SONO-TEK CORPORATION 2023 ANNUAL REPORT
- NOVOCOAT IS A 3-AXIS AUTOMATED MOTION COATING PLATFORM SERIES DEVELOPED IN 2022
Sono-Tek is the world leader in ultrasonic coating solutions that deposit thin films of liquid chemistries used in highly technical manufacturing processes. Our coating systems are used in the creation of a variety of disruptive technology products, primarily for the electronics/microelectronics, precision medical device, and clean energy sectors.
The growing need for functional film capabilities on an expanding range of substrates is driving global demand.
Applying Precision
Coatings Since
1975
We continue to innovate and expand our capabilities with fully engineered solutions designed and built exclusively by our engineering team, including proprietary application expertise. Pictured is the NovoCoat coating system, developed in 2022.
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EXCELLENT BALANCE SHEET STRENGTH
Cash, Cash Equivalents & | Stockholders' Equity | Total Debt |
Marketable Securities | $ in Millions | $ in Millions |
$ in Millions |
*
*Does not include $1M PPP loan, forgiven in Q1 FY2022
The charts above demonstrate the financial success that has resulted from Sono-Tek's strategy of diversification of markets, products and geography. This has led to the ongoing development of an expanded line of ultrasonic coating products and systems that no other company can match, and which has created multiple future growth opportunities. Over the years we have built a substantial barrier to competition through our advanced technological leadership, which we apply to win and retain customers. This has proven to be a significant competitive differentiator for Sono-Tek in the global marketplace.
Founded in 1975, Sono-Tek Corporation designs and manufactures proprietary ultrasonic coating systems that apply precise, thin-film coatings to a multitude of products for the microelectronics/ electronics, medical, alternative energy, and industrial markets, including specialized glass applications for lenses and electronic device surfaces. Our recent growth has been driven by the sale of larger, more complex, and higher value systems that uniquely help our customers succeed while strengthening their bond with us.
Our environmentally-friendly ultrasonic spray systems provide high performance functional and protective coatings, with dramatic reductions in overspray, savings in raw materials, water and energy usage, improved process repeatability, transfer efficiency, high uniformity, and reduced emissions.
Sono-Tek's founder was the inventor of the ultrasonic nozzle and we remain the leader in the industry.
2023 Annual Report 3
Dear Shareholders:
Sono-Tek's fiscal year 2023, ended February 28, 2023, was very successful with renewed market activity, orders and increasing backlog, which closed the year at the highest level in our history. Our focus on three major and growing market segments-electronics and semiconductors, clean energy technologies, and medical device coatings-has shown success and is expected to power us through the foreseeable future. Semiconductor manufacturing and clean energy coating applications now have substantial government funding and incentives, boosting these already strong segments for us.
In fact, we received our first million dollar order from the clean energy sector in August 2022. The order, valued at $1.1 million, was also one of the largest in Sono-Tek's corporate history at the time, both important milestones. Since then, we've received another $1.1 million order from the same customer as well as two other initial orders that are expected to total several million dollars each when the respective production lines are complete.
An unexpected post-COVID challenge developed this year for many businesses as parts, labor inflation and difficulty in finding and retaining personnel led to manufacturing and shipping delays. Sono-Tek was not immune to these challenges but we have successfully navigated them with market-based compensation and additional training of newer staff. One area that has proven to be more challenging is the "supply chain" issue.
Five-Year Performance Highlights | Fiscal Calendar: March 1st - February 28th | ||||||||||
($ in thousands, except employee and per share data) | FY2023 | FY2022 | FY2021 | FY2020 | FY2019 | ||||||
Net Sales | $ | 15,058 | $ | 17,133 | $ | 14,833 | $ | 15,355 | $ | 11,610 | |
Gross Profit | $ | 7,652 | $ | 8,613 | $ | 6,997 | $ | 7,313 | $ | 5,249 | |
Gross Margin | 50.8% | 50.3% | 47.2% | 47.6% | 45.2% | ||||||
Selling, General and Administrative Expense | $ | 4,819 | $ | 4,994 | $ | 4,012 | $ | 4,770 | $ | 3,841 | |
% of Sales | 32 | 29.1 | 27.0 | 31.1 | 33.1 | ||||||
Research and Product Development Expense | $ | 2,150 | $ | 1,730 | $ | 1,645 | $ | 1,428 | $ | 1,325 | |
% of Sales | 14.3 | 10.1 | 11.1 | 9.3 | 11.4 | ||||||
Operating Income | $ | 683 | $ | 1,889 | $ | 1,340 | $ | 1,115 | $ | 82 | |
Operating Margin | 4.5% | 11.0% | 9.0% | 7.3% | 0.7% | ||||||
Net Income | $ | 636 | $ | 2,543 | $ | 1,121 | $ | 1,107 | $ | 162 | |
Diluted Earnings Per Share | $ | 0.04 | $ | 0.16 | $ | 0.07 | $ | 0.07 | $ | 0.01 | |
Weighted Average Shares Outstanding - Diluted | 15,769 | 15,623 | 15,672 | 15,359 | 15,219 | ||||||
Year End Financial Position | |||||||||||
Cash, Cash Equivalents and Marketable Securities | $ | 11,445 | $ | 10,709 | $ | 8,648 | $ | 7,879 | $ | 5,510 | |
Total Assets | $ | 20,175 | $ | 17,626 | $ | 16,423 | $ | 14,743 | $ | 12,200 | |
Total Debt (Long Term) | $ | 0 | $ | 0 | $ | 1,002* | $ | 708 | $ | 871 | |
Stockholders' Equity | $ | 14,634 | $ | 13,741 | $ | 10,951 | $ | 9,782 | $ | 8,585 | |
Book Value Per Share | $ | 0.93 | $ | 0.88 | $ | 0.71 | $ | 0.64 | $ | 0.56 | |
Other Year End Data | |||||||||||
Depreciation and Amortization | $ | 511 | $ | 436 | $ | 463 | $ | 407 | $ | 332 | |
Capital Expenditures | $ | 556 | $ | 327 | $ | 344 | $ | 722 | $ | 547 | |
Number of Full-Time Employees | 73 | 67 | 69 | 76 | 68 | ||||||
*Includes PPP loan, forgiven in Q1 FY2022 |
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Some of our vendors and suppliers have been less successful than Sono-Tek in steering through this environment, and pushed out promised delivery dates of our subsystems. To mitigate this issue going forward, we are increasing vertical integration in several areas to create greater control over our shipping schedules.
However, these key part delays forced us to extend some of our own planned customer shipment dates, which impacted our FY2023 revenue. As a result, total annual revenue decreased 12% over last year, although we still reported a profitable year, with continuing growth in cash and shareholders' equity.
Looking ahead, with our sales team back to traveling around the globe, and our engineering and manufacturing teams back onsite, we are confident that Sono-Tek will achieve improved results in the new fiscal year, based on continued progress to resolve the supply chain backlog issues and the receipt of large new orders from key customers in our target markets.
Our team looks forward to an excellent and exciting FY2024.
Sincerely,
Christopher L. Coccio, PhD | R. Stephen Harshbarger |
Chairman and Chief Executive Officer | President and Chief Operating Officer |
SIZEABLE BACKLOG IN FY2023 IS EXPECTED TO STRENGTHEN REVENUES & GROWTH IN FY2024
Backlog at Fiscal Year End | Revenue | Gross Margin |
$ in Millions | $ in Millions |
Our engineering and manufacturing teams are constantly at work on the development of new advanced platforms to maintain our
dominance in the application of precision thin film coating systems.
2023 Annual Report 5
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Sono-Tek Corporation published this content on 20 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 July 2023 13:38:09 UTC.
