Sono-Tek Corporation (NASDAQ:SOTK) Q2 2024 Earnings Call Transcript

We want to be able to say we can take on these large complex projects. We have the personnel and the capability to do that. So that was the big increase you saw there.

Dr. Chris Coccio: Yeah, we’re adding different types of engineers, but I would say that Steve mentioned the concentration of additions is really in systems and controls engineering, because the equipment’s going from, let’s call it straightforward equipment to smart equipment, and things need to be integrated, both within our line that we supply, but also with the customers product line, manufacturing line. So that requires the addition of some other skills that we had not previously had. We would sell, let’s call it Microsoft based type of controls, basically digital computers and a lot of our customers out there in those big plans have TLC types of controls. So we’re moving in that direction as well, because we can access a much bigger market. So yeah, there’s upfront costs if you will in terms of hiring, but if you look at the whole picture, there’s plenty of sales going forward to justify it, so that’s what we’re doing.

Ted Jackson: Yeah, and I don’t question that at all. I mean, I think it’s very much an appropriate investment. I just want to more kind of understand, now that you’ve had a couple of times where you’ve had to put a – you had a tick up in expenses at the operating line, and that’s been a result of wage pressure, which is obviously still there and then hiring. And I guess I’m just kind of asking how I need to think about that as I – in 2024. Now that you have this higher base, is it a little more back to sort of like, you know what I’m saying, a normalized growth or is that something you’re still going to be investing in and I should expect another good size tick-up in it as we think about the, kind of the coming quarters?

A – Steve Harshbarger: I think it wouldn’t – I don’t think it will be growing at the same rate that you just saw there over this past quarter, but I do anticipate that we will be growing, because as an organization, we’re going to be growing and we’re always looking to develop that next thing that we haven’t done yet. We’ve been always looking to expand upon our capabilities. So as long as we’re heading down the growth path as an organization, that’s going to be the one sector that I see continued growth will be required, but to be able to support that customer base growing.

Ted Jackson: Okay. Then to some more like fun and kind of growth questions. When you look at the medical and alt energy areas, you had a very robust quarter for both of them. And I’m curious with regards to that robustness, how much of that was from some of the delayed business that it’s been impacting the financial since the second half of last year, and how much of it was from stuff that’s been more recently won. And then also maybe within both of those buckets, some color in terms of the specific applications that drove the revenue.

A – Steve Harshbarger: Yeah, got you. It was – it’s probably about a 50/50 split. We were just looking at that, what was things that we had hoped to have shipped out earlier, and then what was new stuff that was coming into us. So as far as the split from that aspect, the system that we shipped a lot of this past quarter were to these big multinational medical companies where they were our customers for more simple medical device systems, primarily our stent coating systems. But now they are just returning to us and buying our medical device systems for all these really complex new devices, new implantable systems, which they now recognize that we’re not just a one application company for medical. They know that, hey, if it’s any medical device, and you want to coat it, Sono-Tek is a good alternative that you should be considering and that’s what’s happening.