Sono-Tek: fiscal 2007/8 earnings hit by slowdown

Sono-Tek Corporation announced sales on 3 June 2008 of USD 5,699,000 for the fiscal year to 29 February 2008, down USD 1,187,000 year-on-year from USD 6,886,000. The company attributed the fall to sof…

Sono-Tek Corporation announced sales on 3 June 2008 of USD 5,699,000 for the fiscal year to 29 February 2008, down USD 1,187,000 year-on-year from USD 6,886,000. The company attributed the fall to softness in some of its markets, particularly the North American electronics segment affected by a slowdown in the economy and the housing market. The decrease was offset to an extent by continued improvements in newer areas of business such as medical coatings, spray dryer equipment, and glass line coating equipment. Net income for the year was USD 11,000, compared to USD 544,000 for the previous fiscal year. The decrease is mainly a result of a decision to continue efforts to diversify business during the slowdown. According to Dr. Christopher L. Coccio, Sono-Tek“s chairman and CEO, “The reduction in current income is a direct result of investments in product and market development, and we expect to create future growth opportunities for the Company over the next year or two with these investments. We are focused on creating new business in the alternative energy market for fuel cell and solar cell coatings, medical device coatings, glass coatings, textile coatings, and food packaging coatings. We envision our future to be based on the ability of our ultrasonic spray systems to reduce the waste of energy, chemicals, water, and associated costs when compared to competitive nozzle systems. The 4Q did show a minor loss as we continue to invest in our business development efforts. We might see a similar loss in the 1Q of the current fiscal year, although we anticipate that our 1Q revenues will show an improvement when compared to the prior fiscal year”. Working capital decreased USD 442,000 to USD 3,790,000 at 29 February 2008 versus USD 4,232,000 at the end of the previous fiscal year. The decrease in working capital is primarily due to the purchase of equipment and leasehold improvements and the reclassification of USD 200,000 of current deferred tax asset to long term. Stockholders“ equity increased from USD 4,851,000 to USD 4,898,000 at 29 February 2008. The company has total debt of USD 52,000, resulting in an excellent debt to equity ratio. Some of the cash balance was used in the 4Q for the firm“s development program, but this use was offset by customer deposits for equipment orders and other factors. The company expects to use cash in the 1Q 2008, although the goal is to replenish the cash balance as new business increases revenues. Founded in 1975, Sono-Tek Corporation is a developer and manufacturer of liquid spray products based on its proprietary ultrasonic nozzle technology.