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:
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%
|
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SOURCE Sono-Tek Corporation