This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk_0: the day and welcome to the sun attack corporation earnings conference call all participants will be and listen only mode should you need assistance we signal a conference specialist by pressing the starkey followed by zero after today's presentation there will be an opportunity to ask questions to ask a question you may prefer star than one on your touch tone phone to draw your question please post star than to please note this event is being recorded i would now it to turn a conference over to stephanie print ppg advisory please go ahead
spk_1: thank you carry and thank you to everyone joining us today sony tech release their second quarter fiscal job premarket this morning if you don't have a copy the release please go to the company's website at charlotte check dot com and couldn't click on the press me flesh news tab and named after such a product market and geography sales tables on the last paid you believe that be part of today's discussion with me on the call today a cliff curcio sonatrach chairman and ceo steve harshbarger president and ceo and feel badly chief financial officer before turning the call over the management i would like to make the following remarks more and forward looking statements please note the berries remarks that may be made on this conference call about future expectations plans and prospect for the company constitute forward looking statements for the purposes of safe harbor provisions under the private securities litigation reform act of nineteen ninety five actual results may vary materially from those into katy perry's forward looking statements as a result various important factors including the discussed in the company file and with the if you see the company assumed no obligation to update the information contained in this conference call i would now like to turn the poll over the cliff coach year chairman ceo sen chris
spk_2: are you stephanie
spk_3: you know everyone
spk_2: thank you for joining us to april first ever or news conference call for now we're planning to hold too early to cause for his career at mid year my to a four year and results johnny pictures fiscal year and is february twenty eighth
spk_3: today with going to discuss your results were released early this morning to the second quarter of fiscal twenty twenty two and in august thirty first twenty twenty one
spk_2: i will begin with so opening remarks and and speed bagley chief financial officer will provide financial review of the second quarter keep article are you pregnant and she go mobile then go through the business in an operational results and the sales growth guidance from that will open the call for your question
spk_3: for don't have you were new to scientific channel to develop the revolutionary method of apply precision than john coding several decades ago
spk_2: the battery technology involved the use of patented high frequency ultrasonic novels incorporated into motion control systems that are able to achieve uniform mike brown to you could for customers we focus on important hijacked markets that require the disability such a semiconductor manufacturing and help electronic devices medical devices you and solar cells and industrial process through such a glass mind that failed me reboot cody
spk_4: over the years we've expanded our footprint us europe asia and latin america
spk_3: exclusion don't for dramatically said in a room real water and are you teach and we are environmentally friendly among other advantages
spk_2: this rich good ship at we made several years ago to ah kermit conflicts complete solutions are says come on sale at broaden our dressing the market has resulted in significant growth and our average you're selling prices are larger machines
spk_3: now what himself rural retreat hundred thousand dollars and system or she sometimes reach over one billion
spk_2: we anticipate the man complex technology will keep growing as electronic device you continue to become more miniaturized and the usage of atlanta medical devices continues to grow around the growth
spk_3: the second quarter was wrong and open our recent trends and sales increased seventy percent year over year and gross profit was up twenty eight percent we the period a very strong balance sheet with nearly ten million a year from zero that we expect the face the air with double digit sales growth and become
spk_4: i'm in our history and lot upset and opportunity for growth in our focus markets and semiconductor medical and clean energy
spk_2: our teams are work and accomplishments recommended during the quarter proved to uplift our common stock to them as that capital market in august the increased exposure from being listed on a national exchange has courted our shareholders much higher trading volume invisibility institution but
spk_3: that's me community we're excited to ring the bell it nasdaq to the memory important milestone i'm not turn the color which keep agree or she fall for some details about financial results if
spk_5: thank you chris a good morning everyone now looking at our second call the full results for the second quarter of fiscal twenty twenty two net sales were four point one million up seventeen percent or five hundred ninety thousand dollars from the second quarter of last year
spk_4: during the quarter approximately sixty two percent of sales originated outside of the us and canada compared with thirty eight percent in a prior your period
spk_5: gross profit increase twenty eight percent year over year to approximately two point one million dollars the gross profit margin with fifty one percent compared with forty six point six percent for the prior year period in approval of four hundred and forty basis points
spk_4: the improvement is due to increase sales combined with a favorable product mix
spk_5: operating income increased one hundred and twenty three percent to four hundred forty nine thousand dollars growth and revenue and gross profit or key factors in the improvement of operating income which were partially offset by increased operating expenses operating margin for the cooler increased to eleven percent compared with five point eight percent
spk_6: and the prior year period
spk_5: net income increased ninety three percent to three hundred and forty four thousand dollars
spk_4: on a personal basis earnings were two cents compared with once and can the prior year
spk_5: deluded weighted average shares outstanding slightly increased to fifteen million six hundred thousand compared to fifteen million five hundred thirty three thousand for the prior year quarter
spk_4: cash and cash equivalents and short term investments that august thirty one twenty twenty one or nine point seven million increase of one point one billion when compared to our fiscal year and february twenty eight twenty twenty one there was no debt on the balance sheet a quarter and
spk_5: second quarter capex was a hundred forty seven thousand for ongoing upgrades are the company's manufacturing facilities
spk_4: at the the full fiscal year we project capex will total approximately three hundred to three hundred and fifty thousand dollars
spk_5: i'll now turn to call over the part where the president and ceo for a second quarter operational reveal safe
spk_7: thanks chief and good morning everybody appreciate your taking the time to listen to our call today if you look at our cue to earnings really sad was put up this morning or you'll see in the short tables on the last page that we break down our sales in three ways or by market products or geography i know i'm going to talk about them that this morning our fiscal second quarter net sales were four million seventy thousand which is up seventeen percent or nearly six hundred thousand i met in comparison to the second quarter of last year by product line the second quarter sales increase was primarily driven by significant shipment a multi access coding for stop ah the system ships with this order now be i used to call electronic diagnostic devices for rapid covered casket our orientales were up six hundred and thirteen thousand or two hundred sixty four percent i this was due to strong sales from our orient semiconductor partners and as well as or oh only pc be flocking partners are looking at the market segments fell to the electronics market increased by seventy nine percent in queue to dis this was primarily driven by strong sales to china pero am systems used in the semiconductor market as well as those systems they're just mentioned to caught the electronic diagnostic devices for rapid covert casket ah the alternative energy market was also straw for us we continue to see growing investment in the clean energy sector fumbled government as well as private industry other driving demand for machines to use recording membranes and fuel cells as well as carbon capture applications by geography approximately sixty two percent of our sales originated outside of the us and canada compared with thirty eight percent in the last year second quarter on the strong overseas sales were primarily drum from a pack and that was led by china which reflects the transition a several countries are as well companies are emerging from corporate nike locked down and the manufacturer shit manufacturing operations really back online shipments to china during the second quarter included strong salesforce don't coding machines are the delivery of a newly developed specially medical device coding system in another follow on strong quarter for oh yeah i'm semiconductor customers
spk_8: are looking at a pack outside of china
spk_7: bills included a new machine the ship to singapore for yeah my cody electromagnetic commission coding and in which is an area we've spoken about several times as part of our focus growth initiative as well as we had a repeat order for a leaders balloon cat that recording machine that was shipped to japan filter the us and canada did dip year over year initial primarily due to the shipment of a large bloke last coding line in last year's que to which we didn't repeat into to this year this isn't unusual because you know tells the a large industrial flow class called machines typically vary from period to period there is also a large order for an event in probably react energy market last years due to the didn't repeat in the current period dropped a covert pandemic in osama picture really been adapting and refocusing ourselves efforts to those countries that are most operational during these corporate nineteen peak the debt this strategy is you know been really helpful to us and softening to impact the pandemic on our operations we expect the sales tax it to be part of found it takes go to market strategy for the foreseeable future here backlog reached a company hi record of six million three hundred thirty two thousand and at the end of our second quarter this is an increase of forty five percent from the end of the first quarter and and increases sixty four percent compared to the end of fiscal twenty twenty one six months ago we believe this growth is really directly related to are expanding product line i in the increasing activity of our application development laboratories in our network of labs located at santa take distributor states around the globe and our home base here in new yorker course are staffed with highly experienced application engineers or the work together with our cars tumors to develop solutions for their next generation of quoted products these will have during important advantage for saddle tech and and they really separate us from others i and closing probably have a lot of momentum and a strong outlook and we're excited about are opportunities for growth in our focus market semiconductor medical and clean energy looking ahead the sales growth guidance for at the back at work fiscal years for double digit increases over the comparable periods of last year for both a third as well as the fourth quarters are in for the fiscal year which will be ending now february twenty eight twenty twenty two dollar ticket is expecting double digit year over year growth which will be or highest in yourselves and corporate history so this concludes the formal part of our presentation and we now like to open up the call for questions and off and back over to the operator
spk_0: we will now begin the question and answer session the ask a question he may press star than one touchdown phone if you're using a speakerphone please pick up your handset before pressing the keys to draw your question please press star than to at this time we will pause momentarily to assemble our roster
spk_9: our first question
spk_0: oh come from decry and of collier's please go ahead
spk_10: read the thank you taking the question then also starting to host the earnings call the is that the important for the a shareholder be it's be duper a question and i'm trying to look at orders and backlog can you give us the level of orders in the quarter and kind of the make up a backlog if i would call last quarter there was one large system one and a half million in their your that the liver and are there any large orders sitting in the six point three million backlog
spk_11: sure good morning
spk_7: the the system which is worth exactly this robot system or that being sold into the semiconductor machine is still in our backlog right now white right now we anticipate that unit to be going out in our cue for this year the when that plan to be shipping out so another by much for five months from now the the backlog other than that you know there's a good chunk of it's gonna be shipping this fiscal year we do anticipate that's probably a million two million and a half that in that backlog that will be got handing out and next fiscal year though also which is typical because you know somebody is larger platform machines now that we
spk_10: offer what you are high value and high dollars they have a longer time to build them and ship them so that would be as to be expected for us
spk_7: the that into your question their decked yeah and and just also i mean i didn't know thirty need vineyards flipped or any cancellations in the backlog and how did the orders look for you to on the orders were solid i mean obviously you got reflected in our and our backlog just increasing so much for this is the highest backlog with think we've ever had and i know we ever had in company history has been pretty exciting for us to see the acceleration and so many of our growth initiative in a really starting to to come through for isn't and to show promise
spk_12: so did most of the large machines you know even though the orders were taken in queue to do that ship and queue to you know that they're going to be going into three four que one
spk_7: it again and we we don't actually report on the orders received by the you know it is a course always reflected in our backlog you can
spk_10: he that video that reflects the right there that's worse that number of orders that came in for us obviously was was quite high
spk_7: into hope you get the failed guidance for the backyard to the or any calm and you'd care to share on our margin that you're anticipating for cute through your cue for you the are on the gross margin cider or operating side sure i mean this past quarter obviously are margins our bit higher than typical for as you know we typically operate margins that are in the mid thigh forties you know forty five to forty nine percent rage in this this quarter was a little bit higher than that as a result of a lot of only and systems you know our our nozzles of we shall nozzles we make excellent excellent marches on those the and and those are lower dollar systems but very high margin systems and and that's what real it's reflected in the margins this quarter heading for work you know what i think we'll probably a long time be getting back down to two aren't normal operating range from margins which is going to be the high forty however it barely short can we are still seeing a lot of these only yeah customers in particular coming out of asia often there is support a semiconductor industry you know there's that ship shortages happening and it's be impacting everybody not just years of year and the us so we're seeing a lot of razor customers though he ended up particular buying a lot of our are smaller oh yeah i'm kids which are nice profit margins on there when i think that's gonna be continuing over at least another quarter or so and and i don't know if we'll continue beyond that but it's
spk_10: going to continue for some period of time here booker raid one last one you know the alternative energy you've had some oh let's say one the to the business kind of going in the to fuel cells and then you've you've talked about
spk_7: o to capture and they can you kind of tie that in with your new efforts and partnerships or for the role to roll capability that you know looking out over the next two years so and just try to tie those together for me sure sure that you know the area where sonatrach is really focused and where are the markets that our products services for the coding membranes they call it the pair membrane of fuel cells or the membranes on c o two carbon capture applications and this is a application that a debate on either marketplace they're very very similar mean almost all the people that are in companies that are manufacturing carbon capture the devices had come out of the fuel cell industry
spk_13: and it it's because the technology is very very similar and so for us the transition from an area that we really knew well me we were awesome my coding fuel cell membrane was very simple for us to go over to carbon capture membranes and the and our customer bases be a new was already as well as many of them came again
spk_7: and from fuel cells as so what we're seeing now is somebody customers as they start to increase their volumes they are changing over from doing low to mid volume manufacturing over to higher volume manufacturing and and what happened with that is they start to have an increased demand to go to roll to roll coding techno
spk_14: algae for the membrane is vs individual pieces of them indigent we've really been following it basically the market bring us there you know if you were ask the same question couple years ago we'd they will no one's doing road or okinawa making any volume of these well now they're starting to really plan to do world a role in starting to do higher volumes so we and
spk_7: agent outside partner which comes from this industry and has a great deal of experience with role to roll technology work the creation of the membranes and the combination of this partner that's really as this awesome experience and role to roll with are quoting experience we believe he's going to be a real winner for us
spk_13: so now this partner is helping us develop a new coding machine
spk_7: that will involve role to roll technology it for remembering that will be applicable both for fuel cell is was carbon capture and we all saw are hoping that that will allow us to expand and other areas of outside of the membrane once we get familiar with role to roll technology so there's some additional follow on markets that we hope to be able to serve as a real
spk_10: salt of this program that we have going on right now today
spk_7: okay great thank you and congratulations
spk_0: a tactic it
spk_15: question comes from bill nicklin of circle and please go ahead
spk_16: good morning already built
spk_17: could you help me out with kind of a capacity question i know
spk_16: you have a complex of buildings which you own on of really expensive piece of land given
spk_18: those facility in your current make or year project it makes a the how much revenue you think you can get out of the existing facilities if you build out into the building that era
spk_7: still have them have begun to pay for them sure sure the well our latest expansion which was now completed last year should allow us to easily go for twenty million dollars and cells within our existing buildings they are likely up to twenty three twenty four million possibly but you know we have the ability to also expanded somebody into some of the buildings that we own and are presently renting and are complex
spk_16: in that would allow us to read somewhere in an area that forty million dollar air area and added are planned you know as we grow you know we have recently shining short term leases with our tenants and as we grow we're just will take over one next building in the next building at a time we actually have right now three buildings that we are not presently occupying and were renting a we're just taking those over one at a time and that's when will we be doing even in the last couple of years we've been taking more space and more space every year thanks another capacity question
spk_7: how do you get year new employees that they tend to be engineers when you get them do you get them up to speed on what it really very sophisticated technology the you use you've in your product yeah it's a good question because i up a new employee recruits are hard to get in the president work environment you know we tried lots of methods for recruitment the you know such as job bears the web you know conventional help did i had none of these really work great going to tell you you know the best met method the we've really seen our word of mouth from fellow employees and are really strong internship program with which we've developed over the years you know we try to recruit like that brightest engineers and college classes really early on and then get them to join us when they're still students and your once they join you know them with they get excited about what's out there are you doing here and we hope to hold onto him for a lot of years following you know the and our technology is you know i just mentioned so unique that it really takes one two three years before someone is really fully effective to contribute in a very significant way so employee retention is real
spk_19: the important to us
spk_16: i think you know our headcount right now is around seventy five people today in that area in i think we have a whole five or six job open positions that are right now to support our a plant growth at this point
spk_20: okay that's it for me appreciate it
spk_21: we're both job with flag
spk_0: even higher in the right people because they're turning out the number from the photo forth thank you for banks will briefly it it gets dark the
spk_2: have a plan express our that one
spk_0: no further questions this concludes the question and answer session anally to turn a conference back over to chris coaches for any closing remarks
Disclaimer