MILTON, N.Y., July 13, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Sono-Tek Corporation (OTCQX: SOTK), the leading developer and manufacturer of ultrasonic coating systems, today reported financial results for its first quarter period of fiscal year 2022, ended May 31, 2021.

First Quarter FY2022 Financial Highlights:

(Compared with prior-year period unless otherwise noted)

• Net Sales were $3,644,000, an increase of 6%, primarily driven by strength in the semiconductor and electronic diagnostic coating markets.
• Gross Profit increased 17% to $1,824,000, and Gross Margin expanded 450 basis points to 50.0%, primarily due to product mix and lower warranty and installation costs.
• Operating Income increased 86% to $343,000.
• Net Income increased 56% to $261,000, excluding the benefit from Paycheck Protection Program Loan, (“PPP”) forgiveness of $1.0 million.
• Stockholders’ Equity increased $1,288,000 to $12,239,000 reflecting the current period’s net income.
• As of May 31, 2021, the Company has no outstanding debt.
• Backlog at May 31, 2021 grew to $4,380,000, up $529,000 or 13.7%, from fiscal yearend at February 28, 2021.
• Sales Growth Guidance for the second quarter of FY2022, ending August 31, 2021, is for a double digit increase over the second quarter of last year.
• Sono-Tek continues to project its highest ever annual sales for fiscal year 2022, ending February 28, 2022.

Dr. Christopher L. Coccio, Chairman and CEO, commented, “Sono-Tek’s sales increased 6% in the first quarter driven by strong demand for multi-axis coating systems. These systems are used in the manufacturing process of electronic diagnostic test kits for COVID-19 and for the semiconductor market, where Sono-Tek is benefiting from the significant investments being made to rapidly increase industry capacity due to current shortages. These gains led to the electronics/microelectronics segment accounting for 62% of the first quarter’s sales mix by market, although our market mix typically fluctuates from quarter to quarter. Costs were lower than a year ago, leading to a 17% increase in Gross Profit. The Gross Margin expanded by 450 basis points to 50.0%, primarily due to the favorable product mix and lower than expected warranty and installation costs. Operating income grew by 86%, aided by disciplined expense control, and net income increased 56%, excluding the benefit from the PPP Loan forgiveness of $1.0 million. At the end of the first quarter, backlog had expanded by nearly 14% from our fiscal yearend in February, or by over $500,000, to $4.4 million.

“Our fiscal second quarter, ending August 31, 2021, has had a fine start, and we expect to report a double digit increase over the second quarter of last year. We continue to project the highest annual sales in corporate history for fiscal year 2022, ending February 28, 2022. These gains stem from the strategic shift in our business model that was initiated several years ago, that expanded 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. Combined with customer requirements, these advancements are proven out in our global network of process development labs, which we believe give Sono-Tek a competitive advantage in meeting the growing global demand for ultrasonic coating systems,” concluded Dr. Coccio.

Fiscal first quarter net sales were $3,644,000, up 6% or $215,000, compared to the first quarter of fiscal 2021, driven primarily by strong demand for multi-axis coating systems used in the manufacturing process of electronic diagnostic test kits for Covid-19 as well as for machines in the semiconductor market. A decrease in integrated coatings systems sales was due to a large integrated coating machine order in the electronics industry for China that shipped in Q1 FY2021, that did not repeat in Q1 FY2022.

In the first quarter of fiscal 2022, approximately 66% of sales originated outside of the United States and Canada compared with 78% in the prior year period. During the global pandemic, several U.S. based customers shifted portions of their operations back to the U.S. due to concerns with potential overseas Covid-related restrictions.

Backlog at May 31, 2021 grew to $4,380,000, up $529,000 or 13.7%, from fiscal yearend at February 28, 2021.

Gross profit margin increased 450 basis points to 50.0% in the first quarter of fiscal 2022 compared to 45.5% in the prior year period. The increase is primarily due to a favorable product mix as well as decreased warranty and installation costs, offset by increased Service Department labor costs and increased travel costs.

Operating income increased to $343,000 in the first quarter of fiscal 2022 compared with $184,000 for the prior year period, an increase of $159,000 or 86%. The increase in operating income is a result of the gross profit improvement of $263,000, offset by an increase in operating expenses of $104,000.

Net income for the first quarter was $1,267,000, including PPP Loan forgiveness of $1.0 million. Excluding the PPP Loan forgiveness, net income was $261,000, or $0.02 per share, compared with net income of $168,000, or $0.01 per share, for the prior year period, an increase of 56%. Diluted weighted average shares outstanding totaled 15,663,772 compared to 15,436,758 for the prior year period.

Balance Sheet and Cash Flow Overview

Cash and cash equivalents and short-term investments at quarter-end were $9.3 million, an increase of $0.6 million from February 28, 2021, the end of fiscal year 2021. The increase was the result of the current period’s net income as well as a decrease in account receivables, and an increase in customer deposits and taxes payable, offset by a decrease in accounts payable and accrued expenses, plus equipment purchases that were made during the first quarter.

Capital expenditures in the first quarter totaled $86,000 which were directed to ongoing upgrades of the Company’s manufacturing facilities. Sono-Tek anticipates total capital expenditures will be approximately $300,000 - $350,000 in fiscal year 2022.

At May 31, 2021, the Company had no debt on its balance sheet. During the first quarter, the Company recorded a gain on the forgiveness of its PPP Loan, awarded under the CARES Act, and accrued interest in the amount of $1,005,372.

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