Q3 Sales of
Third Quarter Fiscal 2022 Highlights (compared with the third quarter of fiscal 2021 unless otherwise noted).
- Net sales increased 15% to
$4,419,000 , driven by strong sales toAsia for medical device coating machines and clean energy coating systems. - Gross Profit increased 12% to
$2,159,000 due to the increase in sales. - Gross Margin was 48.9% compared with 50.5% for the prior year period due to changes in product mix.
- Operating income increased 10% to
$491,000 due to the increase in gross profit, partially offset by increases in operating expenses. - Income before taxes increased 9% to
$493,000 . - Backlog on
November 30, 2021 reached another record high of$6,505,000 , an increase of 3% compared with backlog of$6,332,000 onAugust 31, 2021 (the end of the fiscal Q2) and increased 69% compared to backlog of$3,851,000 onFebruary 28, 2021 (the end of fiscal year 2021).
Nine Month Fiscal 2022 Highlights (compared with the first nine months of fiscal 2021 unless otherwise noted)
Net Sales increased 13% to$12,134,000 , primarily driven by sales of several recently developed new products for the medical market as well as continued expansion ofSono-Tek systems used in the clean energy sector.- Gross Profit increased 18% to
$6,057,000 due to higher sales and a favorable product mix. - Gross Margin expanded 230 basis points to 49.9% primarily due to a favorable product mix and lower than expected warranty and installation costs.
- Operating Income increased 54% to
$1,282,000 due to the increase in gross profit, partially offset by increases in operating expenses. - Income before taxes increased 50% to
$1,295,000 , excluding the benefit from PPP loan forgiveness of$1.0 million . - As of
November 30, 2021 , the Company had no outstanding debt. - Cash and marketable securities were
$10,184,000 onNovember 30, 2021 , an increase of$1,537,000 fromFebruary 28, 2021 , nearly half of which was due to an increase in customer deposits of$729,000 , bringing total deposits to$1,896,000 atNovember 30, 2021 . The increase in customer deposits is primarily due to our record backlog and the growing percentage of orders for costly, complex systems in the backlog.
Guidance
- For the fourth quarter of FY2022,
Sono-Tek expects double digit sales growth over the comparable period of the prior fiscal year. Sono-Tek anticipates double digit sales growth for FY2022, and continues to expect the highest annual sales in corporate history for the fiscal year endingFebruary 28, 2022 .
Dr.
“We ended the third quarter with
“Sono-Tek’s multi-year financial gains stem from the strategic shift in the Company’s business model that was initiated several years ago, expanding its product line to provide higher value complete machine solutions and larger subsystems to original equipment manufacturers (“OEMs”). These product advancements are supported by a high level of application engineering expertise from our specialized staff, in combination with the Company’s globally located process development labs. Looking ahead, we believe that the gains from this shift will continue to be realized as we continue to invest significant resources to further enhance our market diversity with new and expanded applications for Sono-Tek’s unique ultrasonic coating systems,” concluded
Year-to-Date Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
($ in thousands)
Nine Months Ended | Change | ||||||
2021 | 2020 | $ | % | ||||
$ 12,134 | $ 10,736 | 1,398 | 13% | ||||
Gross Profit | $ 6,057 | $ 5,112 | 945 | 18% | |||
Gross Margin | 49.9% | 47.6% | |||||
Operating Income | $ 1,282 | $ 832 | 450 | 54% | |||
Operating Margin | 10.6% | 7.8% | |||||
Net Income | $ 1,987 | $ 666 | 1,321 | 198% | |||
| 16.4% | 6.2% | |||||
Third Quarter Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
($ in thousands)
Three Months Ended | Change | ||||||
2021 | 2020 | $ | % | ||||
$ 4,419 | $ 3,827 | 592 | 15% | ||||
Gross Profit | $ 2,159 | $ 1,931 | 228 | 12% | |||
Gross Margin | 48.9% | 50.5% | |||||
Operating Income | $ 491 | $ 447 | 44 | 10% | |||
Operating Margin | 11% | 12% | |||||
Net Income | $ 376 | $ 320 | 56 | 18% | |||
| 8.5% | 8.4% |
Third Quarter FY2022 Financial Overview
Fiscal third quarter net sales were
Sales of multi-axis coating systems were strong, increasing
Integrated coatings systems sales decreased by
The micro-electronics market also dipped in the third quarter. However, this market sector is expected to rebound in the current fourth quarter due to the planned delivery of a large six-axis robot for the semiconductor industry that is scheduled to ship by the end of Sono-Tek’s fiscal year in February.
In the third quarter of fiscal 2022, approximately 78% of sales originated outside of
Strong sales in Q3 fiscal 2022 were primarily driven from sales to APAC, reflecting the continuing transition of several countries emerging from COVID-19 lockdowns to bring their manufacturing operations back online. APAC shipments during the third quarter included two significant fuel cell membrane coating systems that were sold to different customers in
At quarter end, backlog was a record high of
For the third quarter of fiscal 2022, Gross Profit increased 12% to
Operating income increased 9.8% to
Net income for the third quarter was
Balance Sheet and Cash Flow Overview
Cash and cash equivalents and short-term investments at
Capital expenditures in the third quarter totaled
At
About
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 www.sono-tek.com.
Safe Harbor Statement
This news release contains forward looking statements regarding future events and the future performance of
For more information, contact:
Chief Financial Officer
info@sono-tek.com
Investor Relations:
PCG Advisory
(646) 863-6341
sprince@pcgadvisory.com
CONDENSED CONSOLIDATED BALANCE SHEETS
2021 | ||||||||||
(Unaudited) | 2021 | |||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | 6,833,804 | $ | 4,084,078 | ||||||
Marketable securities | 3,349,962 | 4,563,470 | ||||||||
Accounts receivable (less allowance of | 1,563,460 | 1,757,802 | ||||||||
Inventories, net | 2,799,763 | 2,611,106 | ||||||||
Prepaid expenses and other current assets | 139,856 | 151,316 | ||||||||
Total current assets | 14,686,845 | 13,167,772 | ||||||||
Land | 250,000 | 250,000 | ||||||||
Buildings, net | 1,501,369 | 1,575,135 | ||||||||
Equipment, furnishings and building improvements, net | 1,114,606 | 1,075,190 | ||||||||
Intangible assets, net | 80,875 | 95,456 | ||||||||
Deferred tax asset | 236,120 | 259,838 | ||||||||
TOTAL ASSETS | $ | 17,869,815 | $ | 16,423,391 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current Liabilities: | ||||||||||
Accounts payable | $ | 876,283 | $ | 1,294,483 | ||||||
Accrued expenses | 1,733,451 | 1,750,916 | ||||||||
Customer deposits | 1,895,671 | 1,166,541 | ||||||||
Income taxes payable | 142,517 | 53,567 | ||||||||
Total current liabilities | 4,647,922 | 4,265,507 | ||||||||
Deferred tax liability | 183,011 | 205,562 | ||||||||
Long term debt, less current maturities | - | 1,001,640 | ||||||||
Total liabilities | 4,830,933 | 5,472,709 | ||||||||
Stockholders’ Equity | ||||||||||
Common stock, | 156,997 | 154,527 | ||||||||
Additional paid-in capital | 9,163,979 | 9,064,994 | ||||||||
Accumulated earnings | 3,717,906 | 1,731,161 | ||||||||
Total stockholders’ equity | 13,038,882 | 10,950,682 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 17,869,815 | $ | 16,423,391 |
See notes to unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended | Three Months Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ | 12,134,336 | $ | 10,736,327 | $ | 4,419,401 | $ | 3,827,142 | |||||||||
Cost of Goods Sold | 6,077,645 | 5,624,002 | 2,260,874 | 1,896,516 | ||||||||||||
Gross Profit | 6,056,691 | 5,112,325 | 2,158,527 | 1,930,626 | ||||||||||||
Operating Expenses | ||||||||||||||||
Research and product development costs | 1,243,513 | 1,241,739 | 417,300 | 406,799 | ||||||||||||
Marketing and selling expenses | 2,349,607 | 2,154,956 | 845,362 | 765,969 | ||||||||||||
General and administrative costs | 1,181,502 | 883,384 | 405,280 | 311,130 | ||||||||||||
Total Operating Expenses | 4,774,622 | 4,280,079 | 1,667,942 | 1,483,898 | ||||||||||||
Operating Income | 1,282,069 | 832,246 | 490,585 | 446,728 | ||||||||||||
Interest Expense | - | (23,949 | ) | - | (6,245 | ) | ||||||||||
Interest and Dividend Income | 13,367 | 26,953 | 2,367 | 1,470 | ||||||||||||
Other Income | - | 30,343 | - | 10,824 | ||||||||||||
Paycheck Protection Program Loan Forgiveness | 1,005,372 | - | - | - | ||||||||||||
Income Before Income Taxes | 2,300,808 | 865,593 | 492,952 | 452,777 | ||||||||||||
Income Tax Expense | 314,063 | 199,424 | 116,783 | 132,299 | ||||||||||||
Net Income | $ | 1,986,745 | $ | 666,169 | $ | 376,169 | $ | 320,478 | ||||||||
Basic Earnings Per Share | $ | 0.13 | $ | 0.04 | $ | 0.02 | $ | 0.02 | ||||||||
Diluted Earnings Per Share | $ | 0.13 | $ | 0.04 | $ | 0.02 | $ | 0.02 | ||||||||
Weighted Average Shares - Basic | 15,541,247 | 15,420,787 | 15,622,721 | 15,440,673 | ||||||||||||
Weighted Average Shares - Diluted | 15,572,424 | 15,547,604 | 15,654,936 | 15,583,089 |
See notes to unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Unaudited | ||||||||
Nine Months Ended | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 1,986,745 | $ | 666,169 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 333,729 | 350,043 | ||||||
Stock based compensation expense | 92,680 | 26,973 | ||||||
Inventory reserve | (3,919 | ) | 54,000 | |||||
Paycheck Protection Program Loan Forgiveness | (1,005,372) | - | ||||||
Deferred tax expense | 23,718 | (89,304) | ||||||
Decrease (Increase) in: | ||||||||
Accounts receivable | 194,342 | (744,282) | ||||||
Inventories | (184,738 | ) | (119,211) | |||||
Prepaid expenses and other current assets | 11,460 | 27,071 | ||||||
(Decrease) Increase in: | ||||||||
Accounts payable and accrued expenses | (431,934 | ) | 193,317 | |||||
Customer deposits | 729,130 | 133,423 | ||||||
Income taxes payable | 66,400 | 214,725 | ||||||
Net Cash Provided by Operating Activities | 1,812,241 | 712,924 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of equipment, furnishings and leasehold improvements | (284,798 | ) | (327,180 | ) | ||||
Capital expenditure grant proceeds | - | 100,000 | ||||||
Sale of marketable securities | 1,213,508 | 993,724 | ||||||
Net Cash Provided by Investing Activities | 928,710 | 766,544 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of stock options | 8,775 | - | ||||||
Proceeds from note payable | - | 1,001,640 | ||||||
Repayment of long term debt | - | (126,650 | ) | |||||
Net Cash Provided by Financing Activities | 8,775 | 874,990 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,749,726 | 2,354,458 | ||||||
CASH AND CASH EQUIVALENTS | ||||||||
Beginning of period | 4,084,078 | 3,659,551 | ||||||
End of period | $ | 6,833,804 | $ | 6,014,009 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||||||||
Interest paid | $ | - | $ | 20,573 | ||||
Income Taxes Paid | $ | 224,002 | $ | 74,004 |
See notes to unaudited condensed consolidated financial statements.
PRODUCT, MARKET, AND GEOGRAPHIC SALES
(Unaudited)
Product Sales
Three Months Ended | Change | Nine Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
Fluxing Systems | $ | 104,000 | $ | 242,000 | (138,000 | ) | (57% | ) | $ | 579,000 | $ | 680,000 | (101,000) | (15% | ) | |||||||||||||||||
Integrated Coating Systems | 60,000 | 1,071,000 | (1,011,000 | ) | (94% | ) | 780,000 | 2,920,000 | (2,140,000) | (73% | ) | |||||||||||||||||||||
Multi-Axis Coating Systems | 2,721,000 | 1,249,000 | 1,472,000 | 118% | 6,692,000 | 4,147,000 | 2,545,000 | 61% | ||||||||||||||||||||||||
OEM Systems | 637,000 | 523,000 | 114,000 | 22% | 1,808,000 | 1,177,000 | 631,000 | 54% | ||||||||||||||||||||||||
Other | 897,000 | 742,000 | 155,000 | 21% | 2,275,000 | 1,812,000 | 463,000 | 26% | ||||||||||||||||||||||||
TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | 15% | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | 13% |
Market Sales
Three Months Ended | Change | Nine Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
Electronics/Microelectronics | $ | 898,000 | $ | 1,455,000 | (557,000) | (38% | ) | $ | 4,605,000 | $ | 4,504,000 | 101,000 | 2% | |||||||||||||||||||
Medical | 1,604,000 | 831,000 | 773,000 | 93% | 3,418,000 | 2,484,000 | 934,000 | 38% | ||||||||||||||||||||||||
Alternative Energy | 1,459,000 | 783,000 | 676,000 | 86% | 2,848,000 | 2,004,000 | 844,000 | 42% | ||||||||||||||||||||||||
Emerging R&D and Other | 256,000 | 207,000 | 49,000 | 24% | 691,000 | 723,000 | (32,000 | ) | (4%) | |||||||||||||||||||||||
Industrial | 202,000 | 551,000 | (349,000) | (63%) | 572,000 | 1,021,000 | (449,000) | (44% | ) | |||||||||||||||||||||||
TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | 15% | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | 13% |
Geographic Sales
Three Months Ended | Change | Nine Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
$ | 988,000 | $ | 1,165,000 | (177,000) | (15% | ) | $ | 3,769,000 | $ | 4,076,000 | (307,000) | (8% | ) | |||||||||||||||||||
1,901,000 | 1,039,000 | 862,000 | 83% | 4,754,000 | 3,416,000 | 1,338,000 | 39% | |||||||||||||||||||||||||
1,287,000 | 1,216,000 | 71,000 | 6% | 2,723,000 | 2,414,000 | 309,000 | 13% | |||||||||||||||||||||||||
243,000 | 407,000 | (164,000 | ) | (40% | ) | 888,000 | 830,000 | 58,000 | 7% | |||||||||||||||||||||||
TOTAL | $ | 4,419,000 | $ | 3,827,000 | 592,000 | 15% | $ | 12,134,000 | $ | 10,736,000 | 1,398,000 | 13% |
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