Company News

Sono-Tek Reports Increased Sales and Strong Backlog for Third Quarter Fiscal 2021 and Provides Sales Guidance

Sales of $3.83M, Up 4% Year-over-Year; Backlog up 29% from FYE February 29, 2020

MILTON, N.Y., January 15, 2021 – Sono-Tek Corporation (OTCQX: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its fiscal 2021 third quarter and year-to-date period ended November 30, 2020.

Third Quarter Fiscal 2021 Financial Highlights:

  • Sales of $3.83 million, an increase of $155k compared to third quarter FY2020.
  • Increased backlog to $4.55 million versus $3.52 million on February 29, 2020.
  • Gross margin of 50.5% compared to 48.9% in third quarter FY2020.
  • Net income of $320,000 versus $280,000 for third quarter FY2020, a 14%. increase.
  • Sales Growth Guidance for the remaining quarter of FY2021 is for a 5-10% sequential increase from Q3.

Dr. Christopher L. Coccio, Chairman and CEO, commented, “Sono-Tek had a good third quarter with sales and net income growth despite the impact of Covid-19 on our customers. This was the third consecutive quarter of sales increases and strong performances in backlog, margins, and net income, which were achieved against the backdrop of a difficult global environment. These gains stem from the strategic shift in our business model that we initiated several years ago, expanding our product line to provide higher value complete machine solutions and larger subsystems to original equipment manufacturers (“OEMs”). These product advancements are supported by a high level of application engineering expertise from our specialized staff, in combination with customer requirements that are proven out in our globally located process development labs. We have also invested significant resources to enhance our market diversity.”

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

  Nine Months Ended November 30, Change
  2020 2019 $ %
Net Sales $     10,736,000 $     9,841,000 895,000 9%
Gross Profit 5,112,000 4,649,000 463,000 10%
          Gross Margin 47.6% 47.2%    
Operating Income $           832,000 $           367,000 465,000 127%
          Operating Margin 7.8% 3.7%    
Net Income   $         666,000   $         420,000 246,000 59%
          Net Margin 6.2% 4.3%    
Diluted Earnings Per Share $                0.04 $                0.03    
Weighted Average Shares – Diluted 15,548,000 15,354,000    

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

  Three Months Ended November 30, Change
  2020 2019 $ %
Net Sales $     3,827,000 $     3,672,000 155,000 4%
Gross Profit 1,931,000 1,797,000 134,000 7%
          Gross Margin 50.5% 48.9%    
Operating Income $          447,000 $          270,000 177,000 66%
          Operating Margin 11.7% 7.4%    
Net Income $          320,000 $          280,000 40,000 14%
          Net Margin 8.4% 7.6%    
Diluted Earnings Per Share $0.02 $0.02    
Weighted Average Shares – Diluted 15,583,000 15,372,000    

Third Quarter FY2021 Financial Overview
For the third quarter of fiscal 2021, net sales were $3,827,000, an increase of 4%, or $155,000, compared to the third quarter of fiscal 2020. These results were primarily driven by increased sales of our integrated coating systems to the Industrial market segment, and for subsystems to our OEM segment. In the Industrial segment, we shipped a $463,000 system to the textile industry in the Europe-Middle East-Asia geography, as part of a $1.6 million combined order announced earlier in fiscal 2021. The remaining balance of this order is scheduled to ship at the end of Q4 FY2021, or early in Q1 FY2022, depending on manufacturing load. In the third quarter of fiscal 2021, approximately 70% of sales originated outside of the United States and Canada, compared with 65% in the prior year period.

Backlog on November 30, 2020 was $4,549,000, an increase of 29%, compared with backlog of $3,517,000 on February 29, 2020.

Gross profit margin was 50.5%, compared with 48.9% in the prior year period, an expansion of 160 basis points. The improvement in the gross profit margin is primarily due to the change in product mix this quarter, which typically can cause minor variations depending on actual shipments.

Net income for the third quarter was $320,000, or $0.02 per share, compared with net income of $280,000, or $0.02 per share, for the prior year period. Diluted weighted average shares outstanding totaled 15,583,000 compared to 15,372,000 for the prior year period.

Fiscal Year 2021 Outlook
“We expect that a significant portion of our $4.55 million backlog will ship during the current fiscal year ending February 28, 2021, assuming customer acceptance test schedules for some of the more complex and customized equipment orders.  Therefore, based on this existing backlog, we expect that net sales will increase 5% to 10% for the fourth quarter versus the third quarter of FY2021.  This will result in flat to slightly lower total net sales for the current fiscal year compared to the fiscal year ended February 29, 2020, primarily due to the sales impact from the shipment of our single largest order in Q4 of last year.”

“Overall, it has been an unexpectedly successful year, considering all the impacts and uncertainties introduced into the global economy by the Covid-19 pandemic, which struck at the start of our Fiscal Year in March 2020. We are very appreciative of the excellent work done by our entire team as we shifted to virtual work wherever possible in order to limit Covid exposure,” concluded Dr. Coccio.

Balance Sheet and Cash Flow Overview
Cash and cash equivalents and short-term investments at quarter-end were $9.2 million, an increase of $1.4 million from February 29, 2020, the end of fiscal year 2020.  The increase was the result of the current period’s net income and noncash charges as well as the proceeds of a long term note payable partially offset by the purchases of equipment and the repayment of long term debt.

Year-to-date capital expenditures were $327,000 compared with $392,000 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 ongoing upgrades to the Company’s manufacturing facilities.  Sono-Tek anticipates total capital expenditures to be approximately $0.4 million to $0.5 million in fiscal 2021.

At November 30, 2020, the Company had total debt of $1.6 million, comprised of $1.0 million in a PPP loan under the CARES Act and $581,000 in mortgage debt on the Company’s industrial park complex that accrued annual interest at a rate of 4.15%.   In December 2020, the Company paid off its mortgage debt in its entirety.

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; maintenance of increased order backlog; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; 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 range. 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

Investor Relations:
Stephanie Prince
PCG Advisory
(646) 863-6341