Sono-Tek Corporation

What they do

Sono-Tek builds ultrasonic nozzles and generators that atomize liquids into minute drops applied at low velocity, forming thin, uniform coatings on parts and components. Products include Multi-Axis Coating Systems, Integrated Coating Systems, Fluxing Systems, OEM Systems and the Universal Align subsystem for integration into customers' own equipment. The company was founded in 1975, is headquartered in Milton, New York with manufacturing co-located there, and has a sales and service office in Singapore plus an application process development lab in Guangzhou, China.

Revenue drivers

• Integrated Coating Systems — Increased 91%, or $3.37 million, in fiscal 2026, driven by shipments of multiple high-average-selling-price production systems; machines often sell for over $300,000 and systems can exceed $1,000,000.
• Medical end market — Increased 54%, or $1.75 million, in fiscal 2026 on drug-eluting balloon coating, stent and diagnostic applications; in the first quarter of fiscal 2027, specialty stent coating systems and Drug-Eluting Balloon coating platforms drove net sales.
• Electronics/Microelectronics end market — Increased 16%, or $864,000, in fiscal 2026; the original applications of the technology were blood collection tube coatings and flux coatings for printed circuit boards.
• Fluxing Systems — Increased 53%, or $246,000, in fiscal 2026, applying uniform flux coatings to printed circuit boards.

Recent performance

Fiscal 2026 net sales were a record $20.9 million, up 2% from $20.5 million, with gross profit of $10.6 million and gross margin rising to 51% from 48%. Operating income increased $815,000 to $1.82 million and net income was $1.8 million, up 42% from $1.27 million. For the first quarter of fiscal 2027, net sales rose 10% to $5,661,000 from $5,133,000, and gross profit increased 21% to $3.21 million. Fiscal year-end backlog was $9.12 million, up from $8.67 million, and backlog at May 31, 2026 was $7.73 million versus $7.48 million a year earlier.

Strategy

Management is shifting the business from primarily selling ultrasonic nozzles and components toward complete machine solutions and higher-value subsystems sold to OEMs at higher average selling prices. R&D spending is directed at new coating applications and larger, more sophisticated machinery. The company is expanding its direct sales force and distributor network, and has testing labs at partner sites in China, Taiwan, Germany, Turkey, Korea and Japan plus a lab in New York. It also serves the clean energy sector in next-gen solar cells, fuel cells, green hydrogen generation and carbon capture.

Risks

• Customer concentration — One customer accounted for approximately 28% of net sales in fiscal 2026, up from approximately 11% in fiscal 2025, and the company expects sales to relatively few customers to remain a significant percentage of net sales.
• No long-term volume commitments — Most sales are derived from individual purchase orders with no firm long-term volume commitments, and orders may be delayed or cancelled with loss of deposit as the only penalty.
• End-market demand swings — Alternative/Clean Energy sales declined 19%, or $1.86 million, in fiscal 2026 due to reduced electrolysis-related demand tied to government policy changes, and Multi-Axis Systems fell 25%, or $2.62 million, for the same reason.
• Geographic and geopolitical exposure — Approximately 33% of fiscal 2026 sales originated outside the United States and Canada, exposing results to tariffs, political and regulatory developments, and international hostilities cited in the company's forward-looking statement factors.

Outlook

Management cites growth in the Medical and Electronics/Microelectronics markets and a record fiscal year-end backlog of $9.12 million. It expects wide quarter-to-quarter variation in order flow and shipments as systems grow in size and price. The company's risk factors also reference a rebound of sales to the industrial market in the second quarter of fiscal 2027.