Sono-Tek at Planet MicroCap: Strategic Growth and Innovation

On Wednesday, 23 April 2025, Sono-Tek Corporation (NASDAQ:SOTK) presented at the Planet MicroCap Showcase: VEGAS 2025, emphasizing its strategic initiatives and market expansion. The company showcased its strong financial health and innovative ultrasonic coating technology, which spans multiple industries. Executive Chairman Chris Cochio and CEO Steve Harshbarger outlined both the company’s growth potential and the challenges it faces in maintaining its market position.

Key Takeaways

• Sono-Tek boasts a robust financial position with significant cash reserves and no debt.
• The company is expanding its ultrasonic coating applications across diverse sectors, including medical devices and alternative energy.
• Strategic initiatives focus on providing comprehensive system solutions and enhancing engineering capabilities.
• Sono-Tek is experiencing a long-term growth trend despite past challenges from COVID-19 and supply chain issues.
• The company aims to deepen customer partnerships by offering complete solutions, differentiating itself from competitors.

Financial Results

• Gross margins have consistently remained in the high forties, reflecting strong financial management.
• Sono-Tek has maintained profitability for the past 20 years, though the degree of profitability has fluctuated.
• The company has navigated past economic disruptions, including COVID-19 and supply chain constraints, while sustaining a growth trajectory.

Operational Updates

• Transitioned from basic ultrasonic nozzle setups to offering complete system solutions, including hardware, software, and process expertise.
• Expanded application engineering capabilities, enhancing laboratory facilities in New York and at international distributor sites.
• Developed scalable systems that support both R&D and high-volume production, fostering flexibility and innovation.

Future Outlook

• Sono-Tek is exploring new markets, such as coatings for food containers to replace plastics and micro LEDs for automotive screens.
• The company aims to leverage its technology in the burgeoning fields of augmented and virtual reality.
• Ongoing investments in R&D and marketing are tailored to adapt to changing market conditions and internal strategic decisions.

Q&A Highlights

• Chris Cochio highlighted the company’s global reach, with 40-50% of business conducted overseas.
• The executive team emphasized the importance of early involvement in disruptive technology markets to ensure long-term growth.
• Steve Harshbarger noted that the company’s full system solutions approach strengthens customer relationships, positioning Sono-Tek as a partner rather than just a vendor.

For more detailed insights, please refer to the full transcript.

Full transcript - Planet MicroCap Showcase: VEGAS 2025:

Operator: Okay. Okay? Make sure you speak into the microphone because you’re webcasting this.

Unidentified speaker: Okay. Gotcha. Doctor. Cochio, you’re

Unidentified speaker: gonna speak first, and I’ll speak right after I introduce you. And then Yeah.

Unidentified speaker: It’s gonna text me

Unidentified speaker: to Doctor. Cochio will speak first first, and then I’ll

Unidentified speaker: speak with you. Cochio? And this is the forward backwards, I’m assuming, on

Operator: the Yes.

Unidentified speaker: Slide show. Perfect. So I think

Unidentified speaker: they just click there and forwards backwards is there, Chris.

Operator: Looks like we’re ready.

Unidentified speaker: Excuse

Unidentified speaker: me? You’re gonna start this.

Unidentified speaker: Good afternoon. The next MicroCap presentation is Sonatec. We have doctor Cochio and then Steve Harshbarger.

Unidentified speaker: Thank you, and good morning. Everybody here okay?

Chris Cochio, Executive Chairman, Sonotech: Yeah. Well, I am Chris Cochio, and I am the executive chairman of Sonotech. And Steve Harshbarger here is our president and CEO, and we’re very happy to be here today to tell you about our company. What you see on this cover slide is a semiconductor wafer and some of our equipment that we sell to, semiconductor companies to put down very thin microscopic coating using ultrasonic atomization technology. We’ll talk a little bit about that, but not too much, just enough so you understand what we’re doing.

The next slide is simply the safe harbor statement. I’m gonna skip over that and introduce you to our team. We are located in the Mid Hudson Valley Of New York. It’s a it’s a very localized company in the sense that people are from our area. They work there.

These people have been together for twenty years plus. Steve and I have worked together for twenty four, twenty five years. But we have a large international footprint as well. 40 to 50% of our business is overseas, and it’s been that way for years. So we aren’t an one of those unusual exporters of technology.

The company was actually founded in 1975 by the inventor of what we’ll describe in a moment as ultrasonic coating technology, and it took a while for it to find its footing. You know, when you’re ahead of the curve, it takes a while. But what’s happened is the, technology world has moved into our space. We now have, four worldwide development labs. We’ve got 39 international distributors, and we have customers in over 50 company, countries.

And you can see we have a number of diverse markets. I will talk a little bit about it, and Steve will talk further when he’s, here. One important note is that we have a lot of cash on hand and no debt. And, I’ve heard one or companies this morning say the same thing, and it’s it’s unusual, really, in small cap companies. So the ultrasonic nozzle, which is the heart of our system and which was invented in 1975.

There were patents. There’s intellectual property. But it doesn’t just operate by itself. It needs a firmware, software, electronics, and it has it has intellectual property protection beyond patents, so we have good protection. It puts down a very fine thin microscopic film, and we try to give a little example of what it looks like on this on the l of a of a coin.

You can see what, you know, one little spot looks like, but we, of course, cover the entire surfaces of objects. And that’s some of our equipment down below that, we sell. Thin films are in. This has happened in the past twenty years ten, twenty years. It’s it’s only accelerating as technology becomes more precise.

And, that that slice is a side slice of a of a solar coating, of a solar I’m sorry, a solar cell, a perovskite cell. And you can see it’s a half a micron thick, and it’s very uniform. And that’s critical. Now most of us are not familiar with the metric system, but a human hair is about a hundred microns, so it’s a very thin precise film. So that’s the main advantage of this application for things like solar cells, fuel cells, cardiac stents, semiconductor wafers.

So in the, field, we’re going after a number of the disruptive markets for the past three to five years, microelectronics, handheld devices, for example, cell phones. We work with a variety of companies because they all need coatings either internally or maybe to prevent fingerprinting or, you know, a variety of things of that nature. As far as medical devices, implantables, I mean, people who have had either a heart attack or a suspected heart attack, would have a cardiac stent placed in. And starting fifteen or twenty years ago, the, the medical industry moved towards coating them with a anti restenosis coating to prevent clogging afterwards or scarring afterwards. So our company was the at the forefront of that.

We are we dominate that coding market for medical companies, but it’s gone beyond that now. There are other many other applications, both in in the body and also for things like diagnostic testing. We did we sold a fair amount of equipment for COVID testing back during that time. And then alternative energy, it’s it’s become a significant part of our business. And, around the world, there’s still great interest in finding ways to reduce the, you know, the carbon footprint and other effects of climate.

So it isn’t just about the past or the present. We’re looking at a lot of different areas with our customers. They come into our laboratories, and then they work with us, and we try to help them find ways to succeed in the applications they’re interested in. Micro LEDs, if you have a new car, you’ve got one of those big screens that and that’s been coated with, some of our equipment, smart watches, high-tech glasses, AI or I’m sorry. Augmented and virtual reality.

And then another area that’s very important is lithium lithium battery protection. In the manufacturing process, they’re sort of wrapped with a a material to prevent shorting, and a very high percentage of those, batteries fail in the manufacturing process. So thank goodness they fail there because if they get out and they fail, you know, it’s it’s it can be a major fire hazard, and they’re very hard to put out. We’re working with companies that are trying to put down a spray coating using our technology to avoid the problems that come with folding something around a cell. Another area that I think is very interested is food containers.

There’s a move there’s a movement to get away from plastics because of the microplastics in in the food, and so companies are looking at, let’s say, cardboard containers, but you can’t just put liquids in a cardboard container long term. You need some kind of a food safety coating inside, and so we’re working with companies looking at putting down that type of a barrier coating. Financially, we’ve we’ve had a long term growth track. You know, a little there are some dips when the first dip there was COVID. The second dip was basically the supply chain impact of COVID.

But long term, it’s been a nice growth trend and a consistent gross margins in the high forties, know, for long term, and we’re profitable. I I don’t remember a time in twenty years that we have not been profitable, sometimes more, sometimes less. It just depends on the market circumstances and our internal decisions on how much money to put into r and d and marketing. I’m gonna turn it over to Steve now. He’ll give you more granular detail.

Thank you.

Unidentified speaker0: Thank you, doctor Cochio. Good morning, everybody. Again, my name is Steve Harshbarger, and I’m the president and CEO of Sonotech. And let me first start by saying, well, being here at 10:30AM, I know it’s not very early by normal standards, but when in Vegas after a late night, I do recognize it’s an ambitious commitment. So I appreciate you all joining us here in person.

And let’s dive right into why I think Sonotech’s worth the spot on your radar. Now, all the little circles you see on this slide are showing you pictures of just a sampling of the variety of disruptive high-tech coding applications that Sonotech participates in. And our investors commonly want to understand specifically what changed over the past decade to accelerate us into so many new growth and disruptive applications. While it was about a decade ago, we started to see a significant shift in the rate of which manufacturers were applying functional and or protective thin film nano coatings onto products that historically never had coating on them. You know, protective and functional thin films, you know, they’re now on so many products in our daily lives.

You know, they’re on our food products, they’re on our textiles, they’re on the glasses you might be wearing, they’re on your phone, they’re on your medical devices, you know, inclusive of thousands of different functional nano thin films that are on our electronic devices and sensors. An item like a car for example, might have hundreds of thin film coating processes that go into the manufacturing of the car to make upload parts for that car. And with all of these opportunities, it’s been a very important parts of Sonotech strategy to focus on growth oriented sectors. They’re often developing disruptive technology products where we try to get in early on the ground floor in the development stages. Recognizing the significant number of opportunities in this rapidly expanding addressable market, Sonotech implemented three very important strategic initiatives leading us down clear pathways for growth.

The first of these was to provide full system solutions. Now historically Sonotech primarily catered to the R and D sector with very basic ultrasonic nozzle setups. And then about a decade ago, we began a very important strategic shift to provide our customers with much more than these basic ultrasonic nozzle setups. We became focused to provide our customers with all the know how and that included all the hardware, all the software and very importantly all the process expertise for their specific applications within their specific marketplaces. This shift then propelled Sonotech efforts to develop fully integrated large productions lines, which then increased the value to our customer and enabled us then to justify higher ASPs or higher average selling prices across our product offering.

The second significant pathway we established to accelerate our growth was the rapid expansion of our application engineering capabilities and our laboratory facilities, both in our New York based lab as well as our overseas labs, which are located at our international distributor sites. Our application engineering team, they really guide our customers in several ways. They’ll help to define the proper liquid chemistries that the customer may be using, they’ll help to define the proper product handling needs, They’ll help to define and integrate the machine that may sit before and after the ultrasonic coating process. And they’ll even often go out to the end customer manufacturing site to work with that customers to develop their full coating processes. This full system solutions approach really differentiates Sonotech from our competitors and it builds a very strong relationship with the customer.

We’re much more than a vendor. We’re really like a partner that’s attached at the hip with the customer. Now the third and perhaps the most significant pathway we established to accelerate our growth was the enhancements of our internal capabilities to develop and manufacture systems that were scalable all the way from R and D to have very high volume production. Now the pictures on the right hand side of this slide shows you the transformative journey we’ve gone through over recent years. The top image here shows you one of our R and D systems.

The middle image shows you one of our pilot line systems and the bottom picture here shows you one of our high volume production systems. Now interestingly, it’s not uncommon for a single customer to buy all three of these machines. They may start out in phase one by buying one of our R and D machines to prove coding feasibility on a machine that might range in price from 50 to say $100,000 And then upon successfully proving coding feasibility, then they move on to Phase two and buy a pilot line machine. And these machines are for low volume production and may thing in there. That’s it.

I’ll just park.

Unidentified speaker: We’re gonna take the one with notes. You need your notes? Yeah. Correct. So that’s what I see right there on the I’m gonna see it right there.

Do you wanna Oh. Let’s see. Presentation mode. Yeah. Got you.

Yeah. Slideshow. Think it there you go from beginning. Sorry. Right there.

Perfect.

Unidentified speaker0: Alright. You want it bigger? Or

Operator: Okay. Okay? Make sure you speak into the microphone because you’re webcasting this.

Unidentified speaker: Okay. Gotcha. Doctor Cochin, you’re

Unidentified speaker: gonna speak first, and I’ll speak right

Unidentified speaker: Introduce you. And then Yeah.

Unidentified speaker: It’s gonna text me.

Unidentified speaker: So Doctor. Cochio will speak first first,

Unidentified speaker: and then I’ll speak with you.

Operator: Cochio? And

Unidentified speaker: this is the forward backwards, I’m assuming, on the

Unidentified speaker: slide show? Perfect.

Unidentified speaker: So I think these look there and forwards backwards is there, Chris.

Operator: Looks like we’re ready.

Unidentified speaker: Good afternoon. The next MicroCap presentation is Sonatec. We have doctor Cochio and then Steve Harshbarger.

Unidentified speaker: Thank you, and good morning. Everybody here okay?

Chris Cochio, Executive Chairman, Sonotech: Yeah. Well, I am Chris Cochio, and I am the executive chairman of Sonotech. And Steve Harshberger here is our president and CEO, and we’re very happy to be here today today to tell you about our company. What you see on this cover slide is a semiconductor wafer and some of our equipment that we sell to, semiconductor companies to put down very thin microscopic coating using ultrasonic atomization technology. We’ll talk a little bit about that, but not too much, just enough so you understand what we’re doing.

The next slide is simply the safe harbor statement. I’m gonna skip over that and introduce you to our team. We are located in the Mid Hudson Valley Of New York. It’s a it’s a very localized company in the sense that people are from our area. They work there.

These people have been together for twenty years plus. Steve and I have worked together for twenty four, twenty five years. But we have a large international footprint as well. 40 to 50% of our business is overseas, and it’s been that way for years. So we aren’t an, one of those unusual exporters of technology.

The company was actually founded in 1975 by the inventor of what we’ll describe in a moment as ultrasonic coating technology, and it took a while for it to find its footing. You know, when you’re ahead of the curve, it takes a while. But what’s happened is the, technology world has moved into our space. We now have four worldwide development labs. We’ve got 39 international distributors, and we have customers in over 50 company, countries.

And you can see we have a number of diverse markets. I will talk a little bit about it, and Steve will talk further when he’s, here. One important note is that we have a lot of cash on hand and no debt. And, I’ve heard one or two companies this morning say the same thing, and it’s it’s unusual, really, in small cap companies. So the ultrasonic nozzle, which is the heart of our system and which was invented in 1975, there were patents.

There’s intellectual property. But it doesn’t just operate by itself. It needs a firmware, software, electronics, and it has it has intellectual property protection beyond patents. So we have good protection. It puts down a very fine thin microscopic film, and we try to give a little example of what it looks like on this on the l of a of a coin.

And you can see what, you know, one little spot looks like. But we, of course, cover the entire surfaces of objects, and that’s some of our equipment down below that, we sell. Thin films are in. This has happened in the past twenty years ten, twenty years. It’s it’s only accelerating as technology becomes more precise, and that that slice is a side slice of a of a solar coating, of a solar I’m sorry, a solar cell, a perovskite cell.

And you can see it’s a half a micron thick, and it’s very uniform. And that’s critical. Now most of us are not familiar with the metric system, but a human hair is about a hundred microns, so it’s a very thin precise film. So that’s the main advantage of this application for things like solar cells, fuel cells, cardiac stents, semiconductor wafers. So in the, field, we’re going after a number of the disruptive markets for the past three to five years, microelectronics, handheld devices, for example, cell phones.

We work with a variety of companies because they all need coatings either internally or maybe to prevent fingerprinting or, you know, a variety of things of that nature. As far as medical devices, implantables, I mean, people who have had either a heart attack or a suspected heart attack, would have a cardiac stent placed in. And starting fifteen or twenty years ago, the, the medical industry moved towards coating them with a anti restenosis coating to prevent clogging afterwards or scarring afterwards. So our company was the at the forefront of that. We are we dominate that coding market for medical companies, but it’s gone beyond that now.

There are other many other applications, both in in the body and also for things like diagnostic testing. We did we sold a fair amount of equipment for COVID testing back during that time. And then alternative energy, it’s it’s become a significant part of our business. And, around the world, there’s still great interest in finding ways to reduce the, you know, the carbon footprint and other effects of climate. So it isn’t just about the past or the present.

We’re looking at a lot of different areas with our customers. They come into our laboratories, and then they work with us, and we try to help them find ways to succeed in the applications they’re interested in. Micro LEDs, if you have a new car, you’ve got one of those big screens that and that’s been coated with, some of our equipment, smart watches, high-tech glasses, AI or I’m sorry. Augmented and virtual reality. And then another area that’s very important is lithium lithium battery protection.

In the manufacturing process, they’re sort of wrapped with a a material to prevent shorting, and a very high percentage of those, batteries fail in the manufacturing process. So thank goodness they fail there because if they get out and they fail, you know, it’s it’s it can be a major fire hazard, and they’re very hard to put out. We’re working with companies that are trying to put down a spray coating using our technology to avoid the problems that come with folding something around a cell. Another area that I think is very interested is, food containers. There’s a move there’s a movement to get away from plastics because of the microplastics in in the food, and so companies are looking at, let’s say, cardboard containers, but you can’t just put liquids in a cardboard container long term.

You need some kind of food safety coating inside, and so we’re working with companies looking at putting down that type of a barrier coating. Financially, we’ve we’ve had a long term growth, track. There are some dips when the first dip there was COVID. The second dip was basically the supply chain impact of COVID. But long term, it’s been a nice growth trend and a consistent gross margins in the high forties, you know, for long term, and we’re profitable.

I I don’t remember a time in twenty years that we have not been profitable. Sometimes more, sometimes less. It just depends on the market circumstances and our internal decisions on how much money to put into r and d and marketing. Gonna turn it over to Steve now. He’ll give you more granular detail.

Thank you.

Unidentified speaker0: Thank you, doctor Cochio. Good morning, everybody. Again, my name is Steve Harshbarger, and I’m the president and CEO of Sonotech. And let me first start by saying, well, being here at 10:30AM, I know it’s not very early by normal standards, when in Vegas after a late night, I do recognize it’s an ambitious commitment, so I appreciate you all joining us here in person. And let’s dive right into why I think Sonotech’s worth the spot on your radar.

Now all the little circles you see on this slide are showing you pictures of just a sampling variety of disruptive high-tech coating applications that Sonotech participates in. And our investors commonly want to understand specifically what changed over the past decade to accelerate us into so many new growth in disruptive applications. While it was about a decade ago, we started to see a significant shift in the rate of which manufacturers were applying functional and or protective thin film nano coatings onto products that historically never had coating on them. You know, protective and functional thin films, you know, they’re now on so many products in our daily lives. You know, they’re on our food products, they’re on our textiles, they’re on the glasses you might be wearing, they’re on your phone, they’re on your medical devices, You know, inclusive of thousands of different functional nano thin films that are on our electronic devices and sensors.

An item like a car, for example, might have hundreds of thin film coating processes that go into the manufacturing of the car to make up the parts for that car. And with all of these opportunities, it’s been a very important parts of Sonotech’s strategy to focus on growth oriented sectors. They’re often developing disruptive technology products where we try to get in early on the ground floor in the development stages. Recognizing the significant number of opportunities in this rapidly expanding addressable market, Sonotech implemented three very important strategic initiatives leading us down clear pathways for growth. The first of these was to provide full system solutions.

Now historically Sonotech primarily catered to the R and D sector with very basic ultrasonic nozzle setups. And then about a decade ago, we began a very important strategic shift to provide our customers with much more than these basic ultrasonic nozzle setups. We became focused to provide our customers with all the knowhow and that included all the hardware, all the software, and very importantly, all the process expertise for their specific applications within their specific marketplaces. This shift then propel Sonotech efforts to develop fully integrated large productions lines, which then increased the value to our customer and enabled us then to justify higher ASPs or higher average selling prices across our product offering. The second significant pathway we established to accelerate our growth was the rapid expansion of our application engineering capabilities and our laboratory facilities, both in our New York based lab as well as our overseas labs, which are located at our international distributor sites.

Our application engineering team, they really guide our customers in several ways. They’ll help to define the proper liquid chemistries that the customer may be using, to help to define the proper product handling needs, they’ll help to define integrate the machine that may sit before and after the ultrasonic coating process. And they’ll even often go out to the end customer manufacturing site to work with our customers to develop their full coating processes. This full system solutions approach really differentiates Sonotech from our competitors and it builds a very strong relationship with the customer. We’re much more than a vendor.

We’re really like a partner that’s attached at the hip with the customer. Now the third and perhaps the most significant pathway we established to accelerate our growth was the enhancements of our internal capabilities to develop and manufacture systems that were scalable all the way from R and D.

Operator: This presentation has now finished. Please check back shortly for the archive.

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