Overview

Sono-Tek Corporation is a global leader in designing and manufacturing ultrasonic coating systems that are shaping industries and driving innovation worldwide. The company’s ultrasonic coating systems are used to apply thin films onto parts used in diverse industries, including microelectronics, alternative energy, medical devices, advanced industrial manufacturing, and research and development sectors.

Key Highlights:

• Net Sales for the first half of fiscal 2025 increased by 10% to $10,193,000, strongly impacted by increased sales from the Alternative Energy Market.
• Gross Profit increased 9% to $4,971,000 as a result of increased net sales, though Gross Profit % decreased 70 basis points to 48.8% due to product mix and cost realignment.
• Operating Income increased $50,000 to $524,000 due to the increase in gross profit.
• Interest income, dividend income and unrealized gain on marketable securities increased to $282,000 due to the current high interest rate environment.
• As of August 31, 2024, the Company had no outstanding debt and had cash, cash equivalents and marketable securities totaling $11.6 million.

Sales Performance:

• Total sales for the first half of fiscal year 2025 grew by 10%, driven by shipments to a substantial customer from the Alternative Energy Market.
• Sales to the Alternative / Clean Energy market recorded growth of 80% for the first half of fiscal 2025, influenced by customers transitioning from R&D systems to higher-priced production scale systems.
• Electronics market revenue increased by 30% for the first half of fiscal 2025, positively impacted by shipments of a newly developed coating system for the semiconductor market.
• Medical systems sales declined by 40% for the first half of fiscal 2025, primarily due to lower demand for stent and balloon coating systems, though balloon coating system sales are expected to recover in the second half.
• Industrial sales declined by 46% for the first half of fiscal 2025, strongly impacted by reduced sales to the float glass industry.

Profitability:

• Gross Profit increased 9% to $4,971,000 for the first half of fiscal 2025, though Gross Profit % decreased 70 basis points to 48.8% due to product mix and cost realignment.
• Operating Income increased $50,000 to $524,000 for the first half of fiscal 2025 due to the increase in gross profit, partially offset by an increase in operating expenses.
• Net Income increased by $77,000 to $672,000 for the first half of fiscal 2025, primarily due to the increase in gross profit.

Liquidity and Capital Resources:

• Working capital increased $823,000 to $12,946,000 at August 31, 2024, mostly due to the current period’s net income and non-cash charges.
• Cash and cash equivalents and marketable securities totaled $11.6 million at August 31, 2024, a decrease of $228,000 from February 29, 2024.
• The company used $90,000 of cash in operating activities in the first half of fiscal 2025, a decrease of $1,197,000 compared to the prior year period.
• Investing activities provided $3,808,000 of cash in the first half of fiscal 2025, primarily from the liquidation of marketable securities.

Outlook:

Sono-Tek continues to focus on leveraging its innovative technologies, proprietary know-how, and global reach to develop thin-film coating technologies that enable better outcomes for its customers. The company’s growth strategy is centered on expanding its sales capabilities, increasing its presence in the clean energy sector, and transitioning its business from primarily selling ultrasonic nozzles and components to providing complete machine solutions and higher-value subsystems.