SOTK - Earnings call 2 2024 | Sono-Tek Corporation

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Operator

Good morning, and welcome to the Sono-Tek Corporation Midyear Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Stephanie Prince from PCG Advisory. Please go ahead.

Stephanie Prince

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

quarter half second premarket XXXX their morning. this released and fiscal first results Sono-Tek

have of the of click a go don't geography be the you If copy part market Product, of company's release tab and at the Investors press will section. to tables the website sono-tek.com page the today's and on discussion. on sales news in last the please release, release

President and and call the are Chris CEO; today Chief Steve Chairman Officer. Harshbarger, and With me on Financial COO; Coccio, Dr. Bagley, Steve Sono-Tek's

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

now and to to CEO I over would Chairman like turn of Coccio, Chris call the Sono-Tek. Chris?

Christopher Coccio

President half business results. joining go thank a Good financial first our thank operational remarks, and year then Harshbarger, going Bagley, fiscal We're us. for before provide Financial discuss some results Chief Stephanie, Officer, opening with the to this morning, second begin Steve then that and everyone, morning market you, and will through COO, will of and will you, were XXXX our and quarter and I released opened. the review. Steve

your for comments, call his we'll open the questions. Following

our call a ended reminder, XX, holds year. the XXXX. August currently fiscal midyear X for as This for earnings Sono-Tek X calls is months Now

May XXXX. XX, on XXXX for of earnings fiscal And February, of XXXX. call XXXX ended in February year will the so fiscal XX be our Our fiscal end months next will

many applying products. coatings already the decades thin acknowledgeable technology Sono-Tek able as our nano a systems of film and precision and proprietary customers' ago. control method our involves into motion The incorporated to developed ultrasound uniform high-frequency specialty of advanced Now several know, use micron these coatings you revolutionary achieve are onto of thin and

offer our solutions therefore. raw energy water and in dramatic savings material, and usage environmentally are Our friendly,

thousands average to advantage now years the coating our in be critical functional ago that of first the selling important apply systems to films, in to precision today's Now world coating of ability with meaningfully more thin vitally resulted broadened and complex, our ultrasonic shift in or products solutions and micro significant several is The which made are protective components a our growth them. we complete has offer market strategic to addressable prices. added unit requiring

we finally for This shipped back held over ahead our the at supply Our X.X largely reported $X over second $XXX,XXX happened valued XX% multi-access quarter a year more, than is ever systems chain constraints our the that expectations, -- strongest commonly reach ago our sales now past of can quarter year. of We were higher we million. newest impacts of what in systems when prices growth and our the which one significantly larger machines or quarterly and sell million revenue. the free over

We've film backlog to the of orders, $X.XX to XX% $XX.X addition large our still of to high on our our growth months ago fiscal in end from reached increased now sales, new This X and alternative areas last the million, In year, industry for and Microelectronics clean and sales complex strong that addition talked markets X semiconductors, thin energy. before. global opening growth a history. shift these includes or medical years about devices platforms with strategic technology. This served main our very we've sectors and and in focus for generation, was areas are energy, million, new and neat latest cells, carbon our technology. Clean the fuel green highest systems generational due advanced to hydrogen in was and cells. continuing also these including coating products the system capture advance solar solutions to and many

application transitioning to experienced been did having result of from scale Our lines title systems success production and development a decade. work as our these R&D now R&D production they providing a and prior We're with markets, with lot to -- for engineers. of close a we've customers process

nearly year, valued largest the energy as energy the order is at most the but sector. date and strategy delivery as largest large well are in orders, clean ship the clean The history. These the the sector million it's Sono-Tek's medical first also our and customized from $X primarily systems. from to and among large million order $X.XX recent Over we've announced past from the largest from orders to

achieve in our consider in focus We on come R&D atomization years expansion. Sono-Tek technology attributed more with increase ultrasonic be ago than we to our and proprietary We've to our our remains all life XX through sales shift been research direct where of a own of this quarter result glove. work, our heart this product development a the able at Although systems. began which both of to in investments and strong

million of further expansion these ago large and the In increased half year compared the year growth million custom alone, $X the support platform we've period. And head in we've engineered already and for invested first R&D ] to our off. to to systems, [ the that and in fully our areas We're stay staffed this XX% investments year, we ensure pay front needs. engineers. and our excited that about of sales these count want We by in begun to engineering, $X.X of approximately they've mainly

or strategy growth for to shift with been orders. larger, our outlook greatly complex poor of repeat early the by from success applications Our systems has production more enhanced to multiple

next we're working on fact, machines. already In generation of the

ending shipments half orders, new fiscal delayed in confident to next second sales will year, XXXX the previously positively year-over-year are to at February. least continue expecting sales. ahead We're Looking growth of in that we're this for XX%

put us expect back our path. now, our it that results. Bagley, and who details Steve Steve? these you, I'll We financial our pre-COVID will turn on Thank growth CFO, provide over on to also additional

Stephen Bagley

and Chris, everyone. good you, Thank morning,

For will in the May detail fiscal quarter Steve from ended of of increased second with XX% this and fiscal sales first to $X.XX respect into XXXX, million reported to net quarter XXXX. more year $X.X XX, Harshbarger go increased million sales. XX% the the

approximately XXXX. and XX% of quarter, the with States XX% of United compared the the Canada During second in originated sales of fiscal outside quarter

XX% margin prior compared with year the $X.X second million XX.X% expenses prior period. quarter. Operating was prior due $X.X in product mix. with in year million to the to million profit gross period. year compared The increased the decrease increased Gross XX% to profit was to profit gross the compared margin for XX.X% The $X.X

Chris are As the $XXX,XXX out and new the materials all higher development of earlier, existing increased approximately costs due and head count which development count and of XX% for to Research salaries pointed in which used increased of to markets. of areas. research new and development are all increased XX% related and -- used products technical across supplies, to several product primarily head costs and

to increased in administrative insurance primarily for offset salaries, XX% offset period. Interest show to stock-based of balance CapEx increase commissions, the quarter. add to year in $XX.X for and salaries million, we to continued our was by expense. cash second to our for fiscal increased lab months General by primarily for with of and equivalents, from compared fiscal the increase due or in the Net $X.XX securities which $XXX,XXX The professional at a and than gross cash $XXX,XXX increase $XXX,XXX the in expenses Operating the quarter fees, second income increased resulted expenses. $X.XX to continue to primarily sheet. income to We've and per decrease by to for XXXX. and partially was carry share current compensation primarily increased for holdings, our upgrades in debt of XXX% year-end, rate operating balances. to expenses prior expenses share increase quarter directed X Operating interest of travel selling marketable large facilities. margin and second higher headcount, environment compared fiscal in ongoing average $XX,XXX The of approximately or $XXX,XXX operating and cash partially The XX.X outstanding quarter. the $XXX,XXX gross profit was weighted to increased million tax to quarter income shares from XX% to expenses and income revenue an XXXX, XX, and second XXXX per and development our income, expense. Diluted and increase decrease dividend XXXX, higher a increased offset expense. at dividend was due due to $XXX,XXX fiscal an an shares. on by cash, to offset is slightly $XXX,XXX, and interest in XX% increased trade increased partially manufacturing the and Marketing the approximately increases increase were August profit, in due no X% $XXX,XXX the all quarter

to I'll We year. the over Steve? equipment of an second operational And Steve call new Harshbarger, quarter. and expect to full now President review invest approximately for turn the COO, for in the $XXX,XXX

R. Harshbarger

and Steve, us for Thank everybody, good you, joining today. thanks morning, and

-- down of by ways: our product, by our my of X Sono-Tek And last most that's short the address comments. on As and markets, the details. release I'm going refer tables to all our to earnings know, for breaks Please geography. the listeners in these upcoming likely sales by in page

ended clean multi-access XXXX. commonly and This primarily by medical first and now used the XX% of a of and fiscal year in the systems, May our of energy of For from increased to coating XX% compared increase increase XX, a the quarter sales was net $X.XX came shipments we driven markets. million. is excited ago second our device quarter, which the to year, increase which in were on a report The expectations are ahead

included million. our quarter of this result meaningfully For through of as coating a this finally shipments our year. We up newest break a of to contain continuing of is which significant and chain sales to out machines depth Coating severely total the supply doubled these newly up Integrated and our market. we every of ASP to line in-house systems our $XXX,XXX our able first product to which acceptance new This coating also process increased NovoCoat. that implemented and the call the year's supply with increase program we're were of quarter, to integration most expansion continuing a is we integration line constrained product in build the vertical and sales and own that $X.X the increasing introduction These gain issues Systems they sales XX% were our of driven of a multi-axis chain were the platform, supply glass platforms, ongoing, highest by some developed options manufacturing broaden vertical day. capabilities flow into multi-access and last is

against Systems spray a Flexing were of tough comparison strong. dipped flexing Sonoflex year to released sales the platform called newly when last XX a sales

thousands our their fluxing spray model Over spray machines, when our installed to the of years, advance and latest technology. to equipment our continue upgrade we we've customers fluxers

for has strong although So area. dip still large half, there base very activity in sales in remains the quarter the customer there a a is and been quote first this in fluxor

the falls machines quarter our This parts were of to with by because these support offset spare combat more of other a large supply quarter. high revenue grew service-related parts in for as of is chain this year. maintenance and spare and partners that which excess and their of expected was built multi-access increase own the more we concerns revenue, up are we sales machines prices, other stream inventory last had average XX% into selling and an lower category growing that many as in the OEM well, largely in our OEM growing importance in us Sales ASPs, platform product packages place field. which

full systems. believe support as XX% order packages XX% value the reach our as In spare fact, much could to that of the and service large of follow-on we total

for the Looking carry from the number by clean ASPs systems are many and our positively that in are contract grew large hydrogen green were alternative area, of our announcements many market manufacturing fuel sales our baskets, impacted XXX% and and membranes our energy at cell this recent critical used generation to Sono-Tek contract customers of R&D market -- of large and production capture, the from carbon applications. of higher much to machines growing transitioning scale

sales of Medical value growth. driven shipment our a multinational quarter similar This coating recent during delivered by companies sales several generation million the this that blue this a system systems, new still coating Sales strongly glass -- into XXX% for to Latin systems backlog. of taking same customer, of second the the delivery included Industrial including specialty implantable with quarter. large medical a several and machine device of the XXX% rebounded $X.X grew large in by remains introduction was specialty QX due a system in shipment we America.

approximately to XX% now they're that Sales starting and and as the Canada our XX% advanced addition Reduction energy were and in period sector the ours. Act, U.S. our by it to other to XXXX. investing to Inflation were equipment reach about of the positively geography, in trend government The is These to talked difference of and the and U.S. clean on are impacted By comparable XX% the spending we've U.S. Canada cash by base increased markets. our in initiatives and CHIPS that several research is onshoring of sales which Act the customer include continuing fiscal before. such compared

Pacific other XX%, Asia areas to Asia of due sales while China, very decreased decreased strong. remain sales by to primarily

are open is lockdown, back international after COVID there. regain we our now momentum visits to to working that However, China the

cold XX, backlog million $X million was the had I $XX.X this is apologies. of our XX% to year, continued to a fiscal little highest at last up quarter. than Again, apologize, the I ago last X and to million August from doubled grow reported Our during on in -- have $X.X And backlog the end year. history. compared our months more

Christopher Coccio

water?. of Would you like hot a glass to receive

R. Harshbarger

Yes. All right.

this is includes largest announced, order new Customer August in orders, back. million large -- also That history, sector order valued at from energy $X.XX XX% sector that required the now cough XX, to half a fiscal the the for can the $X.X XXXX. the is deposits growth from over I This date we at receipt year closing, continued and highest to activity our greater and orders I there. the the Chris and million from the over several reflecting the dollars. In my order February reported turn Again, I of expecting reached order increasing year think reflects backlog regenerative the still cold or of it and I'm order the lingering in clean XX% particular. history. which XX, hundred of we're a several some apologize deposits on of recent largest over caught as operator ending good that's little is our for outlook earlier, I with strong, Q&A, mentioned weekend thousand very we'll minimum with me. second full for if year sales back And a speak. it the

Operator

Jackson [Operator our Northland. will from question Ted come Instructions] And first of

R. Harshbarger

Good you yet. don't morning, I but hear can if hear Ted, can't you I me, know

Christopher Coccio

Ted. you, hear can't We

R. Harshbarger

-- figure here come the anybody and Ted out we maybe -- to back there. fix anybody think can does Maybe out don't I audio is here...

Operator

Okay. [Operator Instructions]

R. Harshbarger

Suspect everybody ask a to me I afraid started maybe coughing. because is question

Christopher Coccio

[indiscernible] Nelson -- see Ted -- having don't issues question. They're had Jackson his questions? Obus according a I to... technical can

R. Harshbarger

Chorus looks Call. like sound we It but issue hear to The can get technical queue in the several on have the for it we people them so we the can questions. doesn't through questions, like

tight, us, organizes we're of through us. those Call the For hear just us trying issues that you out group the can for technical that you still with work Chorus hang to

Christopher Coccio

before. happens Correct. folks this The never saying to Chorus are them

So...

R. Harshbarger

that. read must I

I around. think a Murphy running it's guy

Operator

with next Obus come Capital. Wynnefield will question The from Nelson

R. Harshbarger

today. Thanks got for we Neson. Yes, joining you

Nelson Obus

hear comparison was curious EBITDA I'm the in quarter? what the you just Can me?

R. Harshbarger

EBITDA there? the have you do Bagley,

Stephen Bagley

because in second tab on a have right me the of do give second, a front I I guess. not Hold the me. You

Christopher Coccio

at -- while cash. financial to It's we're focused that I our and more you in I would earnings but an we say, growth we on look typically answer get even companies know our don't do, EBITDA. our

Nelson Obus

basically the for is, And just figuring that. helpful your is for that's -- for you a better it's get market to should which what about, board. Well, private cash, enough companies. is think nice entire not the something okay? It's course, credit think you Yes. across of very financial I out It's which see value

Stephen Bagley

income I've [ amortization. I'm depreciation coming and my around in EBITDA, ]. taxes $XXX fact, got before at $XXX in of million, million

Nelson Obus

Well, very nice.

don't operating look, I'm the you're you reporting. get be wrong. economic put just in which company in out lot industrial that though, an a you're color mean, to not an it me what's interesting is -- very slowing environment, are why concerned I is calls, me an and Now down, quarterly atypical of a a rationale which for not the that what it. industrial period slowdown. quarterly to think this way, we're may particularly can in where and in not going it, queue because like for economy get companies fan not But of help a having you counter credit having is you're I should -- I and put looks

we're think But out? of I they think Board either don't calls except, foreign companies situation, But during they quarterly, The given promise it that's in, make something this about. doesn't for consider your that what you help quarterly. the quarterly? company, have that time don't the should have me only course, company sense them or to can have has, particular them conference the in given

R. Harshbarger

had I input, Yes. say quarterly typically that done Nelson. never at calls That's we any will good all.

some relatively into kind should But start, we our with once input, going make plan point, about And for we And to wet conference get we new semiannually. of good we that doing at feet us. So quarterly get maybe calls a our thinking as whole process. we is it's be feet transition this all thought this had, them to all.

of discuss but a new organization, the follow going this our And might is know, for with I'll that step forward. for you IR that our us to BOD aspects good next relatively As on. be

Nelson Obus

a basket. you're under hiding light I bushel your think

given us that to quite what a companies experiencing. numbers counter You've are of lot attractive are quite industrial and

of something think So to bushel putting about. -- I be rid basket, getting that little think, would a

on in for But The of, cards? the more leverage, Or in perhaps be gearing other question you slightly reflected in do of operating environment, of the gross additional hiring is, in which that mix look, are understand and a terms out lot margins anticipate percentages the some down is as up terms normalized your you higher of would look not I specialists. why work margins gross revenue in higher some base? a a

R. Harshbarger

I go think see that to want do ahead, we Chris, -- you to will this? speak

Christopher Coccio

Yes. I we're sale, that think our credit was the down, that's other. been Typically, Actually, bring happened their going in each the starts expect with margins that of that trends And market you the competing when history there in to I is but there. margins. But go gross XXs, that outside into are a in the that's company equipment and would holding been to high XXs say other staying getting into some our are to here. more this is probably the it's side it it's for coin XXs. in [indiscernible] in the hasn't

of So going both on are things that. there sides

R. Harshbarger

And lot for into products, to excess have focus went there mentioned inventory. chain were in a inventory They well are that anticipate platform thought low issues, new introduced platform we products, put our do as of of OEM some reducing occur so that they're that built I that building they functioning your quite first have out costs you And add those OEM partners them our you that this new that I up get And they One result we was The affected things one couple didn't they the into. NovoCoat very big up the sales systems as Nelson, margin. don't OEM to They're that quarter. going excess thing combination products them release in would supply much our earlier. sales were as this quarter, unusually need. a high-margin gross complex, and that to that and basically with that, items. happened new had of a past these is --

efficiencies our line course. product that some And line, or or once say, there just of are reduction listen, reduce as could that ways so don't of X hey, will typically release for different manufacturing out where most months some product But we a that with to affect parts process in costs lines, of quality, follow which product we in over build that costs, things you some with different there. can things we'll make

things think say, bound of to addition to margins in I there'll here will I simultaneously just help operational that So of will leverage some be the some occur happen, point would couple do that that future, see that we're a in general here. at

Nelson Obus

grow in a last I By Look, should one practically to margins ramp incredible that, last course, your capacity mean, ramp-up sales. be have gross that ability in into XX%. helpful. of way, Very in question, big What's of your question. ramp revenues? It's you utilization? held But heck the at you this happy sales. a I the mean, physically do had you

R. Harshbarger

Yes.

the X fortunate in industrial to And year with get within think existing moving of in or right to the we're leases after get those those million into mid-XXs the coming million, tenants, able so existing the our We up is revenue be of within complex, remaining those that which tenants shortly other facility out, can we right one maybe around have and X X we May short-term X is this we're of facility. up them on buildings then existing which $XX now, the then should And to -- of our $XX that. here, one area. X is that million bought now. buildings $XX we we which the that of buildings, Within

further for start expansion. now that existing we space our mid-XXs right to revenue? complex into Now we that, But thinking we beyond go have least at get once within will to enough have about up

Operator

Nicklin. comes question Next The Bill from

William Nicklin

Thanks.

we you're really shareholder your perspective, You appreciate all guys working be because sacrifice. sick. From a hard must

gross quickly to about just margin I running back anyway, So touch you've because the thing XX%. on been want

machines, the also production have larger the doing and now which more spare parts associated order service. You're with

seemed were margins your have analysts So -- their that the which, in margin, above them me which there. in the is think stay out to high as keeps as models it XX% they ought therefore, I past, to

am So missing something? I

R. Harshbarger

You bring up a good point Bill. there,

areas starting just into stream in now field, are is high our these finding out ASP from revenue we're there And us XX% we obviously the both margin to we're that of service those to buying very roll parts extra customers for machines for areas. packages. XX% large the that revenue that One the send contracts or spare are

a Now will these start dollar it should only that increase, today, start of to should fleet much significant starts have as But are lines plus in stream. we where of significant handful it a we revenue high-margin be stream to to machine million revenue a become out more there and coming see that operation.

don't that. in It's of or that's the for those this thing, maybe buy going XX XX, recurring the put service -- every to X it's stream, a years revenue take machine the life But that something and year, some too. out of for the year an like of kind field, we recurring It's they more time more just build. to not contracts

definitely impact from our should way. a that So positive margins

William Nicklin

going equipment expect recent something anomaly Is this order. or that Second see has to legs? question. This production something you an is forward, this

R. Harshbarger

of the now, got it's machines so that They've these immediately that there's, is production. are an high-volume private for to the established I certainly have government they high-volume from production. and an should transitioning either many don't too, a line these And all say, right clean in pilot sector. in that industry, There's sector to energy anomaly R&D customers I process scale. sudden energy money complementing the initiatives found all to of in our initiatives with the scale think now particular, green government

high-volume that's do a been over backing transition that customer say, never had make they've they a a for base to "I'm but customer financial to the now. of that time. base long to huge ours, but we've had going production," And It's

continue, should outside industry easy it's sectors. of that industrial sector so semiconductor all are come. the for or they're to So customers. or "Well, us. I But many to are have whether now. customers growing scale we you in sector our have they're are energy high-volume so across say, ago, sector, but for just sectors volume, energy years and that production or green that that then the anticipate And clean may capabilities the other buying sector, area the and energy ability anticipate but you existing have public scaling already to the happens medical now." So it's the you can to do to X that both now say, with the any right It in-house to once it's for us new super not of, are also technical them, once There's continue heard it continue whether companies to hot companies we green in that be that for sector will right most scale for sector, for is that to do high saying, some we high you I really time volume also, throughput, X

William Nicklin

that of second on orders. heard part of one I you're the your large

many to your that already your If for into what pipeline appetite out you sales customers do maybe having you backlog? look funnel of behind in instances or in call see these multiple got beyond or machines whatever an it some want you same it, you've

R. Harshbarger

Yes.

needs beginning of their them requirements. their indicated requirements of For ultimate high for throughput the machines, are at are come machines large that production phases our these existing doesn't have platform to of ASP that they couple purchasing all meeting a customers anywhere close

other manufacturing those we're for from follow-on that optimistically So customers anticipating to we'll sales see continue. lines

William Nicklin

another then And a kind right. All general question. of

it fit is has about seems their the such customers, dramatic Sono-Tek It that part transition transition. a if that and even business. more transition? your solution What an You're of you're is me their making critical to your talking in customer

R. Harshbarger

or we Yes. their transitioning our successful I critical to with system your when solutions was guess are provide are through solutions. and we're question the transition Sono-Tek aspects important our word word of that the the partner all entails guiding customers to need new with coat coding what you What just them vitally used customers different a our to full to in solutions products.

we're Sometimes, providing coding providing a likely all of combination software complex of together. equipment more new even the or these ultrasonic handling application the solution engineering or proper with expertise or parts or

customers, when process. very we're at often you're the transition forefront, itself by really default Sono-Tek these customers finds technology-based these with So through almost products, where guiding next-gen a working days, introducing

of it Some had that such as next-gen energy on on clean our other now it. prior quoting sector. coating seeing In product may a product never customers what we're a be cases, to transitioning the a that's their in requires from functional

Our simply have Sono-Tek the transition going they're customers transitioning our it's are using as that a customers defined And with really already transition and simultaneously. Sono-Tek customers may to well from both us. that Sono-Tek high-volume coating actually Corporation just production process going is through machinery through machinery the as

We're to base. the growing simultaneously organization of customer transitioning meet capabilities our our expand needs our to

transition So guide quoting of focused machines. around to it film of the But to Sono-Tek all question, want it's at swing product customers that they really deliverables critical to create thin necessary ever to day, through customer them what we're the the of the manufacture. multitude our Sono-Tek but the desired long-winded, the back is to end I it's providing on was original kind know that to your that a providing

William Nicklin

right. All Right.

that that different some there's transitions you in different several across industries think transitions, are commonality markets here but really see. I many heard I is place taking these what there So or

R. Harshbarger

That's There correct, exactly really is. Bill.

Christopher Coccio

engineering. overall to up factory a in and aspect being ends and I just I our it If get in different a mean product Bill. even systems both common the market segment. of comment, if lot engineering The way is -- shows the might it business, up our a going

So that. advantage we're of people. a taking We're of hiring lot

that As we'll for systems the I go hardware mentioned, integration, we we the think and skills as us that be and software to have will do great asset a forward. that integration

William Nicklin

folks had a final specific mini TV a question. on line, an basic transition And final around seem product. if before true, would taking like of kind bit you And that come is little whole this out with to fluxing early it It And something as your down a one there? place industry. participation that's product some know would question display might I'd and the about far to and I which And where fluxing LED you displays new affecting there. see road me it have the question business mentioned, one in you you've is how the that's

R. Harshbarger

area, people applications. area are Sure. competitive of getting an have more would machines are is is an coating there's a to the monitors that that and exploring can area to reasons in LED. that that's we to -- actively that and but area. participate always Sono-Tek for that certainly come. And that that these it And And in technology next-gen be some area definitely there sold for areas. kind days, going micro not that high-tech of lot use on TVs participating out a in is detail into anticipating We is in. anxious much which is area, received some some This new what we're most press it's too particular are to processes I'm in there orders go machines

Operator

next comes Ted Northland. The of Jackson from question

R. Harshbarger

Hey, Ted.

You there.

Edward Jackson

on? going is What

R. Harshbarger

Ted. now, got you We

Edward Jackson

just on back investing little need for and you're I what should And Okay. I'm some a year say, so OpEx how just But you going was in fiscal my thing. have least the about the business, it's to, quite -- to expectations. throw to going provide little start the against weedy next. wall. think to this can color relative my half and Anyway, that phone I'm obviously, you I'd of -- that's the up But with a do. bit to at a

R. Harshbarger

was area high the was grew that Yes. the ASP certainly I that solutions right the upon based platform custom anticipating it we're and -- our a most, are OpEx going engineered trend. of doing continuing of now. these And certainly so many more mean that be result large coating to we

mechanical support get to to had staffing of we on engineered as And the complex infrastructure those future order as and needed areas up that all machines. area, engineer of sales so occurred the beef guys, beefed IT programmers well in growth to the in these and up both mostly really has custom is the that EEs what area

to investment there that. support that's So a We big made done. what we've

growing And we We customers customer complex we in don't to us them is large for these that we we we away. doing would that the -- want are want those only see say, to area. -- turn base that able projects. to because to And take be can on

capability personnel have the that. to and We do the

saw you So that the was increase there. big

Christopher Coccio

that Steve be equipment equipment product but because But controls different and need equipment the call additions concentration types would line with in both engineering from adding of really it, also the mentioned, smart systems customer's line engineers. to supply as the going our I is of -- is manufacturing one. straightforward within we and say things to We're the let's integrated Yes.

So the we that addition had previously some had. skills requires that other not of

let's of customers based basically plants would out of And and big We lot controls. PLC controls, a digital sell, there of those call type our types computers. it, Microsoft have

moving market. we we're access a And that much because bigger in so can direction as well

you of will, But yes, forward justify plenty at it. those going sales whole if upfront in costs, look picture, there's you of So terms if the to hiring.

So that's what doing. we're

Edward Jackson

of line, obviously guess XXXX. times Yes. I wage think tick it's in think I all. to don't understand that And the couple you just and want just very I'm a mean, you've I a to more I and that investment. an at at then had about is up now need a pressure, of appropriate I where there expenses result how hiring. I which operating had of asking that's kind as question of kind in that still much been

higher expect -- think growth? it have still coming of should another base, we be it investing about little Now is I to And a normalized that that Or a it kind like you of is size quarters? more the is going in? back in sort something you're to saying pickup this good as

R. Harshbarger

to as that looking capabilities. because growing, haven't to it always over rate you but and quarter, done just expand it this wouldn't organization, at there looking growing think be going do next we're always develop that an the upon think past -- our we I will I to growing same I thing be be yet, that saw and don't anticipate we're that will we

required we're be I be to that that's see the as continued growth support path going down that long of to organization, customer growth heading sector to will As able base be the the one growing.

Edward Jackson

more in stuff Okay. delayed robustness, and both half had curious And regards applications the them. last business Then that financials of to robust from that some some much within medical to with quarter at maybe kind it been And more areas, of was specific the you look for growthy has Alta I'm that buckets from was of impacting When and energy of been a year? of very color then the like recently how questions. that second of fun both of since won? of drove the And those that's also some the how terms the much revenue. you

R. Harshbarger

earlier. We new and at Got had into Yes. about us. it's was was you. stuff was that. probably And ship -- then It What that out -- things we hoped was coming were XX-XX split. what just that looking to

past they that medical simple So but customers they're that medical systems, aspect, they this systems, systems shipped medical a new systems these recognize which now us we as all to devices, quarter returning were these companies the -- new a to one where we're multinational implantable the of buying company application more just medical. and our device our for coating just lot complex were for systems that device not from our for big stent primarily as far really now split

that, is medical alternative device and you happening. should know And if to want that's that They hey, be it's you considering. good Sono-Tek a coat what's it, any

industrial they've And a But, done development engineers lab know and in that their many Sono-Tek, these expert the medical. The big don't saying, ones for their in us more work you quoting and companies, customers, device we but medical those are whether to for can." that large takes "Hey, before. to application primarily returning us sold So they're impact -- they're existing we that the as with but And of figure want of from help beginning at just to platforms? platforms this us lot to new back was look of out, define arm we for were never the people these guys that basic old to were they're processes. is help new that us coming they're upgrading us applications

Edward Jackson

film there? Alt the that clean more thin of permanent in is kind that about that on it capture? Is asked delivery energy. I I've more of panels? Is But Actually mean, hydrogen? terms more Is

R. Harshbarger

future very and dive years some and for for film ago, thin this kind because some in critical still are us solar companies in hydrogen the quarter increasing for was the Got well you. turn focused been been capture that in exciting believe. good we've area our made and of we shipments that doing up this The has generation. the the of in very, used drastically membranes past green down more backlog took went But solar that's carbon partnerships there area, profitable towards a are existing that are thin multiple more a fairly heading but cells, forward, that area, and very systems coating film fuel

Edward Jackson

very you exciting, out is, me perspective, and from kind last the get Last already Steve. about of there's and Can some rest touched makes the line not exactly just That like question. one if fiscal give quarter be That's really the year, on will comprises good really I feel that of it It really application what up year. next you would but then color a quarter backlog? an the left strong in all question, very backlog and exciting. of my

R. Harshbarger

mixed. fairly It's Sure.

just well coming to as that's are machines. company's with sector. the companies say, again, where new clean in the production combination production going there's companies and in machines. the should seeing And most much brand to a of activity just R&D heavily for However, high-volume transition in is high-volume energy coming machines still we're asking so to weighted And be certainly that the lot to I transitioning

be potential able really that to And if in the see down sector transition it the now. companies these just successfully don't I to all at But far years into place is that next like maybe mean, I So several for slowing through high-volume that's and production sure. area a high-volume upside beyond. strong least good it. way right very for the seems

Operator

Ridge from comes question Ryan Dick next with The Oak Financial.

Richard Ryan

another just there. in Steve, then like -- guys. on There's And quarter, $X.XX in sounds the strong back is a a $X.X the million circle backlog. on there. Congratulations million look, there's

timing backlog. kind that's and the of Are XX% So other the plus of of how should that backlog being there systems backlog delivered? at that million-dollar in look we any

R. Harshbarger

backlog selling few There and XX be year delivered the either next Yes, XX fiscal to close, what's dollar year. more or that's hundred It's to we kind that be good way. XX-XX common year. the becoming split most for ballpark, it's the X these guess be type which this is plus maybe those next about several year, are going in in it's be are machines. this that had a to right going for us fiscal fiscal Is now XX-XX what's area, if thousand now, shipping The shipping next those orders a $XXX,XXX-plus to this backlog somewhat between good existing machine of year are orders fiscal presently. is going of be a which significant in backlog are to other split to year? going and

and quite a time But of months many XX build because it's planned cases. X, can complex in for a machines of pretty year the takes some good large while. these They chunk that's already take delivery next fiscal

Richard Ryan

to if Sure, labs? sure. how so, quantify your or months your that picking up. that, to into I you and your into how labs kind -- feed it, what's of your versus want Can the looks don't now tying maybe about And book talked describe probably care the if book? but you quotation ago would and activity you you in X traffic traffic mean quantify quote the also. is that coat does

R. Harshbarger

thing rate public, out quotes is say will the I that the don't We quotes increasing. to the one but is quantify on the closure

we're that for higher increasing year, out quotes to, say, is are percentage ASPs. -- values and compared the higher than machine the dollar a the So typical quoting actually last buy

in. -- The laboratory every the we're week, to what's right just try It's next that's significant find facility jampacked space to bring now. So there. the to trying person is always

booked probably at that now, expand point it's we've think lab probably I to the again lab several X some have accommodate or and at expanded challenge our but we'll some the X here growth we're times -- right we'll months, experiencing. out point that we're now, a to

Richard Ryan

One Okay. one. last

you when production, You X you kind have that to we or levels customers talked about your Alta seeing Energy years? some this customers X digits higher broaden. there? list are X, you're can I really next of Or R&D with of moving that from legs mean approaching few look are out dealing thing the double over

R. Harshbarger

actually that is to right quoting customers customers but machines where seeing not becoming What as have of now forefront, that to yet, far right just another two, as to now, delivered behind we're we're double wave a -- there's high. there. the but delivering already very production the really there them for at the were as our which they're digits, whole it's transition far But the made expand, are high-volume still As customers have it's or a those heading that volume. doing systems in activity handful high are this super customers

group optimistically here will as that of transition future in the point that, we're well. So thinking customers at some

Richard Ryan

one. had Okay. I last I one guess

to there grow is solar. about kind that -- how you was What or its from an hay to day there? big You historically, And for back get of talked level solar guys? in opportunity

R. Harshbarger

$X crashed, were before think million was about or so was XX was Yes, company, it way ago, smaller time, XX solar ago, Sono-Tek which -- solar significant. that the doing there, we million years at a that's years of I I $X think

us. I lever that, million XX% isn't million sales or going think know, that now of our the something like to $X but was, I for really or shift don't $X significantly

not And machines potential. that is machines reason production larger much selling be it We're $X $X existing primary world. difference solar communicating would in disappointment with, than high-volume makes ASPs, that. be that I was has The a the R&D think or the there million customer It anticipate mean, we I the us. larger It anymore. for only and selling we're all with million we are high big significantly base to now

Operator

This turn for the closing now would to over call any to concludes I our Coccio Chris question-and-answer back like session. remarks.

Christopher Coccio

All today. you, joining right. everyone, Well, thank thank us you, and for

before initiatives you fiscal based our contact Sono-Tek's questions strong We if have in call to the clean and that safe. us and our forward on stay next success outlook ongoing with look May. XXXX next directly high-tech any markets. Do well energy results Please them. our review is platform will year-end

Operator

Thank you participation. has conference your now The concluded. for

disconnect your now lines. may You

Sono-Tek (SOTK) 12 Oct 232024 Q2 Earnings call transcript