Sono-Tek (SOTK) - 2026 Q1 - Quarterly Results

Q1 FY2026 Financial Highlights Sono-Tek reported its fifth consecutive quarter with revenue over $5 million, driven by a significant solar order, leading to improved profitability with gross margins at 52% and operating income more than doubling | Financial Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $5.13 million | $5.03 million | +2% | | Gross Profit | $2.7 million | $2.5 million | +9% | | Gross Margin | 52% | 49% | +3 p.p. | | Operating Income | $483 thousand | $238 thousand | +103% | | Net Income | $485 thousand | $331 thousand | +47% | | Diluted EPS | $0.03 | $0.02 | +50% | - This marks the fifth consecutive quarter with sales over $5 million, driven by strong shipments to the Alternative/Clean Energy Market, including a single high ASP order of $2.95 million[1][3][7] Management Commentary Management expressed satisfaction with the strong start to FY2026, anticipating continued first-half profitability but a cautious full-year outlook due to policy uncertainties - The first half of fiscal year 2026 is expected to maintain current revenue levels and strong profitability[2] - The full-year outlook is cautious, with expectations for relatively flat revenue growth due to uncertainty related to governmental clean energy incentives and evolving tariff policies[2] - The company is seeing promising demand from the medical device industry for high-volume production systems and is focusing on large-scale systems with significantly higher average selling prices (ASPs)[2] FY 2026 Guidance The company expects continued first-half growth and profitability, supported by a $7.5 million backlog, but forecasts flat full-year revenue due to policy uncertainties - Strong growth and profitability are expected for the first half of FY2026, but the full-year outlook is for relatively flat revenue growth due to policy uncertainties[4] - As of May 31, 2025, the equipment and service-related backlog totaled $7.5 million, providing a stable base for near-term demand[4] Detailed Financial Analysis This section details financial performance, highlighting increased gross profit and operating income driven by product mix, and significant shifts in sales across categories, markets, and regions Profitability Analysis Gross margin improved to 52% from 49% YoY due to favorable product mix and US sales, significantly increasing operating and net income | Profitability Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | $2.7 million | $2.5 million | +9% | | Gross Margin | 52% | 49% | +3 p.p. | | Operating Income | $483 thousand | $238 thousand | +103% | | Net Income | $485 thousand | $331 thousand | +47% | - The gross margin increase was mainly due to a favorable product mix, including a repeat high ASP order, and a concentration of shipments to the U.S., which typically involve minimal distributor discounts[6] Sales Analysis by Segment Sales were significantly impacted by a $2.95 million solar order, driving substantial growth in Integrated Coating Systems and Alternative/Clean Energy, while other segments declined Sales by Product Category (YoY) | Product Category | Q1 FY2026 Sales ($) | YoY Change | | :--- | :--- | :--- | | Integrated Coating Systems | $3.05 million | +309% | | Multi-Axis Coating Systems | $0.68 million | -75% | | OEM Systems | $0.13 million | -61% | Sales by End Market (YoY) | End Market | Q1 FY2026 Sales ($) | YoY Change | | :--- | :--- | :--- | | Alternative/Clean Energy | $3.25 million | +42% | | Electronics/Microelectronics | $0.94 million | -40% | | Medical | $0.81 million | -6% | | Industrial | $0.12 million | -62% | Sales by Geography (YoY) | Geography | Q1 FY2026 Sales ($) | YoY Change | | :--- | :--- | :--- | | U.S. & Canada | $3.54 million | +15% | | Asia Pacific (APAC) | $0.60 million | +16% | | Europe, Middle East, Asia (EMEA) | $0.90 million | -28% | Balance Sheet and Cash Flow Overview As of May 31, 2025, Sono-Tek maintained a strong balance sheet with $10.9 million in cash and no debt, reflecting solid financial health - Cash, cash equivalents and marketable securities totaled $10.9 million at May 31, 2025[13] - The company had no debt on its balance sheet and stockholders' equity was $18.3 million[13] - Capital expenditures in Q1 FY2026 were $52,000, invested in manufacturing facility upgrades[13] Financial Statements This section presents detailed unaudited condensed consolidated financial statements for the period ended May 31, 2025, including the Balance Sheet, Statement of Income, and sales breakdowns Condensed Consolidated Balance Sheets This section presents the condensed consolidated balance sheets, detailing assets, liabilities, and equity as of May 31, 2025, and February 28, 2025 - Total assets were $23.42 million as of May 31, 2025, nearly unchanged from $23.41 million at February 28, 2025[17] - Total liabilities decreased to $5.15 million from $5.62 million, while total stockholders' equity increased to $18.27 million from $17.79 million over the same period[17] Condensed Consolidated Statements of Income This section presents the condensed consolidated statements of income, detailing revenue, gross profit, operating income, and net income for Q1 FY2026 and Q1 FY2025 | Income Statement | Q1 FY2026 (3 mo ended May 31, 2025) ($) | Q1 FY2025 (3 mo ended May 31, 2024) ($) | | :--- | :--- | :--- | | Net Sales | $5,132,773 | $5,031,038 | | Gross Profit | $2,664,514 | $2,454,487 | | Operating Income | $483,368 | $238,296 | | Net Income | $484,985 | $330,837 | | Diluted EPS | $0.03 | $0.02 | Product, Market, and Geographic Sales This section provides a detailed breakdown of sales performance by product category, end market, and geographic region for Q1 FY2026 - Sales of Integrated Coating Systems grew 309% YoY to $3.05 million, while Multi-Axis Coating Systems declined 75% to $0.68 million[21] - The Alternative Energy/Clean market became the largest segment, with sales growing 42% YoY to $3.25 million, representing 63% of total sales[22] - Sales in the U.S. & Canada region increased by 15% YoY to $3.54 million, while sales in the EMEA region decreased by 28%[23]