SOTK - Earnings call transcript Q4 2022

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Stephanie Prince

Thank you, Gary and thank you to everyone joining us today.

Sono-Tek released their fourth quarter and fiscal 2022 year end results pre-market today.

If you don't have a copy of the release, please go to the company's website at sono-tek.com and click on the press release/news tab in the Investors section. The product, market and geography sales tables on the last page of the release will be part of today's discussion. With me on the call today are Chris Coccio, Sono-Tek's Chairman and CEO; Steve Harshbarger, President and COO; and Steve Bagley, Chief Financial Officer.

over remarks I concerning call make like the following the forward-looking turning to would management, to Before statements. prospects future Please may note purposes Securities plans of about the provisions for XXXX. Litigation be that company and expectations, Private made on Safe forward-looking the this conference the various statements for the remarks Reform under of constitute Harbor call Act discussed statements in from as vary company's results materially those factors, indicated including these important may the those result a with forward-looking the of filings SEC. various Actual by The contained company the assumes no obligation to in update information call. this conference now call Chairman Coccio, to would I Sono-Tek. like turn over to of CEO the Chris and Chris?

Christopher Coccio

earnings with Bagley, and of our for will remarks. I us go XXXX. morning fourth fiscal opening sales fiscal And and released our some through that XX, Steve conference Thank the year. the a Steve Thank you ended we're then COO provide year-end and were morning President and business good Harshbarger. going to call. will will February growth the results today you, results and then earlier Today discuss Officer for year Financial for joining this financial begin operational Chief quarter guidance. which Stephanie XXXX XXXX, everyone. review year

open earnings will call call. that the This second questions. Following for is our your

devices, microns on ultrasonic ability developed as able technology to frequency for tech are that such patented we coatings. cells, important and electronic semiconductor coatings food medical to focus the ago. The customers. up The decades August. first into incorporated Sono-Tek, our devices, use fuel was control and thin solar involves motion nozzles that when revolutionary even processes and Briefly are we as handheld film and the of results lines, applying require to industrial last NASDAQ precision, last listed new several markets those reported glass after we manufacturing, method high textiles, We such achieve systems uniform midyear proprietary high October, coating our for of who a

our Europe, Over the and we've to from Latin the expanded U.S. years, Asia footprint and America.

solutions that to energy usage Our shift versus in unit several among water dramatic and years we strategic many in material, broadened are more friendly resulted advantages. made components growth raw other complex The complete average significant our ago in offer market environmentally has offer sales addressable our selling prices. solutions has and savings

test more unique and includes of and for experiencing diagnosis. Most global COVID focused larger $X Our benefit now cells energy, $XXX,XXX This three and the our strong includes This sell for fuel medical and genomics over we machines societal all thin and and long-term being semiconductors, All systems. from each capture, three which prices they application And and growing film, carbon films had rapid our are and areas often from are thin coating technology used technology. in recently, of devices. main these kits, for advanced these are which markets clean new diagnostic opening success million. markets. reach includes onto microelectronics over now test of penetrating blood strong system We've areas more identification, deployed needs. demand on growth, of

we fourth Advanced the XXXX expanding and SIC changing of of the it's finished to to year and technology better quarter process began which our coating note. the product to handling, billion market We year still stakeholders Solutions. capabilities, understand are As coating by company. the our instrumentation process include designation. Code We're the is entered March our XX% of in trends And we $XX and the belongs. more is advance sales, Sono-Tek our new market. fiscal capabilities The are also This When the to continue global coating where for outlook. community, in approximately roll-to-roll example used business X, of opens for in One more a our to other global really approximately investment that $X is million in was customers, we last our helpful and high on pandemic. record fiscal with strong, world the over a impacted the the

Steve for As larger our and through details new the capabilities will allowed moments. geographically in a orders first billion we higher expect the which Sono-Tek Steve year. focus to cash sales few flexibility during capture year, The project by again fourth segment, quickly the end with million market than will the the and into and year record. the trends and us double-digit be $XX.X with $X another changed ended the a fiscal at combined system the last year. balance new expanding and quarter And of quarter over continued go year. of growth fiscal We

for energy. financial Steve? have capabilities details Steve goals. achieve on also our of of during to We're our over balance team that, our and and we're call our some applications results. currently sheet. have for debt in paid we new debt right semiconductors, the about drive very And With opportunities We Bagley, the clean turn developing to our and I'll technology and mortgage markets our focus excited our medical right no our Chief Financial that with growth the the off the Officer for year

Stephen Bagley

year and XXXX in year compared XXXX. million morning XX% to Chris fiscal net million, $XX.X everyone. fiscal in Thank $XX.X results And now looking fiscal with you, XXXX our sales increased good at

approximately XX% prior During year the period. originated sales the compared with the outside of Canada year of XX% U.S. in and

fiscal cash for million And million, the profit The XX.X% our The increase year year our increased basis earnings XXX manufacturing XXXX XX.X our combined and to share with forgiveness, lower of sales were period. a compared to expected I'll million be gross XX, over income shares by mix, Steve? million $X.XX Spending there income $X.X no for with XXXX fiscal year year profit. warranty compared the for fiscal and February and facilities. XX% million increased points, to operating year installation million was compared On the weighted at about Harshbarger, is average $X.X operational to year. ongoing prior a the year costs. and And and prior with to compared investments upgrades growth short-term revenue period. increased for and from year. and gross million million were in $X.X increases with outstanding The PPP now or compared $X.X offset XXX%. than and increased to margin favorable XXXX million for prior $X increase XX.X XXXX. President an prior by turn COO to on on per due call reflects loan sheet. year Our CapEx compared income for XX.X% increased debt total due the of balance the was $XXX,XXX. with in primarily XX% for to fiscal focused Diluted basis, review million, of period. Steve reaching the margin improvements compared $X.X for fiscal taxes. fiscal profit - equivalents $XX.X is prior sales, an $X.XX, continues companies for increase XXXX Cash to to Operating in million $X.X operating XX% XXXX. an increase fiscal Net fiscal of XXXX X% The in $X.X gross income in

Steve Harshbarger

Yes, morning, good thanks and Steve joining us Thanks, for everyone. today.

million, million that's I'm XXXX see products this compared By energy investments the driven As private today. of in how focused page the XXXX short Fiscal XX% you on and by sales. And sector. or $XX.X tables in our was And the to by talking XX% we alternative up in $X.X sales release, accelerating can net press million, and you market going the down market geography. our governments on markets, clean $X.X them sales energy last break were to ways earnings be grew to that's to three from net and fiscal industries sales. about

in Sono-Tek to hydrogen coated in machinery used capture clean catalyst particular cells, and used market. carbon applications generation being this fuel is membranes create

$X.X to repeat a due significant the And sale in as based is to market. fiscal robot in X.X dental a grew an driven XX% Our medical significant electronics industry due current our the it grew strong shipment a as America XXXX/XXXX which of didn't primarily device semiconductor period. for to a X-axis to in dip of saw is large textile primarily year customer market by sales million, XX%. The customized in the the device in XX% by as solutions, this The industrial medical to industry. well China North market increase our occurred million, market that

in that the billion using recent cells integration Looking existing really is billion $X.X energy invested expertise markets. phase heart of these for to see capture adoption and sector U.S. of applications, our only infrastructure process. are to of world. Coating one growth. in opportunities into many ahead, bill electrolysis membranes The we will targeted the includes one the around clean the our $X R&D, Sono-Tek's which markets and This of which directs of future the is areas fuel electrolysis of growth be hydrogen and carbon electrolysis key programs. directly continue for and first of

an momentum geography new OEM OEM designs. XX% platforms. declined to several and Integrated result a This multi-axis packages that China, a product the shipment sales as Canada of sales textile a outside in driven into fiscal strong year. in increase mainly due Japan used was was they sales invested of and the increased with over large By year well a 'XX of to mentioned sale fiscal of being significant commitments countries to line, the which and were as used this product machines relationships XXXX the for $X.X By new financial $X.X repeat the XXXX with energy million in as Korea, in of sold are year-over-year, their sector XX% to earlier, XX% which similar the year multi-axis due OEM the fiscal XXXX. systems industry developing of our machine prior markets. coating XX% by systems million, gaining compared FY of that XX% I making machine million. coating semiconductor billions U.S. South Both robot sophisticated fiscal market. European are originated X-axis were to clean in several approximately highly diagnostic dollars in also incorporated medical $X.X didn't sales which into are Sono-Tek were -

you see only result all with and XX% As customers to and restrictions. the and X% The sales manufacturing grew APAC FY from in a online fewer many overseas COVID international - of U.S. sales. XX% our of EMEA Latin operations back increased bringing with showing America 'XX, can Canada, decline

an was $X.X to South due is for growth of increase strategy, increase February was system with in and our of optimization, XX%. full selling sales Korea sales February product Sono-Tek, $X.X compared the a in customizing in at our XXXX which our and a attributed which the for includes million especially APAC course. significant The strongly expansion enhanced sector growth Backlog contributed customers, price average increased to to million, XXXX energy continued delivers higher value here clean of XX, to XX, line machines. at backlog to solution

again double-digit at ending fiscal annual year year-over-year XXXX our track February first corporate on highest report our in ahead is May sales to XXXX Looking XX FY generate XXXX to In the quarter of ending XX, growth. Sono-Tek history. expects

first questions, for open the be half I'll back questions our holding open financial you that results call next call it year for in to and We'll I operator. earnings XXXX before we'll to we August. know the you send just fiscal call October the now in want let for ending Lastly,

Operator

Circle [Operator with comes Nicklin Bill first Advisors. Instructions] N question go Our ahead. Please from

William Nicklin

getting quite beginning you've And you're good appears a markets on Good accelerate. nascent some that on time that morning. working to are in report. for significant and Congratulations these it traction been now

sounds it So good?

Christopher Coccio

Bill Nicklin. Thanks,

William Nicklin

depicting presentations, the recent illustrations your the understanding market of in is, size of size. equipment question first general My included coating and the you've

relates What the taking So to do in its are are changes ultrasonic place and relevant, market, coating that equipment size a as the where me share, and you see and in already your relevant coating pardon your equipment XX% in changes ultrasonic share? it customer's market shops? you've market initiatives you have

Christopher Coccio

Yes question, Bill. thanks, good

either that require Over a manufacturers really spray a alternative as their to several quality. have reduce or qualified the viable costs on of tech past, large increase years, chunk being now coatings products high the ultrasonic

coating many and we product see solutions because line predominantly machines [ph] as there's describe are these production. In They've production R&D these I more shift rapid levels, customers of without complex And same would larger, growth what matured Sono-Tek [indiscernible]. ultrasonic to course really now of this their from out to moving shifted is the is operations. of we're as implement So into participating well. a markets, into production R&D, - full what to machines that and focused our blown then particular,

we're the really, think, that's So I primary seeing shift that there.

William Nicklin

we you've made. door Then coating or general ways the coating you equipment needs much if much presentations you larger How from your the in market, for which larger, that general Thanks. customers' this drags past we opens changing equipment can as at into look is market? in see are,

Christopher Coccio

good Yes it's because so Sono-Tek existing - and larger, market. another good already ultrasonic dominate it much a we question, is coating the equipment

the understand focus is growth always needs then way for chunk development our initiatives customer our typically the bit The But and in are of this in start A we quite the market. good flexibility back requirements trying roll-to-roll gravure the minimizing of well-established predominant and problem our larger or today program in our general to primary coating about. thin work or then of technologies. customer change the to like and aren't We a solution like always at we've really very applications would capturing coating that slot-die focus customer. ways be equipment where coatings, example our the on in the the nozzles. of to kind with So are driver, strong they roll-to-roll onto is talked the that These pressure having morphologies all technology products. providing that used a coating market

morphology area varying our roll-to-roll applications And this technology. going can So chemistry, participating liquid equipment while that create coatings, and capability to ideal uniform in provide to that full be system more coating thinner, we'll out provide are for using solutions, the with less giving soon we're there. the our the

So, it's there. in the really strategy a significant change

William Nicklin

I have Thanks. another question, may. I if

Christopher Coccio

Sure.

William Nicklin

discussions they they're Could where of within each As revenue see and these field cells different two kind markets, how give and those look electrolyte overall be we on closely of, they're the particular how areas materials, the very we How of different? I me granularity read your this applications, related. you particular fuel of some market? may prospects sizes similar, dynamics and

Christopher Coccio

critical know, the is cases, you sure. all equipment, coating those onto the Yes kind all we're applying technically area a coating requirements just similar. of complex for It areas that are technical very those Because mentioned the you almost of this catalyst in membranes.

and lots talking lines, you R&D different the they're requirements. our carbon applications that a them take to to almost equipment often capabilities way. understand as very look to cases, applications, stages successful on coating product all they requires like, this Whereas really from all equipment that Fuel optimal help hundreds solvents applications from mature understand treatments decades because in our our is years, customize our so and pilot certainly and the engineers the every the certainly other we to product independent participation for - at develop its dial for develop. with dive our is and fairly focused for And at lots engineers for that with captures, sort post customers the application know, even electrolyzer and to pre engineers They - really successfully other how chemistries expertise these in example expertise correct cells process. of process like more this unique process these providers. machine the configuration. in can really application like specific and necessary be to where configurations, some markets, coated. the development This which of are in of However, and potential various coating Sono-Tek about can each are the that's they're for of ultrasonic and many to coating Out production are need, is of separates of be honest,

William Nicklin

currently incoming next those your or if out sales represented from the areas funnel you more may, of to at going couple this, over How orders of are full look as One your in to I years? much you production. look runs in if R&D pilot

Christopher Coccio

more, like its XX% to directed closer our complex I high about selling shifting We this area implemented equipment of recent with to we production were XX% anticipate, and the machines production AI years we're we've ago, would like higher trend of in is predominantly focused of R&D equipment. at into being scale say, Eight price. volume production needs. been to Over years, our from Today, larger capabilities certainly continue a as production our environments. going larger average these with broaden machines, machines

establish for go to our a drives But Of what will never heavily as, methods it production going standard R&D definitely spray They're us machines to generation large away. will course, our ultrasonic to going applications. important they're really machines, to - future next growth. be coating

William Nicklin

pilot now. I there? or experience areas, full R&D, margins anything there All you you to. complex? I units you'll right, had are the larger mean, a So probably think little production. right units have are imagine Do build gross But Is all so would those high yet more particular that crossed taken in margins? good the really and more similar your R&D margins pretty

So do the get different areas the of and you if expect as what full machines production changes, type into over mode? larger any, three

Christopher Coccio

Yes, if timeframe. is larger to we the willing are and full time many really for importantly, system needs of - solution market a an and if solves within that customers. the to premium ultimately accelerated thing seeing We're What deliver growth many as had high shifted these quality we can areas, their we slightly a these really these - sure. really is improved production surprisingly, really our markets to Sure, that they've focus we're pay machines. these tech margins on finding

going to well, they're our pay time rapidly. And getting - where really to things that's margins we're for it. because help on to willing that that drive is focused market So as

William Nicklin

One may. last question, if I

the You governments, dollars been a billions there, so large look of over you think dependent or couple year? each customers get of mentioned of couple spent being diversified that back by not how the going at So And do customers has the by area. energy if And offered one particularly be a up order in or changed? to two on or affected to large are we profile of at of one customers least? you year group alternative order the more able your each are big you're have least years, a

Christopher Coccio

in new these them typically and of relationships a relatively years. our lots And sector, Sono-Tek. coating energy where and they've industry that know It's this many with them Yes, with focused of participants, rate companies company really yes are highly the quick. And the to solutions. we're in our quality with well new are medical, multinational the In deliver come to entering happening is we names. huge But seeing say in companies clean most already markets of for partnered are participating semiconductor that Sono-Tek. ability established trust market

did are to or past, that to most So buy maybe two back or machines purchasing. at more, commonly repeat are one projects in look buy several they're coming nowadays. They and dealing that we're the these customers with often larger

William Nicklin

I thanks good. right, sounds appreciate very much, All it.

Christopher Coccio

Hey care. Bill, good take chatting

Stephen Bagley

you, Bill. Thank

Operator

with from go next The Please is Nate question ahead. ThinkEquity. Nahirny

Nate Nahirny

on space clean that Sono-Tek you grow that's numbers. That's a do see large touch significant energy have the on anticipate kind earnings fitting growth market. Where in? portion congratulations to obviously Hey, and do guys you of space? in continuing continue had continuing to to Wanted to the good guys you growth. little extremely a or segment, And a impressive addressable bit

Steve Harshbarger

dynamic, of world continued and so got prices gas the dynamics there. the be think it's growth solution Yes, be of There's, aggressive. got to clean There's very look part to going the is and here. be many the today, at energy rising Ukraine I around happening to

Christopher Coccio

be awake that are of if expand weren't And their happens report just alternate energy, vulnerabilities, all we've just on to energy, that now, seen come Nate, issues. organization energy they pipelines. the put clean they answer, sources in developing alternative European to has a the Russian but both security it they've to their not recent fully multiple before to out, about

going going they're fuel on, be be cells which it's be significant cells, sums of continuing to money every in spending focused to so And solar that we're are to hydrogen or whether or area important. even

has those Sono-Tek in of fields. strengths all

have just our has extent past energy, So like I stop to in you to look horizon, I doing the certain has business and food, they're which a I feel history. it we're accelerated further. be we do. of But by gone if sort even driven great can't that perfect on just things our going in to at market may mean, mean a that to your or medicine There you like be one - be may it down. But spot it's the already. things because just stock people recession accelerate

we're lead So excited company pretty will this forward? about what

Nate Nahirny

absolutely No guys, it? Got exciting, again. congratulations very

Christopher Coccio

you. Thank

Steve Harshbarger

Thanks Nate.

Operator

[indiscernible] Instructions] question next [Operator The from Capital. Please go is ahead.

Unidentified Analyst

you're I the question, on Congratulations going what the results see CapEx expecting about Yes, if want few kind the thanks you And a equipment? next for color longevity manufacturing guidance, little but bit great guys. over on little years. expecting, sales for to for of talk if then just of appreciate can the a the about also you're my just just bit of taking question this forward, given the and being Quick year. CapEx

Stephen Bagley

Yes, sure.

factory. rise increase capabilities things implemented we've to it describe helps, efficiencies our automating it's spray when ways We've processes and technology of areas with that days our software as, our really lot shaping I a maximize technological and our and some our found labor actually advancements predicting utilized systems It to us of has a to that helps take manufacturing the - systems through CapEx the like next there. to tough of several And we're is way. significant aerodynamic these of been the get especially level, processes labor into a of in there slight to of easily are that our those shortage coming CapEx a in We lot we're throughout in shortage, year. And the automation. operations, this investments implementing our of would

a of just so growth see well. sort here growth as for accommodate So, here. place operational of We're infrastructure our as to we we're growth, anticipating a is year But will CapEx fully that in into the coming growth lot are to in prepared that we're putting slight in capital well. growth we similar accommodate again

Christopher Coccio

technology. has mentioned, manufacturing Steve As

about You not do tools think know, from really work is how purchasing to meetings right in in don't we the of about I type putting Sono-Tek, continuing talked of else competitors a analysis critical because which often we spray that been understanding our world in and even in differentiate ultrasonic anybody it's but path. comes what our we're it's this, that like down granular very and place systems have - level, from intimate and can detailed how ourselves measurement we to is facilities. today. down to close the And there's the who,

property effects Just gets in with that is changes our precision, for the the is for of field. reasons course, Steve profile doing equipment small a we're people, really but intellectual how comes significant the any of can pieces it and the in in what mentioned, labor have applied of all of the key, one challenge,

master going continue. to and So that, it's think we're I the of

Unidentified Analyst

I've it, guys. again. appreciate Thank got it. Right, you all That's

Operator

Dr. Coccio, conference remarks. turn concludes [Operator over no question-and-answer our any to back would Instructions] this questions, Showing closing the I further for session. like

Christopher Coccio

And you. us joining thank today everyone. for Thank you

us of Have a and goodbye. the contact results report excited Mid-Year clean Please if about any Conference have in day medical questions. Call year additional XXXX be markets and directly our half semiconductor energy. November hold we're a great well you Sono-Tek when ending in in a fiscal first for momentum our We'll strong August has And XXXX. for we a growth opportunities lot of outlook. of focus and very

Operator

The conference for is you attending today's presentation. concluded. now Thank

disconnect. now may You

Sono-Tek (SOTK) 24 May 222022 Q4 Earnings call transcript