SONO-TEK CORP. SOTK
SONO-TEK CORP. SOTK
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Sono-Tek Sales Grew 5% to $2.82 million in First Quarter Fiscal 2020 with Continued Record Backlog

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Sono-Tek Sales Grew 5% to $2.82 million in First Quarter Fiscal 2020 with Continued Record Backlog
- Record high backlog of $4,024,000
- First quarter gross margin was 46%
- Achieved net income of $25,000, up 19%
- Company expects second quarter revenues to increase 15-20% vs last year, with further growth expected in the third quarter

PR Newswire

MILTON, N.Y., July 15, 2019 /PRNewswire/ -- Sono-Tek Corporation (OTCQX: SOTK) the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its first quarter ended May 31, 2019 ("fiscal 2020").

"The first quarter of FY2020 showed the expected 5% revenue growth, along with a profitable bottom line. More importantly, we continued to invest in upfront resources in Sales and Marketing, which includes Application Engineering personnel.  Application Engineering 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.

We experienced significant growth in larger Multi-Axis coating systems this quarter, along with increases in orders of Fluxing Systems and Integrated Coating Systems. We also experienced large increases in the Electronics/Microelectronics, Alternative Energy, and Emerging R&D market areas. Globally, we had increases in the US and Canada and Latin America geographies, which more than offset reductions in the Asia Pacific markets. For the first quarter of fiscal 2020, 44% of our sales originated in the US and Canada compared to 37% last year.

Due to the record increase in our orders and backlog this quarter, we are expecting second quarter  revenues to increase by 15-20% over last year. Furthermore, our current expectation is to see similar growth in the balance of the Fiscal Year," commented Dr. Christopher L. Coccio, Chairman and CEO.

First Quarter Fiscal 2020 Review   


Three Months Ended May 31,

Change


2019

2018

$

%

Net Sales

$     2,822,000

$      2,701,000

121,000

4.5%

Gross Profit

1,305,000

1,271,000

34,000

2.7%

          Gross Margin

46.2%

47.1%



Operating Income

$          5,000

$           32,000

(27,000)

(84%)

          Operating Margin

0.2%

1.2%



Net Income

$          25,000

$           21,000

4,000

19%

          Net Margin

0.9%

0.8%



Basic Earnings Per Share

$0.00

$0.00



Diluted Earnings Per Share

$0.00

$0.00



Weighted Average Shares -Basic

15,268,000

14,988,000



Weighted Average Shares - Diluted

15,357,000

15,089,000



The Company's net sales growth was driven by a combination of increases in the Electronics/Microelectronics market (up 16%), the Alternative Energy market (up 118%), and the Emerging R&D market (up 68%).  The Company's strategy of providing paid coating services as a part of our Application Engineering services in addition to its coating equipment, is clearly benefitting revenues.

From a product sales perspective, Fluxing Systems demand increased 15%, Integrated Coating Systems demand increased 13%, and Multi-Axis Coating System demand increased 24%. 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, 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 2020, approximately 56% of sales originated outside of the United States and Canada compared with 63% in the prior-year period.  As expected, the geographic shift reflects higher sales to U.S. markets supported by strong economic growth here combined with a decrease in APAC as the Chinese trade situation is sorted out.

The change in product mix resulted in a slightly lower gross margin of 46.2%, and we increased our net income by 18% to $25,000 this quarter. We expect our income to rise considerably as we proceed through the year, due to the increasing backlog and growth in orders with associated leverage on our operating costs.

Balance Sheet and Cash Flow Overview

Cash and cash equivalents and short-term investments at quarter-end were $5.7 million, up from $5.5 million at the end of fiscal 2019.  The increase was the result of the timing of working capital requirements primarily due to an increase in accounts payable and customer deposits partially offset by an increase in inventories.

Net cash provided by operating activities was $362,000 in the first quarter of fiscal 2020 compared with using $374,000 in the prior fiscal year period.  Capital expenditures in the first quarter of fiscal 2020 were $129,000 compared with $101,000 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
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 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; timely development and market acceptance of new products and paid coating services; adequacy of financing; capacity additions; the ability to enforce patents; maintenance of operating leverage; continued reduction in inventory requirements; maintenance of order backlog; consummation of order proposals; continued sales growth in the Electronics/Microelectronics, Alternative Energy, and Emerging R&D market areas; and the ability to achieve increased sales volume at projected levels and continued  profitability.  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


[email protected] 


 

FINANCIAL TABLES FOLLOW

 

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended May 31,


2019


2018





Net Sales

$2,822,428


$2,700,860

Cost of Goods Sold

1,517,493


1,429,663

 Gross Profit

1,304,935


1,271,197





Operating Expenses




 Research and product development costs

337,173


333,866

 Marketing and selling expenses

677,412


629,788

 General and administrative costs

285,813


275,392

 Total Operating Expenses

1,300,398


1,239,046





Operating Income

4,537


32,151




Interest Expense

(8,947)


(10,614)

Interest and Dividend Income

31,171


34,606

Realized gain on sale of marketable securities


29,392

Net unrealized loss on marketable securities


(49,061)

Other income

4,755


2,520





Income Before Income Taxes

31,516


38,994





Income Tax Expense

6,303


17,564




Net Income

$25,213


$21,430


Basic Earnings Per Share

$0.00


$0.00





Diluted Earnings Per Share

$0.00


$0.00

















Weighted Average Shares - Basic

15,268,071


14,987,613





Weighted Average Shares - Diluted

15,357,295


15,088,512


 

 


SONO-TEK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS



May 31,




2019


February 28,


(Unaudited)


2019

ASSETS




Current Assets:




Cash and cash equivalents

$     1,922,886


$       3,144,123

Marketable securities

3,779,187


2,365,706

Accounts receivable (less allowance of $46,000)

1,332,353


1,397,891

Inventories, net 

2,378,720


1,658,016

Prepaid expenses and other current assets

105,013


395,005

Total current assets

9,518,159


8,960,741





Land

250,000


250,000

Buildings, net

1,712,123


1,731,547

Equipment, furnishings and building improvements, net

866,471


802,932

Intangible assets, net

118,778


122,941

Deferred tax asset

332,017


332,017





TOTAL ASSETS

$      12,797,548


$       12,200,178





LIABILITIES AND STOCKHOLDERS' EQUITY








Current Liabilities:




Accounts payable

$         1,013,961


$          585,694

Accrued expenses

614,518


632,706

Customer deposits

1,334,306


1,149,558

Current portion of long term debt

164,410


162,816

Income taxes payable

12,575


6,272

Total current liabilities

3,139,770


2,537,046





Deferred tax liability

370,757


370,757

Long term debt, less current maturities

665,838


707,715

Total liabilities

4,176,365


3,615,518





Stockholders' Equity




Common stock, $.01 par value; 25,000,000 shares authorized, 
     15,301,613 and 15,197,563 shares issued and outstanding, 
     respectively

153,016


151,976

Additional paid-in capital

8,939,877


8,929,607

Accumulated deficit

(471,710)


(496,923)

Total stockholders' equity

8,621,183


8,584,660





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$     12,797,548


$       12,200,178

 

 

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended May 31,


2019


2018





CASH FLOWS FROM OPERATING ACTIVITIES:




Net Income

$ 25,213


$ 21,430

Adjustments to reconcile net income to net cash




provided by (used in) operating activities:




Depreciation and amortization

89,207


80,893

Stock based compensation expense

11,310


8,900

Inventory reserve

14,000


18,000

Unrealized loss on marketable securities


49,061

Decrease (Increase) in:




Accounts receivable

65,538


(198,504)

Inventories

(734,704)


(89,372)

Prepaid expenses and other current assets

289,992


4,773

(Decrease) Increase in:




Accounts payable and accrued expenses

410,079


(290,133)

Customer Deposits

184,748


2,895

Income taxes payable

6,303


17,564

Net Cash Provided By (Used In) Operating Activities

361,686


(374,493)









CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of equipment and furnishings

(129,159)


(101,634)

 Sale (Purchase) of marketable securities

(1,413,481)


40,093

Net Cash (Used In) Investing Activities

(1,542,640)


(61,541)





CASH FLOWS FROM FINANCING ACTIVITIES:




Repayment of long-term debt

(40,283)


(38,678)

Net Cash (Used In) Financing Activities

(40,283)


(38,678)









NET (DECREASE) IN CASH AND CASH EQUIVALENTS

(1,221,237)


(474,712)





CASH AND CASH EQUIVALENTS




Beginning of period

3,144,123


2,016,464

End of period

$1,922,886


$1,541,752





SUPPLEMENTAL CASH FLOW DISCLOSURE:




Interest paid

$8,947


$10,614

Taxes Paid

$-


$-

 

 

SONO-TEK CORPORATION

ADDITIONAL INFORMATION – MARKET AND PRODUCT SALES

(Unaudited)


Market Sales:



Three Months Ended May 31,

Change


2019

% of total

2018

% of total

$


%

Electronics/Microelectronics

$ 1,538,000

55%

$ 1,329,000

49%

209,000


16%

Medical

543,000

19%

912,000

34%

(369,000)


(40%)

Alternative Energy

386,000

14%

177,000

7%

209,000


118%

Emerging R&D and Other

285,000

10%

170,000

7%

115,000


68%

Industrial

70,000

2%

113,000

4%

(43,000)


(38%)

TOTAL

$2,822,000


$2,701,000


$121,000


4%

 

Product Sales:



Three Months Ended May 31,

Change


2019

% of total

2018

% of total

$


%

Fluxing Systems

$ 391,000

14%

$ 340,000

13%

51,000


15%

Integrated Coating Systems

396,000

14%

349,000

13%

47,000


13%

Multi-Axis Coating Systems

1,073,000

38%

862,000

32%

211,000


24%

OEM Systems

319,000

11%

451,000

16%

(132,000)


(29%)

Other

643,000

23%

699,000

26%

(56,000)


(8%)

TOTAL

$2,822,000


$2,701,000


$121,000


4%

 

Cision View original content:http://www.prnewswire.com/news-releases/sono-tek-sales-grew-5-to-2-82-million-in-first-quarter-fiscal-2020-with-continued-record-backlog-300885132.html

SOURCE Sono-Tek Corporation

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