Sono-Tek Corporation Q4 FY2024 earnings call

Sono-Tek developed proprietary ultrasonic coating technology for precision thin films, offering environmental benefits and higher average selling prices (ASPs). The company achieved record-breaking revenue and backlog in FY2024, with sales up 31% y-o-y. It shifted to larger customized systems, increased headcount by ~15%, and saw R&D spending rise 34%, marketing/selling expenses up 17%, and G&A up 26%. The company delivered 2 high-volume high ASP production systems in FY2024 and had a backlog of $9.1 million with 4 high ASP systems scheduled for delivery.

For the full year of fiscal 2024, net sales increased 31% to $19.7 million from $15.1 million in fiscal 2023. Geographically, approximately 55% of sales were to U.S. and Canadian customers in 2024, up from 45% in 2023. By product, multi-access coating systems in the clean energy sector saw a $3.3 million increase (48%), integrated coating systems rose 159% to $2.9 million, while PCB flexing sales dipped. Spare parts and service-related revenue increased by 17%. By market, alternative clean energy grew 96%, electronics had a modest uptick, medical rebounded 13%, and industrial was up 48%. EMEA sales increased 20%, Asia was flat, and Latin America declined 21%.

Guiding for strong first quarter FY2025 revenue growth above 30% (against a weaker first quarter last year). Expecting 8% to 10% year-over-year revenue growth for fiscal year 2025 ending February 28, 2025, even with quarterly comparisons of record shipments in FY2024.

Gross profit margin decreased due to increased indirect production salaries, transportation, installation, warranty costs, and reallocation of labor expenses. Warranty costs fluctuate with product mix. Supply chain issues in previous years, though efforts to broaden supply chain are ongoing. Competitive landscape with China-based companies growing in number and size, posing a threat to U.S. and European competitors.

Q: Broader questions about competitive position, R&D cycle time, and durability of revenues A: Steve Harshbarger discussed competitive analysis, R&D cycle times averaging 3-4 years, and growing repeat business and service revenue from larger systems Q: Questions about backlog breakdown, lab activity to orders, and medical shipments A: Steve Harshbarger provided details on backlog breakdown, lab success rate, and medical device partnerships and shipments