Sono-Tek (SOTK) Q2 2025 earnings summary

Executive summary

• Achieved record first half revenue of $10.2M, up 10% year-over-year, and net income of $672K, up 13% year-over-year, reflecting operational improvements and higher sales.

• Q2 revenue of $5.2M decreased 8% year-over-year but increased 3% sequentially, meeting guidance and driven by clean energy and electronics shipments.

• Record backlog of $11.7M, up 7% year-over-year and 26% from year-end, led by large clean energy sector orders.

• Strategic shift to larger, high ASP, production-scale systems in clean energy and advanced electronics is fueling growth.

• Strong sales momentum expected to continue, with further acceleration anticipated in FY2026 as more high ASP systems are delivered.

Financial highlights

• First half FY2025 net sales increased 10% to $10.2M; Q2 net sales were $5.2M (down 8% year-over-year, up 3% sequentially).

• Gross profit for the first half rose 9% to $4.97M; Q2 gross profit was $2.5M (down 10% year-over-year); gross margin for Q2 was 48.7%-49%.

• Q2 operating income: $286K (down 49% year-over-year, up 20% sequentially); first half operating income: $524K.

• Q2 net income: $341K ($0.02/share), down from $541K; first half net income: $672K ($0.04/share), up 13%.

• Strong cash position: $11.6M in cash and marketable securities, no debt; working capital increased to $12.95M.

Outlook and guidance

• Expects continued sales growth and profitability for the remainder of fiscal 2025, supported by record backlog and strong demand in clean energy and electronics.

• Significant backlog for next fiscal year, with $6M in large clean energy orders scheduled for FY2026.

• Anticipates further acceleration of growth in FY2026 as more high ASP systems are delivered.

• Management expects balloon coating system sales to recover in the second half of FY2025 based on backlog and order activity.

• Anticipates capital expenditures of ~$460K for FY2025, focused on manufacturing upgrades.