Sono-Tek Corporation Reports 3% Net Sales Increase, Decline in Net Income for Nine Months Ending November 30, 2024

Sono-Tek Corporation reported its financial results for the nine months ending November 30, 2024, revealing a net sales increase of 3% to $15.4 million compared to $14.9 million in the same period last year. The growth was primarily driven by a 63% surge in sales to the Alternative Energy market, which reached $7.7 million, up from $4.7 million. However, the company experienced a decline in net income, which fell 26% to $946,000 from $1.3 million in the prior year, attributed to decreased gross profit and increased operating expenses.

In the third quarter alone, net sales decreased by 9% to $5.2 million from $5.7 million year-over-year. This decline was influenced by reduced sales in the Industrial and Medical markets, particularly in the U.S. and EMEA regions. Gross profit for the quarter also decreased by 20% to $2.3 million, with the gross profit margin dropping to 45% from 51% in the previous year. The decrease in gross profit was linked to a less favorable product mix and a higher proportion of international sales, which typically carry distributor discounts.

Sono-Tek's operational metrics showed a strong backlog of $10.6 million as of November 30, 2024, slightly down from $10.7 million a year earlier. The company has been expanding its geographic reach, with sales in the Asia Pacific region increasing by 64% in the third quarter, driven by strong demand in South Korea and India. The company also reported a significant increase in cash and cash equivalents, which rose to $8.1 million from $2.1 million at the end of February 2024, reflecting improved liquidity.

Strategically, Sono-Tek has been transitioning from selling primarily ultrasonic nozzles to offering complete machine solutions, which has resulted in higher average selling prices. The company is also focusing on expanding its sales capabilities by increasing its direct sales force and establishing testing labs in key international markets. This strategic shift is expected to enhance product adoption rates and market share, particularly in the clean energy sector.

Looking ahead, Sono-Tek anticipates continued fluctuations in order flow and shipments, influenced by market conditions and customer demand. The company remains optimistic about its growth prospects, particularly in the Alternative Energy market, and is committed to leveraging its innovative technologies to drive future sales. Management noted that while challenges remain, the ongoing recovery in the Electronics/Microelectronics and Medical markets, along with strategic investments in R&D, positions the company well for future growth.