Sono-Tek Corp. Stock price
Is Sono-Tek Corp. a Top Scorer Stock based on the Dividend, High-Growth-Investing or Leverman Strategy?
As a Free StocksGuide user, you can view scores for all 9,134 stocks worldwide.
StocksGuide Premium
StocksGuide Unlimited
Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $72.61m | Revenue (TTM) = $21.44m
Market Cap = $72.61m | Estimated Revenue = $22.12m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $55.96m | Revenue (TTM) = $21.44m
Enterprise Value = $55.96m | Forward Revenue = $22.12m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Sono-Tek Corp. Stock Analysis
Analyst Opinions
8 Analysts have issued a Sono-Tek Corp. forecast:
Analyst Opinions
8 Analysts have issued a Sono-Tek Corp. forecast:
Sono-Tek Corp. Events
Past Events
|
MAY
28
Q4 2026 Earnings Call
4 months ago
|
|
OCT
14
Q2 2026 Earnings Call
11 months ago
|
StocksGuide Free
Sono-Tek Corp. — Q4 2026 Earnings Call
1. Management Discussion
Good day, and welcome to the Sono-Tek Corporation Fiscal Year and 2026 Results Conference Call. [Operator Instructions]. Please note today's event is being recorded.
I'd now like to turn the conference over to Kirin Smith with Investor Relations. Please go ahead.
Thank you, Rocco, and thank you, everyone, for joining us today. Senate released their fourth quarter and full year fiscal 2026 results this morning. If you don't have a copy of the release, please visit the company's website at www. sano-tech.com and navigate to the Investors section. The product market and geography sales tables on the last page of the release will be part of today's discussion.
With me on the call today are Dr. Chris Coccio, Executive Chairman; Steve Harshbarger, CEO and President; and Steve Bagley, Chief Financial Officer. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements.
Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC. The company assumes no obligation to update the information contained in this conference call.
As a reminder, this is our full year fiscal 2026 call for the period ended February 28, 2026. Our next call will be our midyear fiscal 2027 update for the second quarter and first half ended August 31, 2026, and will be held in October.
I would now like to turn the call over to Chris Coccio, Executive Chairman of Sono-Tek. Chris, please go ahead.
Thank you, Kirin, and good morning, everyone. I will start with some opening remarks, and then Steve Harshbarger, our CEO and President, will go through a deeper business and operational review. This will be followed by Steve Bagley, our Chief Financial Officer, and he will provide the financial review. Following their comments, we'll open the call for questions, as Kirin mentioned.
Fiscal 2026 was a year of strong execution and very meaningful progress for Sono-Tek, we delivered our second consecutive year of revenue above $20 million, and we reached million while maintaining consistent quarterly performance with 8 consecutive quarters above $5 million each.
We're also proud to report that fiscal year 2026 marks our third consecutive year of annual revenue growth and 16th year in a row of profitability. Most importantly, we achieved significant profitability expansion. The gross margin increased to 51%. The operating income grew 81% and we delivered strong bottom line performance, which was supported by operating leverage and favorable product mix.
Our results reflect the continued success of our strategic shift towards higher value, high ASP production systems. These are driving both revenue quality and margin expansion. From a market perspective, Medical was a standout performer. It increased 54% year-over-year and was driven by strong demand for balloon catheter coating systems, stent applications and other advanced medical technologies.
We also saw continued growth in electronics, particularly in electrically active coatings, which support diagnostic-related applications. So clean energy remains a key long-term opportunity. We are now experiencing a decline in electrolysis related demand during the year due to policy shifts at the government level. However, this was partially offset by solely related system shipments earlier in the fiscal year.
Geographically, we saw strong performance in the U.S. market, which grew 12% and represented approximately 67% of total revenue. that benefits both revenue growth and margins due to reduced international related costs. We ended the year with a solid backlog and a strong balance sheet, providing a stable foundation for our future growth.
Now looking ahead, we anticipate continued revenue growth and profitability in the first half of fiscal 2027, and that would be driven by momentum in the medical sector and sustained demand for high ASP systems. For the full year of fiscal 2027, we're currently expecting relatively flat to modestly higher revenue compared to fiscal 2026.
Visibility beyond the first half, however, remains limited due to continued uncertainty in certain clean energy sectors and the timing of these high ASP the customer orders, which can create significant shifts in quarterly revenues -- this is particularly true as we continue to see a higher frequency of larger, more complex system orders that typically involve longer lead times and have less predictable shipment timing.
And with that, I'll turn it over to Steve Harshberger, our CEO and President. Steve?
Thanks, Dr. Coccio, and good morning, everybody. We are very encouraged by our fiscal 2026 performance, which reflects both consistency in revenue and meaningful improvement in profitability. For the fourth quarter, revenue increased 10% to $5.6 million. Gross profit increased 15% to $2.79 million. Gross margin reached 50%, and net income increased 70% to approximately $557,000. This performance reflects strong execution and continued demand for our high-value systems.
For the full fiscal year, revenue increased to $20.9 million. Gross profit increased 8% to $10.56 million. Gross margin expanded to 51% and driven, of course, by product mix and increased percentage of U.S. sales and operating income increased 81% to $1.82 million. These results clearly demonstrate the operating leverage in our business as we scale with these high ASP systems.
Now I'll provide a few other key highlights of the year in regards to our end markets for FY 2026. Medical increased 54%, and that was driven by production scale systems and the growing adoption across multiple medical device coating applications. The electronics market increased by 16%, and that was supported by electronically active layers being deposited on diagnostic-related devices.
The clean energy market declined 19%, reflecting reduced electrolysis demand. And the industrial basket declined, which commonly would show variability in demand on our large glass coating orders. As for our products category for FY 2026, integrated coating systems, which we have renamed in-line coating systems increased 91%, and that was driven by our solar-related systems. Multi-access systems declined due to our lower clean energy demand and flexing systems increased 53%, and that was supported by strong Asia demand.
Regarding our geographic trends for FY 2026, the U.S. and Canada increased 12%, and that was driven by shipments of 5 high ASP that's at high average selling price systems totaling $3.85 million. The international markets were mixed with some softness in Asia and Latin America. We closed fiscal 2026 with a solid backlog which showcases the strength of our overall business and order activity.
We contributed to increased sales and a strong backlog as a direct result of our investments in R&D with a strong focus on product expansion and our balance sheet remains strong with still no outstanding debt. So overall, our results highlight the strength of our diversification strategy and the continued shift towards high margin and higher ASP, high-volume production system sales.
We remain confident in our long-term growth prospects and we're looking ahead. And as Chris mentioned, we expect continued revenue growth and profitability for the first half of FY 2027, driven by the medical and microelectronics market and expanding adoption of our product production scale systems. And now I'll turn it over to our CFO, Steve Bagley for a deeper financial review, and then we'll open it up after that for questions.
Over to you, Steve.
Very good. Thank you, Steve, and good morning, everyone. And now a review of our full fiscal year 2026 year-over-year results. Net sales were $20.9 million, and that's up 2% from $20.5 million in the prior year. Gross profit increased 8% and to $10.56 million with margin expanding to 51% from 48%, and that was driven by favorable product mix and increased U.S.-based system sales.
Operating income increased 81% to $1.2 million, with operating margins improving to 9% from 5%. I Total operating expenses were $8.7 million, relatively flat year-over-year. Our research and development costs decreased 6% to $2.55 million, and that's primarily due to lower personnel and material costs.
Sales and marketing decreased 4% to $3.5 million and that reflects lower commission and personnel costs. Our G&A costs increased 14% to $2.66 million, and that's driven by higher salaries, insurance and stock-based compensation expense. Our interest and dividend income totaled approximately $443,000, that's slightly lower than last year, and that's due to reduced interest rates.
Our tax expense increased, and that's due to the current year's increase in income before income taxes and net income for the year was approximately $1.8 million, and that's up 42% on from $1.27 million in the prior year, and that is reflecting strong operating performance and margin expansion.
Regarding our balance sheet, cash, cash equivalents and marketable securities totaled $14.8 million, and that's an increase from $11.9 million in the prior year. We continue to have 0 outstanding debt and our working capital increased to $16.2 million. I'm also pleased to state that our cash flows from operating activities generated $3.2 million and that is a significant increase when compared to $525,000 in the prior fiscal year.
The current year's cash flow was supported by profitability and favorable working capital dynamics including higher customer deposits and inventory management. We ended fiscal year 2026 with a backlog of approximately $9.12 million, and that's remaining pretty close to historically high levels, and that is supporting our visibility into fiscal 2027. Overall, we are very pleased with our financial performance for the year and believe we are well positioned moving forward.
And now we will open the call for any questions from the audience and Racco, please go ahead.
[Operator Instructions]. It looks like our first question today comes from Dick Ryan at Colliers.
2. Question Answer
Solid end to the year. We're 1 quarter into fiscal '27. Can you talk on the the order activity, what you're seeing kind of the segments? I mean you -- I think you indicated in the past that the backlog had had shipped all the alternative energy or clean energy. So the backlog was pretty much medical and other. Can you kind of give us a sense of your order pipeline to date here with the like I said, with first quarter already in the bag essentially?
Yes, yes, for sure, good question, Dick. As you indicated, our backlog historically for the last few years, has been very heavily clean energy related. I can tell you this current fiscal year, it's very light clean energy related. It's really transitioned and shifted drastically over towards the medical sectors and the microelectronic sectors.
So that's most definitely where we're seeing our fastest growth coming from -- but I should note that it's really a result of a lot of the machine integration development we did for the clean energy sector prior that was directly transferable those capabilities over to these other marketplaces. So our diversification really worked to our advantage here. But that's where it's really coming from.
And that also goes is how it's looking going forward. If I look at our quotes and for cash going out, it continues to be the high ASP, high average selling price, larger production systems that are being quoted presented. So it's customers that maybe were buying machines that were $400,000, $500,000, $600,000 a piece, but now they are making these transitions over to machines that are maybe $1 million, $2 million or $3 million as part of the transition to our capabilities to provide these high ASP complex platforms.
Okay. Okay. Then the last call, midyear, you talked about coming out of the major semiconductor show, showing a lot of interest and kind of renewed confidence in entering that market longer term as they move from 200 to 300 fab photoresist business. Can you give us an update on the progress you've seen over the last 6 months, Steve?
Sure. That's been a very serious focus for us over the last year. As we've talked about in prior discussions, we had what I would describe a very solid and product that was well received for the 200-millimeter lab market. Well, we've put a lot of effort into the development of 300-millimeter wafers with the goal of ultimately directly goes more towards the fab marketplace. And that's coming along quite nicely.
But I said maybe a little bit longer than we expected it to be, but it is coming along nicely. We're going to be participating and bringing that $300 million, so of machine is planned for the end of this calendar year to be doing a semiconductor show Semicon in Europe, which is actually the first time we've ever participated in that show for Sono-Tek.
We think it's a significant enough introduction that we want to make the world aware of this availability and capability at these upcoming shows. So I think we'll start to see that begin to contribute to the revenue stream more so in the coming fiscal year. Maybe we'll find in FY 2027, maybe we'll see some orders, but actual deliveries will likely be more likely to fall in the following fiscal year in FY 2028, I should say, would be in FY 2028 would be actual deliveries of machines that are focused on that.
But we're anxious to get it out there for that market to see it and to really gauge the acceptance of it. But I think it will go fairly well. It's a product that we feel like we're being pulled into versus us trying to push our way into the marketplace. I believe we have customers that see need for us with that product.
Okay. Then one last one for me. You have a nice buildup of cash. I don't think you've done any stock repurchases down here. What's the status of the repurchase program? And I think your investments have been kind of for organic growth. What's your thoughts on potential M&A.
Yes. You're correct in the fact that we do have a stock repurchase program, which we've exercised some, but it's been very minimal amount that we've purchased back so far, maybe several hundred thousand dollars or something along those lines. So it's not a significant amount at this time.
We certainly do continue to have active, both inbound and outbound discussions as part of our normal daily routine in practice at Sono-Tek. We -- like everybody, we're out there looking for the correct valuations and the correct synergies. And we most certainly -- we're highly selective. There's no doubt about that, that we're very highly selective.
But I think we're fortunate that we have the ability to be highly selective because if something doesn't happen immediately for us, we feel like we have a long runway of growth for organically within the company, but we continue to be relatively active considering both inbound and outbound activity.
Okay. Great. Congratulations on another strong performance here.
Our next question today comes from Ted Jackson at Northland Securities.
So Steve, I'll start with, I mean, a little bit on backlog and bookings and things like that. So the backlog at 9.1%. I mean, it's down sequentially, but up year-over-year. It's a solid number. But if I kind of back through it, the book-to-bill is 0.44, and your bookings number is around $2.5 million. Correct me if I'm wrong on that. My data only goes back through 2022, but that's actually the lowest kind of bookings number, I have in terms of the step I've been following and tracking and I guess the question with that is, has there been like beyond like the halt energy, has there been somewhat of a a slowdown in terms of business coming in the door? And then could you -- or is there just opportunity out there that hasn't manifested itself and any kind of bookings growth and if there is maybe a discussion about what are the opportunities that are out there that would -- that could come into play to strengthen up your view with regards to the second half, I mean it's a whole bunch of stuff around there, but you get kind of were on for -- that's my first question.
Yes. Yes, yes, 100%. And it's been a common question over the past 1 year, 1.5 years now since the new administration has come into play. I think because we participate in that clean energy sector, I think our investor base may have thought, "Oh, Sono-Tek is going to get punished for that." And there is no doubt in the electrolyzer area, our business did slow down, but I think what a lot of our investors did recognize is our ability to switch to other marketplaces very quickly with the same technology, but just refocus our front end of the organization to other markets that we're thriving.
And right now, it is more lumpy our backlog than what it's been historically and that's just because of these high ASP platforms that come in. We get more frequently these $3 million, $4 million, $5 million orders that come and drop in and it makes our backlog go up and then it works through it and disappears. We certainly have to work towards making sure those are coming in not just once a quarter, but our goal here is to make sure those sort of orders will be coming in once a month and ultimately, a couple of times a month going forward, in addition to our normal flow business.
So although we'll see it's lumpy as I think right now, year-over-year, I think we're either flat or just slightly up maybe backlog. And I think it's right near our year-end high backlog number that we've ever had. But when you compare to the prior quarter, it did dip back down. But I think, again, you're going to start to see it go back up again and continue to see that kind of lumpiness going through it.
Most definitely, though, the big shift, which is going to drive the backlog moving forward, is the ability to drive higher ASP, more complex platforms into the portfolio. And I should say that every time we get an order, we almost kind of think, "Oh, wow, it couldn't get any bigger than this." And then all of a sudden, you go back and ask just 2 simple -- 2 simple words to your customer base. We typically now will just say, what next? What else do you need from us? What would make your process, your life, your manufacturing realm easier if Sono-Tek provided for you.
And that's much different than saying, here's what we have to offer. Here's what we have to offer is just the beginning of the conversation that we have with our customers now. The bigger question is -- all right, here's what you have to offer, but what else would you like us to provide you. And that's really driving our growth significantly.
And I look at some of these more recent quoting activity, product projects that we have. It's not uncommon for us to quote a customer, say, a $1 million machine, but by the end of the discussion 6 months later, that $1 million machine might be $6 million or $5 million or $4 million, but several times larger than what it started out.
And that's all because of our ability both to provide and ask the question of what else -- what next would you like us to provide to you. And the customer now they have the confidence to give us those sort of additional add-ons because they worked with us for so long.
And they know that the quality of the products we're delivering to them are good. So it's worked out really well for us with that strategy, and that's something we're going to be continuing to doing. And to be honest, I don't really know how high it could go. -- that every time we hit another milestone, where we'll say, wow, that's a $3 million, $4 million or $5 million order it seems like the next order becomes an larger.
So we're just going to keep on pushing that as far as the [indiscernible] will let us take it and drive these high ASP production systems larger and larger.
Do you have a pipeline of opportunity that will enable you to feel more confident in the second half of the year. And if so, at what point does where is kind of like the cliff to where you need to have that those opportunities become orders and then maybe some discussion about the markets that they're in.
Yes. Yes. We most definitely have a pipeline, and that's driven by the forecast and we keep track, although we don't give guidance or publicly announce it, but we had forecast and marketplaces where they're coming from that most of the most recent activity is microelectronics in the medical sector. Then as far as guidance.
I think the biggest challenge for us now is that with these high ASP complex production systems, it's the lead time because if we say, for example, get an order in the next month and keep in mind, we're just finishing our fiscal year Q1 and in another couple of days from now.
So we've got very good guidance on Q1 and pretty good guidance on Q2. But if we get any significantly high ASP orders, probably in the next month, there's a very good chance they'll ship within this fiscal year. If by chance those same orders come in, in 2 months from now, that will very likely push them into the next fiscal year, which is still good, but it just kind of is pushing on the current fiscal year. So that's why you'll see us be a little bit more cautious on second half numbers, and we should be able to give much clearer guidance in our next conference call. and that will be dependent upon did we get orders over this next month or that allow us to ship these big production platforms in the current fiscal year? Or will they be pushing into next fiscal year?
And again, it makes a visibility, a little bit tough longer term because of that. But either way, there's definitely a nice upward trend in the activity and these quotes that are going out in the level of seriousness with these quotes.
And then on taking up too much time. But my next question is just if you look at your geographic mix and you kind of look at it for the past few years, you have had exceptionally solid growth out of North America. I mean you had $4.5 million of revenue in 2020. You did almost $14 million of revenue for Vestm26. It's been up every year over that time frame. And what dragged down the aggregate growth has been. Is there a case to be made just ignoring kind of the end markets that the decline in APAC has become such a small portion of revenue for Sono-Tek that the growth metrics on the top line might improve just because you don't have that drag.
Most definitely. I mean there's a lot of areas where things could -- because we're, in my opinion, just at the beginning phases. I mean opinion, we're still small. And there's so much potential upside here. And with our high ASP platforms, it only takes 1 or 2 significant orders to make a big impact on the revenue upside.
And of course, we're never going to say, oh, we're anticipating to get this $10 million order until it's really locked in there. But orders like that are the kind of thing where all of a sudden, you could be up by 50%, 80% on 1 significant order. And that's a big change in the company's overall trajectory.
And we always plan kind of conservatively because we like to stay profitable. We like to make money. Well, don't get me wrong. We continue to invest very heavily in our R&D to grow the company, but when we give guidance, we like to give relatively conservative guidance to make sure we achieve what we're saying we're going to do and leave some upside potential.
And our next question comes from Bill Nicklin at Bill Will Insights.
Nice margins, like margin improvement. Good job. Thanks I got a couple here. And you kind of touched on some of it. And basically, over the last 4 or 5 years or so, you've consistently delivered strong growth margins, and it looks like they're getting stronger and headed higher from here.
With that -- but yet, your bottom line has not been stellar. Was that a specific strategy? And what do you think you've accomplished from that? And where do we -- are we a going forward based on what it looks like is the money that you spent building out the business.
Yes, good question. I was to a significant extent it was deliberate. We very intentionally reinvested heavily in application engineering, things like process development and maybe broader integrated system capabilities, all with the goal is to position Sono-Tek for large, more sophisticated production opportunities.
And I have to also say that importantly, our net margins certainly could have been higher during that period. And that's how we've chosen to prioritize near-term profitability over some of these growth initiatives in strategic investments.
And at the same time, I would say that some of the market acceptance and pricing and resilience we've seen with these newer integrated system solutions definitely exceeded our original expectations. As we've evolved towards more complex and higher ASP production platforms, which commonly involved outsourcing subsystems and our integration partners.
I for sure initially expected some downward pressure on margins. But in practicality, that really hasn't happened. We've been able to maintain consistently strong gross margins through that transition. And they stayed within -- and really, I would describe as an unusually tight range. They're generally in that upper 40s to low 50% area.
And I think it's because our customers understand that they're not simply buying sophisticated coating equipment for Sono-Tek anymore. They're buying our process expertise our application knowledge and highly specialized integrated capabilities tailored to their specific manufacturing needs and processes. So while we're certainly a manufacturing company, our customers, they're increasingly viewing Sono-Tek as much more of a technology solutions and maybe a process expertise provider, I would say, rather than, say, a traditional equipment supplier, where margins typically fluctuate much more significantly.
And the good news is our customers are willing to pay for integration expertise and the ability to work with a single source for a broader turnkey solution, which has again allowed us to maintain these healthy margins.
Great. A couple of years ago, there was some discussion about building out what we call Building 6 on your campus -- and that appeared that we get put on hold probably because of the clean energy slowdown. I understand that's back under consideration and -- now -- and that would take your overall capacity up from somewhere $25 million to $29 million now up to the $40 million to $44 million range. Is that correct? And what is in your pipeline as you look out that could get the revenues up to that $40 million to $44 million range.
Sure. Sorry, yes, good observation A couple of years ago, as you mentioned, we did discuss larger expansion initiatives but primarily anticipated with green energy growth sector -- and when portions of that market slowed, we took a more measured approach, I would describe it as rather than expanding too aggressively ahead of demand. However, more recently, we've been increasingly proactive with the next phase of our manufacturing expansion.
And going along with that is some flow optimization strategy. And this first phase that we're looking at right now takes advantage of currently underutilized vertical space. And that's within our existing facility. And it's really by constructing a mezzanine structure in reconfiguring portions of our manufacturing store for improved workflow efficiency and space utilization. We expect to begin implementing that phase during the current calendar year.
And the investment will likely be in the area and this is early, but $500,000 to $600,000 a and should increase our practical annual revenue capacities to roughly $35 million at this point, it's our latest guess, while also to very importantly, improving our operational efficiency throughout the facility.
Now we're also actively working with New York State economic development programs, and we're hopeful that they'll participate in supporting this project. We believe internally here that our investment is very well aligned with the state's goals around advanced manufacturing and high-value domestic production jobs.
So our goal is to continue expanding these capabilities here in New York rather than elsewhere. And we believe state partition can play an important role in helping support those objectives. So we're hopeful that confirmation of state participation will allow us to formally kick off this phase the project during the current calendar year.
Beyond that, we do have an additional expansion phase under consideration that would involve taking over our adjacent space that we have that's currently in a least building on a short-term lease. And assuming that moves forward, we believe it could expand our overall capacity to approximately that $45 million area of revenue, as you mentioned.
And I think what's really important is what's driving this renewed interest in the expansion is not just one end market, but it's the broader evolution of the business towards larger, more sophisticated production platforms, mostly across the medical devices and microelectronics and some very selected clean energy opportunities we're seeing these large system opportunities, these higher ASP programs and a pipeline that increasingly supports the need for additional scalable manufacturing capacity over time.
Great. Let's say you get up to the $35 million, the $40 million to $45 million revenue run rate. what is your headcount going to look like?
I think -- as Steve be exact, but I think we're currently operating with around 90 employees. And SP-5 Is that right, Steve?
Yes. That is about right right now, yes.
Okay. And while we would certainly expect headcount to increases, revenues scale, we certainly wouldn't expect it to increase proportionately in revenue, of course. The majority of hiring of personnel would likely incur within probably the manufacturing operations as we expand production capability and throughput. But at the same time, we would expect continued growth in particular of our FTE group, which, as a reminder, is our Footfield deployed engineering team. that team works very closely with customers on application development, the process optimization and helping ensure successful implementation of our technology with the customer in their manufacturing environment.
So we're also quite aggressive on increasing deployment, as I mentioned, AI and automation tools across their organization to help improve scalability over the time. And we are seeing opportunities to do more with less across many areas of the business, and that includes areas like programming, marketing, sales support contractor used purchasing and several other operational type of functions, I would describe. And I guess I really believe Sono-Tek that we're ahead of the curve organizationally in our adoption of AI tools -- but frankly, we're still in the relatively early stages of appointment with that said.
So I think there's still some meaningful additional leverage potential over time as those systems mature internally. So overall, for as your question for a scenario where revenue output, let's say, approximately double from our current levels. I would estimate headcount to grow in the range roughly of maybe 30% to 40% which should reflect both operating leverage and scalability built into our general business model.
And our next question comes from David McGinnis of Private Investor.
Yes. It's great that every quarter, there's more terrific news on Sono-Tek. I am disappointed in the lack -- the Pinel use of the stock buyback program. that stocks go up on earnings per share beat. And when you're just trying to get $0.01 above expectations, 1 way to do that is reduce the number of shares. And for many months, the stock was down a value to it in the low $4 -- so this would have been a great investment. What are your thoughts?
Yes, it's a reasonable question, Dave, and it is something that we bring about the DoD level quite often about what is the right timing to do stock buybacks. I know we do have a relatively significant amount of cash on hand. And we bought back a relatively small amount of stock to date. It continues to be something we look at closely.
Most of the potential acquisition opportunities we're looking at are not cheap. So we have had the ability to look at them quite aggressively and to make short-term moves if we needed to. And I can tell you having that cash on hand also gives us a lot of flexibility to make strategic moves aggressively when we see the right opportunity to arise. And the opportunities are more plentiful now and but higher cost, I should note than what they've been historically for us.
And that's just because our overall model is becoming larger by scale. So we most certainly will continue to look at that. I wouldn't be surprised if that number for the buyback starts to change what the BOD is guidance for. But it's something we're going to continue to be looking at and evaluating what's great timing there for sure.
Okay. Interesting. And I'll throw in a different point is the world has had quite a few oil price stocks in the past. And my point is this 1 is different. We have the Ukraine war. We've now got countries with the Iran War problems that are seeing, they need energy independence. It's not just a matter of our alternative energy sources, good value, financially prudent. It's how do I make sure that I can still keep the electricity on. So -- it's interesting that in Sono-Tek business, that's prop, I'm very hopeful in that area as well.
Yes. I appreciate that commenting because I also agree that long term, energy independence is going to ultimately have to be a major factor and criteria for almost all governments. So I've got to believe that this will, at some point here, become back to the prior level of activity it was, if not significantly higher in the future. But timing certainly will be an impact with the administrations and how they're being handled from that standpoint.
Thank you. And that does conclude our question-and-answer session for today. I'd like to turn the conference back over to Steve Harshbarger for any closing remarks.
Excellent Well, thank you, and in closing, for fiscal 2026. I believe this was a strong year for SonoTek marked by consistent revenue, significant margin expansion and continued strategic execution. We believe our focus on high ASP production systems market diversification and operational discipline is driving sustained long-term value.
We remain confident in our outlook for FY 2027, supported by strong momentum in the medical and microelectronic sectors, and this is supported with our strong backlog. And I thank you all for joining us this morning, and we look forward to updating you on our progress in the coming months. So thanks very much, everybody. Enjoy your rest of your day.
Thank you, sir. That concludes today's conference call, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Thank you. Thank you all.
Sono-Tek Corp. — Q2 2026 Earnings Call
1. Management Discussion
Good day, and welcome to the Sono-Tek Second Quarter and First Half Fiscal Year 2026 Results Conference Call. [Operator Instructions] Please note that this event is being recorded.
I would now like to turn the conference over to Mr. Kirin Smith with PCG Advisory. Please go ahead, sir.
Thank you, operator, and thank you, everyone, for joining us today. Sono-Tek released their second quarter and first half fiscal 2026 results this morning. If you don't have a copy of the release, please go to the company's website at sono-tek.com and click the Press Release/News tab in the Investors section. The product, market and geography sales tables on the last page of the release will be part of today's discussion. With me on the call today are Dr. Chris Coccio, Sono-Tek's Executive Chairman; Steve Harshbarger, CEO and President; and Steve Bagley, Chief Financial Officer.
Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC. The company assumes no obligation to update the information contained in this conference call.
As a reminder, Sono-Tek currently holds 2 earnings calls for fiscal year. This is our midyear fiscal 2026 call for the second quarter and first half ended August 31, 2025. Our next earnings call will be our full year call for the 12 months ended February 28, 2026, and will be held next May. I would now like to turn the call over to Chris Coccio, Executive Chairman of Sono-Tek. Chris, please go ahead.
Good morning, and thank you, Kirin, and thank you, everyone, for joining us today. We're going to discuss our second quarter and first half fiscal 2026 results that were released this morning before the market opened. I'll begin with some opening remarks and then Steve Harshbarger, CEO and President, we'll go through a deeper business and operational review. This will be followed by Steve Bagley, our Chief Financial Officer, who will provide the financial review. Following their comments, we'll open the call to your questions.
This past August, we held our Annual Shareholder Meeting at our company headquarters and manufacturing facility in Milton, New York. I'd like to thank all the shareholders who attended and were able to see firsthand the core technology, the key advantages and how it's being utilized by our customers in various industries. They were also able to see how bustling our facility is as we continue to grow. For those newer investors in our company, we welcome the opportunity to showcase our products and technology with an open invitation. As a refresher for the newer and prospective investors on the call today, Sono-Tek developed a revolutionary method of applying precision thin film coatings several decades ago.
The proprietary technology involves the use of our advanced high-frequency ultrasonic nozzles incorporated into specialty motion control systems. They are able to achieve uniform micron and nano thin coatings onto our customers' products. Our unique value proposition and key differentiator is that our thin film coating machines provide dramatic savings at the expense of liquids being applied and are environmentally friendly by minimizing material usage and reducing overspray. Importantly, this often helps companies comply with increasingly stringent government regulations aimed at reducing hazardous waste entering the environment. But the real key advantage of our ultrasonic coating systems is the ability to apply precision thin films, which are vitally important in today's world, with thousands of products and micro components now requiring a functional or protective coating to be added to them.
A major strategic shift that we made several years ago to offer more complex and complete solutions has meaningfully broadened our addressable market and resulted in significant growth in our average unit selling price. Our larger machines now commonly sell for over $300,000 and system prices can reach $1 million or more. This can significantly impact our quarterly revenue. Additionally, our move into the clean energy sector has found excellent results in the next-generation solar cell fuel cells, green hydrogen generation and carbon capture applications, as we help shape a sustainable future. This is what we saw last fiscal year, where we saw the largest customer order in our history, followed by an additional order of the same size 2 weeks later.
More recently, and in line with our diversification strategy, we announced a very large order of over $5 million through a company in the medical device industry. And just yesterday, we announced another large order of over $2.8 million from another major U.S. medical device manufacturer. The beauty of our technology is the immense value it brings across many industries, including the electronics market, life Sciences and clean energy to name a few. The new year has presented some changes and uncertainties for most businesses, such as changes taking place in relationships with trading partners and the redirection of climate policy and related government spending. On the trade issues, Sono-Tek builds our key ultrasonic hardware at our factory in Milton, New York, and a large portion of our other materials use our U.S. space. So we see minimal concern there.
On the export side, more than half of our current sales are to the U.S. market, and we have been exposed to tariffs in certain other countries for many, many years. So we could be effective for better or worse depending on the outcome of negotiations taking place. Clean energy continues to represent a significant portion of our sales. Fortunately, a large share of these sales come from commercial customers such as U.S.-based solar panel manufacturers and carbon capture and conversion companies. The solar customers are supported by commercial users and the carbon capture customers by airlines and other corporations focused on reducing their carbon footprint. This includes efforts to develop sustainable aviation fuel and other carbon-based products.
While we do anticipate a decline in clean energy orders this year, our diversification strategy helps us to mitigate and offset potential declines. This is being driven by ongoing enhancements to our equipment across all sectors, including new expanded features and functionalities that are supporting sales in the medical and semiconductor markets. I'm pleased to report that we're seeing strong momentum in the medical device industry, particularly in growing interest for our high-volume production systems and increased demand for our balloon catheter coating machines. It's important to note that we have used a form of forward deployed engineering with a number of customers now to help them in their subsequent system purchases from us.
For the first half of our fiscal year, we experienced modest annual revenue growth and the second quarter marked the sixth consecutive quarter in a row of revenue over $5 million. On top of that, our first half revenue made a new record high at $10.3 million and net income came in at $917,000, which is up about 36% from the previous year. We remain encouraged by the path ahead, supported by a solid backlog of $11.2 million and strong balance sheet with $10.6 million in cash and no debt.
For the full fiscal year, we are increasing our prior guidance to reflect modest revenue growth. This outlook balances continued caution as the market adjusted the recent shifts in government, clean energy and tariff policies, which we expect will be positively offset by growing demand from the medical device industry. We will continue to refine our guidance as we gain more clarity through the remainder of the year.
In closing my part, we are excited that our investments have begun to pay off, and our strategies have positioned us well for continued success and long-term value creation. Our outlook for growth has been greatly enhanced by the early success of our strategy to shift to larger, more complex systems and platforms for production applications. There are multiple and repeat orders as well as our focus on opening new markets for our unique thin film coating technology.
Thank you. I'll now turn the call over to Steve Harshbarger, our CEO and President. Steve please go ahead.
Thanks, Chris, and good morning, everybody. Appreciate you all joining us here today. Let me start by saying that we are very pleased with our overall performance and the strategies we have put in place to help shield us from these macro factors with a unique value proposition and clear product offering that solves critical problems for many diverse industries. It's extremely gratifying to see our investments hitting their stride. Our sales for the second quarter and first half met our guidance with flat to slight revenue growth. That's even with an unplanned customer requested shipment delay that moved 1 system into the third quarter.
This comes on the back of a strong fiscal 2025, which benefited from growth in the clean energy sector. The strength and resilience of our business continues to grow, and it's exciting to see our diversification strategy paying off with momentum now building in the medical device industry. Our second quarter medical market sales increased by 150% year-over-year or $602,000 to $1 million, and that was led by balloon coating systems shipped to the U.S., Europe and China.
Regarding the second quarter, revenue was up slightly to $5.16 million and increased sequentially compared to $5.13 million in the first quarter of fiscal 2026. And that's marking the sixth consecutive quarter of revenue over $5 million. Gross profit for the quarter increased 3% year-over-year to $2.6 million compared with $2.5 million last year. And that's mainly due to a favorable product mix of mature high ASP systems with reduced costs and some favorable warranty expenses in the current period. Net income for the quarter increased 27% to $431,000 and that's compared to $340,000 last year, and that's reflecting a combination of higher gross profit and lower operating expenses.
Now I'll provide a few other key highlights in the quarter. By geography, U.S. Canada sales decreased 22% year-over-year or $775,000 and that's driven by slowing momentum in the U.S. clean energy industry. However, this was positively offset by sales in Asia, which increased by 153% year-over-year or $562,000 with major growth in China and other parts of Asia. Additionally, we saw EMEA sales increased 25% or $288,000, while Latin America sales were down by $74,000.
By product category, integrated coatings system sales, which we're now referring to as in-line coating systems decreased by $493,000 or 24% to $1.53 million, and that was primarily driven by that same customer requested delivery delay that I just mentioned, which came from the clean energy sector and has since now shipped in our Q3 FY 2026. Here as well, we saw a positive offset with multi-access coating systems increasing by $99,000 or 5% to $2.03 million. Fluxing sales increased by $46,000 or 39% to $165,000, and that's reflecting our increased demand for our fluxers from Asia. Additionally, OEM sales increased by $188,000 or 92% to $394,000 and that's driven by strong shipments to our fluxer OEMs and new optics-related OEM wins. And the spare parts, services and other sales category increased by $161,000 or 18% to $1.04 million.
By end market, as I highlighted earlier, the medical market increased by 150% year-over-year or $602,000 to $1 million and that was again led by balloon coating system sales shipped to both the U.S., Europe and China. Alternative clean energy decreased slightly by 3% year-over-year, or $65,000 to $2.43 million supported by strong clean energy backlog going into FY 2026. The electronics markets declined by 1% year-over-year down $22,000 to $1.46 million. The industrial market declined 68% or $517,000 down to $288,000. And that's influenced by a large FY 2025 European glass coating order that didn't repeat.
Regarding our first half of fiscal 2026 results, we reported record revenues of $10.3 million compared to $10.19 million in the year ago period. Gross profit increased 6% year-over-year to $5.3 million compared with $5 million and net income increased 36% year-over-year to $917,000 or $0.06 per share compared with $672,000 or $0.04 per share. The increase in revenue for the first half of fiscal year 2026 was driven by a 65% or $1.82 million increase in sales from in-line coating systems sales reflecting shipments of 6 high ASP systems to a major solar customer totaling $4.42 million. While we're not projecting further near-term orders from this customer in FY 2026, we do remain optimistic about potential future demand depending on the customers' execution of expansion plans.
The increase in in-line coating systems we experienced was somewhat offset by our product division, which can fluctuate from time to time. U.S. Canada sales decreased 5% year-over-year or $324,000, driven by slowing momentum in the clean energy industry, but was positively offset by increased sales in Asia with 74% growth year-over-year or $647,000, led by strong medical sales in China and strong alternative energy sales in Japan and South Korea. EMEA sales were relatively flat, declining $60,000 and Latin America sales down $160,000 due to slowing flexing sales in Mexico.
By product category, as I mentioned before, in-line coating system sales increased by $1.82 million or 65% to $4.58 million driven by shipment of 6 high ASP systems to a major solar customer totaling $4.42 million. Fluxing sales increased by $64,000 or 25%, driven by strength in Asia. Multi-access coating systems declined by $1.89 million or 41% to $2.71 million following a strong FY 2025 for semiconductor systems that didn't repeat and slower clean energy activity in FY 2026. OEM sales were slightly down by $13,000 or 2% and spare parts and services and others were up by $126,000 or 6%.
By end market, the medical market rose by 44% or $553,000 driven by strong balloon coating systems shipped to the U.S., Europe and China and increased stent coating activity in Europe and China. Alternative energy rose 90% year-over-year to $901,000 by the shipment of the 6 high ASP solar coating systems I mentioned earlier. The electronics market declined by 21% year-over-year or $646,000 following strong FY 2025 semiconductor sales and FY 2026 timing for similar machines. The industrial market declined 67% or $711,000, influenced by a large FY 2025 European glass coating order that didn't repeat.
We closed the first half of fiscal 2026 with a solid equipment and service-related backlog of $11.2 million, which was near record levels. The backlog clearly represents the strength of our overall business and reflects encouraging order activity. We attribute the increase in sales and the strong backlog as a direct result of our investment in R&D with a strong focus on product expansion. For the first half, we have invested $1.3 million in R&D compared to $1.4 million in the year ago period. And our balance sheet remains strong, whereas of August 31, our cash, cash equivalents and marketable securities totaled $10.6 million, still again with no outstanding debt.
In closing, we're updating our prior guidance to reflect modest growth for revenue. And this balance continues caution as the market digests recent shifts in the U.S. government clean energy and tariff policy which we will -- which we expect will be positively offset by our growing demand from the medical device industry. And most importantly, we remain very confident in our long-term growth prospects. Our momentum stems from our deliberate strategy and shift to large customized systems with accelerating ASP and our proprietary ultrasonic nozzles technology, which remains at the core of our systems for all this diversified industries. And we've been able to achieve this significant shift organically through our own development efforts.
With that, I will hand the call over to Mr. Steve Bagley, our CFO, to review our financials in more detail. Steve, please proceed.
Very good. Thank you, Steve, and good morning, everyone. I will first walk you through the fiscal 2026 second quarter results, followed by our first half results. Net sales for the quarter increased slightly to $5.16 million compared to the second quarter of fiscal 2025 and also increased sequentially compared to the first quarter sales of fiscal 2026 of $5.13 million. Gross profit increased 3% year-over-year or $74,000 to $2.6 million and the gross profit percentage increased to 50% due to a favorable mix of -- product mix of mature high ASP systems with reduced costs and favorable warranty expenses in the current period.
Operating expenses decreased to $2.17 million when compared to $2.23 million in the prior year's second quarter. The decrease is primarily due to reduced marketing and selling expenses. Research and product development costs decreased to $627,000 versus $696,000 in the prior year. And the decrease is primarily due to decreases in research and development materials and supplies and salary expense.
Marketing and selling expenses decreased to $871,000 for the quarter versus $988,000 in the prior year. The decrease is due to a decrease in salary expense related to the departure of a salesperson and a decrease in trade show expenses and travel expenses. These decreases were partially offset by an increase in salaries related to our sales application lab. General and administrative expenses increased to $670,000 for the quarter compared with $546,000 in the prior year. The increase is primarily due to an increase in salaries, corporate expenses and stock-based compensation expense. These increases were partially offset by decreases in legal and accounting fees.
Operating income increased $135,000 a or 47% to $421,000 compared with $286,000 in the prior year. In the second quarter of fiscal 2026, an increase in gross profit, combined with a decrease in operating expenses were key factors in the increase of operating income. Interest and dividend income remained steady at $82,000 in the second quarter that compares with $85,000 in the prior year's quarter. Our present investment policy is to invest excess cash in highly liquid low-risk U.S. treasury securities. At August 31, 2025, the majority of our holdings were rated at or above investment grade.
In the second quarter, we recorded a tax provision of $103,000 compared to $74,000 in the prior year. Net income for the quarter was $424,000 or $0.03 per share, and that compares with $341,000 or $0.02 per share in the prior year period. The increase in net income is primarily due to the current period's increase in gross profit and decrease in operating expenses.
Now for the financial results for the first 6 months of fiscal 2026. Total sales for the first half of fiscal 2026 increased year-over-year by $103,000 to a record $10.3 million. Gross profit increased $283,000 or 6% to $5.3 million, and that's primarily due to product mix and favorable warranty expenses in the current period. The gross profit percentage increased to 51% from 49% in the prior year period. Operating expenses decreased slightly to $4.35 million when compared to $4.45 million in the prior year's first half.
Research and product development costs decreased to $1.3 million versus $1.4 million in the prior year first half, and that's primarily due to decreases in research and development, materials and supplies and salary expense. Marketing and selling expenses decreased to $1.7 million for the first half, and that compares to $1.9 million in the prior year. The decrease was due to a decrease in salary expense related to the departure of the salesperson and decreases in commission expense, trade show expenses and travel expenses. These decreases were partially offset by an increase in salaries related to our sales application lab. General and administrative expenses increased slightly to $1.3 million compared with $1.1 million in the prior year. The increase is primarily due to increases in salaries corporate expenses and stock-based compensation expense, and these increases were partially offset by decreases in legal and accounting fees.
Operating income increased considerably by 72% to $381,000 to $905,000 and that compares with $524,000 in the prior year period, and this underscores the operating leverage from our stronger gross profit and a decrease in operating expenses. Operating margin for the first half of fiscal 2026 was 9% compared to 5% in the prior year. In the first half of fiscal 2026, interest and dividend income decreased by $4,000 to $224,000 and that compares with $228,000 in the first half of fiscal 2025. Additionally, unrealized gains decreased $52,000 to $2,000 as compared with $54,000 in the first half of fiscal 2026 -- 2025.
Net income increased $35,000 (sic) to $909,000 or $0.06 per share for the first half of fiscal 2026 compared with $672,000 or $0.04 per share for the first half of fiscal 2025. Diluted weighted average shares outstanding decreased slightly to approximately 15.7 million shares. We continue to maintain a strong cash position with cash, cash equivalents and marketable securities totaling $10.6 million at August 31, 2025, and we continue to carry no debt on our balance sheet.
CapEx for the 6 months was $113,000. And all of that is directed to ongoing upgrades of our manufacturing and development labs facilities, and we expect to invest approximately $300,000 in new equipment for the full fiscal year. And now we'll open the call for any questions from the audience. Operator, please go ahead.
[Operator Instructions] And your first question today will come from Ted Jackson with Northland Securities.
2. Question Answer
Congratulations on the quarter. So my first question, Steve, is I want to maybe auger in a little bit on the medical device strength and the Chinese exposure that's from it. In the past, I know that China has been a bit of a difficult market for you because there's been sort of copycat ultrasonic coating vendors there and we've been trying to overcut you in price. And so I'm a little curious in terms of how the business came about and kind of the competitive dynamics for the win. And this mean that we're going to see you have a better profile in China going forward and maybe some discussion with regards to tariffs around China and any kind of concerns you might have there. That's kind of a mouthful, but that's my first question.
Sure, sure. Yes. Well, China's certainly still low, is on our mind. And I should start by saying that even when we send our advanced coating systems over to China, they actually are not getting our most advanced coating systems that we actually keep those pretty close to home, so they're actually usually getting like one generation behind us, just from a proprietary standpoint. But we were fortunate that in the medical device industry, in particular, that we've been able to capture some significant orders where these customers evaluated these Chinese copycat companies, and they just found out that the quality just did not meet the bare minimum requirements to compete with Sono-Tek.
So they actually made decisions to pay, it's about maybe 3 or 4 times per machine, if they could buy that same machine from a Chinese manufacturer to get it through Sono-Tek here in the U.S. And that's even with the significant tariff simplifications that are happening. So it's a real complement, I guess, to us from the standpoint of the quality of our systems and it's the one industry that defects are much more critical than, say, like on a printed circuit board, a defect is a life in those industries. So there is some level of paying a premium in those sort of particular niches for us right now.
And in the balloon are, in particular, that's an area that we believe that we're going to dominate similar to the stent manufacturing area that we've had in the past. So I think China is jumping on that, knowing that they need Sono-Tek if they want to be heading into that market from medical devices.
And then -- so then are these customers -- are these actually Chinese entities. They're not Western companies manufacturing in chinese.
Yes. These particular ones happen to be Chinese manufacturers, which is unusual also, just as you're pointing out, it would be much more common for us to say have a Western entity manufacturing in China that is buying Sono-Tek, that would be a much more common scenario. But in these particular cases, it's actually surprisingly. Chinese manufacturers that are saying, hey, the quality is so low of our domestically made stuff that we're going to buy Sono-Tek anyway. And that's certainly without encouragement by the Chinese government, the Chinese government has a big push right now to buy made in China. But there are certain technologies that they just are not able to perfect enough that they have to be buying from the U.S. even at these very premium prices over domestic manufacturing equipment.
And then is there a similar industry in -- like in terms of balloon catheters within the Western world? And do you have exposure to there? Or is this driving interest for you outside of China?
Yes, it is. It's kind of similar to the standard industry, which we're very familiar with, and that's one of those areas that we dominate the marketplace that if you capture the 2 or 3 major manufacturers of that particular application, you'll tend to get the second tier manufacturers following them. And although it's all proprietary and confidential and there's nothing that we're supposed to get out, personnel travel from companies to companies. And so it does tend to snowball upon itself.
And I believe right now, we're in a position that we're capturing the major leaders in this particular niche. And I think it's snowballing across the globe. Geographically, it's snowballing, whether it's to Japan or to China or to Europe or in our home base in the U.S., they are -- we are becoming the industry standard in this niche? And this is a niche that's just starting to. So what's great is that this is in the beginning basis. So there's a lot of growth ahead of us here for this area.
And then -- so I've got 2 more questions on medical and then maybe one more. I have others behind it, but I'll get out of line because I can always come back in. So using stent as kind of -- like, let's call it, a guidepost to how the balloon catheter market might turn out. Can you walk us through like when you got your first order in that market and how it evolved? And then like how many systems have you sold and over what period of time, and just kind of so we can get a sense to that. And then the question behind that is you've had tremendous success within stents. It looks like you're positioned well for balloon. What other stuff is out there for you in the medical market. And then actually, I will step aside, and I'll come back in the queue after some. I'm sure there's a couple others...
Sure. I appreciate that. For sure, we are definitely trying to emulate the success that we had in stent. I guess one of the big differences between the stent market and our newest markets like balloon catheter, coating the drug-eluting balloons, is that our product offering at the time of stent was very limited and it was smaller ASP machines that we're selling for maybe $50,000 to $80,000. Now those machines probably could have sold for $150,000 to $200,000, if we had the capabilities to add more offerings more capabilities onto those machines. But we didn't at the time.
But fortunately, for us now, due to all these investments we've made over the last several years, we are now able to offer a much more sophisticated platform for balloon coating than we would have ever been able to offer for stent coding at the time. And that has driven the ASP up higher on the machines. But even more importantly, it's resulted in a much more satisfied customer that's really able to see our capabilities beyond just the coating coding part of it. It's the capabilities of manipulating the product.
It's the capabilities of curing or cleaning and having this fully integrated systems which drives our ASP up, and we're now finding is starting to help improve gross margins as well is really significant for us, and it opens us up where that customer now recognizes, oh, Sono-Tek, they're not just a stent coating company anymore. They have manufacturing capabilities for coating just about any one of your medical devices. And although balloons is the one that's kind of taking off for us right now, there's a lot of other things in the hopper that we are also involved with, which we want to repeat and emulate that same process for as well.
Your next question today will come from Bill Nicklin with Bill Will Insights.
Steve, I'm on a cell phone and not a great area. So can you hear me?
I got you, Bill.
Looking at the recent orders you have and kind of what's been taking place over the last few years, there's strong indications that Sono-Tek is intentionally and strategically taking a path of building out your applied engineering model. And I think it's pretty evident through customer accessibility to your lab and involvement in your lab, testing infrastructure, new hires you've made, leadership promotions and so forth. And it appears to me this is -- this strategy is the functional equivalent of what some popular -- been known as FDA (sic) [ FDE ] or forward deployed engineers. So in line with that, could you walk me through how the application engineering build-out fits into your broader growth strategy and what specific capabilities or customer outcomes are you building toward?
Sure, sure. That's a great question. And it really -- I would say it gets at the heart of why we continue down a path of what we're now actually starting to refer just as you referenced as forward deployed engineering. That actually came out of the software term, but it's changed and it's grown over time. The definition of it, it's really a key part of our growth strategy, and it touches on everything from customer adoption to sales efficiency and competitive pricing. And I'll do my best to walk through those areas that you just mentioned. Our forward deployed engineering model builds around what we originally called our custom engineered solutions team and really is core to scaling our growth.
This team creates -- created -- it just was created a couple of years ago now, and it was actually an expansion of our application engineering group and has already grown from 1 senior engineer now to 3 individuals, showing the strong demand for what we see in this capability area. And it enables our most experienced engineers to work directly within the customer production environments to deploy and optimize customized and production scale coating systems. And this hands-on approach really accelerates system adoption. It maximizes the real-world coating performance and it very much strengthens our long-term partnerships.
And all of these ultimately are key drivers in expanding our high ASP production platforms. And by embedding our FD engineers directly with customers, we're hoping to expect to see shortened sales cycles and improve our win rates because the solutions are already proven in production where they're not just proven in our labs. So over time, this should allow a lower customer acquisition cost. Since those same embedded engineers, they should often uncover new opportunities within our existing accounts. So I think that might kind of explain where they're coming from. So the really big thing for this model just sets us -- gets us closer to our customers. We move faster and turn that collaboration into bigger business for both sides.
All right. Maybe following on a little. What are the key performance indicators you're tracking internally to measure whether the FDE group is delivering a return on investment? And what's the expected time line for margin expansion or growth acceleration because of that?
Yes. We've long tracked the percentage of revenue tied to like laboratory testing and application development, and that's which I think is right around -- currently around 60% to 70% of our shipments are tracked to that right now. And we also certainly measure the revenue tied to the high ASP systems, which now represents roughly 2/3 of our total sales. And almost all of these big complex systems pass through that FDE group, that forward deployed engineering team. And while ROI and things are a little bit difficult to quantify directly, we certainly see positive results as more R&D and pilot line systems transition into these large multisystem production lines.
And I would strongly expect margin benefits to build gradually over the next 1 to 2 years as more and more of these large accounts move into full-scale production. And that's similar to the multisystem orders for these high ASP systems that we delivered earlier this year for the solar industry, which ended up coming through with really strong margins. So I would expect that to continue with this model.
All right. And one more quick one. How does the application engineering investment affects your competitive position, if you can give me some specifics? And are customers selecting you over competitors, specifically because of this capacity or capability? And how does that translate into pricing power and margin expansion?
So FDE, it's absolutely a clear differentiator. Customers increasingly are going to be choosing Sono-Tek because we bring process engineering expertise directly right into their production floor. So it elevates our role from equipment supplier to really become a technology partner. And that supports strong pricing and a really strong pricing power when you think about it, it's going to give us much deeper account penetration and more possibilities for recurring revenue from product expansions as well as those same returning customers considering us for new projects, which they may not have otherwise.
So I think we're going to see that roll over into margin expansion fairly quickly for us because as they become higher and higher developed and going through our process, we've seen here historically that the margins will start to expand on those high ASP machines once the first round of them have gone through our manufacturing process.
Thanks, Steve. It's good to see all this hard work and money spent come to fruition and good luck the rest of the year.
I appreciate that, Bill. It's been a significant investment for us, and we're happy to see it taking off for us. So it should be an exciting time.
And your next question today will come from Dick Ryan with Oak Ridge Financial.
Congrats on the success of the diversification kicking in. Just most things have been asked, but just a couple of questions specific. You mentioned 2 new optics-related OEMs. Can you give a little detail? Is that -- are these significant wins, I mean, obviously, any win is worthy, but can you provide a little more detail on those 2 new OEMs?
Yes. They are in the optics area, the lens area. What's -- what I would describe as significant for them is that right now, they are not in a wheelhouse for Sono-Tek, I would say, has a great depth of knowledge. But these guys do have significant depth of knowledge and that if we can get embedded with them, we will start to learn a lot more about that industry in that field. And that's very valuable for us. Often, we need a partner to accelerate our entrance into these newer type of applications because otherwise, it could take us -- with a partner, we might be able to get in, in 1 to 2 years, but without a partner, it might take us 4 or 5 years to really understand the area effectively. So I think it's going to be significant. It's probably not going to be significant from a revenue standpoint short term, but it could be significant from a new market entrants long term.
Okay. That sounds good. What's going on in the semi side? That market seems to be holding up well. The front end has got some higher expectations of spending in 2026. What are you seeing on the semi side of the business?
Yes. Well, until this past month, I was thinking more almost flattish, but then we just came out of a trade show, Semicon it's called, in Arizona it was. And it was, by far, the best trade show we've ever had and the best interest of leads and customers talking to us very seriously about equipment. And when I asked about what was the differentiator, although it was a very good year in general for semiconductor at the show, but they said, really, it was our product line expansion this year was significant enough that it was growing our addressable market at the show.
So customers that would have walked by us last year or the year before, now are starting to recognize, oh, these guys have a lot more capabilities then they had over the last several years. And we did make some more significant investments into the show to make sure we showed that and displayed that at the show. You had a larger sized booth with actual machinery there running, but it really paid off for us. And I think that we're going to start to see that become a fairly significant growth area for the organization over the next year or 2 as a result of this. And that's still got a long way from stopping the upper peak on this. We're going to be showing some significant new product additions this year, and I think it will be ongoing like that for the next several years that will continue to grow that product offering.
Okay. Have you been able to quantify what the addressable market opportunity might be for you guys?
We haven't put a dollar figure to it, but I will say this that our next strategic shift is moving from what is mostly a 200-millimeter high-tech lab environment over to 300-millimeter environments which are mostly fab directed. And that's the expansion of our product line offering right now is heading in that direction, and that seems to be where most of the investment is heading and where we could bring the biggest benefit and impact. So I think it's going to be again, higher ASP machines that are more complex. But I think right now, we've got the right strategic partners aligned with us. We've kind of worked out all the details to enter into there this year pretty quickly.
Congrats on that. That's a significant opportunity moving into the 300-millimeter space.
Your next question today is a follow-up from Ted Jackson of Northland Securities.
I just have a couple more left. So one is just a backlog near record, like over what time frame will that revenue be recognized?
Yes. The largest orders that we have just recently announced, which was that $5 million last month and almost $3 million order that came in last week, or this week, I should say, just yesterday. The bulk of those will be shipping in our FY 2027 year or so after March. But there will probably be some level maybe 15 -- 10% to 15% of that be ship out in the current fiscal year, just the beginning orders for those. So that's the bulk of it, though, it's going to be heading into next year. And that's why right now, we're only projecting modest growth for the current fiscal year, and that's just because the build time on these machines is significant.
So although we'll be able to ship some of them, we won't be able to ship anywhere near a significant portion of them in the current fiscal year. But we're in good shape for this year. Like I said, so we'll come in at modest growth. Had the clean energy sector kept on full steam like we anticipated, was we probably would have shown huge growth this year. But we deal with what we got. And fortunately, our team here were able to shift really quickly over to capitalizing on the investment we made into building these highly complex machines and just shifting it over to the medical sector very, very effectively.
And then on the second half of '26, you are projecting modest growth for the year. Given that you had a piece of business slipped from the second quarter to the third quarter, would we expect to see your second half sales to be a little more weighted in the third quarter vis-a-vis the fourth quarter because of that?
Yes, I think they're not going to be way off from each other, but it's probably going to be a little bit heavier in Q3 versus Q4 because of that one system that did get, at their customer request get pushed into Q3. So I would suspect Q3 will probably be slightly higher than Q4, but they both should be pretty solid for us.
Do you think that you can take your streak of $5 million-plus revenue quarters from $6 million to $8 million.
We haven't given any projections there yet, but I think I would be disappointed if we don't do it, but we haven't given any formal projections there, but I would be disappointed if we don't do that.
This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Steve Harshbarger, for any closing remarks.
Okay. Well, I just want to thank everybody for joining us today and to tell you all that we look forward to having you come back for our next conference call. Sono-Tek's long-term outlook remains strong, supported by the continued success of our newly developed high ASP platforms across advanced technology markets. So we look forward to sharing our full fiscal year 2026 results during our next call in May. In the meantime, we will be presenting at some key upcoming investor conferences. Next week, we're actually at LD Micro in California. And please don't hesitate to reach out to us with any questions. And thank you again, and enjoy the rest of your day, everybody.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Financial data from Sono-Tek Corp.
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| May '26 |
+/-
%
|
||
| Revenue | 21 21 |
4%
4%
100%
|
|
| - Direct Costs | 10 10 |
3%
3%
48%
|
|
| Gross Profit | 11 11 |
12%
12%
52%
|
|
| - Selling and Administrative Expenses | 6.37 6.37 |
6%
6%
30%
|
|
| - Research and Development Expense | 2.50 2.50 |
6%
6%
12%
|
|
| EBITDA | 2.87 2.87 |
47%
47%
13%
|
|
| - Depreciation and Amortization | 0.63 0.63 |
10%
10%
3%
|
|
| EBIT (Operating Income) EBIT | 2.24 2.24 |
78%
78%
10%
|
|
| Net Profit | 2.06 2.06 |
44%
44%
10%
|
|
In millions USD.
Don't miss a Thing! We will send you all news about Sono-Tek Corp. directly to your mailbox free of charge.
If you wish, we will send you an e-mail every morning with news on stocks of your portfolios.
Sono-Tek Corp. Stock News
Company Profile
Sono-Tek Corp. engages in the design and manufacture of ultrasonic coating systems. The firm also provides patented nozzles and generators for manufacturers equipment. Its products categories include electronics, energy, medical, glass, food, textiles, nanotechnology, and industrial. The company was founded by Harvey L. Berger on March 21, 1975 and is headquartered in Milton, NY.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Harshbarger |
| Employees | 84 |
| Founded | 1975 |
| Website | www.sono-tek.com |


