Sono-Tek Corporation (SOTK) Q4 2026 Earnings Report, Transcript and Summary

Good day. And welcome to the Sono-Tek Corporation Fiscal Year and 26 Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note today's event is being recorded. I would like to now turn the conference over to Kirin Smith with Investor Relations. Please go ahead.

Thank you, Rocco. Thank you, everyone, for joining us today. Sono-Tek released their fourth quarter and full year fiscal 2020 results this morning. If you do not have a copy of the release, please visit the company's website at www.sonotech.com. And navigate to the Investors section. The 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. Christopher L. Coccio, Executive Chairman Steve Harshbarger, CEO and President and Steve Bagley, Chief Financial Officer. Before turning the call over to management, I would 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 the Safe Harbor provisions under the Private Securities Litigation Reform Act of 2000. 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. Company assumes no obligation to update the information contained in this conference call. As a reminder, this is our full year fiscal 26 call for the period ended February 28, 2026. Our next call will be our midyear fiscal 27 update for the second quarter and first half ended August 31, 2026 and will be held in October. I would now like to turn the call over to Christopher L. Coccio, Executive Chairman of Sono-Tek. Christopher, please go ahead.

Thank you, Kieran, and good morning, everyone. I will start with some opening remarks, and then Steve Harshbarger, our CEO and president, will go through a deeper business and operational review. This will be followed by Steve Bagley, our chief financial officer. He will provide the financial review. Following their comments, we will open the call for questions as Kieran mentioned. Fiscal 2026 was a year of strong execution and very meaningful progress for Sono-Tek. We delivered our second consecutive year of revenue above $20 million--$20.9 million while maintaining consistent quarterly performance with 8 consecutive quarters above $5 million each. We are also proud to report that fiscal year 26 marks our third consecutive year of annual revenue growth and 16th year in a row of profitability. Most importantly, we achieved significant profitability expansion. The gross margin increased to 51%. The operating income grew 81% and we delivered strong bottom line performance which was supported by operating leverage and favorable product mix. Our results reflect the continued success of our strategic shift towards higher value high ASP production systems, These are driving both revenue quality and margin expansion. From a market perspective, medical was a standout performer It increased 54% year over year and was driven by strong demand for balloon catheter coating systems and other advanced medical technologies. We also saw continued growth in electronics, in electrically active coatings, which support diagnostic related applications. So clean energy remains a key long term opportunity We are now experiencing a decline in electrolysis related demand during the year due to policy shifts at the government level. However, this was partially offset by solar related system shipments earlier in the fiscal year. Geographically, we saw strong performance in The US which grew 12% and represented approximately 67% of total revenue. That benefits both revenue growth and margins due to reduced international related costs. We ended the year with a solid backlog and a strong balance sheet. Providing a stable foundation for our future growth. Now looking ahead, we anticipate continued revenue growth and profit profitability in the first half of fiscal 27 and that would be driven by momentum in the medical sector and sustained demand for high ASP systems. For the full year of fiscal 2027, we are currently expecting relatively flat to modestly higher revenues compared to fiscal 26. Visibility beyond the first half, however, remains limited due to continued uncertainty in certain clean energy sectors, and the timing of these high ASP customer orders, can create significant shifts in quarterly revenues. This is particularly true as we continue to see a higher percentage of larger, more complex system orders that typically involve longer lead times and have less predictable shipment timing. And with that, I will turn it over to Steve Harshbarger, our CEO and President. Steve?

Thanks, Dr. Coccio, and good morning, everybody. We are very encouraged by our fiscal 26 performance which reflects both consistency in revenue and meaningful improvement in profitability. For the quarter--fourth quarter, revenue increased 10% to $5.6 million gross profit increased 15% to $2.79 million gross margin reached 50% and net income increased 70% to $557 thousand. This performance reflects strong execution and continued demand for our high value systems. For the full fiscal year, revenue increased to $20.9 million gross profit increased 8% to $10.6 million gross margin expanded to 51% driven of course by product mix and increased percentage of U.S. sales And operating income increased 81% to $1.82 million These results clearly demonstrate the operating leverage in our business as we scale with these high ASP systems. Now I will provide a few other key highlights of the year In regards to our end markets for FY 2026. Medical increased 54% and that was driven by production scale systems and the growing adoption of across multiple medical device coating applications. The electronics market increased by 16% and that was supported by electronically active layers being deposited on diagnostic related devices. The clean energy market declined 19% reflecting reduced electrolysis demand. And the industrial basket declined, which shows variability in demand on our large glass coating orders. As for our products category for FY 2026, integrated coating systems, which we have renamed inline coating systems, increased 91% and that was driven by our solar related systems. Multi axis systems declined due to our lower clean energy demands. In fluxing systems, increased 53% and that was supported by strong Asia demand. Regarding our geographic trends for FY 2026, The U.S. and Canada increased 12% and that was driven by shipments of 5 high ASP, that is high average selling price systems totaling $3.85 million The international markets were mixed, with some softness in Asia and Latin America. We closed fiscal 26 with a solid backlog which showcases the strength of our overall business and order activity. We attribute to increased sales and the strong backlog direct result of our investments in R&D with a strong focus on product expansion. And our balance sheet remains strong with still no outstanding debt. Overall, our results highlight the strength of our diversification strategy, and the continued shift towards high margin and higher ASP high volume production system sales We remain confident in our long term growth prospects and looking ahead. As Chris mentioned, we expect continued revenue growth and profitability for the first half of FY 27 driven by the medical and microelectronics market and expanding adoption of our product production scale systems. And now I will turn it over to our CFO, Steve Bagley, for a deeper financial review and then we will open it up for after that for questions over to you, Steve.

Very good. Thank you, Steve, and good morning, everyone. And now a review of our full fiscal year 2026 year-over-year results. Net sales were $20.9 million and that is up 2% from $20.5 million in the prior year. Gross profit increased 8% to $10.6 million with margin expanding to 51% from 48% driven by favorable product mix and increased U. S.-based system sales. Operating income increased 81% to $1.82 million with operating margins improving to 9% from 5%. Total operating expenses were $8.7 million, relatively flat year over year. Our research and development costs decreased 6% to $2.55 million and that is primarily due to lower personnel and material costs. Sales and marketing decreased 4% to $3.53 million and that reflects lower commission and personnel costs. Our G&A costs increased 14% to $2.66 million and that is driven by higher salaries, insurance and stock based compensation expense. Our interest in dividend income totaled $443 thousand. that is slightly lower than last year. And that is due to reduced interest rates. Our tax expense increased and that is due to the current year's increase in income before income taxes. And net income for the year was $1.8 million and that is up 42% from $1.27 million in the prior year and that is reflecting strong operating performance and margin expansion. Regarding our balance sheet, cash, cash equivalents and marketable securities totaled $14.8 million and that is an increase from $11.9 million in the prior year We continue to have no outstanding debt and our working capital increased to $16.2 million I am also pleased to state that our cash flows from operating activities generated $3.2 million and that is a significant increase when compared to $525 thousand in the prior fiscal year. The current year's cash flow was supported by profitability and favorable working capital dynamics, including higher customer deposits and inventory management. We ended fiscal year 26 with a backlog of approximately $9.12 million and that is remained pretty close to historically high levels. and that is supporting our visibility into fiscal 27. Overall, we are very pleased with our financial performance for the year and believe we are well positioned moving forward. And now we will open the call for any questions from the audience. And, Rocco, please go ahead.

Yes, sir. Thank you. To ask a question, you can press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, We will pause for just a moment to assemble our roster. And it looks like our first question today comes from Dick Ryan at Colliers. Please go ahead.

Morning. Steve, are you there? Am I on mute? Sorry. I think I was on mute. Thanks for taking my Hey, a solid end to the year. You know, we are 1 quarter into fiscal 2027. Can you talk on the order activity What you are seeing kind of the segments? I mean, you I think you indicated in the past that the backlog had shipped all the alternative energy or clean energy so the backlog was pretty much medical and other. Can you give us a sense of your order pipeline to date here with the like I said, with first quarter already in the bag essentially.

Yes, yes, for sure. Good question, Dick. As you indicated, our backlog historically for the last few years has been very heavily clean energy related. I can tell you this current fiscal year it is very light on clean energy related. it is really transitioned and shifted drastically over to the medical sectors and the microelectronics sectors. So that is most definitely where we are seeing our fastest growth coming from. But I should note that it is really a result of a lot of the machine integration development we did for the clean energy sector That was directly transferable, those capabilities over to these other marketplaces. So our diversification really work to our advantage here. But that is where it is really coming from. And that also goes how it is looking going forward. If I look at our quotes and forecast going out, it continues to be these high ASP, high average selling price larger production systems that are being quoted and presented. So it is customers that maybe were buying machines that were $400 thousand or $500 thousand $600 thousand or $1 million a piece. But now they are making these transitions over to machines that are maybe $1 million, $2 million, or $3 million as part of the transition to our capabilities to provide these high ASP complex platforms. Okay.

Thank you. And the last call, mid year, you talked about coming out of a major semiconductor show. Showing a lot of interest and kind of renewed confidence in entering that market longer term as they move from 200 to 300-millimeter fab photoresist business. Can you give us an update on the progress you have seen over the last 6 months, Steve?

Sure. that is been a very serious focus for us over the last year. As we have talked about in prior discussions, we had what I would describe a very solid end product that was well received for the 200-millimeter lab market. Well, we have put a lot of effort into the development of 300-millimeter wafers with the goal of ultimately directing those more towards the fab marketplace And that is coming along quite nicely with us. Maybe a little bit longer than we expected it to be, but it is coming along nicely. We are going to be participating in bringing that 300-millimeter machine as planned for the end of this calendar year to be doing a semiconductor show Semicon Europe, which is actually the first time we have ever participated in that show for Sono-Tek. We think it is a significant enough introduction that we want to make the world aware of this availability and capability at these upcoming shows. So I think we will start to see that begin to contribute to the revenue stream more so in the coming fiscal year, maybe we will find in FY 2027, maybe we will see some orders, but actual deliveries will likely be more likely to fall in the following fiscal year in FY 2028, I should say, would be in FY 2028 would be actual deliveries of machines that are focused on that. But we are anxious to get it out there. For the market to see it and to really gauge the acceptance of it. But I think it will go fairly well, you know, it is a product that we feel like we are being pulled into versus us trying to push our way into the marketplace. I believe we have customers that see a need for us with that product. Okay.

Thanks. And 1 last 1 for me. We have a nice buildup of cash. I do not think you have done any stock repurchases down here. what is the status of the repurchase program? And I think your investments have been kind of for organic growth. what is your thoughts on potential M&A? R. Stephen Harshbarger: Yes. You are correct in the fact that we do have a stock repurchase program of which we have exercised some, but it is been very minimal amount that we have purchased back so far.

I think it is maybe several hundred thousand dollars or something along those lines. But so it is not a significant amount at this time. We certainly do continue to have active both inbound and outbound discussions as part of our normal daily routine in practice at Sono-Tek. You know, like everybody, we are out there looking for the correct valuations and the correct synergies. And we most certainly were highly selective. there is no doubt about that, that we are very highly selective. But I think we are fortunate that we have the ability to be highly selective because if something does not happen immediately for us, we feel like we have a long runway of growth organically within the company. But we continue to be relatively active considering both inbound and outbound activity. Okay, great. Thanks Steve and congratulations on another strong performance here. I will get back in line. Thank you. Thanks, Dick. Was good catching up.

Thank you. And our next question today comes from Ted Jackson at Northland Securities. Please go ahead.

Thanks very much. Good morning. Hey, good morning, Ted. So, Steve, let's start with I mean, a little bit on backlog and bookings things like that.

So, you know, backlog at 9.1. I mean, it is down sequentially, but up year over year, it is a solid number. But if I kind of back through it, you know, the book to bill was, roughly 0.4 and your bookings number is around $2.5 million. You can correct me if I am wrong on that. And, yeah. My data only goes back through 2022, but that is actually the lowest kind of bookings number I have seen I have in terms of the stuff I have been you know, following and tracking.

And I guess the question with that is has there been a you know, like, beyond, like, the Alt Energy You know, has there been somewhat of a slowdown in terms of, business coming in the door? And then could you or is there opportunity out there that manifested itself and, you know, any kind of, you know, bookings growth and if there is maybe a discussion about what are the opportunities that are out there that would that could come into play to strengthen up your view with regards to the second half? I mean, it is a whole bunch of stuff around there, but you get where I am going. that is my first question.

Yeah. 100%. And it is been a common question over the past year, year and a half now since the new administration has come into play. I think because we participate in that clean energy sector, I think our investor base may have thought, oh, Sono-Tek's gonna get punished for that. And there is no doubt in the electrolyzer area, our business did slow down. But I think what a lot of our investors did not recognize is our ability to switch to other marketplaces very quickly. With the same technology, but just refocus our front end of the organization to other markets that were thriving. And right now, it is more lumpy. Our backlog than what it is been historically. And that is just because of these high ASP platforms that come in. You know, we get more frequently these $3 million, $4 million, or $5 million orders that drop in and it makes your backlog go up and then it works through and disappears. We certainly have to work towards making sure those are coming in not just once a quarter, but our goal here is to make sure those sort of orders will be coming in once a month and ultimately a couple times a month going forward in addition to our normal flow business. So although we will see it is lumpy, as I think right now, year over year, we are either flat or just slightly up maybe backlog I think it is so it is right near our year end high backlog. Number that we have ever had. But when you compare it the prior quarter, it did dip back down. But I think again you are going to start to see it go back up again. And continue to see that lumpiness going through it. Most definitely though, the big shift which is going to drive the backlog moving forward is the ability to drive higher ASP more complex platforms into the portfolio. And I should say that every time we get an order, we almost think, wow, it could not get any bigger than this. And then all of a sudden you go back and ask 2 simple words to your customer base. We typically now will just say, what next? What else do you need from us? What would make your process, your life, your manufacturing realm easier if Sono-Tek provided it for us for you. And that is much different than saying, here's what we have to offer. You know, here's what we have to offer is just the beginning of the conversation that we have with our customers now. The bigger question is, here's what we have to offer, but what else would you like us to provide you And that is really driving our growth significantly. And I look at some of these more recent quoting activity, the products that we have, it is not uncommon for us to quote a customer say a million dollar machine but by the end of the discussion, 6 months later, that million dollar machine might be $6 million or $5 million or $4 million but several times larger than what it started out. And that is all because of our ability both to provide and ask the question of what else, what next would you like us to provide to you. And the customer now they have the confidence to give us those sorts of additional add ons because they worked with us for so long. And they know that the quality of the products we are delivering to them are good. So it is worked out really well for us with that strategy. that is something we are going to be continuing to do. And to be honest, I do not know how high it could go. That every time we hit another milestone, we will say, wow, that is a $3 million, $4 million, or $5 million order. It seems like the next order becomes larger. So we are just going to keep on pushing that as far as this will let us take it and drive these high ASP production systems, larger and larger.

Do you have a view of a pipeline of opportunity that will enable you to feel more confident in the second half of the year? And if so, at what point does you where's kind of like the point where you need to have that? Those opportunities, become orders And then, you know, maybe some discussion about markets that they are in.

Yeah. Yeah. We most definitely have a pipeline. And that is driven by the forecast and we keep track, although we do not give guidance or publicly announce it, but we had forecast and marketplaces where they are coming from. Most of the most recent activity is microelectronics in the medical sector. Then as far as guidance, I think the biggest challenge for us now with these high ASP complex production systems, it is the lead time because if we say for example, get an order in the next month, and keep in mind we are just finishing our fiscal Q1 in another couple of days from now. So we have got very good guidance on Q1. And pretty good guidance on Q2. But if we get any significantly high ASP orders, probably in the next month there is a very good chance they will ship within this fiscal year. If by chance those same orders come in 2 months from now, that will very likely push them into the next fiscal year. Which is still good, but it just kind of is punishing on the current fiscal year. So, that is why you will see us be a little bit more cautious on second half numbers. And we should be able to give much clearer guidance in our next conference call. And that will be dependent upon did we get orders over this next 1 or 2 months? That allow us to ship these big production platforms in the current fiscal year or will they be pushing into next fiscal year And again, it makes the visibility a little bit tough longer term because of that. But either way, there is definitely a nice upward trend in the activity and these quoting quotes that are going out in the level of serious with these quotes.

And then, because I am taking up too much time, but my, next question is just if you look at your geographic mix and you kind of look at it for the past few years, you have had exceptionally solid growth. Out of North America. I mean, you had $0.5 million of revenue in 2020 You did almost $14 million of revenue in 2026. it is been up every year over that time frame. And which dragged down the aggregate growth has been APAC. Is there a case to be made just ignoring kind of the end markets that you know, that the decline in APAC has become such a small portion of revenue for Sono-Tek that the growth on the top line might improve just because you do not have that drag?

Oh, most definitely. I mean, there is a lot of areas where things could, because we are, in my opinion, just at the beginning phases. I mean, opinion, we are still small, and there is so much potential upside here. And with our high ASP platforms, it only takes 1 or 2 significant orders to make a big impact on the revenue upside. And, you know, of course, we are never going to say, alright, we are anticipating to get this $10 million order until it is really locked in there. But orders like that are the kind of thing where all of a sudden you could be up by 50% to 80%. on 1 significant order. And that is a big change in the company's overall trajectory. And we always plan conservatively because we like to stay profitable. We like to make money. But do not get me wrong, We continue to invest very heavily in our R&D to grow the company. But when we give guidance, we like to give relatively conservative guidance to make sure we achieve what we are saying we are going to do and leave some upside potential. Great. I will let someone else take a question if they want. Thanks very much, Steve. Hey, good talking to you, Ted.

Thank you. And our next question comes from Bill Nicklin at White Insights. Please go ahead.

Hey. Good morning. Hey, good morning, Bill.

Nice margins, nice margin improvement. Good job. Thanks. And thanks for taking questions. I got a couple here. And you have touched on some of it. Basically, over the last 4 or 5 years or so, you consistently delivered strong gross margins and it looks like they are getting stronger and headed higher from here. Was that but yet your bottom line has not been stellar. Was that a specific strategy and what do you think you have accomplished from that? And where are we at going forward based on, what it looks like is the money that you spent building out the business. Yes, good question. I would speak to a significant extent it was deliberate. We very intentionally reinvested heavily in application engineering, things like process development, and maybe broader integrated system capabilities, all with the goal is to position Sono-Tek for large, more sophisticated production opportunities I also have to say that importantly, our net margins certainly could have been higher during that period. And that is had we chosen to prioritize near term profitability over some of these growth initiatives and strategic investments. I am not at the same time, I would say that some of the market acceptance in pricing resilience we have seen with these newer integrated system solutions definitely exceeded our original expectations. As we have evolved towards more complex and higher ASP production platforms. Which commonly involved outsourcing subsystems and our integration partners. I, for sure, initially expected some downward pressure on margins. But in practicality that has not really happened. We have been able to maintain consistently strong gross margins through the transition. And they stayed within and really I would describe as an unusually tight range. They are generally in the upper-40% to low-50% area. And I think it is because our customers understand that they are not simply buying sophisticated coating equipment from Sono-Tek anymore. They are buying our process expertise, our application knowledge, and highly specialized integrated capabilities tailored to their specific manufacturing needs and processes. So, while we are certainly a manufacturing company, our customers they are increasingly viewing Sono-Tek as much more of a technology solutions and maybe a process expertise provider, I would rather than, say, a traditional equipment supplier. Where margins typically fluctuate much more significantly. And the good news is our customers are willing to pay for integration expertise and the ability to work with a single source for a broader turnkey solution. Which has again allowed us to maintain these healthy margins. Great. Thanks. A couple of years ago, there was some discussion about building out what we call building 6 on your campus. And that appeared that we get put on hold probably because of the clean energy slowdown. I understand that is back under consideration and now, and that would take your overall capacity up from somewhere $25 million to $29 million now up to $40 million to $44 million range. Is that correct? And what is in your pipeline as you look out that could get the revenues up to that $40 million to $44 million range. Sure. Sure. Yeah. Good observation. A couple years ago, as we mentioned, we did discuss larger expansion initiatives tied primarily in anticipation of green energy growth sector And when portions of that market slowed, we took a more measured approach I would describe it as rather than expanding too aggressively ahead of demand. However, more recently, we have been increasingly proactive with the next phase of our manufacturing expansion And going along with that is some flow optimization strategy. And this first phase that we are looking at right now takes advantage of currently underutilized vertical space. And that is within our existing facility. And it is really by constructing a mezzanine structure and reconfiguring portions of our floor for improved workflow efficiency and space utilization. We expect to begin implementing that phase during the current calendar year and the investment will likely be in the area of this is early but $500 thousand to $600 thousand. And should increase our practical annual revenue to roughly $35 million at this point is our latest guess. While also though very importantly improving our operational efficiency throughout the facility. Now we are also actively working with New York State Economic development programs. And we are hopeful that they will participate in supporting this project. We believe internally here that our investments very well align with the state's goals around advanced manufacturing and high value domestic production jobs. So our goal is to continue expanding these capabilities here in New York rather than elsewhere. And we believe state participation can play an important role helping support those objectives. So we are hopeful that confirmation of state participation will allow us to formally kick off this phase of the project during the current calendar year Beyond that, we do have an additional expansion phase under consideration that would involve taking over our adjacent space that we have currently in a leased building on a short term lease. And assuming that moves forward, we believe it could expand our overall capacity to approximately that $45 million in area revenues you mentioned. And I think what is really important is what is driving this renewed interest and expansion. Is not just 1 end market, but it is the broader evolution of the business towards larger more sophisticated production platforms, mostly across medical devices and microelectronics in some very selected clean energy opportunities. You know, we are seeing these large system opportunities, these higher ASP programs, and a pipeline that increasingly supports the need for additional scalable manufacturing capacity over time Great. Thanks. Let's say you get up to the $35 million, then $40 million to $45 million revenue run rate. What is your headcount going to look like?

You know, I do not think if that is if that is Steve Bagley's would be exact, but I think we are currently operating with around 90 employees. And is 90 right, Steve? 90 is about right, right now. Yes.

Oh, Okay.

And while we could certainly expect headcount to increase as revenues scale, we certainly would not expect it to increase proportionally revenue, of course, The majority of hiring a personnel would likely be within the manufacturing operations as we expand production capability and throughput. But at the same time, we would expect continued growth in particular of our FTE group, which as a reminder is our field deployed engineering team. That team works very closely with customers on application development, process optimization, and helping ensure successful implementation of our technology with the customer and their manufacturing environment So we are also quite aggressive on increasing deployment, as we mentioned, AI and automation tools across the organization to help improve scalability over time. And we are seeing opportunities to do more with less across many areas of the business. And that includes areas like programming, marketing, sales support, contract reviews, purchasing, and several other operational type of functions I would describe. And I guess I really believe that Sono-Tek that we are ahead of the curve organizationally in our adoption of AI tools. But frankly, you know, we are still in the relatively early stages of deployment with that said. So I think there is still some meaningful additional leverage potential over time as those systems mature internally. So overall, to answer your question, for a scenario where revenue output let's say it approximately doubles from our current levels. I would estimate headcount to grow in the range roughly of maybe 30% to 40% which should reflect both the operating leverage and scalability built into our general business model. Great. Thank you very much. I will jump out at this time. at the end, I might have another question or 2. Thank you. You got it, Bill.

Thank you. And our next question comes from Daniel McGinnis, a private investor. Please go ahead.

Yes. it is great that every quarter, there is more terrific news on Sono-Tek. I am disappointed in the lack, the minimal use of the stock buyback program. That, stocks go up on earnings per share beats. And when you are just trying to get a penny above expectations, 1 way to do that is reduce the number of shares. And for many months, the stock was down, trading, at the value within the low-$4 range. So this would have been a great investment. What are your thoughts?

Yeah. it is a reasonable question, Dan. You know, and it is something that we bring it about the BOD level. Quite often about what is the right timing to do stock buybacks. I know we do have a relatively, significant amount of cash on hand. And we bought back a relatively small amount of stock to date. It continues to be something we look at closely Most of the potential acquisition opportunities we are looking at are not cheap. So we have had the ability to look at them quite aggressively and to make short term moves if we needed to. And I will tell you, having that cash on hand also gives us a lot of flexibility to make strategic moves aggressively when we see the right opportunity arise. And the opportunities are more plentiful now but higher cost, I should note. than they have been historically for us. And that is just because our overall model is becoming larger by scale. So, we most certainly will continue to look at that. I would not be surprised if that number for buybacks starts to change where the BoD's guidance is for. But it is something we are going to continue to be looking at and evaluating of what is the right timing there for sure. Okay. Interesting. And I will throw in a different point is, world has had quite a few oil price shocks in the past and my point is this 1 is different, We had the Ukraine war. We have now got countries with the Iraq war. Problems that are seeing that they need energy independence. it is not just a matter of are alternative energy, sources, good value, financially prudent, it is how do I make sure that I can still keep the electricity on. So it is interesting that the effort in Sono-Tek's business that is dropped but I am very hopeful in that area as well. Yes, I appreciate that comment, Dan, because I also agree that, you know, long term energy independence is going to ultimately have to be a major factor and criteria for almost all governments. You know? So I have got to believe that this will at some point here become back to the prior level of activity it was, if not significantly higher in the future. But timing certainly will be an impact with the and how they are being handled from that standpoint. Great. Well, thank you. Good talking.

Thank you. And that does conclude our question and answer session for today. I would like to turn the conference back over to Steve Harshbarger for any closing remarks.

Excellent. Well, thank you. And in closing for fiscal 26, I believe this was a strong year for Sono-Tek. Marked by consistent revenue, significant margin expansion and continued strategic execution. We believe our focus on high ASP production systems market diversification and operational discipline is driving sustained long term value. We remain confident in our outlook for FY 2027. Supported by strong momentum in the medical and microelectronics sectors. And this is supported with our strong backlog. And I thank you all for joining us this morning. And we look forward to updating you on our progress in the coming months. Thanks very much everybody. Enjoy your rest of your day.

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. Thank you. Thanks. Thank you all.