Sono‑Tek Corporation reported fiscal third‑quarter 2026 results on January 13, 2026, with net sales of $5.0 million, a 24% increase in net income, and a gross margin of 50% for the quarter. The company’s record backlog rose to $12.26 million, and year‑to‑date gross margin climbed to 51% from 48% in the prior year.
Revenue fell 4% year‑to‑year to $5.0 million, missing the consensus estimate of $5.25 million. The shortfall was largely driven by a decline in Multi‑Axis Coating Systems revenue, which contracted as demand for electrolysis‑related products weakened under recent U.S. clean‑energy policy changes. The loss was partially offset by a sharp increase in In‑Line Coating Systems sales and continued strength in the medical and industrial segments, which helped keep total revenue above $5 million for the seventh consecutive quarter.
Gross margin expanded to 50% in Q3 from 45% in the same quarter a year earlier, reflecting a higher mix of high‑ASP production systems and disciplined cost control. The year‑to‑date margin of 51% represents a 3‑percentage‑point lift over the prior year, underscoring the company’s ability to capture pricing power even as volume slipped.
Net income rose 24% quarter‑over‑quarter, but earnings per share fell to $0.02, a miss of $0.01 versus the $0.03 consensus. The EPS shortfall is attributable to the revenue miss and a modest increase in cost of sales, while margin expansion helped cushion the impact. The result indicates that while operational efficiency is improving, revenue growth remains a key challenge.
Management reiterated its guidance for fiscal 2026, projecting modest revenue growth and maintaining margin targets. “We delivered another solid quarter marked by our seventh consecutive period of revenue above $5 million, continued profitability, and meaningful margin expansion,” said Dr. Christopher L. Coccio, Executive Chairman. The guidance reflects a “watchful” outlook that balances the softening clean‑energy market with robust demand in the medical device sector.
Sono‑Tek’s strategic pivot from component sales to complete machine solutions is evident in the higher‑ASP mix and the growing backlog. The company remains debt‑free with a healthy cash position, and customer concentration—one customer accounting for 38% of sales and 67% of accounts receivable—highlights the importance of maintaining strong relationships while expanding into new markets such as semiconductors and industrial applications.
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