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

So we anticipate that to continue, both with our existing customers that are already buying them, but also new customers. There’s so many companies that you may not have heard of, say three or four years ago, but they are now public companies. They are growing and they are saying, well, we are in the clean energy sector and we are scaling for high volume production right now. So I anticipate that to continue for some time to come. And it will also I should say, continue in other sectors outside of the green energy sector for us. It just happens to be that green energy is the most hot area for us right now. But once you have the ability to scale to high volume, you can really do that for any sector, whether it’s the semiconductor sector or whether it’s the industrial sector or medical sector.

Once you have that in-house technical capabilities to scale for super high volume throughput, then it’s easy to do so across all the industry sectors.

Bill Nicklin: Thank you. I heard that you’re on the second part of one of your large orders. If you look out behind that into your sales funnel or pipeline, whatever you want to call it, do you see these same customers having an appetite for multiple machines in some instances or maybe many instances beyond what you’ve already got in your backlog?

Steve Harshbarger: Yes. For our existing customers that are purchasing these large platform high ASP machines, all of them have indicated they are at the beginning phases of their requirements. A couple of machines doesn’t come anywhere close to meeting their ultimate needs for production throughput requirements. So we’re optimistically anticipating that we’ll see follow-on sales from those customers for other manufacturing lines to continue.

Bill Nicklin: And then, another kind of a general question. You’re talking about your transition. It seems to me that your customers are making an even more dramatic transition in their business. What is it that Sono-Tek has in their solutions that is such a critical part of the customer’s transition?

A – Steve Harshbarger: Yeah, I guess the important word you just used in your question was the word solutions. What are the Sono-Tek solutions that are vitally critical to our customers transitioning with our new or different coating need? When we partner with our customers to provide full system solutions, it entails all aspects of what we’re guiding them through to a successful transition to coat their products. Sometimes we’re providing the solution with the proper application engineering expertise or new ultrasonic coating equipment or providing complex parts handling or software or more likely even a combination of all of these together. So when you’re at the forefront working with technology-based customers, introducing next gen products, which is where Sono-Tek really finds itself very often these days, we’re almost by default guiding these customers through a transition process.

Some of our customers may be transitioning from a product that’s never had a coating on it prior, to their next gen product that now requires a functional coating on it. In other cases, such as what we’re seeing in the clean energy sector, our customers may already have defined the coating process using Sono-Tek machinery and they are simply just transitioning to high volume production machinery from us. And it’s really actually a transition that both Sono-Tek customers are going through, as well as a transition that Sono-Tek Corporation is going through with our customers simultaneously. We’re simultaneously transitioning our organization to expand our capabilities to meet the needs of our growing customer base. So I know that was kind of long-winded, but to swing back to your original question, it’s really a multitude of critical deliverables that we’re providing our customers to guide them through the transition to Sono-Tek machines.

But at the end of the day, it’s all focused around Sono-Tek providing the customer whatever is necessary to create the desired thin film coating on the product that they want to manufacture.