via NewMediaWire – Sono-Tek Corporation (Nasdaq: SOTK), the leading
developer and manufacturer of ultrasonic coating systems, today
reported financial results for its first quarter of fiscal year
2024, ended May 31, 2023.
First Quarter Fiscal 2023 Highlights (compared with the
first quarter of fiscal 2023 unless otherwise noted). The
three-month periods ended May 31, 2023 and 2022 are referred to as
the first quarter of fiscal 2024 and fiscal 2023, respectively.
- Net Sales were $3.6 million, a decrease of 11%, primarily
driven by vendor delays which pushed out planned first quarter
shipments into the second and third quarters of fiscal 2024.
- Gross Profit was $1.8 million, a decrease of 16% due to the
decline in sales, the Gross Margin was 49.3%.
- As of May 31, 2023 the Company had $12.1 million in cash, cash
equivalents and marketable securities and no outstanding debt.
- Backlog at May 31, 2023 was $9.96 million, a record high and a
17% increase from the preceding quarter, and a year-over-year
increase of 135%. New high margin, production line, system orders
for the green energy sector are contributing to the growth in
backlog.
- Sales Guidance for the second quarter of FY2024, ending August
31, 2023, is for substantial sales growth as delayed orders have
already begun shipping to customers.
- Sales Guidance for fiscal year 2024, ending February 29,
2024, anticipates sales to rebound strongly due to the record
backlog and ongoing improvements of supply chain issues.
“The first quarter of fiscal 2024 continued to be impacted by
lingering supply chain issues, however, we’ve made significant
progress improving the situation, which is expected to begin to
positively impact shipments in the current fiscal quarter that
began on June 1, 2023. This positive development is due to a
combination of vendor initiatives and our own success increasing
our internal vertical integration.
“With these issues continuing to improve, we are moving
aggressively forward with full production of the delayed systems
that have the potential for multiple repeat orders this year. Our
record backlog has grown to $9.96 million at quarter end from both
delayed shipments to customers and the new orders that we’ve
received. Since our fiscal year ended in February, backlog has
grown 17% and is 135% higher than a year ago. Supported by the
orders in hand and expected from the Green Energy sector, activity
in our development labs, and the recovery of a more reliable supply
chain, Sono-Tek is looking forward to an excellent year,” said Dr.
Christopher L Coccio, Chairman and CEO.
First Quarter Fiscal 2024 Results
(Narrative compares with prior-year period unless
otherwise noted) ($ in thousands)
|
|
|
Change |
|
FY 2023 |
FY 2022 |
$ |
% |
Net
Sales |
$ |
3,603 |
|
$ |
4,052 |
|
$ |
(449 |
) |
-11 |
% |
Gross
Profit |
$ |
1,777 |
|
$ |
2,107 |
|
$ |
(330 |
) |
-16 |
% |
Gross Margin |
|
49.32 |
% |
|
52.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(Loss)/Income |
$ |
(92 |
) |
$ |
381 |
|
$ |
(473 |
) |
-124 |
% |
Operating Margin |
|
-2.55 |
% |
|
9.40 |
% |
|
|
|
|
|
|
|
Net
Income |
$ |
53 |
|
$ |
306 |
|
$ |
(253 |
) |
-83 |
% |
Net Margin |
|
1.47 |
% |
|
7.55 |
% |
|
|
First Quarter Fiscal 2024 Sales Overview
Net sales were $3,603,000 in the first quarter of fiscal 2024, a
decrease of 11%. The decrease was primarily due to the impact of
delayed shipments to customers resulting from lingering supply
chain issues.
Integrated Coating System sales increased by 84%, largely due to
the final delivery of a multi-system order to an industrial market
customer. Sales of Multi-Axis coating systems recorded an 11%
decrease due to the lingering supply chain challenges in the period
that resulted in the shipping delay of several large system
orders. OEM System sales decreased by 51% resulting from
several OEM customers purchasing higher than typical quantities of
systems in FY2023 in order to build their own excess supply of
inventory.
Sales to the Alternative Energy and Industrial markets increased
by 37% and 219% respectively. The Alternative Energy market was
impacted by the continued adoption of Sono-Tek platforms used in
the manufacturing of critical membranes for carbon capture, green
hydrogen generation and fuel cells applications. The Industrial
market was positively impacted by the final shipment of a
multi-system order. Sales to the Medical market decreased by
77%, due to the delayed delivery of several multi-axis coating
machines. These systems are presently scheduled for shipment
in Q2 FY2024.
Approximately 66% of sales were to the U.S. and Canada compared
to 48% in the comparable period of fiscal 2023. The increased sales
to the U.S. and Canada were positively impacted by several U.S.
government initiatives to invest in the green energy sector and
advanced research markets. EMEA sales decreased by 57% primarily
due to the previously mentioned supply chain related shipment
delays of multi-axis systems.
Backlog on May 31, 2023 was $9,957,000, a record high and an
increase of 17% compared with backlog of $8,541,000 on February 28,
2023. Backlog increased 135% from the $4,230,000 backlog at May 31,
2022, the end of the first quarter of fiscal 2023. The increase in
backlog is due to the receipt of additional orders as well as the
delay in shipments due to supply chain issues.
First Quarter FY 2024 Financial Overview
Gross profit was $1,777,000, a decrease of 16% compared with
$2,107,000 for the first quarter of fiscal 2023. The gross profit
margin was 49.3% compared with 52% for the prior year period,
primarily due to a less favorable product mix resulting from
the lingering supply chain issues in the period.
Operating expenses were $1,869,000, an 8% increase from the
prior year period. Research and product development costs increased
27% to $656,000 primarily due to increased salaries and the higher
costs of research and development materials and supplies, which are
directed to the Company’s ongoing focused growth initiatives.
Marketing and selling expenses increased 1% to $801,000 primarily
due to increases in salaries, and travel and trade show expenses,
partially offset by a decrease in sales commissions. General and
Administrative expenses decreased 2% to $412,000 primarily due to
decreases in stock-based compensation, professional fees and
corporate expenses, partially offset by an increase in
salaries.
Operating income decreased $473,000 when compared to the prior
year period to an operating loss of $92,000. The current period’s
operating loss is a result of the decrease in gross profit combined
with an increase in operating expenses in the first quarter of
fiscal 2024.
Interest, dividend income and unrealized gain on marketable
securities increased $128,000 to $124,000 due to the current high
interest rate environment in the first quarter of fiscal 2024.
Net income was $53,000, or $0.00 per share, compared with
$306,000, or $0.02 per share, for the first quarter of fiscal 2023,
primarily due to a decrease in operating income partially offset by
an increase in interest and dividend income and an income tax
benefit for the period. Diluted weighted average shares outstanding
were 15,769,442 compared to 15,752,424 for the prior year
period.
Balance Sheet and Cash Flow Overview
At May 31, 2023 cash, cash equivalents and marketable securities
totaled $12.1 million, Sono-Tek had no debt on its balance sheet
and stockholders’ equity was $14.7 million.
At May 31, 2023, the Company had received approximately $3.6
million in cash deposits from its customers. These deposits
are downpayments from customers for current orders.
Capital expenditures in the first quarter of fiscal 2024 were
$149,000 which were invested in ongoing upgrades to the Company’s
manufacturing facilities. Sono-Tek anticipates capital expenditures
will total approximately $500,000 in fiscal year 2024.
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; the recovery of
the Electronics/Microelectronics and Medical markets following
COVID-19 related slowdowns; 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
-FINANCIAL TABLES FOLLOW -
SONO-TEK
CORPORATION |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
|
|
|
May 31,
2023 |
|
February 28, |
|
|
|
|
(Unaudited) |
|
2023 |
|
|
ASSETS |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,294,339 |
|
$ |
3,354,601 |
|
Marketable securities |
|
7,847,008 |
|
|
8,090,000 |
|
Accounts receivable (less allowance of $12,225) |
|
1,141,476 |
|
|
1,633,866 |
|
Inventories |
|
3,755,057 |
|
|
3,242,909 |
|
Prepaid expenses and other current assets |
|
189,300 |
|
|
254,046 |
|
|
Total
current assets |
|
17,227,180 |
|
|
16,575,422 |
|
|
|
|
|
|
|
|
Land |
|
|
250,000 |
|
|
250,000 |
Buuldings, equipment, furnishings and leasehold improvements,
net |
|
2,642,801 |
|
|
2,624,996 |
Intangible assets, net |
|
53,193 |
|
|
57,202 |
Deferred tax asset |
|
726,777 |
|
|
667,098 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
20,899,951 |
|
$ |
20,174,718 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
933,630 |
|
$ |
810,863 |
|
Accrued expenses |
|
1,339,289 |
|
|
1,427,446 |
|
Customer deposits |
|
3,610,575 |
|
|
2,838,165 |
|
Income taxes payable |
|
262,571 |
|
|
381,421 |
|
|
Total
current liabilities |
|
6,146,065 |
|
|
5,457,895 |
|
|
|
|
|
|
|
|
Deferred tax liability |
|
18,227 |
|
|
82,865 |
|
Total Liabilities |
|
6,164,292 |
|
|
5,540,760 |
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
Common stock, $.01 par value; 25,000,000 shares authorized,
15,42,073 |
|
|
|
|
and 15,742,073 shares issued and outstanding, respectively |
|
157,421 |
|
|
157,421 |
|
Additional paid-in capital |
|
9,615,193 |
|
|
9,566,898 |
|
Accumulated earnings |
|
4,963,045 |
|
|
4,909,639 |
Total stockholders’ equity |
|
14,735,659 |
|
|
14,633,958 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
20,899,951 |
|
$ |
20,174,718 |
|
|
|
|
|
|
|
|
See notes to
unaudited condensed consolidated financial statements. |
|
|
|
|
|
|
|
|
SONO-TEK
CORPORATION |
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net Sales |
$ |
3,603,018 |
|
|
$ |
4,051,535 |
|
|
Cost of Goods Sold |
|
1,825,786 |
|
|
|
1,944,522 |
|
|
Gross Profit |
|
|
|
1,777,232 |
|
|
|
2,107,013 |
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
Research and
product development costs |
|
656,438 |
|
|
|
516,633 |
|
|
Marketing and selling expenses |
|
|
800,784 |
|
|
|
789,862 |
|
|
General and administrative costs |
|
|
411,626 |
|
|
|
419,993 |
|
|
Total
Operating Expenses
|
|
|
|
1,868,848 |
|
|
|
1,726,488 |
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)/Income |
|
(91,616 |
) |
|
|
380,525 |
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend Income |
|
105,990 |
|
|
|
7,415 |
|
|
Net
unrealized gain/(loss) on marketable securities |
|
|
|
17,658 |
|
|
|
(11,853 |
) |
|
Income before Income Taxes |
|
32,032 |
|
|
|
376,087 |
|
|
|
|
|
|
|
|
|
|
|
Income Tax (Benefit) Expense |
|
(21,374 |
) |
|
|
70,451 |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
53,406 |
|
|
$ |
305,636 |
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
$ |
0.00 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share |
$ |
0.00 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares – Basic |
|
15,742,073 |
|
|
|
15,729,175 |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares – Diluted |
|
15,769,442 |
|
|
|
15,752,424 |
|
|
|
|
|
|
|
|
|
|
|
See notes to
unaudited condensed consolidated financial statements. |
|
|
|
|
|
|
|
|
|
|
SONO-TEK
CORPORATIONPRODUCT, MARKET, AND GEOGRAPHIC
SALES(Unaudited)
Product
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Change |
|
|
|
2023 |
|
% of
total |
|
|
2022 |
|
% of
total |
|
|
$ |
|
% |
Fluxing Systems |
|
$ |
236,000 |
|
6% |
|
$ |
309,000 |
|
8% |
|
$ |
(73,000) |
|
-24% |
Integrated Coating
Systems |
|
|
309,000 |
|
9% |
|
|
168,000 |
|
4% |
|
|
141,000 |
|
84% |
Multi-Axis Coating
Systems |
|
|
1,763,000 |
|
49% |
|
|
1,979,000 |
|
49% |
|
|
(216,000) |
|
-11% |
OEM Systems |
|
|
274,000 |
|
8% |
|
|
554,000 |
|
14% |
|
|
(280,000) |
|
-51% |
Spare Parts, Services and
Other |
|
|
1,021,000 |
|
28% |
|
|
1,042,000 |
|
25% |
|
|
(21,000) |
|
-2% |
TOTAL |
|
$ |
3,603,000 |
|
|
|
$ |
4,052,000 |
|
|
|
$ |
(449,000) |
|
-11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31, |
|
|
Change |
|
|
|
2023 |
|
% of
total |
|
|
2022 |
|
% of
total |
|
|
$ |
|
% |
Electronics/Microelectronics |
|
$ |
1,375,000 |
|
38% |
|
$ |
1,287,000 |
|
32% |
|
$ |
88,000 |
|
7% |
Medical |
|
|
383,000 |
|
11% |
|
|
1,675,000 |
|
41% |
|
|
(1,292,000) |
|
-77% |
Alternative Energy |
|
|
833,000 |
|
23% |
|
|
609,000 |
|
15% |
|
|
224,000 |
|
37% |
Emerging R&D and
Other |
|
|
126,000 |
|
3% |
|
|
203,000 |
|
5% |
|
|
(77,000) |
|
-38% |
Industrial |
|
|
886,000 |
|
25% |
|
|
278,000 |
|
7% |
|
|
608,000 |
|
219% |
TOTAL |
|
$ |
3,603,000 |
|
|
|
$ |
4,052,000 |
|
|
|
$ |
(449,000) |
|
-11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Change |
|
|
|
|
|
|
|
May 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
$ |
|
% |
|
|
|
|
|
U.S. & Canada |
|
$ |
2,368,000 |
$ |
1,938,000 |
|
$ |
430,000 |
|
22% |
|
|
|
|
|
Asia Pacific (APAC) |
|
|
572,000 |
|
706,000 |
|
|
(134,000) |
|
-19% |
|
|
|
|
|
Europe, Middle East, Asia
(EMEA) |
|
|
426,000 |
|
990,000 |
|
|
(564,000) |
|
-57% |
|
|
|
|
|
Latin America |
|
|
237,000 |
|
418,000 |
|
|
(181,000) |
|
-43% |
|
|
|
|
|
TOTAL |
|
$ |
3,603,000 |
$ |
4,052,000 |
|
$ |
(449,000) |
|
-11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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