Sono-Tek Reports Sales of $3.48 million in Second Quarter Fiscal 2021 and 50% Increase in Net Income and Provides Second Half FY2021 Sales Guidance

  • Second quarter revenues increased 4% to $3.48 million; second quarter gross margin was 46.6% versus 46.2%
  • Second quarter net income increased 50% to $178,000
  • First half FY2021 sales of $6.9 million increased 12% year-over-year; net income of $346,000, more than doubled from the $140,000 reported in the prior year period
  • Backlog increased 45% to $5.1 million from February 29, 2020
  • Second half of fiscal 2021, ending November 30, 2020, is expected to continue on the increasing sales trend experienced in the second quarter, as global industrial businesses continue to recover.

MILTON, N.Y., Oct. 14, 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 fiscal year 2021 second quarter and year-to-date period ended August 31, 2020.

Dr. Christopher L. Coccio, Chairman and CEO, commented, “In the second quarter of FY2021, Sono-Tek recorded 4% revenue growth and a 50% increase in our bottom line compared to last year’s second quarter. The increase in net income reflects growth in revenue and gross profit as well as tight expense control and reductions. The Coronavirus has impacted some of our customers, particularly in the timing of orders, but we have been able to win orders in other areas to maintain some of our pre-Covid positive momentum, as demonstrated by the first half of the year 45% increase in backlog. We believe that our performance has been excellent given the uncertainties that most businesses have faced this year.”

“The growth in sales was driven by a significant shipment of an integrated coating system for the industrial market valued at $400k, plus a strong quarter for Multi-Axis coating machines sold to the Alternative Energy market, which combined to offset the slight decrease in sales of fluxing systems and other smaller units. The Alternative Energy market growth was driven by US companies interested in electrolyzer and fuel cell coating equipment, which is associated with carbon reduction energy supply. Our Medical business experienced a dip in revenue as several orders were put on hold due to COVID, but we are optimistic these will come back as various countries come back online,” continued Dr. Coccio.

“Our strategy to provide customers with a high level of application engineering support, in combination with large complex ultrasonic coating systems that are often highly customized, continues to cushion our business in these difficult times. For example, in July we announced a $1.5 million order for a highly engineered proprietary 6-axis ultrasonic coating system for an important European customer in the electronics industry. This order is among the largest orders that we’ve received in our history and is a direct result of the close collaboration between our engineers and the customer.  These types of orders have increased in frequency over the past few years, and importantly, have increased our average revenue per order from tens of thousands of dollars to hundreds of thousands of dollars currently.”  

“As a result of the increase in our backlog this quarter, we are expecting third quarter revenues to increase over the second quarter and for this trend to continue through the balance of the fiscal year, ending February 28, 2021. Sono-Tek’s flexibility in quickly refocusing its efforts to those countries that are operational has been helpful in softening the impact of the pandemic and will continue to be a part of our strategy for the foreseeable future,” concluded Dr. Coccio.

Year-to-Date Fiscal 2021 Results (Narrative compares with prior-year period unless otherwise noted)

 Six Months Ended August 31,Change
Net Sales$     6,909,000$     6,168,000741,00012%
Gross Profit3,182,0002,852,000330,00012%
          Gross Margin46.1%46.2%  
Operating Income$           386,000$           97,000289,000298%
          Operating Margin5.6%1.6%  
Net Income  $         346,000  $         140,000206,000147%
          Net Margin5.0%2.3%  
Diluted Earnings Per Share$                0.02$                0.01  
Weighted Average Shares – Diluted15,531,00015,377,000  

Second Quarter Fiscal 2021 Results (Narrative compares with prior-year period unless otherwise noted)

 Three Months Ended August 31,Change
Net Sales$     3,481,000$     3,346,000135,0004%
Gross Profit1,621,0001,547,00074,0005%
          Gross Margin46.6%46.2%  
Operating Income$          201,000$          92,000109,000118%
          Operating Margin5.8%2.8%  
Net Income$          178,000$          115,00063,00055%
          Net Margin5.1%3.4%  
Diluted Earnings Per Share$0.01$0.01  
Weighted Average Shares – Diluted15,533,00015,399,000  

Second Quarter FY2021 Review

Sales growth during the second quarter of fiscal 2021 was driven by a significant shipment of an integrated coating system for the Industrial Market valued at approximately $400,000, combined with a strong quarter for Multi-Axis coating systems sold to the Alternative Energy markets.  The sales increase in these product lines more than offset the second quarter’s sales decrease in fluxing systems and in the Other product category.

From a product sales perspective, the Alternative Energy market showed significant growth, primarily driven by sales to US – based companies for electrolyzer coating equipment used for fuel cell manufacturing and advanced carbon emission reduction technology. The Company also recorded a strong quarter from the Industrial market resulting from the latest developed float glass coating platform shipping to a US – based customer.   Quarterly demand and revenue in any of the Market or Product baskets typically varies due to the size and timing of orders, as a result, the multi-quarter totals at year-end are often more significant than reported in individual quarters, reflecting overall Market and Product trends.

In the second quarter of fiscal 2021, approximately 38% of sales originated outside of the United States and Canada compared with 72% in the prior-year period.  The decrease in sales originating outside the US and Canada was influenced by the COVID-19 pandemic, as the Company experienced a decrease in orders from several geographic territories outside the US during COVID-19 peaks.

For the second quarter of fiscal 2021, gross profit increased $74,000, or 5%, compared with the prior-year period. Gross profit margin was 46.6% for the second quarter of fiscal 2021 versus 46.2% in the comparable period. Operating income increased by $109,000, more than doubling to $201,000 in the second quarter of fiscal 2021 compared with $92,000 for the prior year period. Growth in revenue and gross profit were key factors in the improvement. Operating margin for the quarter increased to 5.8% compared with 2.8% in the prior year period. Operating leverage enabled the Company to increase its net income by $63,000, or 55%, to $178,000 compared with $115,000 for the comparable period. 

Balance Sheet and Cash Flow Overview

Cash and cash equivalents and short-term investments at quarter-end were $7,825 million, a modest decrease from February 29, 2020, the end of fiscal year 2020.  The decrease was the result of the timing of working capital requirements primarily due to increases in accounts receivable and inventories and decreases in customer deposits and accounts payable. Higher inventory is necessary to address both customer demand for shorter delivery cycles and increased order levels.

Year-to-date capital expenditures were $290,000 compared with $319,000 in the prior-year period. The fiscal 2021 expenditures do not reflect $100,000 in grant proceeds received during the second quarter.  The current period’s capital expenditures are for upgrades to the Company’s manufacturing facilities.  Sono-Tek anticipates total capital expenditures to be approximately $0.5 million to $0.6 million in fiscal 2021.

At August 31, 2020, the Company had total debt of $1.6 million, comprised of $1.0 million in a PPP loan under the CARES Act and $624,000 in mortgage debt on the Company’s industrial park complex that accrues annual interest at a rate of 4.15%.   

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

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; 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; the recovery of the Electronics/Microelectronics and Medical markets following COVID-19 related slowdowns; the forgiveness of our PPP loan; 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 as forecasted.  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 

Financial Tables Follow


 August 31,   
 2020February 29,
Current Assets:        
Cash and cash equivalents $3,971,611  $3,659,551 
Marketable securities  3,852,601   4,219,240 
Accounts receivable (less allowance of $71,000)  1,348,648   929,701 
Inventories, net  2,462,048   2,381,891 
Prepaid expenses and other current assets  94,835   153,698 
   Total current assets  11,729,743   11,344,081 
Land  250,000   250,000 
Buildings, net  1,614,391   1,654,061 
Equipment, furnishings and building improvements, net  1,236,607   1,212,578 
Intangible assets, net  97,999   106,291 
Deferred tax asset  176,314   176,314 
TOTAL ASSETS $15,105,054  $14,743,325 
Current Liabilities:        
Accounts payable $712,704  $668,721 
Accrued expenses  1,319,327   1,613,409 
Customer deposits  988,102   1,648,690 
Current maturities of long term debt  725,743   169,716 
Income taxes payable  63,743   70,621 
   Total current liabilities  3,809,619   4,171,157 
Deferred tax liability  251,761   251,761 
Long term debt, less current maturities  899,573   538,000 
   Total liabilities  4,960,953   4,960,918 
Commitments and Contingencies – (Note 10)      
Stockholders’ Equity        
Common stock, $.01 par value; 25,000,000 shares authorized, 15,435,935 and 15,348,180 shares issued and outstanding, respectively  154,360   153,482 
Additional paid-in capital  9,033,531   9,018,406 
Accumulated earnings  956,210   610,519 
   Total stockholders’ equity  10,144,101   9,782,407 

See notes to unaudited condensed consolidated financial statements.


  Six Months Ended
August 31,
Three Months Ended
August 31,
Net Sales $6,909,185  $6,168,250  $3,480,641  $3,345,822 
Cost of Goods Sold  3,727,486   3,316,323   1,859,675   1,798,830 
        Gross Profit  3,181,699   2,851,927   1,620,966   1,546,992 
Operating Expenses                
Research and product development costs  834,940   658,870   423,516   321,697 
Marketing and selling expenses  1,388,987   1,476,696   682,270   799,284 
General and administrative costs  572,254   619,475   313,852   333,662 
            Total Operating Expenses  2,796,181   2,755,041   1,419,638   1,454,643 
Operating Income  385,518   96,886   201,328   92,349 
Interest Expense  (17,704)  (17,465)  (9,287)  (8,518)
Interest and Dividend Income  25,483   56,983   2,837   25,812 
Other income  19,519   16,877   8,084   12,122 
Income Before Income Taxes  412,816   153,281   202,962   121,765 
Income Tax Expense  67,125   13,303   25,199   7,000 
Net Income $345,691  $139,978  $177,763  $114,765 
Basic Earnings Per Share $0.02  $0.01  $0.01  $0.01 
Diluted Earnings Per Share $0.02  $0.01  $0.01  $0.01 
Weighted Average Shares – Basic  15,410,952   15,285,024   15,424,126   15,301,613 
Weighted Average Shares – Diluted  15,530,910   15,376,906   15,533,010   15,399,163 

See notes to unaudited condensed consolidated financial statements.


Six Months Ended
August 31,
Net Income $345,691  $139,978 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
Depreciation and amortization  214,280   191,977 
Stock based compensation expense  16,003   43,827 
Inventory reserve  36,000   32,000 
Decrease (Increase) in:        
   Accounts receivable  (418,947  125,491 
   Inventories  (116,157)  (952,898)
   Prepaid expenses and other current assets  58,863   212,642 
(Decrease) Increase in:        
   Accounts payable and accrued expenses  (250,099  352,124 
   Customer Deposits  (660,588  434,894 
   Income taxes payable  (6,878  8,472 
Net Cash (Used In) Provided by Operating Activities  (781,832  588,507 
Purchase of equipment and furnishings  (290,347)  (319,055)
Capital expenditure grant proceeds  100,000    
Sale (purchase) of marketable securities  366,639   (1,051,898
Net Cash Provided by (Used in) Investing Activities  176,292   (1,370,953
Proceeds from note payable – bank  1,001,640    
Repayment of long term debt  (84,040)  (80,696)
Net Cash Provided by (Used In) Financing Activities  917,600   (80,696)
Beginning of period  3,659,551   3,144,123 
End of period $3,971,611  $2,280,981 
Interest paid $13,972  $17,465 
Income Taxes Paid $74,004  $4,831 

See notes to unaudited condensed consolidated financial statements.

Product and Market Sales

Product Sales

 Three Months Ended
August 31,
ChangeSix Months Ended
August 31,
Fluxing Systems $94,000  $211,000   (117,000)  (55%) $438,000  $602,000   (164,000  (27%) 
Integrated Coating Systems  673,000   413,000   260,000   63%   1,849,000   810,000   1,039,000   128% 
Multi-Axis Coating Systems  1,985,000   1,815,000   170,000   9%   2,898,000   2,888,000   10,000    
OEM Systems  232,000   246,000   (14,000)  (6%)  654,000   565,000   89,000   16% 
Other  497,000   661,000   (164,000  (25%  1,070,000   1,303,000   (233,000  (18%) 
TOTAL $3,481,000  $3,346,000   135,000   4%  $6,909,000  $6,168,000   741,000   12% 

Market Sales

 Three Months Ended
August 31,
ChangeSix Months Ended
August 31,
Electronics/Microelectronics $811,000  $1,376,000   (565,000  (41% $3,051,000  $2,913,000   138,000   5% 
Medical  961,000   1,250,000   (289,000  (23%  1,653,000   1,792,000   (139,000)  (8%)
Alternative Energy  826,000   223,000   603,000   270%   1,221,000   610,000   611,000   100% 
Emerging R&D and Other  479,000   400,000   79,000   20%   516,000   685,000   (169,000  (25%
Industrial  404,000   97,000   307,000   316%   468,000   168,000   300,000   179% 
TOTAL $3,481,000  $3,346,000   135,000   4%  $6,909,000  $6,168,000   741,000   12% 
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