SOTK 8-K
Sono Tek Corp (SOTK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02: Results of Operations and Financial Condition.
Item 7.01: Regulation FD Disclosure
On July 11, 2024, Sono-Tek Corporation issued a press release regarding its financial results for the quarter ended May 31, 2024 in the form attached as exhibit 99.1.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01: Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Press Release dated July 11, 2024. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SONO-TEK CORPORATION
By: /s/ Stephen J. Bagley
Stephen J. Bagley
Chief Financial Officer
July 11, 2024
Exhibit 99
2012 Route 9W ● Milton, NY 12547 ● 845-795-2020
Sono-Tek Reports 40% Increase in Sales and 525% Increase in
Net
Income for First Quarter Fiscal 2025
Provides Sales Guidance for Second Quarter of Fiscal 2025 and
Anticipates
Continued Sales Growth for Fiscal 2025
MILTON, N.Y., July 11, 2024 – 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 2025, ended May 31, 2024.
First Quarter FY2025 Financial Highlights:
(Compared with prior-year period unless otherwise noted)
- Net Sales for the quarter increased 40% to $5,031,000 compared to $3,603,000 in the prior year period, driven by strong shipments to the Medical and Alternative/Clean Energy markets.
- Gross Profit increased 38% to $2,454,000 compared to $1,777,000 in the prior year period.
- Operating Income increased $330,000 to $238,000, from an operating loss of $92,000 at May 31, 2023. The increase is due to the current period’s increase in gross profit partially offset by an increase in operating expenses.
- Gross Margin decreased slightly to 48.8% compared to 49.3% in the prior year period due to a realignment of organizational framework that started in Q4 FY2024, but remains strong and within its historical range.
- Income before taxes was $391,000 compared to $32,000 in the prior year period.
- Net income was $331,000, or $0.02 per share, compared with $53,000 or $0.00 per share, an increase of 525%
- Cash, cash equivalents and marketable securities at quarter-end were $12.2 million, an increase of $0.3 million from February 29, 2024 with no outstanding debt.
- Combined Equipment and service-related backlog at May 31, 2024 was $7.83 million, compared to equipment and service-related backlog of $9.28 million at February 29, 2024.
- Sales growth guidance for the second quarter of FY2025, ending August 31, 2024, is for growth of 2%-5% above the first quarter ended May 31, 2024 and for continued sales growth for the full fiscal year over the last fiscal year.
“Sono-Tek began its fiscal year with strong sales momentum and is looking forward to an excellent year with increasing orders in green energy systems combined with strength in the medical device coating market and the semiconductor/electronics markets. We are aggressively moving forward with full production systems with the potential for multiple repeat orders this year,” according to Dr. Christopher L Coccio, Executive Chairman.
Steve Harshbarger, CEO & President of Sono-Tek, remarked, “Our growth strategies are continuing to gain momentum as our customers move from R&D and pilot machines to our complex large-scale production systems with significantly higher Average Selling Prices (ASP). We remain excited about our prospects for attracting additional high-volume, high-ASP production system orders in fiscal year 2025. Due to the increased frequency of high ASP large platform machine orders, our revenue can be highly variable from quarter to quarter resulting in large fluctuations in backlog. With our strong sales momentum bolstered by our solid balance sheet, we remain focused on continued execution and look forward to building on our record revenues.”
First Quarter Fiscal 2025 Results
| Three Months Ended May 31, | Change | |||||||||||||||
| 2024 | 2023 | $ | % | |||||||||||||
| Net Sales | $ | 5,031,000 | $ | 3,603,000 | 1,428,000 | 40% | ||||||||||
| Gross Profit | 2,454,000 | 1,777,000 | 677,000 | 38% | ||||||||||||
| Gross Margin | 48.8% | 49.3% | ||||||||||||||
| Operating Income | $ | 238,000 | $ | (92,000 | ) | 330,000 | 359% | |||||||||
| Operating Margin | 4.7% | (2.6% | ) | |||||||||||||
| Net Income | $ | 331,000 | $ | 53,000 | 278,000 | 525% | ||||||||||
| Net Margin | 6.6% | 1.5% | ||||||||||||||
| Basic Earnings Per Share | $ | 0.02 | $ | 0.00 | ||||||||||||
| Diluted Earnings Per Share | $ | 0.02 | $ | 0.00 | ||||||||||||
| Weighted Average Shares -Basic | 15,751,000 | 15,742,000 | ||||||||||||||
| Weighted Average Shares - Diluted | 15,774,000 | 15,769,000 | ||||||||||||||
First Quarter FY2025 Financial Overview
Net Sales for the quarter increased 40% to $5,031,000 compared to $3,603,000 in the prior year period, driven by strong shipments to the Medical and Alternative/Clean Energy markets.
In the first quarter of fiscal 2025, approximately 39% of sales originated outside of the United States and Canada compared with 34% in the prior year period.
Equipment related backlog at May 31, 2024 was $7.69 million, compared to backlog of $9.08 million at February 29, 2024, a decrease of $1.39 million or 15.4%. Combined equipment and service-related backlog at May 31, 2024 was $7.83 million, compared to equipment and service related backlog of $9.28 million at February 29, 2024, a decrease of $1.5 million or 16%.
Gross Profit increased 38% to $2,454,000 compared to $1,777,000 in the prior year period. Gross profit margin decreased 50 basis points to 48.8% in the first quarter of fiscal 2025 compared to 49.3% in the prior year period due to product mix changes and recharacterization of expenses associated with evolving workforce roles, as successful development initiatives transition toward mainstream manufacturing.
Operating income increased to $238,000 in the first quarter of fiscal 2025 compared to an operating loss of $92,000 for the prior year period, an increase of $330,000 or 359%. The increase in operating income is a result of the improvement in gross profit of $677,000, offset by an increase in operating expenses of $347,000.
Net income for the first quarter was $331,000, or $0.02 per share, compared with net income of $53,000 or $0.00 per share, for the prior year period, an increase of 525%. Diluted weighted average shares outstanding totaled 15,774,376 compared to 15,769,442 for the prior year period.
Balance Sheet and Cash Flow Overview
Cash, cash equivalents and marketable securities at quarter-end were $12.2 million, an increase of $0.3 million from February 29, 2024, the end of fiscal year 2024. The increase was the result of the current period’s net income and non-cash charges partially offset by an increase in inventories and a decrease in payables and customer deposits.
Capital expenditures in the first quarter totaled $33,000 which were directed to ongoing upgrades to the Company’s manufacturing facilities. Sono-Tek anticipates total capital expenditures will be approximately $300,000 - $350,000 in fiscal 2025.
At May 31, 2024, Sono-Tek had no debt on its balance sheet.
About Sono-Tek
Sono-Tek Corporation is a global leader in the design and manufacture of ultrasonic coating systems that are shaping industries and driving innovation worldwide. Our ultrasonic coating systems are used to apply thin films onto parts used in diverse industries including microelectronics, alternative energy, medical devices, advanced industrial manufacturing, and research and development sectors worldwide. Sono-Tek's bold venture into the clean energy sector is showing transformative results in next-gen solar cells, fuel cells, green hydrogen generation, and carbon capture applications as we shape a sustainable future.
Our product line is rapidly evolving, transitioning from R&D to high-volume production machines with significantly higher average selling prices, showcasing our market leadership and adaptability. Our comprehensive suite of thin film coating solutions and application consulting services ensures unparalleled results for our clients and helps some of the world's most promising companies achieve technological breakthroughs and bring them to the market. The Company strategically delivers its products to customers through a network of direct sales personnel, carefully chosen independent distributors, and experienced sales representatives, ensuring efficient market reach across diverse sectors around the globe.
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, including political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; inflationary and supply chain pressures; the recovery of the Electronics/Microelectronics and Medical markets; rebound of sales to the industrial market in the second quarter of fiscal year 2025; maintenance of order backlog; 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; 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:
Sono-Tek Corp.
Stephen J. Bagley
Chief Financial Officer
Ph: (845) 795-2020
Investor Relations:
Kirin Smith
PCG Advisory
Ph: (646) 823-8656
http://www.sono-tek.com
FINANCIAL TABLES FOLLOW
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| May 31, 2024 | February 29, | |||||||
| (Unaudited) | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 2,402,007 | $ | 2,134,786 | ||||
| Marketable securities | 9,749,483 | 9,711,351 | ||||||
| Accounts receivable (less allowance of $12,225) | 1,401,582 | 1,470,711 | ||||||
| Inventories | 5,479,368 | 5,221,980 | ||||||
| Prepaid expenses and other current assets | 148,603 | 207,738 | ||||||
| Total current assets | 19,181,043 | 18,746,566 | ||||||
| Land | 250,000 | 250,000 | ||||||
| Buildings, equipment, furnishings and leasehold improvements, net | 2,709,183 | 2,832,156 | ||||||
| Intangible assets, net | 45,020 | 47,566 | ||||||
| Deferred tax asset | 1,369,210 | 1,255,977 | ||||||
| TOTAL ASSETS | $ | 23,554,456 | $ | 23,132,265 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,020,777 | $ | 1,049,742 | ||||
| Accrued expenses | 1,711,800 | 1,739,478 | ||||||
| Customer deposits | 3,339,816 | 3,419,706 | ||||||
| Income taxes payable | 618,010 | 414,807 | ||||||
| Total current liabilities | 6,690,403 | 6,623,733 | ||||||
| Deferred tax liability | 199,987 | 229,534 | ||||||
| Total liabilities | 6,890,390 | 6,853,267 | ||||||
| Commitments and Contingencies (Note 9) | - | - | ||||||
| Stockholders’ Equity | ||||||||
| Common stock, $.01 par value; 25,000,000 shares authorized, 15,750,880 shares issued and outstanding as of May 31 and February 29, 2024 | 157,509 | 157,509 | ||||||
| Additional paid-in capital | 9,824,618 | 9,770,387 | ||||||
| Accumulated earnings | 6,681,939 | 6,351,102 | ||||||
| Total stockholders’ equity | 16,664,066 | 16,278,998 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 23,554,456 | $ | 23,132,265 | ||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended May 31, | ||||||||
| 2024 | 2023 | |||||||
| Net Sales | $ | 5,031,038 | $ | 3,603,018 | ||||
| Cost of Goods Sold | 2,576,551 | 1,825,786 | ||||||
| Gross Profit | 2,454,487 | 1,777,232 | ||||||
| Operating Expenses | ||||||||
| Research and product development costs | 731,430 | 656,438 | ||||||
| Marketing and selling expenses | 897,190 | 800,784 | ||||||
| General and administrative costs | 587,571 | 411,626 | ||||||
| Total Operating Expenses | 2,216,191 | 1,868,848 | ||||||
| Operating Income/(Loss) | 238,296 | (91,616) | ||||||
| Interest and Dividend Income | 142,654 | 105,990 | ||||||
| Net unrealized gain on marketable securities | 10,361 | 17,658 | ||||||
| Income Before Income Taxes | 391,311 | 32,032 | ||||||
| Income Tax Expense/ (Benefit) | 60,474 | (21,374 | ) | |||||
| Net Income | $ | 330,837 | $ | 53,406 | ||||
| Basic Earnings Per Share | $ | 0.02 | $ | 0.00 | ||||
| Diluted Earnings Per Share | $ | 0.02 | $ | 0.00 | ||||
| Weighted Average Shares - Basic | 15,750,880 | 15,742,073 | ||||||
| Weighted Average Shares - Diluted | 15,774,376 | 15,769,442 | ||||||
See notes to unaudited condensed consolidated financial statements.
SONO-TEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended May 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ | 330,837 | $ | 53,406 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 158,491 | 135,208 | ||||||
| Stock based compensation expense | 54,231 | 48,295 | ||||||
| Inventory reserve | 11,839 | (10,582 | ) | |||||
| Unrealized (gain) on marketable securities | (10,361 | ) | (17,658 | ) | ||||
| Deferred tax expense | (142,780 | ) | (124,317 | ) | ||||
| Decrease (Increase) in: | ||||||||
| Accounts receivable | 69,129 | 492,390 | ||||||
| Inventories | (269,227 | ) | (501,566 | ) | ||||
| Prepaid expenses and other current assets | 59,135 | 64,746 | ||||||
| (Decrease) Increase in: | ||||||||
| Accounts payable | (28,965 | ) | 122,767 | |||||
| Accrued expenses | (27,678 | ) | (88,157 | ) | ||||
| Customer deposits | (79,890 | ) | 772,410 | |||||
| Income taxes payable | 203,203 | (118,850 | ) | |||||
| Net Cash Provided by Operating Activities | 327,964 | 828,092 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment, furnishings and leasehold improvements | (32,972 | ) | (149,004 | ) | ||||
| Sale of marketable securities | 5,211,058 | 3,707,074 | ||||||
| Purchase of marketable securities | (5,238,829 | ) | (3,446,424 | ) | ||||
| Net Cash (Used)/Provided by Investing Activities | (60,743 | ) | 111,646 | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 267,221 | 939,738 | ||||||
| CASH AND CASH EQUIVALENTS | ||||||||
| Beginning of period | 2,134,786 | 3,354,601 | ||||||
| End of period | $ | 2,402,007 | $ | 4,294,339 | ||||
| SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Taxes Paid | $ | — | $ | 221,942 | ||||
See notes to unaudited condensed consolidated financial statements.
Market Sales:
| Three Months Ended May 31, | Change | |||||||||||||||||
| 2024 | % of total | 2023 | % of total | $ | % | |||||||||||||
| Electronics/Microelectronics | $ | 1,568,000 | 31% | $ | 1,375,000 | 38% | 193,000 | 14% | ||||||||||
| Medical | 857,000 | 17% | 383,000 | 11% | 474,000 | 124% | ||||||||||||
| Alternative Energy/Clean | 2,282,000 | 46% | 833,000 | 23% | 1,449,000 | 174% | ||||||||||||
| Emerging R&D and Other | 11,000 | 0% | 126,000 | 3% | (115,000 | ) | (91%) | |||||||||||
| Industrial | 313,000 | 6% | 886,000 | 25% | (573,000 | ) | (65%) | |||||||||||
| TOTAL | $ | 5,031,000 | $ | 3,603,000 | $ | 1,428,000 | 40% | |||||||||||
Product Sales:
| Three Months Ended May 31, | Change | |||||||||||||||||
| 2024 | % of total | 2023 | % of total | $ | % | |||||||||||||
| Fluxing Systems | $ | 134,000 | 2% | $ | 236,000 | 6% | (102,000 | ) | (43%) | |||||||||
| Integrated Coating Systems | 747,000 | 15% | 309,000 | 9% | 438,000 | 142% | ||||||||||||
| Multi-Axis Coating Systems | 2,664,000 | 53% | 1,763,000 | 49% | 901,000 | 51% | ||||||||||||
| OEM Systems | 332,000 | 7% | 274,000 | 8% | 58,000 | 21% | ||||||||||||
| Spare Parts, Services and Other | 1,154,000 | 23% | 1,021,000 | 28% | 133,000 | 13% | ||||||||||||
| TOTAL | $ | 5,031,000 | $ | 3,603,000 | $ | 1,428,000 | 40% | |||||||||||