Sono-Tek Corporation

Good morning and welcome to the Sono Tech Corporation mid-year fiscal year 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Stephanie Prince from PCG Advisory. Please go ahead.

Thank you, Andrea, and thank you to everyone joining us today. Donatec released their second quarter and first half fiscal 2024 results pre-market this morning. If you don't have a copy of the release, please go to the company's website at sonitech.com and click on the Press Release News tab in the Investor section. Product, market, and geography sales tables on the last page of the release will be part of today's discussion. With me on the call today are Dr. Chris Coccio, Sonitech's Chairman and CEO, Steve Harshbarger, President and COO, and Steve Bagley, Chief Financial Officer. Before turning the call over to management, I'd like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans, and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements. as a result of various important factors, including those discussed in the company's filings with the SEC. The company assumes no obligation to update the information contained in this conference call. I would now like to turn the call over to Chris Boccio, Chairman and CEO of Sonitech. Chris?

Good morning, and thank you, Stephanie, and thank you, everyone, for joining us. Today, we're going to discuss our second quarter and first half of fiscal year 2024 results that were released this morning before the market opened. I will begin with some opening remarks, and then Steve Bagley, our Chief Financial Officer, will provide a financial review. Steve Harshbarger, President and COO, will then go through the business and operational results. Following his comments, we'll open the call for your questions. Now, as a reminder, Sonotech currently holds two earnings calls per fiscal year. This is our mid-year call for the six months as of August 31st, 2023. Our fiscal year end is February, so fiscal 2024 will end on February 29th, 2024. And our next earnings call for the 12 months of fiscal 2024 will be in May of 2024. Now, as many of you already know, Sonotech developed a revolutionary method of applying thin film precision coating several decades ago. The proprietary technology involves the use of our advanced high-frequency ultrasonic nozzles incorporated into specialty motion control systems, and these are able to achieve uniform micron and nano thin coatings onto our customers' products. Our solutions offer dramatic savings in raw material, water, and energy usage, and are environmentally friendly, therefore. Now, the first critical advantage of our ultrasonic coating systems is the ability to apply precision-thin films, which are vitally important in today's world, with thousands of products and micro-components now requiring a functional or protective coating to be added to them. The strategic shift that we made several years ago to offer more complex, complete solutions has meaningfully broadened our addressable market and resulted in significant growth in our average unit selling prices. Excuse me. Our larger machines now commonly sell for over $300,000 and assistance prices can reach $1 million or more, which significantly impacts our quarterly revenue. This is what happened in the second quarter when we finally were largely free of the supply chain constraints that held back our sales growth over the past year. We reported our strongest quarter ever 50% higher than a year ago and ahead of expectations, we shipped one of our newest multi-access systems valued at over $1.1 million. In addition to new orders and sales reached $5.64 million. Now, in addition to the high sales, backlog still increased 26% from the end of our last fiscal year, six months ago, to $10.7 million, the highest in our history. This growth was due to our strategic shift to large, complex systems and platforms, and also our focus on opening new markets for our unique thin film coating technology. This includes three main areas with very strong global growth that we've talked about before, microelectronics and semiconductors, medical devices, and alternative or clean energy. We've served these industry sectors for many years and are continuing to advance our products and system solutions in these areas for the latest generational technology. Clean energy, including fuel cells, green hydrogen generation, carbon capture, and advanced solar cells, our markets, we've been providing R&D and pilot lines for close to a decade. We're now having a lot of success with these customers transitioning from production to production scale systems as a result of prior R&D and process development work they did with our experienced application engineers. Over the past year, we've announced nearly $6 million in large orders, primarily from the clean energy, but also the medical sector. The largest and most recent order is valued at $2.19 million, and it's the largest order from the clean energy sector to date, as well as the largest in Sonotech's history. These orders are among the first from our deliberate shift in strategy to large, customized systems. Although our proprietary ultrasonic atomization technology, where Sonotech began more than 40 years ago, remains at the heart of all of our systems. We've been able to achieve this shift through our own research and development work, which we consider to be our lifeblood. We attribute increase in sales both in This quarter and to come, a direct result of our investments in R&D with a strong focus on product expansion. In the first half of the year alone, we've already invested $1.4 million compared to $1 million in the year-ago period. And to further support our growth and expansion for these large platform custom engineered systems, we've increased our headcount by approximately 10% this year, mainly in the areas of engineering, R&D, and sales engineers. We want to ensure that we stay fully staffed and in front of our needs. We're excited about these investments and that they've begun to pay off. Our outlook for growth has been greatly enhanced by the early success of our strategy to shift to larger, more complex systems for production applications with multiple and repeat orders. In fact, we're already working on the next generation of machines. Looking ahead to the second half of this year, we're confident that shipments of previously delayed and new orders will continue to positively impact sales. We're expecting at least 25% year-over-year sales growth for fiscal 2024, ending next February. We expect that these results will put us back on our pre-COVID growth path. Thank you now, and I'll turn it over to Steve Bagley, our CFO, who will provide additional details on our financial results.