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SONO TEK CORP (SOTK)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 net sales were $5.163M, flat year over year (+$0.001M) and up sequentially from $5.13M; gross margin rose to 50% (49% prior-year) and diluted EPS was $0.03, with operating margin at 8% and net margin at 8% .
  • Management raised full-year FY26 guidance slightly to “modest revenue growth” (from “relatively flat” after Q1) amid clean energy policy/tariff uncertainty; backlog increased 50% sequentially to $11.21M, supported by strong medical device orders .
  • Two large medical orders announced: $5M MediCoat systems (deliveries begin CY2026 over ~12 months) and a separate >$2.8M ExactaCoat MD order (deliveries beginning early CY2026 through 1H CY2026), reinforcing momentum in medical devices .
  • Versus S&P Global consensus, Q2 EPS beat ($0.03 vs $0.025*) while revenue slightly missed ($5.163M vs $5.246M*); management cited product mix and lower OpEx as EPS drivers, while in-line systems were delayed to Q3 by a customer .
  • Geographic mix shifted: U.S./Canada down 22% y/y while APAC +153% and EMEA +25%; medical sales +150% y/y to $1.00M, offsetting clean energy softness and a non-repeat industrial order .

What Went Well and What Went Wrong

What Went Well

  • Medical market strength: Q2 medical sales +150% y/y to $1.004M, with balloon catheter systems shipped to the U.S., Europe, and China .
  • Margin performance and profitability: Q2 gross margin increased to 50% (49% prior-year); operating income up 47% to $421K and net income up 24% to $424K due to higher gross profit and lower OpEx .
  • Strategic wins: Announced $5M MediCoat and >$2.8M ExactaCoat MD orders, broadening high-ASP opportunities and validating medical device strategy; “We continue to see the success of our growth strategies with customers moving into complex large-scale production systems…” — CEO Steve Harshbarger .

What Went Wrong

  • U.S./Canada weakness: Q2 sales down 22% y/y (-$775K) due to slowing U.S. clean energy momentum .
  • Industrial decline: Q2 industrial sales down 68% y/y (-$517K) on non-repeat of a large FY25 European glass coating order .
  • In-Line Coating Systems (formerly Integrated) down 24% y/y (-$493K) on a customer-requested delivery delay in clean energy, shifting shipments into Q3 .

Financial Results

Summary vs prior periods and consensus

MetricQ4 FY25Q1 FY26Q2 FY26 (Estimate*)Q2 FY26 (Actual)
Revenue ($USD)$5.121M $5.133M $5.247M*$5.163M
Diluted EPS ($USD)$0.02 $0.03 $0.025*$0.03
Gross Margin (%)47.0% 52.0% —50%
Operating Margin (%)5.6% 9.42%*—8%
Net Margin (%)6.4% 9.45%*—8%

Note: Asterisks indicate values retrieved from S&P Global.

Product Category Breakdown (Q2 yoy)

Product Category ($USD)Q2 FY25Q2 FY26
Fluxing Systems$119,000 $165,000
In-Line Coating Systems$2,023,000 $1,530,000
Multi-Axis Coating Systems$1,931,000 $2,030,000
OEM Systems$205,000 $394,000
Spare Parts, Services & Other$884,000 $1,044,000
Total$5,162,000 $5,163,000

End Market Breakdown (Q2 yoy)

End Market ($USD)Q2 FY25Q2 FY26
Electronics/Microelectronics$1,477,000 $1,455,000
Medical$402,000 $1,004,000
Alternative/Clean Energy$2,498,000 $2,433,000
Emerging R&D and Other$30,000 $33,000
Industrial$755,000 $238,000
Total$5,162,000 $5,163,000

Geographic Breakdown (Q2 yoy)

Geography ($USD)Q2 FY25Q2 FY26
U.S. & Canada$3,495,000 $2,720,000
APAC$368,000 $930,000
EMEA$1,136,000 $1,424,000
Latin America$163,000 $89,000
Total$5,162,000 $5,163,000

KPIs and Balance Sheet

KPIQ1 FY26Q2 FY26
Backlog ($USD)$7.48M $11.21M
Cash, cash equivalents & marketable securities ($USD)$10.9M (as of 5/31/25) $10.6M (as of 8/31/25)
DebtNone None
CapEx$52K in Q1 $113K in 1H FY26; FY26 expected ≈$300K
Consecutive quarters >$5M revenue5 6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growthFY26“Relatively flat revenue growth” “Modest revenue growth” Raised slightly
CapExFY26—≈$300K expected New specificity
Backlog conversion timingFY26–FY27—Majority of $5M and >$2.8M medical orders ship in FY27; ~10–15% in FY26 Clarified timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25, Q1 FY26)Current Period (Q2 FY26)Trend
Medical device momentumPromising demand for high-volume medical systems; strategy to pursue high-ASP production platforms Medical sales +150% y/y; $5M MediCoat and >$2.8M ExactaCoat MD orders announced Accelerating
Clean energy policy/tariffsVisibility limited; cautious outlook; clean energy drove Q1 revenue via high-ASP shipments Guidance raised slightly but caution persists; alt/clean energy -3% y/y in Q2; 6 high-ASP solar systems shipped in 1H Mixed/moderating near term
Semiconductor initiativesFY25 highlighted clean energy; limited semi color in PR Best ever semicon trade show; expanding into 300mm fab environments; higher-ASP, more complex systems pipeline Building
Forward deployed engineering (FDE)Not highlighted previouslyDetailed FDE model explained; deeper customer embedding, faster adoption, pricing power, margin expansion over 1–2 years Emerging/positive
Geography mix shiftQ1: U.S./Canada +15% y/y; EMEA -28% y/y Q2: U.S./Canada -22% y/y; APAC +153% y/y; EMEA +25% y/y Shift toward APAC/EMEA

Management Commentary

  • “We are… raising guidance slightly, now anticipating modest revenue growth, taking into consideration evolving governmental clean energy incentives and tariff policies… offset by growing demand in the medical device market.” — Dr. Christopher L. Coccio, Executive Chairman .
  • “Customers [are] moving into complex large-scale production systems with significantly higher average selling prices ‘ASPs’… growing adoption by leading medical device manufacturers worldwide.” — Steve Harshbarger, CEO & President .
  • “Gross profit percentage increased to 50% due to… mature high ASP systems with reduced costs and favorable warranty expenses… OpEx decreased… Operating income increased 47% to $421,000.” — Stephen J. Bagley, CFO .

Q&A Highlights

  • China medical wins despite copycat competition and tariffs: Chinese manufacturers chose Sono-Tek for quality-critical applications (balloon catheters), paying 3–4x domestic alternatives; advanced systems shipped to China are a generation behind proprietary U.S. platforms .
  • Forward deployed engineering: Embedded engineers accelerate adoption, lower customer acquisition costs, deepen account penetration; KPI focus on percent of revenue tied to lab/application work (~60–70%) and high-ASP systems (~two-thirds of sales); margin expansion expected over 1–2 years .
  • Semiconductor outlook: Strong lead generation and addressable market expansion at SEMICON; strategic push into 300mm fab environments with higher-ASP systems and partners .
  • Backlog timing and H2 phasing: Majority of recent $5M and >$2.8M medical orders ship in FY27; Q3 likely slightly higher than Q4 due to Q2-delayed clean energy system .

Estimates Context

  • Q2 FY26: EPS beat ($0.03 vs $0.025*) and revenue slight miss ($5.163M vs $5.247M*); EBITDA came in ~$0.581M vs ~$0.616M* .
  • Q1 FY26: EPS beat ($0.03 vs $0.02*), revenue slight miss ($5.133M vs $5.241M*) .
  • FY26 consensus implies ~$20.65M revenue* and ~$0.105 EPS*, consistent with “modest growth” guidance .

Note: Asterisks indicate values retrieved from S&P Global.

MetricQ1 FY26 Estimate*Q1 FY26 ActualQ2 FY26 Estimate*Q2 FY26 Actual
Revenue ($USD)$5.241M*$5.133M $5.247M*$5.163M
Primary EPS ($USD)$0.02*$0.03 $0.025*$0.03
EBITDA ($USD)$0.499M*~$0.637M*$0.616M*~$0.581M*

Note: Asterisks indicate values retrieved from S&P Global.

Key Takeaways for Investors

  • Medical device momentum is now a core growth driver; two multi-million-dollar orders broaden high-ASP pipeline and support backlog strength into FY27 .
  • Near-term growth is modest, but margin profile is improving on product mix and cost discipline; Q2 GM at 50% and lower OpEx supported EPS beat .
  • Clean energy demand is uneven amid policy/tariff shifts, but shipments of high-ASP solar systems in 1H and diversified end-market exposure mitigate risk .
  • Embedded engineering and 300mm semi expansion should raise win rates, pricing power, and ASPs over the next 1–2 years; watch for margin expansion and repeat systems .
  • H2 FY26 phasing: Expect Q3 slightly above Q4 as a delayed clean energy system shipped; majority of large medical orders contribute in FY27, setting up a stronger forward year .
  • Geographic pivot: APAC/EMEA growth is offsetting U.S. clean energy softness; sustained traction in China medical despite tariffs underscores competitive moat .
  • Actionable: Position for EPS resilience driven by mix/OpEx control, monitor medical order flow conversion, and track semi platform announcements for incremental TAM expansion .