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Sono-Tek Announces Record Orders of $13.4 million and Record Yearend Backlog for Fiscal Year 2019

- Strong demand in leading markets drove sales up 5.5% over fiscal 2018 to $11.6 million with gross margin of 45%; For the fourth quarter, sales grew 1% over prior-year period with gross margin of 46%

- Investments in sales and marketing to win leading market positions in alternative energy and medical market applications impacted operating margin

- Record orders of $13.4 million in fiscal 2019, up 145% over prior year, from strong demand in microelectronics/electronics and alternative energy markets

- Achieved record backlog at year end of $3.0 million, up 145% from backlog of prior year. Backlog includes $1.7 million order for a newly introduced Robotic Coating Platform

- Expect sales growth of 15% to 20% in fiscal 2020 and measurable conversion of sales to operating income and earnings


News provided by

Sono-Tek Corporation

May 28, 2019, 17:20 ET

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MILTON, N.Y., May 28, 2019 /PRNewswire/ -- Sono-Tek Corporation (OTCQX: SOTK) the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its fourth quarter and fiscal year ended February 28, 2019 ("fiscal 2019").

"Our strategy to expand the addressable market for our unique ultrasonic coating technology continues to gain traction.  We developed new, complex solutions for the Alternative Energy, Microelectronics and Medical markets during the year.  These more complex solutions address high value applications for our customers and provide economically compelling alternatives to traditional coating technologies.  We have focused our sales and marketing resources on these targeted opportunities and, combined with strong market conditions, drove sales up 5.5% to $11.6 million," commented Dr. Christopher L. Coccio, Chairman and CEO. 

Dr. Coccio concluded, "Our strong pipeline of opportunities gained momentum this last year.  This momentum, combined with our record backlog of $3.0 million, provides us confidence in our expectations to grow revenue approximately 15% to 20% in fiscal 2020.  While we will continue to invest in advancing our technologies through new product development and building an experienced staff of application engineers to drive growth, we expect that we should demonstrate solid operating leverage on the higher volume in fiscal 2020 as well."  

Fiscal 2019 Review (Results compared with fiscal 2018)

 ($ in thousands)





Change


FY 2019


FY 2018


$


%

Net Sales

$   11,610


$   11,008


$     602


5.5%

Gross Profit

$     5,249


$     5,296


(47)


(1%)

     Gross Margin

45.2%


48.1%













Operating Income (Loss)

$          82


$        382


(300)


(79%)

     Operating Margin

.7%


3.5%













Net Income

$        162


$        368


$   (206)


(56%)

     Net Margin

1.4%


3.3%













The increase in net sales reflects higher volume in Multi-Axis Systems and OEM Systems due in large part to growth in the alternative energy markets, being led by fuel cell development programs in China, and, more recently, Europe.

In fiscal 2019, approximately 65% of sales originated outside of the United States and Canada.  This compares with 56% in fiscal 2018.  The geographic shift was mostly due to higher sales to Asian markets

Gross margin decreased due to a combination of mix and the Company's pricing strategy to establish its ultrasonic coating technology as the product of choice in Asia for fuel cell applications.  The Company expects margins on this equipment to improve as it gains volume and improves material productivity and operating efficiencies.  

The Company continued to invest in new product development and associated marketing as it addressed market expansion opportunities.  Sono-Tek formed a software engineering team dedicated to the integration of manufacturing operations and key vendors. In addition, the team will drive the value engineering process to improve material and manufacturing synergies that are driven by highly intuitive interface technology.

Sono-Tek achieved net income of $0.2 million, or $0.01 per basic and diluted share, this compared with $0.4 million, or $0.02 per basic and diluted share in the prior year.  The decline in net income was the result of aggressive investment in expanding the sales team and product development, as well as investments in engineering to advance operational capability and productivity.

Fourth Quarter Fiscal 2019 Review (Results compared with the fourth quarter of fiscal 2018)

 ($ in thousands)





Change


FY 2019


FY 2018


$


%

Net Sales

$     2,936


$     2,894


$         42


1%

Gross Profit

$     1,336


$     1,350


(14)


(1%)

     Gross Margin

45.5%


46.7%













Operating Income (Loss)

$         (14)


$          94


(108)


(115%)

     Operating Margin

(.46%)


3.3%













Net Income

$          61


$        103


$       (42)


(41%)

     Net Margin

2.1%


3.6%













Balance Sheet and Cash Flow Overview

Net cash used in operating activities was $109,000 in fiscal 2019, compared with generating $1,802,000 in fiscal 2018. Capital expenditures in fiscal 2019 increased to $0.5 million compared with $0.2 million in the prior fiscal year.  In fiscal 2019, the Company invested in new CNC machinery and other equipment to expand production capacity for expected volume and to enhance its precision machining capabilities for new ultrasonic coating solutions. 

At February 28, 2019, the Company had total debt of $871,000, down $156,000 from fiscal 2018 year-end.  Total debt is approximately 10% of the Company's total capitalization and is related to the mortgage on the industrial park where the Company's manufacturing operations are located.

Sono-Tek has a revolving credit line of $1,500,000 and a $750,000 equipment purchase facility, both of which had no outstanding borrowings at year-end.

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
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, press releases, and other written and oral statements.  These "forward-looking statements" are based on currently available competitive, financial and economic data and our operating plans.  They are inherently uncertain, and investors must recognize that events could turn out to be significantly different from our expectations.  These factors include, among other considerations, general economic and business conditions; political, regulatory, competitive, technological and trade barrier developments affecting our operations or the demand for our products; timely development and market acceptance of new products; adequacy of financing; capacity additions; the ability to enforce patents; completion of backlog during the current fiscal year and the ability to achieve increased sales volume at projected levels and continued profitability.

For more information, contact:

Stephen Bagley
Chief Financial Officer
Sono-Tek Corporation
[email protected]

SONO-TEK CORPORATION

CONSOLIDATED BALANCE SHEETS



February 28,


2019


2018

ASSETS




Current Assets:




Cash and cash equivalents

$             3,144,123


$             2,016,464

Marketable securities

2,365,706


4,405,900

Accounts receivable (less allowance of $46,000)

1,397,891


774,778

Inventories, net

1,658,016


1,354,083

Prepaid expenses and other current assets

395,005


139,406

Total current assets

8,960,741


8,690,631





Land

250,000


250,000

Buildings, net

1,731,547


1,807,339

Equipment, furnishings and leasehold improvements, net

802,932


498,401

Intangible assets, net

122,941


136,576

Deferred tax asset

332,017


396,387





TOTAL ASSETS

$           12,200,178


$           11,779,334





LIABILITIES AND STOCKHOLDERS' EQUITY








Current Liabilities:




Accounts payable

$                585,694


$                652,863

Accrued expenses

632,706


893,192

Customer deposits

1,149,558


344,098

Current maturities of long term debt

162,816


156,119

Income taxes payable

6,272


84,621





Total current liabilities

2,537,046


2,130,893





Deferred tax liability

370,757


385,384

Long term debt, less current maturities

707,715


870,532





Total Liabilities

3,615,518


3,386,809





Commitments and Contingencies

-


-





Stockholders' Equity




Common stock, $.01 par value; 25,000,000 shares authorized, 15,197,563 and 14,986,367 issued and outstanding, respectively 

151,976


149,864

Additional paid-in capital

8,929,607


8,901,171

Accumulated deficit

(496,923)


(760,115)

Accumulated other comprehensive income

—


101,605





Total stockholders' equity

8,584,660


8,392,525





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$           12,200,178


$           11,779,334

SONO-TEK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME



Fiscal Year Ended


February 28,


2019


2018





Net Sales

$         11,609,599


$         11,008,444

Cost of Goods Sold

6,361,353


5,711,951

Gross Profit

5,248,246


5,296,493





Operating Expenses




Research and product development

1,324,766


1,280,308

Marketing and selling

2,686,382


2,516,461

General and administrative

1,154,611


1,118,107

Total Operating Expenses

5,165,759


4,914,876





Operating Income

82,487


381,617





Other Income (Expense):




Interest Expense

(39,977)


(46,117)

Interest and Dividend Income

136,677


91,459

Realized gain on sale of marketable securities

73,699


11,208

Net unrealized loss on marketable securities

(100,184)


—

Other Income

28,732


21,896

Income before Income Taxes

181,434


460,063





Income Tax Expense

19,847


91,856





Net Income

$              161,587


$              368,207

Other Comprehensive Income




       Net unrealized gain on marketable securities

—


59,355





Comprehensive Income

$              161,587


$              427,562









Basic Earnings Per Share

$                      .01


$                      .02





Diluted Earnings Per Share

$                      .01


$                      .02





Weighted Average Shares – Basic

15,107,778


14,968,450





Weighted Average Shares – Diluted

15,218,913


15,095,123

SONO-TEK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



Fiscal Year Ended


February 28,


2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES:



Net Income

$           161,587

$              368,207

Adjustments to reconcile net income to net



cash (used in) provided by operating activities:



Depreciation and amortization

332,147

399,526

Stock based compensation expense

30,548

41,728

Inventory reserve

66,000

104,601

Unrealized loss on marketable securities

100,184

—

Deferred tax expense

49,743

(33,558)

(Increase) Decrease in:



Accounts receivable

(623,113)

376,023

Inventories

(369,933)

(118,000)

Prepaid expenses and other assets

(255,599)

(12,130)

(Decrease) Increase in:



Accounts payable and accrued expenses

(327,655)

340,739

Customer deposits

805,460

265,196

                 Income taxes payable

(78,349)

70,002

Net Cash (Used In) Provided by Operating Activities

(108,980)

1,802,334







CASH FLOWS FROM INVESTING ACTIVITIES:



Purchase of equipment, furnishings and leasehold improvements

(547,251)

(189,245)

Sale (purchase) of marketable securities

1,940,010

(2,004,360)

Net Cash Provided By (Used In) Investing Activities

1,392,759

(2,193,605)




CASH FLOWS FROM FINANCING ACTIVITIES:



Proceeds from exercise of options

—

210

Repayment of long-term debt

(156,120)

(149,698)

Net Cash (Used In) Financing Activities

(156,120)

(149,488)







NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

1,127,659

(540,759)




CASH AND CASH EQUIVALENTS:



Beginning of year

2,016,464

2,557,223

End of year

$        3,144,123

$        2,016,464







Supplemental Cash Flow Disclosure:






Interest Paid

$              39,977

$              46,117




Income Taxes Paid

$              28,178

$              59,494

SOURCE Sono-Tek Corporation

Related Links

http://www.sono-tek.com

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