“The first quarter of FY2020 showed the expected 5% revenue growth, along with a profitable bottom line. More importantly, we continued to invest in upfront resources in Sales and Marketing, which includes Application Engineering personnel.  Application Engineering has become an essential element in our growth strategy of pursuing larger, more complex ultrasonic coating systems. These orders increase our average revenue per order.

We experienced significant growth in larger Multi-Axis coating systems this quarter, along with increases in orders of Fluxing Systems and Integrated Coating Systems. We also experienced large increases in the Electronics/Microelectronics, Alternative Energy, and Emerging R&D market areas. Globally, we had increases in the US and Canada and Latin America geographies, which more than offset reductions in the Asia Pacific markets. For the first quarter of fiscal 2020, 44% of our sales originated in the US and Canada compared to 37% last year.

Due to the record increase in our orders and backlog this quarter, we are expecting second quarter  revenues to increase by 15-20% over last year. Furthermore, our current expectation is to see similar growth in the balance of the Fiscal Year,” commented Dr. Christopher L. Coccio, Chairman and CEO.

First Quarter Fiscal 2020 Review   

The Company’s net sales growth was driven by a combination of increases in the Electronics/Microelectronics market (up 16%), the Alternative Energy market (up 118%), and the Emerging R&D market (up 68%).  The Company’s strategy of providing paid coating services as a part of our Application Engineering services in addition to its coating equipment, is clearly benefitting revenues.

From a product sales perspective, Fluxing Systems demand increased 15%, Integrated Coating Systems demand increased 13%, and Multi-Axis Coating System demand increased 24%. Quarterly demand and revenue in any of the Market or Product baskets typically varies due to the size and timing of orders, so the multi-quarter totals at year-end are often more significant, reflecting overall Market and Product trends.

See the accompanying tables at the end of this release for a breakout of sales by Market and Product. 

In the first quarter of fiscal 2020, approximately 56% of sales originated outside of the United States and Canada compared with 63% in the prior-year period.  As expected, the geographic shift reflects higher sales to U.S. markets supported by strong economic growth here combined with a decrease in APAC as the Chinese trade situation is sorted out.

The change in product mix resulted in a slightly lower gross margin of 46.2%, and we increased our net income by 18% to $25,000 this quarter. We expect our income to rise considerably as we proceed through the year, due to the increasing backlog and growth in orders with associated leverage on our operating costs.

Balance Sheet and Cash Flow Overview

Cash and cash equivalents and short-term investments at quarter-end were $5.7 million, up from $5.5 million at the end of fiscal 2019.  The increase was the result of the timing of working capital requirements primarily due to an increase in accounts payable and customer deposits partially offset by an increase in inventories.

Net cash provided by operating activities was $362,000 in the first quarter of fiscal 2020 compared with using $374,000in the prior fiscal year period.  Capital expenditures in the first quarter of fiscal 2020 were $129,000 compared with $101,000 in the prior fiscal year period.

About Sono-Tek

Sono-Tek Corporation is the leading developer and manufacturer of ultrasonic coating systems for applying precise, thin film coatings to protect, strengthen or smooth surfaces on parts and components for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive.

The Company’s solutions are environmentally-friendly, efficient and highly reliable, and enable dramatic reductions in overspray, savings in raw material, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions.

Sono-Tek’s growth strategy is focused on leveraging its innovative technologies, proprietary know-how, unique talent and experience, and global reach to further develop microscopic coating technologies that enable better outcomes for its customers’ products and processes.

For further information, visit www.sono-tek.com.

Safe Harbor Statement
This news release contains forward looking statements regarding future events and the future performance of Sono-Tek Corporation that involve risks and uncertainties that 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; timely development and market acceptance of new products and paid coating services; adequacy of financing; capacity additions; the ability to enforce patents; maintenance of operating leverage; continued reduction in inventory requirements; maintenance of order backlog; consummation of order proposals; continued sales growth in the Electronics/Microelectronics, Alternative Energy, and Emerging R&D market areas; and the ability to achieve increased sales volume at projected levels and continued  profitability.  We refer you to documents that the company files with the Securities and Exchange Commission, which includes Form 10-K and Form 10-Qs containing additional important information.

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FINANCIAL TABLES FOLLOW