Sono-Tek Corporation (SOTK) Q1 2027: Revenue Growth and Margin Expansion — Positive Outlook

Sono-Tek Corporation (Nasdaq: SOTK) reported its financial results for the first quarter of fiscal 2027, ending May 31, 2026. The company achieved a notable revenue increase of $528,000, or +10% year-over-year, bringing total net sales to $5.66 million. This performance reflects strong demand in the medical sector, particularly for specialty stent coating systems and Drug-Eluting Balloon platforms.

Key Financial Metrics

• Net Sales: $5.66 million, up $528,000 or +10% YoY
• Gross Profit: $3.21 million, up $549,000 or +21% YoY
• Gross Margin: Expanded to 57% from 52%
• Operating Income: $897,000, up $414,000 or +86% YoY
• Net Income: $741,000, up $256,000 or +53% YoY
• Earnings Per Share (EPS): $0.05, compared to $0.03 in the prior year

Analyst View

This quarter's results are a positive development for shareholders. The significant revenue growth, coupled with an impressive expansion in gross margin and operating income, indicates that Sono-Tek is effectively executing its strategy of focusing on higher-value production systems. The 86% increase in operating income and the 53% rise in net income demonstrate improved profitability, which is crucial for long-term shareholder value.

The company's focus on the medical sector has proven beneficial, as evidenced by the strong demand for its products. The gross margin expansion to 57% is particularly noteworthy, reflecting a favorable product mix and higher-value system shipments. However, management has cautioned that this level of gross margin may not be sustainable in every future quarter due to fluctuations in product and geographic mix.

Operational Highlights

• Medical Sector Growth: The primary driver of revenue growth was the medical sector, with strong demand for specialty stent coating systems and Drug-Eluting Balloon platforms across the U.S., Europe, and Asia.
• Alternative Energy Decline: The company experienced a decline in alternative energy shipments, which partially offset the overall revenue growth.
• Investment in Growth: Operating expenses increased by 6% to $2.32 million, reflecting continued investment in sales, engineering, and business development initiatives.

Balance Sheet and Backlog

• Cash and Cash Equivalents: $16.65 million, up from $14.81 million at the prior year-end.
• Backlog: Increased to $7.73 million from $7.48 million year-over-year, although it decreased from $9.12 million at the end of fiscal 2026.

Future Outlook

Sono-Tek anticipates continued revenue growth in the first half of fiscal 2027, driven by strong demand in the medical sector and ongoing shipments of higher-value production systems. The company maintains its previous guidance of flat to modest revenue growth for the full fiscal year, primarily due to the timing of several large production platform orders.

Investors should watch for:

• Continued demand trends in the medical sector.
• The timing of shipments for higher-value production systems.
• Updates on backlog and order visibility, particularly in the clean energy sector, which remains uncertain.

In conclusion, Sono-Tek's first quarter results reflect a strong start to fiscal 2027, with significant growth in revenue and profitability. The company's strategic focus on high-value production systems, particularly in the medical sector, positions it well for future growth. Shareholders can remain optimistic as the company navigates the challenges and opportunities ahead.

Note: The following tables present amounts in thousands.

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Amounts in Thousands

	Three Months Ended	2026	2025
Net Sales	$5,661,159	$5,132,773
Cost of Goods Sold	$2,447,241	$2,468,259
Gross Profit	$3,213,918	$2,664,514
Operating Expenses
Research and product development costs	$616,982	$668,470
Marketing and selling expenses	$1,024,984	$858,151
General and administrative costs	$674,792	$654,525
Total Operating Expenses	$2,316,758	$2,181,146
Operating Income	$897,160	$483,368
Interest and Dividend Income	$114,624	$142,098
Net unrealized (loss) on marketable securities	($26,271)	($21,923)
Income Before Income Taxes	$985,513	$603,543
Income Tax Expense	$244,345	$118,558
Net Income	$741,168	$484,985
Basic Earnings Per Share	$0.05	$0.03
Diluted Earnings Per Share	$0.05	$0.03
Weighted Average Shares - Basic	15,713,185	15,733,955
Weighted Average Shares - Diluted	15,737,276	15,748,556

SONO-TEK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Amounts in Thousands

ASSETS	May 31, 2026	2026	February 28
Current Assets:
Cash and cash equivalents	$8,982,075	$7,339,403
Marketable securities	$7,669,872	$7,469,649
Accounts receivable (less allowance of $12,225, respectively)	$1,264,932	$3,350,953
Inventories	$4,063,132	$3,923,350
Prepaid expenses and other current assets	$659,518	$743,295
Total current assets	$22,639,529	$22,826,650
Land	$250,000	$250,000
Buildings, equipment, furnishings and leasehold improvements, net	$2,138,226	$2,173,443
Intangible assets, net	$27,892	$29,791
Deferred tax asset	$809,182	$1,141,611
TOTAL ASSETS	$25,864,829	$26,421,495
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$935,442	$1,038,885
Accrued expenses	$2,088,229	$2,227,401
Customer deposits	$2,006,896	$3,069,743
Income taxes payable	$147,984	$255,398
Total current liabilities	$5,178,551	$6,591,427
Deferred tax liability	$75,238	$55,909
Total liabilities	$5,253,789	$6,647,336
Commitments and Contingencies (Note 10)
Stockholders’ Equity
Common stock, $.01 par value; 25,000,000 shares authorized, 15,716,723 and 15,710,389 issued and outstanding as of May 31, 2026 and February 28, 2026	$157,167	$157,104
Additional paid-in capital	$10,282,508	$10,186,858
Accumulated earnings	$10,171,365	$9,430,197
Total stockholders’ equity	$20,611,040	$19,774,159
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$25,864,829	$26,421,495

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