Sono-Tek Announces Record Orders of $13.4 million and Record Yearend Backlog for Fiscal Year 2019

- Strong demand in leading markets drove sales up 5.5% over fiscal 2018 to $11.6 million with gross margin of 45%; For the fourth quarter, sales grew 1% over prior-year period with gross margin of 46%

Published

MILTON, N.Y., May 28, 2019 /PRNewswire/ -- Sono-Tek Corporation (OTCQX: SOTK) the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its fourth quarter and fiscal year ended February 28, 2019 ("fiscal 2019").

"Our strategy to expand the addressable market for our unique ultrasonic coating technology continues to gain traction.  We developed new, complex solutions for the Alternative Energy, Microelectronics and Medical markets during the year.  These more complex solutions address high value applications for our customers and provide economically compelling alternatives to traditional coating technologies.  We have focused our sales and marketing resources on these targeted opportunities and, combined with strong market conditions, drove sales up 5.5% to $11.6 million," commented Dr. Christopher L. Coccio, Chairman and CEO. 

Dr. Coccio concluded, "Our strong pipeline of opportunities gained momentum this last year.  This momentum, combined with our record backlog of $3.0 million, provides us confidence in our expectations to grow revenue approximately 15% to 20% in fiscal 2020.  While we will continue to invest in advancing our technologies through new product development and building an experienced staff of application engineers to drive growth, we expect that we should demonstrate solid operating leverage on the higher volume in fiscal 2020 as well."  

Fiscal 2019 Review (Results compared with fiscal 2018)

 ($ in thousands) Change
FY 2019 FY 2018 $ %
Net Sales $   11,610 $   11,008 $     602 5.5%
Gross Profit $     5,249 $     5,296 (47) (1%)
     Gross Margin 45.2% 48.1%
Operating Income (Loss) $          82 $        382 (300) (79%)
     Operating Margin .7% 3.5%
Net Income $        162 $        368 $   (206) (56%)
     Net Margin 1.4% 3.3%

The increase in net sales reflects higher volume in Multi-Axis Systems and OEM Systems due in large part to growth in the alternative energy markets, being led by fuel cell development programs in China, and, more recently, Europe.

In fiscal 2019, approximately 65% of sales originated outside of the United States and Canada.  This compares with 56% in fiscal 2018.  The geographic shift was mostly due to higher sales to Asian markets

Gross margin decreased due to a combination of mix and the Company's pricing strategy to establish its ultrasonic coating technology as the product of choice in Asia for fuel cell applications.  The Company expects margins on this equipment to improve as it gains volume and improves material productivity and operating efficiencies.  

The Company continued to invest in new product development and associated marketing as it addressed market expansion opportunities.  Sono-Tek formed a software engineering team dedicated to the integration of manufacturing operations and key vendors. In addition, the team will drive the value engineering process to improve material and manufacturing synergies that are driven by highly intuitive interface technology.

Sono-Tek achieved net income of $0.2 million, or $0.01 per basic and diluted share, this compared with $0.4 million, or $0.02 per basic and diluted share in the prior year.  The decline in net income was the result of aggressive investment in expanding the sales team and product development, as well as investments in engineering to advance operational capability and productivity.

Fourth Quarter Fiscal 2019 Review (Results compared with the fourth quarter of fiscal 2018)

 ($ in thousands) Change  ($ in thousands) Change
FY 2019 FY 2018 $ % FY 2019 FY 2018 $ %
Net Sales $   11,610 $   11,008 $     602 5.5% Net Sales $     2,936 $     2,894 $         42 1%
Gross Profit $     5,249 $     5,296 (47) (1%) Gross Profit $     1,336 $     1,350 (14) (1%)
     Gross Margin 45.2% 48.1%      Gross Margin 45.5% 46.7%
Operating Income (Loss) $          82 $        382 (300) (79%) Operating Income (Loss) $         (14) $          94 (108) (115%)
     Operating Margin .7% 3.5%      Operating Margin (.46%) 3.3%
Net Income $        162 $        368 $   (206) (56%) Net Income $          61 $        103 $       (42) (41%)
     Net Margin 1.4% 3.3%      Net Margin 2.1% 3.6%

Balance Sheet and Cash Flow Overview

Net cash used in operating activities was $109,000 in fiscal 2019, compared with generating $1,802,000 in fiscal 2018. Capital expenditures in fiscal 2019 increased to $0.5 million compared with $0.2 million in the prior fiscal year.  In fiscal 2019, the Company invested in new CNC machinery and other equipment to expand production capacity for expected volume and to enhance its precision machining capabilities for new ultrasonic coating solutions. 

At February 28, 2019, the Company had total debt of $871,000, down $156,000 from fiscal 2018 year-end.  Total debt is approximately 10% of the Company's total capitalization and is related to the mortgage on the industrial park where the Company's manufacturing operations are located.

Sono-Tek has a revolving credit line of $1,500,000 and a $750,000 equipment purchase facility, both of which had no outstanding borrowings at year-end.

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, competitive, technological and trade barrier developments affecting our operations or the demand for our products; timely development and market acceptance of new products; adequacy of financing; capacity additions; the ability to enforce patents; completion of backlog during the current fiscal year and the ability to achieve increased sales volume at projected levels and continued profitability.

For more information, contact:

Stephen Bagley
Chief Financial Officer
Sono-Tek Corporation
info@sono-tek.com

 ($ in thousands) Change  ($ in thousands) Change SONO-TEK CORPORATION
FY 2019 FY 2018 $ % FY 2019 FY 2018 $ % CONSOLIDATED BALANCE SHEETS
Net Sales $   11,610 $   11,008 $     602 5.5% Net Sales $     2,936 $     2,894 $         42 1%
Gross Profit $     5,249 $     5,296 (47) (1%) Gross Profit $     1,336 $     1,350 (14) (1%) February 28,
     Gross Margin 45.2% 48.1%      Gross Margin 45.5% 46.7% 2019 2018
ASSETS
Operating Income (Loss) $          82 $        382 (300) (79%) Operating Income (Loss) $         (14) $          94 (108) (115%) Current Assets:
     Operating Margin .7% 3.5%      Operating Margin (.46%) 3.3% Cash and cash equivalents $             3,144,123 $             2,016,464
Marketable securities 2,365,706 4,405,900
Net Income $        162 $        368 $   (206) (56%) Net Income $          61 $        103 $       (42) (41%) Accounts receivable (less allowance of $46,000) 1,397,891 774,778
     Net Margin 1.4% 3.3%      Net Margin 2.1% 3.6% Inventories, net 1,658,016 1,354,083
Prepaid expenses and other current assets 395,005 139,406
Total current assets 8,960,741 8,690,631
Land 250,000 250,000
Buildings, net 1,731,547 1,807,339
Equipment, furnishings and leasehold improvements, net 802,932 498,401
Intangible assets, net 122,941 136,576
Deferred tax asset 332,017 396,387
TOTAL ASSETS $           12,200,178 $           11,779,334
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $                585,694 $                652,863
Accrued expenses 632,706 893,192
Customer deposits 1,149,558 344,098
Current maturities of long term debt 162,816 156,119
Income taxes payable 6,272 84,621
Total current liabilities 2,537,046 2,130,893
Deferred tax liability 370,757 385,384
Long term debt, less current maturities 707,715 870,532
Total Liabilities 3,615,518 3,386,809
Commitments and Contingencies - -
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares authorized, 15,197,563 and 14,986,367 issued and outstanding, respectively  151,976 149,864
Additional paid-in capital 8,929,607 8,901,171
Accumulated deficit (496,923) (760,115)
Accumulated other comprehensive income 101,605
Total stockholders' equity 8,584,660 8,392,525
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $           12,200,178 $           11,779,334

 

 

 ($ in thousands) Change  ($ in thousands) Change SONO-TEK CORPORATION SONO-TEK CORPORATION
FY 2019 FY 2018 $ % FY 2019 FY 2018 $ % CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Net Sales $   11,610 $   11,008 $     602 5.5% Net Sales $     2,936 $     2,894 $         42 1%
Gross Profit $     5,249 $     5,296 (47) (1%) Gross Profit $     1,336 $     1,350 (14) (1%) February 28, Fiscal Year Ended
     Gross Margin 45.2% 48.1%      Gross Margin 45.5% 46.7% 2019 2018 February 28,
ASSETS 2019 2018
Operating Income (Loss) $          82 $        382 (300) (79%) Operating Income (Loss) $         (14) $          94 (108) (115%) Current Assets:
     Operating Margin .7% 3.5%      Operating Margin (.46%) 3.3% Cash and cash equivalents $             3,144,123 $             2,016,464 Net Sales $         11,609,599 $         11,008,444
Marketable securities 2,365,706 4,405,900 Cost of Goods Sold 6,361,353 5,711,951
Net Income $        162 $        368 $   (206) (56%) Net Income $          61 $        103 $       (42) (41%) Accounts receivable (less allowance of $46,000) 1,397,891 774,778 Gross Profit 5,248,246 5,296,493
     Net Margin 1.4% 3.3%      Net Margin 2.1% 3.6% Inventories, net 1,658,016 1,354,083
Prepaid expenses and other current assets 395,005 139,406 Operating Expenses
Total current assets 8,960,741 8,690,631 Research and product development 1,324,766 1,280,308
Marketing and selling 2,686,382 2,516,461
Land 250,000 250,000 General and administrative 1,154,611 1,118,107
Buildings, net 1,731,547 1,807,339 Total Operating Expenses 5,165,759 4,914,876
Equipment, furnishings and leasehold improvements, net 802,932 498,401
Intangible assets, net 122,941 136,576 Operating Income 82,487 381,617
Deferred tax asset 332,017 396,387
Other Income (Expense):
TOTAL ASSETS $           12,200,178 $           11,779,334 Interest Expense (39,977) (46,117)
Interest and Dividend Income 136,677 91,459
LIABILITIES AND STOCKHOLDERS' EQUITY Realized gain on sale of marketable securities 73,699 11,208
Net unrealized loss on marketable securities (100,184)
Current Liabilities: Other Income 28,732 21,896
Accounts payable $                585,694 $                652,863 Income before Income Taxes 181,434 460,063
Accrued expenses 632,706 893,192
Customer deposits 1,149,558 344,098 Income Tax Expense 19,847 91,856
Current maturities of long term debt 162,816 156,119
Income taxes payable 6,272 84,621 Net Income $              161,587 $              368,207
Other Comprehensive Income
Total current liabilities 2,537,046 2,130,893        Net unrealized gain on marketable securities 59,355
Deferred tax liability 370,757 385,384 Comprehensive Income $              161,587 $              427,562
Long term debt, less current maturities 707,715 870,532
Total Liabilities 3,615,518 3,386,809 Basic Earnings Per Share $                      .01 $                      .02
Commitments and Contingencies - - Diluted Earnings Per Share $                      .01 $                      .02
Stockholders' Equity Weighted Average Shares – Basic 15,107,778 14,968,450
Common stock, $.01 par value; 25,000,000 shares authorized, 15,197,563 and 14,986,367 issued and outstanding, respectively  151,976 149,864
Additional paid-in capital 8,929,607 8,901,171 Weighted Average Shares – Diluted 15,218,913 15,095,123
Accumulated deficit (496,923) (760,115)
Accumulated other comprehensive income 101,605
Total stockholders' equity 8,584,660 8,392,525
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $           12,200,178 $           11,779,334

 

 ($ in thousands) Change  ($ in thousands) Change SONO-TEK CORPORATION SONO-TEK CORPORATION SONO-TEK CORPORATION
FY 2019 FY 2018 $ % FY 2019 FY 2018 $ % CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF CASH FLOWS
Net Sales $   11,610 $   11,008 $     602 5.5% Net Sales $     2,936 $     2,894 $         42 1%
Gross Profit $     5,249 $     5,296 (47) (1%) Gross Profit $     1,336 $     1,350 (14) (1%) February 28, Fiscal Year Ended Fiscal Year Ended
     Gross Margin 45.2% 48.1%      Gross Margin 45.5% 46.7% 2019 2018 February 28, February 28,
ASSETS 2019 2018 2019 2018
Operating Income (Loss) $          82 $        382 (300) (79%) Operating Income (Loss) $         (14) $          94 (108) (115%) Current Assets: CASH FLOWS FROM OPERATING ACTIVITIES:
     Operating Margin .7% 3.5%      Operating Margin (.46%) 3.3% Cash and cash equivalents $             3,144,123 $             2,016,464 Net Sales $         11,609,599 $         11,008,444 Net Income $           161,587 $              368,207
Marketable securities 2,365,706 4,405,900 Cost of Goods Sold 6,361,353 5,711,951 Adjustments to reconcile net income to net
Net Income $        162 $        368 $   (206) (56%) Net Income $          61 $        103 $       (42) (41%) Accounts receivable (less allowance of $46,000) 1,397,891 774,778 Gross Profit 5,248,246 5,296,493 cash (used in) provided by operating activities:
     Net Margin 1.4% 3.3%      Net Margin 2.1% 3.6% Inventories, net 1,658,016 1,354,083 Depreciation and amortization 332,147 399,526
Prepaid expenses and other current assets 395,005 139,406 Operating Expenses Stock based compensation expense 30,548 41,728
Total current assets 8,960,741 8,690,631 Research and product development 1,324,766 1,280,308 Inventory reserve 66,000 104,601
Marketing and selling 2,686,382 2,516,461 Unrealized loss on marketable securities 100,184
Land 250,000 250,000 General and administrative 1,154,611 1,118,107 Deferred tax expense 49,743 (33,558)
Buildings, net 1,731,547 1,807,339 Total Operating Expenses 5,165,759 4,914,876 (Increase) Decrease in:
Equipment, furnishings and leasehold improvements, net 802,932 498,401 Accounts receivable (623,113) 376,023
Intangible assets, net 122,941 136,576 Operating Income 82,487 381,617 Inventories (369,933) (118,000)
Deferred tax asset 332,017 396,387 Prepaid expenses and other assets (255,599) (12,130)
Other Income (Expense): (Decrease) Increase in:
TOTAL ASSETS $           12,200,178 $           11,779,334 Interest Expense (39,977) (46,117) Accounts payable and accrued expenses (327,655) 340,739
Interest and Dividend Income 136,677 91,459 Customer deposits 805,460 265,196
LIABILITIES AND STOCKHOLDERS' EQUITY Realized gain on sale of marketable securities 73,699 11,208                  Income taxes payable (78,349) 70,002
Net unrealized loss on marketable securities (100,184) Net Cash (Used In) Provided by Operating Activities (108,980) 1,802,334
Current Liabilities: Other Income 28,732 21,896
Accounts payable $                585,694 $                652,863 Income before Income Taxes 181,434 460,063
Accrued expenses 632,706 893,192 CASH FLOWS FROM INVESTING ACTIVITIES:
Customer deposits 1,149,558 344,098 Income Tax Expense 19,847 91,856 Purchase of equipment, furnishings and leasehold improvements (547,251) (189,245)
Current maturities of long term debt 162,816 156,119 Sale (purchase) of marketable securities 1,940,010 (2,004,360)
Income taxes payable 6,272 84,621 Net Income $              161,587 $              368,207 Net Cash Provided By (Used In) Investing Activities 1,392,759 (2,193,605)
Other Comprehensive Income
Total current liabilities 2,537,046 2,130,893        Net unrealized gain on marketable securities 59,355 CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 210
Deferred tax liability 370,757 385,384 Comprehensive Income $              161,587 $              427,562 Repayment of long-term debt (156,120) (149,698)
Long term debt, less current maturities 707,715 870,532 Net Cash (Used In) Financing Activities (156,120) (149,488)
Total Liabilities 3,615,518 3,386,809 Basic Earnings Per Share $                      .01 $                      .02
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,127,659 (540,759)
Commitments and Contingencies - - Diluted Earnings Per Share $                      .01 $                      .02
CASH AND CASH EQUIVALENTS:
Stockholders' Equity Weighted Average Shares – Basic 15,107,778 14,968,450 Beginning of year 2,016,464 2,557,223
Common stock, $.01 par value; 25,000,000 shares authorized, 15,197,563 and 14,986,367 issued and outstanding, respectively  151,976 149,864 End of year $        3,144,123 $        2,016,464
Additional paid-in capital 8,929,607 8,901,171 Weighted Average Shares – Diluted 15,218,913 15,095,123
Accumulated deficit (496,923) (760,115)
Accumulated other comprehensive income 101,605 Supplemental Cash Flow Disclosure:
Total stockholders' equity 8,584,660 8,392,525 Interest Paid $              39,977 $              46,117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $           12,200,178 $           11,779,334 Income Taxes Paid $              28,178 $              59,494

 

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SOURCE Sono-Tek Corporation

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