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

Steve Harshbarger: Yeah, those are the two most significant orders that are in the backlog presently. There are several other orders that are in those, that few hundred thousand-dollar plus area, which is becoming kind of a more common type of machine for us to be selling now, these $300,000 plus machines. The backlog split right now, and it’s going to be somewhat close, which is delivered next fiscal year or this fiscal year. It’s going to be good either way. But it’s about a 50/50 split, if we had to guess, between what’s going to be shipping this fiscal year that’s in the existing backlog and what’s going to be shipping next fiscal year. It’s a good ballpark. Maybe 60/40, 40 next year, 60 this year, but it’s a pretty good chunk that’s already planned for next fiscal year, because the build time and the delivery of some of these large, complex machines takes quite a while. They can take nine to 12 months in many cases.

Dick Ryan: Sure, sure. You probably don’t want to quantify it, but you talked about your quote activity picking up. Can you describe how your quotation book looks now versus six months ago? If you would care to quantify, that would be great also. And maybe tying into that, does the traffic in the labs feed into the quote book? If so, what’s your traffic in your labs?

Steve Harshbarger: We don’t quantify the quotes out to the public, but the one thing we’ll see is that the closure rate on the quotes is increasing. So the percentage that we’re quoting out – excuse me, we’re actually buying a machine is increasing and the quotes are for higher dollar values than typical, compared to say last year, the higher ASPs. So that’s what’s significant there. The laboratory facility is jam-packed right now. It’s – every week we’re just always trying to find the space to try to bring the next person in. I think right now we’re booked out two or three months and it’s a challenge that we’ll probably at some point – we’ve expanded our lab several times now, but we’ll probably have to expand the lab again at some point here to accommodate the growth that we’re experiencing.

Dick Ryan: Okay, one last one. You talked about your Alt Energy customers moving from R&D to higher levels of production. You’re seeing that list broaden. I mean, are you dealing with one, two or three customers there or are you kind of approaching double digits that this thing really can have some legs when we look out over the next few years?

Steve Harshbarger: As far as customers that we’re actually delivering or have delivered systems to, it’s still just a handful right now that are doing this in super high volume. But as far as where the coating activity is for those customers to expand to becoming double digits, it’s very high. What we’re seeing right now, the customers that have already made the transition to our high volume production machines are really at the forefront. But there’s a whole other wave of customers behind them, which are not there yet, but they are heading there. So we’re optimistically thinking that that group of customers will transition at some point here in the future as well.

Dick Ryan: Okay. I guess I had one last one. You talked about solar. Historically, how big was solar in its heyday for you guys and is there an opportunity to kind of get back to that level or grow from there?

Steve Harshbarger: Yeah. Ten years ago, before the solar wave crashed, that’s about ten years ago I think, I think Sono-Tek was doing $2 million or $3 million solar there, which was at that time, we were a smaller company, so it was significant. I think that was, I don’t know, 40% of our sales or something like that, but now $2 million or $3 million isn’t really going to shift the lever significantly for us. The existing solar customer base now that we are communicating with, I mean, I think we anticipated to be significantly larger than that. If it was only $2 million or $3 million, it would be a big disappointment for us. That, it has much larger potential and the primary reason is, is we’re not selling R&D machines there anymore. We’re selling high volume production machines with high ASPs and that makes all the difference in the world.