Q2 Sales Up 17% and Q2 Net Income Up 93% Year-over-Year; Backlog up 64% from FYE
Second Quarter FY2022 Financial Highlights:
(Compared with prior-year period unless otherwise noted)
- Net sales were
$4,070,000 , up 17% or$589,000 , driven by increased sales of OEM systems to theChina market. - Gross Profit increased 28% to
$2,074,000 due to higher sales and product mix. - Gross Margin expanded 440 basis points to 51.0% primarily due to product mix.
- Operating income increased 123% to
$449,000 , compared to$201,000 . - Net income was
$344,000 , an increase of 93%. - Backlog reached a record high of
$6,332,000 , an increase of 45% compared with backlog of$4,380,000 onMay 31, 2021 (the end of the fiscal Q1) and increased 64% compared to backlog of$3,851,000 onFebruary 28, 2021 (the end of fiscal 2021). - Uplisted to Nasdaq Capital Market on
August 27, 2021 .
First Half Fiscal 2022 Highlights
(Compared with prior-year period unless otherwise noted)
Net Sales were$7,715,000 , an increase of 12%, primarily driven by strength in the semiconductor and electronic diagnostic coating markets.- Gross Profit increased 23% to
$3,898,000 due to higher sales and product mix. - Gross Margin expanded 440 basis points to 50.5% primarily due to product mix and lower than expected warranty and installation costs.
- Operating Income increased 105% to
$791,000 due to increases in gross profit, partially offset by increases in operating expenses. - Income before taxes increased 94% to
$802,000 , excluding the benefit from PPP loan forgiveness of$1.0 million . - As of
August 31, 2021 , the Company had no outstanding debt.
Guidance
- Sales Growth Guidance for the third and fourth quarters of FY2022 is for double digit increases over the comparable periods of last year.
Sono-Tek continues to expect the highest annual sales in corporate history for fiscal year 2022, endingFebruary 28, 2022 .
Dr.
“The outlook is strong as well. We expect double-digit sales increases for both the third and fourth quarters of the fiscal year based on the strength of our backlog. We expect this growth to generate the highest annual sales in corporate history for the year ending in
Year-to-Date Fiscal 2022 Results (Narrative compares with prior-year period unless otherwise noted)
Six Months Ended | Change | |||
2021 | 2020 | $ | % | |
$ 7,715,000 | $ 6,909,000 | 806,000 | 12% | |
Gross Profit | 3,898,000 | 3,182,000 | 716,000 | 23% |
Gross Margin | 50.5% | 46.1% | ||
Operating Income | $ 791,000 | $ 386,000 | 405,000 | 105% |
Operating Margin | 10.3% | 5.6% | ||
Net Income | $ 1,611,000 | $ 346,000 | 1,265,000 | 366% |
Net Margin | 20.9% | 5.0% | ||
Diluted Earnings Per Share | $ 0.10 | $ 0.02 | ||
Weighted Average Shares - Diluted | 15,614,000 | 15,531,000 |
Second Quarter Fiscal 2021 Results (Narrative compares with prior-year period unless otherwise noted)
Three Months Ended | Change | |||
2021 | 2020 | $ | % | |
$ 4,070,000 | $ 3,481,000 | 589,000 | 17% | |
Gross Profit | 2,074,000 | 1,621,000 | 453,000 | 28% |
Gross Margin | 51.0% | 46.6% | ||
Operating Income | $ 449,000 | $ 201,000 | 248,000 | 123% |
Operating Margin | 11.0% | 5.8% | ||
Net Income | $ 344,000 | $ 178,000 | 166,000 | 93% |
Net Margin | 8.5% | 5.1% | ||
Diluted Earnings Per Share | ||||
Weighted Average Shares - Diluted | 15,602,000 | 15,533,000 |
Second Quarter FY2022 Financial Overview
Fiscal second quarter net sales were
In the second quarter of fiscal 2022, approximately 62% of sales originated outside of
Backlog reached a record high of
For the second quarter of fiscal 2022, the gross profit margin was 51.0% compared with 46.6% for the prior year period, an improvement of 440 basis points. The improvement is due to increased sales combined with a favorable product mix.
Operating income increased 123% to
Net income for the second quarter was
Balance Sheet and Cash Flow Overview
Cash and cash equivalents and short-term investments at
Capital expenditures in the second quarter totaled
At
Conference Call Information
The Company will hold a conference call to discuss its second quarter fiscal year 2022 financial results today,
A replay of the call will be available at 1 (877) 344-7529, access code 10160904, through
About
The Company’s solutions are environmentally-friendly, efficient and highly reliable and enable dramatic reductions in overspray, savings in raw material, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions.
Sono-Tek’s growth strategy is focused on leveraging its innovative technologies, proprietary know-how, unique talent and experience, and global reach to further develop microscopic coating technologies that enable better outcomes for its customers’ products and processes.
For further information, visit www.sono-tek.com.
Safe Harbor Statement
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news releases, and other written and oral statements. These “forward-looking statements” are based on currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events could turn out to be significantly different from our expectations and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; the duration and scope of the COVID-19 pandemic; the extent and duration of the pandemic’s adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; our ability to sell and provide our services and products, including as a result of continued pandemic related travel restrictions, mandatory business closures, and stay-at home or similar orders; any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations resulting from the pandemic; the ability of our customers and suppliers to continue their operations as result of the pandemic, which could result in terminations of contracts, losses of revenue; and further adverse effects to our supply chain; maintenance of increased order backlog, including effects of any COVID-19 related cancellations; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; maintenance of increased order backlog; consummation of order proposals; completion of large orders on schedule and on budget; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems; and realization of quarterly and annual revenues within forecasted range of sales guidance. We refer you to documents that the company files with the
For more information, contact:
Chief Financial Officer
info@sono-tek.com
Investor Relations:
PCG Advisory
(646) 863-6341
sprince@pcgadvisory.com
Financial Tables Follow
CONDENSED CONSOLIDATED BALANCE SHEETS
2021 | |||||||||
(Unaudited) | 2021 | ||||||||
ASSETS | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 6,143,106 | $ | 4,084,078 | |||||
Marketable securities | 3,554,124 | 4,563,470 | |||||||
Accounts receivable (less allowance of | 1,482,334 | 1,757,802 | |||||||
Inventories, net | 2,923,855 | 2,611,106 | |||||||
Prepaid expenses and other current assets | 124,214 | 151,316 | |||||||
Total current assets | 14,227,633 | 13,167,772 | |||||||
Land | 250,000 | 250,000 | |||||||
Buildings, net | 1,525,958 | 1,575,135 | |||||||
Equipment, furnishings and building improvements, net | 1,057,084 | 1,075,190 | |||||||
Intangible assets, net | 85,736 | 95,456 | |||||||
Deferred tax asset | 236,120 | 259,838 | |||||||
TOTAL ASSETS | $ | 17,382,531 | $ | 16,423,391 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current Liabilities: | |||||||||
Accounts payable | $ | 1,080,255 | $ | 1,294,483 | |||||
Accrued expenses | 1,398,318 | 1,750,916 | |||||||
Customer deposits | 1,916,784 | 1,166,541 | |||||||
Income taxes payable | 202,188 | 53,567 | |||||||
Total current liabilities | 4,597,545 | 4,265,507 | |||||||
Deferred tax liability | 183,011 | 205,562 | |||||||
Long term debt, less current maturities | - | 1,001,640 | |||||||
Total liabilities | 4,780,556 | 5,472,709 | |||||||
Stockholders’ Equity | |||||||||
Common stock, | 155,313 | 154,527 | |||||||
Additional paid-in capital | 9,104,925 | 9,064,994 | |||||||
Accumulated earnings | 3,341,737 | 1,731,161 | |||||||
Total stockholders’ equity | 12,601,975 | 10,950,682 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 17,382,531 | $ | 16,423,391 |
See notes to unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended | Three Months Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ | 7,714,935 | $ | 6,909,185 | $ | 4,070,467 | $ | 3,480,641 | |||||||||
Cost of Goods Sold | 3,816,771 | 3,727,486 | 1,996,468 | 1,859,675 | ||||||||||||
Gross Profit | 3,898,164 | 3,181,699 | 2,073,999 | 1,620,966 | ||||||||||||
Operating Expenses | ||||||||||||||||
Research and product development costs | 826,213 | 834,940 | 412,397 | 423,516 | ||||||||||||
Marketing and selling expenses | 1,504,245 | 1,388,987 | 739,603 | 682,270 | ||||||||||||
General and administrative costs | 776,222 | 572,254 | 473,423 | 313,852 | ||||||||||||
Total Operating Expenses | 3,106,680 | 2,796,181 | 1,625,423 | 1,419,638 | ||||||||||||
Operating Income | 791,484 | 385,518 | 448,576 | 201,328 | ||||||||||||
Interest Expense | - | (17,704 | ) | - | (9,287 | ) | ||||||||||
Interest and Dividend Income | 11,000 | 25,483 | 7,640 | 2,837 | ||||||||||||
Other Income | - | 19,519 | - | 8,084 | ||||||||||||
Paycheck Protection Program Loan Forgiveness | 1,005,372 | - | - | - | ||||||||||||
Income Before Income Taxes | 1,807,856 | 412,816 | 456,216 | 202,962 | ||||||||||||
Income Tax Expense | 197,280 | 67,125 | 112,392 | 25,199 | ||||||||||||
Net Income | $ | 1,610,576 | $ | 345,691 | $ | 343,824 | $ | 177,763 | ||||||||
Basic Earnings Per Share | $ | 0.10 | $ | 0.02 | $ | 0.02 | $ | 0.01 | ||||||||
Diluted Earnings Per Share | $ | 0.10 | $ | 0.02 | $ | 0.02 | $ | 0.01 | ||||||||
Weighted Average Shares - Basic | 15,500,952 | 15,410,952 | 15,507,484 | 15,424,126 | ||||||||||||
Weighted Average Shares - Diluted | 15,613,930 | 15,530,910 | 15,602,359 | 15,533,010 |
See notes to unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Unaudited | ||||||||
Six Months Ended | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 1,610,576 | $ | 345,691 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 224,233 | 214,280 | ||||||
Stock based compensation expense | 40,717 | 16,003 | ||||||
Inventory reserve | (24,919 | ) | 36,000 | |||||
Paycheck Protection Program Loan Forgiveness | (1,005,372) | - | ||||||
Deferred tax expense | 1,167 | - | ||||||
Decrease (Increase) in: | ||||||||
Accounts receivable | 275,468 | (418,947) | ||||||
Inventories | (287,830 | ) | (116,157) | |||||
Prepaid expenses and other current assets | 27,101 | 58,863 | ||||||
(Decrease) Increase in: | ||||||||
Accounts payable and accrued expenses | (563,094 | ) | (250,099) | |||||
Customer deposits | 750,243 | (660,588) | ||||||
Income taxes payable | 148,622 | (6,878) | ||||||
Net Cash Provided by (Used in) Operating Activities | 1,196,912 | (781,832) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of equipment, furnishings and leasehold improvements | (147,230 | ) | (290,347 | ) | ||||
Capital expenditure grant proceeds | - | 100,000 | ||||||
Sale (purchase) of marketable securities | 1,009,346 | 366,639 | ||||||
Net Cash Provided by Investing Activities | 862,116 | 176,292 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from note payable | - | 1,001,640 | ||||||
Repayment of long term debt | - | (84,040 | ) | |||||
Net Cash Provided by Financing Activities | - | 917,600 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,059,028 | 312,060 | ||||||
CASH AND CASH EQUIVALENTS | ||||||||
Beginning of period | 4,084,078 | 3,659,551 | ||||||
End of period | $ | 6,143,106 | $ | 3,971,611 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURE: | ||||||||
Interest paid | $ | - | $ | 13,972 | ||||
Income Taxes Paid | $ | 47,488 | $ | 74,004 |
See notes to unaudited condensed consolidated financial statements.
ADDITIONAL INFORMATION -- PRODUCT, MARKET AND GEOGRAPHIC SALES
(unaudited)
Product Sales
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
Fluxing Systems | $ | 117,000 | $ | 94,000 | 23,000 | 24% | $ | 476,000 | $ | 438,000 | 38,000 | 8% | ||||||||||||||||||||
Integrated Coating Systems | 565,000 | 673,000 | (108,000 | ) | (16% | ) | 720,000 | 1,849,000 | (1,129,000) | (61% | ) | |||||||||||||||||||||
Multi-Axis Coating Systems | 1,891,000 | 1,985,000 | (94,000 | ) | (5%) | 3,970,000 | 2,898,000 | 1,072,000 | 37% | |||||||||||||||||||||||
OEM Systems | 845,000 | 232,000 | 613,000 | 264% | 1,171,000 | 654,000 | 517,000 | 79% | ||||||||||||||||||||||||
Other | 652,000 | 497,000 | 155,000 | 31% | 1,378,000 | 1,070,000 | 308,000 | 29% | ||||||||||||||||||||||||
TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | 17% | $ | 7,715,000 | $ | 6,909,000 | 806,000 | 12% |
Market Sales
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
Electronics/Microelectronics | $ | 1,448,000 | $ | 811,000 | 637,000 | 79% | $ | 3,707,000 | $ | 3,051,000 | 656,000 | 22% | ||||||||||||||||||||
Medical | 1,097,000 | 961,000 | 136,000 | 14% | 1,814,000 | 1,653,000 | 161,000 | ) | 10% | |||||||||||||||||||||||
Alternative Energy | 957,000 | 826,000 | 131,000 | 16% | 1,389,000 | 1,221,000 | 168,000 | 14% | ||||||||||||||||||||||||
Emerging R&D and Other | 269,000 | 479,000 | (210,000) | (43% | ) | 435,000 | 516,000 | (81,000 | ) | (16%) | ||||||||||||||||||||||
Industrial | 299,000 | 404,000 | (105,000) | (26%) | 370,000 | 468,000 | (98,000) | (21% | ) | |||||||||||||||||||||||
TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | 17% | $ | 7,715,000 | $ | 6,909,000 | 806,000 | 12% |
Geographic Sales
Three Months Ended | Change | Six Months Ended | Change | |||||||||||||||||||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||||||||||||||||||
$ | 1,553,000 | $ | 2,156,000 | (603,000) | (28% | ) | $ | 2,781,000 | $ | 2,911,000 | (130,000) | (4% | ) | |||||||||||||||||||
1,631,000 | 455,000 | 1,176,000 | 258% | 2,853,000 | 2,377,000 | 476,000 | 20% | |||||||||||||||||||||||||
593,000 | 767,000 | (174,000 | ) | (23% | ) | 1,436,000 | 1,198,000 | 238,000 | 20% | |||||||||||||||||||||||
293,000 | 103,000 | 190,000 | 184% | 645,000 | 423,000 | 222,000 | 52% | |||||||||||||||||||||||||
TOTAL | $ | 4,070,000 | $ | 3,481,000 | 589,000 | 17% | $ | 7,715,000 | $ | 6,909,000 | 806,000 | 12% |
Source:
2021 GlobeNewswire, Inc., source