Executive Summary

Q1 FY26 net sales were $5.13M (+2% YoY), gross margin expanded to 52% (+300 bps YoY), and operating income rose 103% YoY to $0.48M; diluted EPS was $0.03, up from $0.02 YoY .
EPS beat Wall Street consensus by $0.01, while revenue came in modestly below consensus by ~$0.11M; results reflect completion of a $2.95M advanced solar order and favorable U.S. mix; management highlighted a cautious full-year outlook given clean energy incentives and tariff uncertainty ; EPS/Revenue consensus data marked with * below (Values retrieved from S&P Global).
Guidance: First half FY26 revenue growth and strong profitability maintained; full-year outlook shifted to relatively flat revenue growth amid policy shifts; backlog stood at $7.5M at quarter end .
Stock narrative catalysts: margin expansion from high-ASP mix; continued backlog-driven shipments in H1; and an explicit EPS beat versus consensus, offset by tempered full-year revenue expectations .

What Went Well and What Went Wrong

What Went Well

Fifth consecutive quarter with revenue above $5M, supported by high-ASP integrated systems and U.S.-weighted mix; “we are pleased with the solid start…based on projected shipments…we anticipate the first half…to maintain revenue levels and strong profitability” .
Gross margin expanded to 52% (from 49% YoY) on favorable product/geography mix (high-ASP repeat order and lower distributor discounts/commissions in U.S.) .
Operating income increased 103% YoY, net income up 47% YoY as gross profit improved and OpEx declined; “Operating Income: Increased 103%…Net Income: Increased 47%” .

What Went Wrong

Electronics market sales declined 40% YoY (-$624K), partly due to a non-repeating semiconductor wafer handler sale in the prior year; EMEA and Latin America geographies also declined YoY .
Multi-Axis systems were down 75% YoY (-$1.99M) due to reduced North American sales tied to lower R&D funding in clean energy following government policy shifts .
Full-year outlook tempered: Management expects “relatively flat revenue growth” for FY26 given uncertainty around clean energy incentives and evolving tariffs (timing of orders) .

Financial Results

Revenue, EPS, Margins vs Prior Periods and Estimates

Metric	Q1 FY25 (oldest)	Q4 FY25	Q1 FY26 (newest)
Revenue ($USD)	$5,031,038	$5,121,000	$5,132,773
Diluted EPS ($)	$0.02	N/A (not disclosed in FY25 Q4 release)	$0.03
Gross Profit ($USD)	$2,454,487	$2,425,000	$2,664,514
Gross Margin (%)	49%	47%	52%

Results vs S&P Global Consensus (Q1 FY26)

Metric	Consensus*	Actual
Revenue ($USD)	$5,241,280*	$5,132,773
Primary EPS ($)	$0.02*	$0.03

EPS: Bold beat of $0.01 vs consensus; Revenue: slight miss of ~$0.11M vs consensus*.
Values marked with * retrieved from S&P Global.

Segment Breakdown (Q1 FY26 vs Q1 FY25)

Product Category	Q1 FY25 ($USD)	% of total	Q1 FY26 ($USD)	% of total	YoY Change ($)	YoY Change (%)
Fluxing Systems	$134,000	2%	$152,000	3%	$18,000	13%
Integrated Coating Systems	$747,000	15%	$3,054,000	59%	$2,307,000	309%
Multi-Axis Coating Systems	$2,664,000	53%	$677,000	13%	$(1,987,000)	(75%)
OEM Systems	$332,000	7%	$130,000	3%	$(202,000)	(61%)
Spare Parts, Services and Other	$1,154,000	23%	$1,120,000	22%	$(34,000)	(3%)
Total	$5,031,000	—	$5,133,000	—	$102,000	2%

Market Sales (Q1 FY26 vs Q1 FY25)

End Market	Q1 FY25 ($USD)	% of total	Q1 FY26 ($USD)	% of total	YoY Change ($)	YoY Change (%)
Electronics/Microelectronics	$1,568,000	31%	$943,000	19%	$(625,000)	(40%)
Medical	$857,000	17%	$809,000	16%	$(48,000)	(6%)
Alternative/Clean Energy	$2,282,000	46%	$3,248,000	63%	$966,000	42%
Emerging R&D and Other	$11,000	0%	$14,000	0%	$3,000	27%
Industrial	$313,000	6%	$119,000	2%	$(194,000)	(62%)
Total	$5,031,000	—	$5,133,000	—	$102,000	2%

Geographic Sales (Q1 FY26 vs Q1 FY25)

Region	Q1 FY25 ($USD)	Q1 FY26 ($USD)	YoY Change ($)	YoY Change (%)
U.S. & Canada	$3,091,000	$3,543,000	$452,000	15%
APAC	$513,000	$597,000	$84,000	16%
EMEA	$1,245,000	$897,000	$(348,000)	(28%)
Latin America	$182,000	$96,000	$(86,000)	(47%)
Total	$5,031,000	$5,133,000	$102,000	2%

KPIs and Balance Sheet Highlights (Quarter-End)

KPI	Q1 FY26	Reference
Backlog	$7.5M	At May 31, 2025
Cash, Cash Equivalents & Marketable Securities	$10.9M	At May 31, 2025
Debt	None	—
Stockholders’ Equity	$18.3M	At May 31, 2025
CapEx (quarter)	$52,000	Q1 FY26

Guidance Changes

Metric	Period	Previous Guidance (FY25 release, May 28, 2025)	Current Guidance (Q1 FY26, July 10, 2025)	Change
Revenue/Profitability	H1 FY26	Continued revenue growth and profitability expected	Continued revenue growth and strong profitability expected	Maintained
Full-Year Revenue	FY26	Visibility limited; to revisit after Q1	Relatively flat revenue growth anticipated amid clean energy/tariff policy shifts	Introduced cautious full-year outlook (effectively lowered vs typical growth expectations)

Earnings Call Themes & Trends

Note: Company holds two earnings calls per year (full-year and mid-year); no standalone Q1 FY26 call. Next call is mid-year (six months ended Aug 31, 2025) in October .

Topic	Previous Mentions (Q-2: Q3 FY25; Q-1: Q4 FY25)	Current Period (Q1 FY26)	Trend
Clean energy demand & policy	Q3 FY25: Alt/Clean Energy +42% YoY to $3.0M; backlog strong; evolving tariffs noted ; Q4 FY25 call: backlog $8.6M; 8 clean energy systems in backlog to ship H1 FY26; cautious on U.S. incentives, tariffs; EU/Asia supportive	Alt/Clean Energy +42% YoY to $3.25M; full-year outlook flat due to policy/tariff uncertainty	Near-term shipments solid; full-year tempered
High-ASP strategy	Q4 FY25 call: shift to large production systems; multiple $2.95M orders; integrated systems up 28% in FY25	Repeat high-ASP order ($2.95M) drove margin expansion; integrated systems $3.05M (59% mix)	Executing; margins benefiting
Medical devices	Q4 FY25 call: balloon catheter systems ramp; move to higher-value production systems; geography shift from China to U.S./EU	Medical –6% YoY; management still “promising demand” for high-volume systems	Mixed near term; positive medium-term
Semiconductors	Q4 FY25 call: new wafer handling partner; proposals increasing ASP from ~$300K to ~$850K	Electronics down 40% YoY; prior-year semiconductor sale didn’t repeat	Pipeline building; current comps tough
Tariffs/Macro	Q4 FY25 call: minimal tariff impact outside China; FX favorable in Japan/Korea; U.S. policy uncertainty	Outlook explicitly cautious due to clean energy incentives and tariffs	Persistent risk
Backlog/Shipments	Q4 FY25 call: $8.6M backlog; majority of 8 clean energy systems to ship Q1/Q2 FY26	Backlog $7.5M at Q1 end; continued H1 growth/profitability expected	Stable baseline demand

Management Commentary

Executive Chairman: “We…anticipate the first half of fiscal year 2026 to maintain revenue levels and strong profitability…our full-year outlook remains cautious…uncertainty related to governmental clean energy incentives and evolving tariff policies…” .
CEO: “We are proud to report our fifth quarter in a row of revenue over $5 million…As we stay focused on high ASP orders we are well positioned…to navigate potential short-term demand shifts…” .
Q4 FY25 call (context for Q1): “We’re seeing strong momentum in the medical device industry, particularly…balloon coating machines…We…expect continued revenue growth and profitability in the first half of fiscal 2026” .
Q4 FY25 call on semis: “Our first proposal…increased a machine…from ~$300,000 to around $850,000…we would not even have been in the running…without…increased capabilities” .

Q&A Highlights

Clean Energy Backlog Timing: Eight systems in backlog slated to ship in Q1/Q2 FY26; majority expected to hit P&L in H1 .
Tariffs Impact: Minimal outside China; FX moves in Japan/Korea favorable; customers not meaningfully deterred at present .
Medical Pipeline: Transition from stents to balloon catheters with higher-value production systems; demand concentrated in U.S./EU .
Semiconductor Strategy: Wafer handling partnership enabling entry into fabs with higher ASP systems (~$500K–$1M potential) .
Capital Allocation & CapEx: Active $2M buyback authorization; FY26 CapEx guide ~$430K vs ~$500K in FY25 .

Estimates Context

Q1 FY26 EPS: $0.03 vs consensus $0.02* → Bold beat on EPS .
Q1 FY26 Revenue: $5.13M vs consensus $5.24M* → Modest miss on revenue*.
Expectations may need to adjust: margin resilience from high-ASP mix suggests EPS revisions upward despite flattish full-year revenue narrative; monitor H1 shipment conversion and Medical/Semi order closures .
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Mix-driven margin strength: Gross margin expanded to 52% aided by high-ASP integrated systems and U.S.-weighted shipments, supporting EPS outperformance .
H1 visibility intact: Backlog-supported shipments and reiterated H1 growth/profitability underpin near-term confidence; watch backlog conversion cadence .
Full-year caution: Management now explicitly expects relatively flat FY26 revenue growth given clean energy policy/tariff uncertainty—bias estimates lower on top-line, hold EPS on margin resilience .
Medical ramp potential: Balloon catheter production systems and higher-complexity offerings in U.S./EU can offset clean energy variability medium term .
Semiconductor optionality: New wafer-handling capabilities broaden addressable market and raise ASPs, creating late-FY26/FY27 upside if orders close .
Order flow indicators: June 23 medical diagnostic $1.12M order highlights progress moving long-standing mid-size customers to larger automation platforms .
Risk monitor: U.S. clean energy incentives and tariff trajectory remain swing factors for second-half bookings; international demand (EU/Asia) currently more supportive per management .

Additional Documents Reviewed

Q1 FY26 8-K and press release including detailed product/market/geographic tables .
FY25 year-end press release and 8-K (context on H1 guidance and FY25 performance) .
Q3 FY25 press release (trend analysis) .
Other relevant press releases: $1.12M medical diagnostic order (June 23, 2025) .

Note: Sono-Tek typically hosts two earnings calls per year (full-year and mid-year), so there was no standalone Q1 FY26 call; the next call is the mid-year call in October .

SONO TEK CORP (SOTK)·Q1 2026 Earnings Summary