Sono-Tek Corporation Q2 FY2026 earnings call

• Sono-Tek developed proprietary ultrasonic coating technology for precision thin films, offering environmental benefits and cost savings. - Shift to larger, more complex systems with higher average unit selling prices, with machines now commonly selling for $300,000 and systems up to $1,000,000. - Success in clean energy sector with large orders in solar, fuel cells, etc. - Annual shareholder meeting showcased technology and facility. - Medical device industry growth, particularly in balloon catheters, with 150% YOY sales increase in Q2. - Strong backlog of $11,200,000 and strong balance sheet with $10,600,000 in cash and no debt. - Investment in R&D, focusing on product expansion.

In the second quarter, revenue was $5,160,000, up slightly from the first quarter of fiscal 2026 ($5,130,000) and marked the sixth consecutive quarter over $5,000,000. For the first half, revenue reached a record $10,300,000. By product category, Integrated Coatings Systems (inline coating systems) decreased by $493,000 (24%) to $1,530,000 in Q2 but increased by $1,820,000 (65%) to $4,580,000 in the first half. Multi Coating Systems declined by $1,890,000 (41%) to $2,710,000 in the first half. Fluxing sales increased by $46,000 (30%) to $165,000 in Q2 and $64,000 (25%) in the first half. OEM sales rose by $188,000 (92%) to $394,000 in Q2 but were slightly down by $13,000 in the first half. By end market, the medical market saw a 150% YOY increase to $1,000,000 in Q2 and 44% YOY increase to $1,000,000 in the first half. Clean energy sales had fluctuations with slight declines in some periods.

• Increased prior guidance for modest revenue growth in full fiscal year, balancing caution from shifts in clean energy and tariff policies with growing demand from medical device industry. - Guidance will be refined as the year progresses. - Anticipates continued growth from newly developed high ASP platforms across advanced technology markets.

• Trade issues and potential impact of tariffs on exports. - Market adjustments related to shifts in U.S. government clean energy and tariff policies.

Q: Ted Jackson asked about medical device strength in China, competitive dynamics, and tariffs.

A: Steve Harshbarger stated Chinese manufacturers chose Sono-Tek over copycat vendors due to quality, even with tariffs, and emphasized the medical device industry's critical defect requirements.

Q: Bill Nicklin inquired about the application engineering build-out and ROI.

A: Steve Harshbarger explained the forward deployed engineering model accelerates system adoption, shortens sales cycles, and is key to scaling growth.

Q: Dick Ryan asked about new OEMs and the semi-side business.

A: Steve Harshbarger discussed optics OEMs as strategic partners for market entry and noted increased interest in the semiconductor side post-trade show.

Q: Ted Jackson followed up on backlog recognition and sales quarters.

A: Steve Harshbarger said large orders will ship in FY 2027 with some in the current year, and expects to continue $5,000,000+ revenue quarters.