cash used in operating activities was $396,000 in the first quarter of fiscal 2021 compared with generating $362,000 in the prior fiscal year period.  Capital expenditures in the first quarter of fiscal 2021 were $152,000 compared with $129,000 in the prior fiscal year period.  

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, press 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. 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; 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.

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 

FINANCIAL TABLES FOLLOW


SONO-TEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

  May 31, 2020  February 29, 
  (Unaudited)  2020 
ASSETS        
Current Assets:        
Cash and cash equivalents $4,381,947  $3,659,551 
Marketable securities  3,908,454   4,219,240 
Accounts receivable (less allowance of $71,000)  1,341,617   929,701 
Inventories, net  2,512,222   2,381,891 
Prepaid expenses and other current assets  146,588   153,698 
Total current assets  12,290,828   11,344,081 
         
Land  250,000   250,000 
Buildings, net  1,634,226   1,654,061 
Equipment, furnishings and building improvements, net  1,279,083   1,212,578 
Intangible assets, net  102,145   106,291 
Deferred tax asset  176,314   176,314 
         
TOTAL ASSETS $15,732,596  $14,743,325 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities:        
Accounts payable $1,007,517  $668,721 
Accrued expenses  1,409,167   1,613,409 
Customer deposits  1,325,694   1,648,690 
Current portion of long-term debt  556,212   169,716 
Income taxes payable  112,548   70,621 
Total current liabilities  4,411,138   4,171,157 
         
Deferred tax liability  251,761   251,761 
Long term debt, less current maturities  1,111,265   538,000 
Total liabilities  5,774,164   4,960,918 
         
Stockholders’ Equity        
Common stock, $.01 par value; 25,000,000 shares authorized,
15,422,985 and 15,348,180 shares issued and outstanding, respectively
  154,230   153,482 
Additional paid-in capital  9,025,755   9,018,406 
Accumulated earnings  778,447   610,519 
Total stockholders’ equity  9,958,432   9,782,407 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $15,732,596  $14,743,325 

See notes to unaudited condensed consolidated financial statements.

    

SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

  Three Months Ended May 31,  
  2020  2019  
          
Net Sales $3,428,544  $2,822,428  
Cost of Goods Sold  1,867,811   1,517,493  
      Gross Profit  1,560,733   1,304,935  
          
Operating Expenses         
   Research and product development costs  411,424   354,173  
   Marketing and selling expenses  706,717   677,412  
   General and administrative costs  258,402   268,813  
      Total Operating Expenses  1,376,543   1,300,398  
          
Operating Income  184,190   4,537  
          
Interest Expense  (8,417)  (8,947) 
Interest and Dividend Income  22,646   31,171  
Other income  11,435   4,755  
          
Income Before Income Taxes  209,854   31,516  
          
Income Tax Expense  41,926   6,303  
          
Net Income $167,928  $25,213  
          
Basic Earnings Per Share $0.01  $0.00  
          
Diluted Earnings Per Share $0.01  $0.00  
          
Weighted Average Shares - Basic  15,397,779   15,268,071  
          
Weighted Average Shares - Diluted  15,436,758   15,357,295  
                

See notes to unaudited condensed consolidated financial statements.

   
  

SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

  Three Months Ended May 31, 
  2020  2019 
       
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $167,928  $25,213 
Adjustments to reconcile net income to net cash        
provided by (used in) operating activities:        
Depreciation and amortization  109,878   89,207 
Stock based compensation expense  8,097   11,310 
Inventory reserve  18,000   14,000 
Decrease (Increase) in:        
Accounts receivable  (411,916  65,538 
Inventories  (148,331)  (734,704)
Prepaid expenses and other current assets  7,110   289,992 
(Decrease) Increase in:        
Accounts payable and accrued expenses  134,554   410,079 
Customer Deposits  (322,996  184,748 
Income taxes payable  41,927   6,303 
Net Cash (Used In) Provided By Operating Activities  (395,749  361,686 
         
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of equipment, furnishings and leasehold improvements  (152,402)  (129,159)
Sale (Purchase) of marketable securities  310,786   (1,413,481)
Net Cash Provided By (Used In) Investing Activities  158,384   (1,542,640)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from note payable - bank  1,001,640   - 
Repayment of long-term debt  (41,879)  (40,283)
Net Cash Provided By (Used In) Financing Activities  959,761   (40,283)
         
         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  722,396   (1,221,237)
         
CASH AND CASH EQUIVALENTS        
Beginning of period  3,659,551   3,144,123 
End of period $4,381,947  $1,922,886 
         
SUPPLEMENTAL CASH FLOW DISCLOSURE:        
Interest paid $7,210  $8,947 
Taxes Paid $  $ 

See notes to unaudited condensed consolidated financial statements.

SONO-TEK CORPORATION
ADDITIONAL INFORMATION – MARKET AND PRODUCT SALES
(Unaudited)

 Product Sales:

  Three Months Ended May 31, Change 
  2020  % of total  2019  % of total  $  %  
Fluxing Systems $344,000   10%  $391,000   14%   (47,000  (12%) 
Integrated Coating Systems  1,176,000   34%   396,000   14%   780,000   197%  
Multi-Axis Coating Systems  913,000   27%   1,073,000   38%   (160,000)  (15%) 
OEM Systems  422,000   12%   319,000   11%   103,000   32%  
Other  574,000   17%   643,000   23%   (69,000)  (11%) 
TOTAL $3,429,000      $2,822,000      $607,000   22%  
                               

Market Sales:

  Three Months Ended May 31,  Change 
  2020  % of total  2019  % of total  $  %  
Electronics/Microelectronics $2,240,000   65%  $1,538,000   55%   702,000   46%  
Medical  692,000   20%   543,000   19%   149,000   27%  
Alternative Energy  395,000   12%   386,000   14%   9,000   2%  
Emerging R&D and Other  37,000   1%   285,000   10%   (248,000  (87% 
Industrial  65,000   2%   70,000   2%   (5,000)  (7%) 
TOTAL $3,429,000      $2,822,000      $607,000   22%