Sono-Tek Corporation

For fiscal 2026, Sono-Tek reported net sales of $20.9 million, up 2% from $20.5 million in the prior year. Gross profit was $10.56 million, up 8%, and gross margin expanded to 51% from 48%. Operating income rose 81% to $1.82 million, operating margin improved to 9% from 5%, and net income increased 42% to approximately $1.8 million from $1.27 million. For the fourth quarter, revenue increased 10% to $5.6 million, gross profit rose 15% to $2.79 million, gross margin was 50%, and net income increased 70% to approximately $557,000. Cash, cash equivalents and marketable securities totaled $14.8 million, up from $11.9 million, with no debt. Operating cash flow was $3.2 million versus $525,000 a year ago, and backlog was approximately $9.12 million. Looking ahead, management expects continued revenue growth and profitability in the first half of FY2027, driven by medical and microelectronics demand and high-ASP systems. For full-year FY2027, they guided to relatively flat to modestly higher revenue versus FY2026, citing uncertainty in clean energy and order timing.

CEO Steve Harshbarger emphasized that the business is shifting decisively toward medical and microelectronics, with the legacy clean energy exposure becoming much less important in the current backlog. He said the company is seeing more quotes for larger, more complex, higher-ASP systems, and that customer conversations are now centered on what else Sono-Tek can provide rather than just standard equipment. His tone was confident and constructive, but he also stressed that timing on large orders makes visibility beyond the first half limited.

CFO Steve Bagley highlighted the year’s financial improvements: $20.9 million in sales, $10.56 million in gross profit, 51% gross margin, $1.82 million in operating income, and $1.8 million in net income. He noted operating expenses were $8.7 million and relatively flat, with R&D down 6% to $2.55 million, sales and marketing down 4% to $3.53 million, and G&A up 14% to $2.66 million. He also pointed to a stronger balance sheet, including $14.8 million in cash and marketable securities, zero debt, $16.2 million of working capital, and $3.2 million of operating cash flow, supported by higher customer deposits and inventory management.

Analysts focused on backlog, bookings, and whether the clean energy slowdown was masking softer demand, but management said the business is rotating toward medical and microelectronics and that high-ASP orders are inherently lumpy. On the semiconductor opportunity, Harshbarger said the 300-millimeter product is progressing, likely to show up at SEMICON Europa, and may contribute to revenue more in FY2027 with deliveries more likely in FY2028. Questions also centered on capital allocation: management said buybacks have been minimal so far, cash gives flexibility for selective M&A, and the board continues to evaluate timing. They also discussed expansion plans, with a first phase costing about $500,000 to $600,000 potentially lifting capacity to roughly $35 million, and a later phase that could move capacity toward about $45 million.