Sono-Tek Sales Grew 22% to $3.43 million in First Quarter Fiscal 2021
5 years ago
- 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., July 15, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- 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 |
|
2020 |
2019 |
$ |
% |
| Net Sales |
$ 3,429,000 |
$ 2,822,000 |
607,000 |
22% |
| Gross Profit |
1,561,000 |
1,305,000 |
256,000 |
20% |
| Gross Margin |
45.5% |
46.2% |
|
|
| Operating Income |
$ 184,000 |
$ 5,000 |
179,000 |
3580% |
| Operating Margin |
5.4% |
0.2% |
|
|
| Net Income |
$ 168,000 |
$ 25,000 |
143,000 |
572% |
| Net Margin |
4.9% |
0.9% |
|
|
| Basic Earnings Per Share |
$0.01 |
$0.00 |
|
|
| Diluted Earnings Per Share |
$0.01 |
$0.00 |
|
|
| Weighted Average Shares -Basic |
15,398,000 |
15,268,000 |
|
|
| Weighted Average Shares - Diluted |
15,437,000 |
15,357,000 |
|
|
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:
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% |
|
|
|
|
|
|
|
|
|
|
