Fiscal second quarter and first half 2027
Filed Oct 14, 2026First-half net sales increased 6% to $10.89 million and gross margin expanded to 55%, led by 289% medical-market sales growth; fiscal 2027 outlook for flat to modest revenue growth was reiterated.
First-half revenue, gross profit, operating income and net income increased, supported by medical demand and favorable mix, but second-quarter revenue rose only 1% while operating income and net income declined year over year. The company reiterated flat to modest full-year revenue growth despite a higher backlog and subsequent fiscal 2028 orders.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net Sales — Three Months Ended August 31, 2026GAAP | $5,232,153 | – | 1% |
| Gross Profit — Three Months Ended August 31, 2026GAAP | $2,766,855 | – | 7% |
| Gross Margin — Three Months Ended August 31, 2026GAAP | 53% | – | – |
| Cost of Goods Sold — Three Months Ended August 31, 2026GAAP | $2,465,298 | – | – |
| Research and product development costs — Three Months Ended August 31, 2026GAAP | $679,160 | – | – |
| Marketing and selling expenses — Three Months Ended August 31, 2026GAAP | $1,000,747 | – | – |
| General and administrative costs — Three Months Ended August 31, 2026GAAP | $705,417 | – | – |
| Total Operating Expenses — Three Months Ended August 31, 2026GAAP | $2,385,324 | – | – |
| Operating Income — Three Months Ended August 31, 2026GAAP | $381,531 | – | (9%) |
| Operating Margin — Three Months Ended August 31, 2026GAAP | 7% | – | – |
| Interest and Dividend Income — Three Months Ended August 31, 2026GAAP | $153,936 | – | – |
| Net unrealized (loss)/gain on marketable securities — Three Months Ended August 31, 2026GAAP | $(37,433) | – | – |
| Income Before Income Taxes — Three Months Ended August 31, 2026GAAP | $498,034 | – | – |
| Income Tax Expense — Three Months Ended August 31, 2026GAAP | $131,740 | – | – |
| Net Income — Three Months Ended August 31, 2026GAAP | $366,294 | – | (14%) |
| Basic Earnings Per Share — Three Months Ended August 31, 2026GAAP | $0.02 | – | – |
| Diluted Earnings Per Share — Three Months Ended August 31, 2026GAAP | $0.02 | – | – |
| Net Sales — Six Months Ended August 31, 2026GAAP | $10,893,312 | – | 6% |
| Gross Profit — Six Months Ended August 31, 2026GAAP | $5,980,775 | – | 14% |
| Gross Margin — Six Months Ended August 31, 2026GAAP | 55% | – | – |
| Cost of Goods Sold — Six Months Ended August 31, 2026GAAP | $4,912,537 | – | – |
| Research and product development costs — Six Months Ended August 31, 2026GAAP | $1,296,143 | – | – |
| Marketing and selling expenses — Six Months Ended August 31, 2026GAAP | $2,025,731 | – | – |
| General and administrative costs — Six Months Ended August 31, 2026GAAP | $1,380,209 | – | – |
| Total Operating Expenses — Six Months Ended August 31, 2026GAAP | $4,702,083 | – | – |
| Operating Income — Six Months Ended August 31, 2026GAAP | $1,278,692 | – | 41% |
| Operating Margin — Six Months Ended August 31, 2026GAAP | 12% | – | – |
| Interest and Dividend Income — Six Months Ended August 31, 2026GAAP | $268,559 | – | – |
| Net unrealized (loss)/gain on marketable securities — Six Months Ended August 31, 2026GAAP | $(63,704) | – | – |
| Income Before Income Taxes — Six Months Ended August 31, 2026GAAP | $1,483,547 | – | – |
| Income Tax Expense — Six Months Ended August 31, 2026GAAP | $376,085 | – | – |
| Net Income — Six Months Ended August 31, 2026GAAP | $1,107,462 | – | 22% |
| Basic Earnings Per Share — Six Months Ended August 31, 2026GAAP | $0.07 | – | – |
| Diluted Earnings Per Share — Six Months Ended August 31, 2026GAAP | $0.07 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Medical market sales — Three Months Ended August 31, 2026Led by shipments of balloon coating systems and specialty stent-coating systems. | $3,105,000 | – | 209% |
| Medical market sales — Six Months Ended August 31, 2026Driven by shipments of balloon coating systems and specialty stent-coating systems. | $7,050,000 | – | 289% |
| Electronics/Microelectronics market sales — Three Months Ended August 31, 2026The filing reports lower sales. | $1,204,000 | – | (17%) |
| Electronics/Microelectronics market sales — Six Months Ended August 31, 2026The filing reports lower sales. | $2,068,000 | – | (14%) |
| Alternative/Clean Energy market sales — Three Months Ended August 31, 2026The filing cites significant shifts in U.S. government policy and spending within green-hydrogen, electrolysis and fuel-cell applications. | $535,000 | – | (78%) |
| Alternative/Clean Energy market sales — Six Months Ended August 31, 2026The filing cites significant shifts in U.S. government policy and spending within green-hydrogen, electrolysis and fuel-cell applications. | $855,000 | – | (85%) |
| Industrial market sales — Three Months Ended August 31, 2026Influenced by a system sold to the defense sector for an optics-related application. | $385,000 | – | 62% |
| Industrial market sales — Six Months Ended August 31, 2026Influenced by a system sold to the defense sector for an optics-related application. | $915,000 | – | 156% |
| Emerging R&D and Other market sales — Three Months Ended August 31, 2026The filing reports lower sales. | $3,000 | – | (91%) |
| Emerging R&D and Other market sales — Six Months Ended August 31, 2026The filing reports lower sales. | $5,000 | – | (89%) |
| In-Line Coating Systems product sales — Three Months Ended August 31, 2026Strong medical sales in the United States. | $1,778,000 | – | 16% |
| In-Line Coating Systems product sales — Six Months Ended August 31, 2026The prior-year period included shipment of six high ASP systems valued at $4.42 million that did not repeat in fiscal 2027. | $3,937,000 | – | (14%) |
| Multi-Axis Coating Systems product sales — Three Months Ended August 31, 2026The filing reports lower sales. | $1,975,000 | – | (3%) |
| Multi-Axis Coating Systems product sales — Six Months Ended August 31, 2026Strong sales of specialty stent-coating systems to the U.S. medical device market. | $4,050,000 | – | 50% |
| OEM Systems product sales — Three Months Ended August 31, 2026Continued strong fluxing-system sales to a European OEM partner and strong semiconductor sales to an OEM in China. | $642,000 | – | 63% |
| OEM Systems product sales — Six Months Ended August 31, 2026Continued strong fluxing-system sales to a European OEM partner and strong semiconductor sales to an OEM in China. | $873,000 | – | 67% |
| Fluxing Systems product sales — Three Months Ended August 31, 2026The filing reports lower sales. | $27,000 | – | (84%) |
| Fluxing Systems product sales — Six Months Ended August 31, 2026The filing reports lower sales. | $119,000 | – | (62%) |
| Spare Parts, Services and Other product sales — Three Months Ended August 31, 2026The filing reports lower sales. | $810,000 | – | (22%) |
| Spare Parts, Services and Other product sales — Six Months Ended August 31, 2026The filing reports lower sales. | $1,914,000 | – | (12%) |
| U.S. & Canada geographic sales — Three Months Ended August 31, 2026Strong sales to the U.S. medical-device market, including the stent and drug-coated balloon markets. | $3,682,000 | – | 35% |
| U.S. & Canada geographic sales — Six Months Ended August 31, 2026Strong sales to the U.S. medical-device market, including the stent and drug-coated balloon markets. | $7,212,000 | – | 15% |
| Asia Pacific geographic sales — Three Months Ended August 31, 2026Lower sales in South Korea, Taiwan and Japan, partially offset by increased sales in China. | $507,000 | – | (45%) |
| Asia Pacific geographic sales — Six Months Ended August 31, 2026Lower sales in South Korea, Taiwan and Japan, partially offset by increased sales in China, including strong medical and semiconductor sales. | $1,244,000 | – | (19%) |
| Europe, Middle East, Africa geographic sales — Three Months Ended August 31, 2026Softer clean-energy sales in the region. | $952,000 | – | (33%) |
| Europe, Middle East, Africa geographic sales — Six Months Ended August 31, 2026Softer clean-energy sales, partially offset by strong sales to a European fluxing OEM partner and steady medical-sector sales. | $1,883,000 | – | (19%) |
| Latin America geographic sales — Three Months Ended August 31, 2026The filing states sales were essentially flat with the prior-year quarter. | $91,000 | – | 2% |
| Latin America geographic sales — Six Months Ended August 31, 2026Included a $242,000 medical system shipped to Costa Rica. | $554,000 | – | 199% |
Full fiscal year 2027 outlook
- Revenueflat to modest revenue growth
- NoteReflecting the timing of several large orders, growing demand in the medical device market and higher value production systems.
What drove it
- First-half medical-market sales increased 289% to $7,050,000, driven by balloon coating systems and specialty stent-coating systems.
- First-half gross margin expanded to 55% from 51%, primarily reflecting an unusually favorable product and geographic mix.
- First-half operating income increased 41% to $1,278,692, reflecting increased gross profit and operating leverage.
- U.S. & Canada sales increased 15% in the first half, driven by strong U.S. medical-device sales.
- The company cited higher-value production systems and growing medical-device demand in its full-year outlook.
Concerns
- Second-quarter operating income declined to $381,531 from $421,154 and net income declined to $366,294 from $423,693 despite net sales growth.
- Alternative/Clean Energy sales decreased 85% to $855,000 in the first half, reflecting shifts in U.S. government policy and spending in the clean-energy sector.
- First-half Electronics/Microelectronics sales decreased 14% to $2,068,000, while Asia Pacific and EMEA sales each declined 19%.
- The company expects flat to modest fiscal 2027 revenue growth because the timing of large higher-value production platform orders can increase quarter-to-quarter variability.
What to watch
- Execution and shipment timing for the three subsequent orders totaling approximately $7.19 million expected to ship during fiscal 2028.
- Whether the $9.51 million equipment and service-related backlog converts to revenue as planned.
- Sustainability of medical-sector demand as customers move from development into commercial manufacturing.
- Trajectory of clean-energy demand following policy and spending shifts.
- Whether favorable product and geographic mix continues to support gross margin.
Balance sheet and cash flow
- Cash and cash equivalents were $10,249,779 at August 31, 2026, compared with $7,339,403 at February 28, 2026.
- Marketable securities were $7,505,420 at August 31, 2026, compared with $7,469,649 at February 28, 2026.
- Cash, cash equivalents and marketable securities totaled $17.7 million at August 31, 2026, compared with $14.8 million at February 28, 2026.
- The company reported no outstanding debt.
- Combined equipment and service-related backlog was $9.51 million at August 31, 2026, compared with $7.73 million at the end of the first quarter of fiscal 2027, an increase of approximately $1.78 million, or 23%.
- Subsequent to quarter end, the company received three orders totaling approximately $7.19 million expected to ship during fiscal 2028.
Analysis
Sono-Tek reported a stronger first half, with GAAP net sales increasing 6% to $10,893,312, gross profit increasing 14% to $5,980,775, and gross margin expanding to 55% from 51%. Operating income increased 41% to $1,278,692 and net income increased 22% to $1,107,462. The company attributed the margin improvement primarily to an unusually favorable product and geographic mix, while it cited increased gross profit and operating leverage for the operating-income increase.
The second-quarter result was less robust than the first-half result. Net sales increased 1% to $5,232,153 and gross margin rose to 53% from 50%, but operating income declined 9% to $381,531 and net income declined 14% to $366,294. Higher operating expenses partially offset the gross-profit increase. Marketing and selling expenses were $1,000,747 versus $871,353 in the prior-year quarter, while research and product development costs and general and administrative costs were also higher.
Medical was the central growth engine. Medical sales increased 209% to $3,105,000 in the quarter and 289% to $7,050,000 in the first half, led by balloon coating and specialty stent-coating systems. Multi-Axis Coating Systems sales increased 50% to $4,050,000 in the first half, while OEM Systems sales increased 67% to $873,000. These gains offset severe declines in Alternative/Clean Energy sales, which fell 85% to $855,000 in the first half, and lower Electronics/Microelectronics sales. U.S. & Canada sales increased 15% in the first half, while Asia Pacific and EMEA sales each decreased 19%.
The balance sheet showed $10,249,779 of cash and cash equivalents and $7,505,420 of marketable securities at August 31, 2026, with no outstanding debt. Combined equipment and service-related backlog reached $9.51 million, up approximately $1.78 million, or 23%, from the end of the first quarter. Orders received after quarter end totaling approximately $7.19 million are expected to ship during fiscal 2028, increasing visibility beyond the current fiscal year.
Management reiterated its expectation of flat to modest revenue growth for full fiscal 2027. The stated outlook reflects the timing of several large orders, medical-device demand and higher-value production systems. The key reported tension is that first-half medical growth, margin expansion, backlog growth and subsequent orders are favorable, while the company still expects limited full-year growth and acknowledges greater quarter-to-quarter variability from large production-system orders.
Management, verbatim
Fiscal 2027 is progressing well, with solid first-half revenue growth, meaningful gross margin expansion and strong improvement in operating profitability. These results reflect disciplined execution across our operations and continued progress with our strategy of focusing on higher-value production systems in advanced technology markets, particularly medical devices.
Steve Harshbarger, President and Chief Executive Officer of Sono-Tek
We continue to maintain our previously communicated expectation of flat to modest revenue growth for the full fiscal year. This outlook reflects the timing of several large, higher-value production platform orders, which can result in increased quarter-to-quarter variability as these systems become a larger portion of our business.
Steve Harshbarger, President and Chief Executive Officer of Sono-Tek
The exceptional growth in our medical business demonstrates how our technology and application expertise are enabling customers to address increasingly demanding coating requirements in sophisticated medical-device applications.
Dr. Christopher L. Coccio, Executive Chairman
Not in the filing
stated, not guessed- Previous outlook section was not provided; therefore, no comparison of actual results with prior guidance is included.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- Dividends were not reported.
- Detailed full-year fiscal 2027 revenue range was not reported.
- Forward gross-margin guidance was not reported.
- Forward operating-expense guidance was not reported.
- Forward tax-rate guidance was not reported.
- Non-GAAP metrics were not reported.
- A reported income-tax rate was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.