Full Press Release Details
Contact: Jeff Ritchey, CEO, CFO, & Secretary
Matthew Hayden, Investor Relations
Hayden Communications, Inc.
PRO-DEX, INC. ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
Sales Increase 30% over prior year quarter and 24% year to date
Backlog up 53% since December
SANTA ANA, CA, May 22, 2006 - PRO-DEX, INC. (NASDAQ: PDEX), a developer
and manufacturer of embedded motion control, miniature rotary drive systems and
fractional horsepower DC motors, which enables speed-to-market for customers who
serve the medical, dental, factory automation, scientific research, aerospace
and military markets, today announced financial results for the fiscal third
quarter ending March 31, 2006.
Consolidated net sales for the third quarter were $4.2 million, an
increase of 30.0 percent compared to the $3.2 million reported for the third
quarter last year and a 10.8 percent sequential increase compared to the $3.8
million for the second quarter of the 2006 fiscal year. Approximately 818,000 of
the increase was due to the Astromec acquisition. Net income for the quarter
decreased to $6,000, or $0.00 per basic and diluted share, as compared to a net
income of $275,000 or $0.03 per basic and diluted share for the three months
ended March 31, 2005. For purposes of calculating diluted earnings per share,
approximately 10.0 million shares were used for the quarter ending March 31,
2006, compared to approximately 9.6 million shares for the prior year.
Pro-Dex's CEO, Jeff Ritchey, commented, "We continue to generate
top-line growth and remain profitable, despite the challenges that have impacted
our operations during the past few quarters. While the financial results
reported today are disappointing, our order backlog, together with continuing
structure and system improvements, should allow us to maintain a positive
outlook on future sales and profits."
"Recent acquisitions have proven to be valuable additions to the
Company. As they have siginificantly broadened our product offering and
increased the size of our addressable market," Mr. Ritchey continued. The
reception for the Intraflow(R) system has been very positive at the Dental and
Endodontist trade shows and we are beginning to see sales build to meaningful
levels. Our Pro-Dex Astromec acquisition has been accretive to our operating
income and we continue to work toward integrating its specialized motor
manufacturing technology into the medical devices and other systems we provide
for both current and prospective customers.
For the three months ended March 31, 2006, the Company's consolidated
gross profit decreased 11.4 percent to $1.5 million, or 34.5 percent of sales,
compared to $1.6 million, or 50.7 percent of sales, for the same three months in
the previous year. Margins were impacted by approximately $359,000 in costs
directly related to the repair and upgrade of product shipped during fiscal
2005. This included an accrual of $235,000 for estimated warranty reserve costs
for costs associated with shipments made in prior periods. These repair and
upgrade costs resulted from previously disclosed faulty vendor-supplied
components that required design changes impacting many of our medical device
Total operating expenses for the quarter ended March 31, 2006 increased
11.1 percent to $1.4 million, compared to $1.3 million for the three months
ended March 31, 2005. The increase was the result of additional sales and
marketing expenses associated with the IntraFlow product and administrative
costs associated with Pro-Dex Astromec, offset by personnel expense reductions.
Operating expenses during the third quarter were 34.3 percent of sales compared
to 50.7 percent in the prior year third quarter.
Consolidated net sales for the nine months ending March 31, 2006 were
$11.7 million, up 23.9 percent compared to the $9.5 million reported for the
same period last year. Gross profit for the nine months ending March 31, 2006
was $4.9 million, or 41.6 percent of sales, compared to $5.1 million, or 54.1
percent of sales in the same period last year. The decrease in gross profit as a
percentage of sales was primarily related to the impact of approximately
$551,000 in unplanned warranty and accrued costs incurred during the first nine
months of the fiscal year associated with faulty vendor-supplied components and
associated product redesigns. Total operating expenses for the nine months
ending March 31, 2006 were $4.0 million, up 4.8 percent compared to the $3.8
million for the same period last year. As a result, net income for the nine
months ending March 31, 2006 decreased 35.2 percent to $596,000, or $0.06 per
basic and diluted share, as compared to a net income of $921,000 or $0.10 per
basic and diluted share, for the nine months ended March 31, 2005.
Addressing the Company's ongoing operations, Mr. Ritchey noted, "We completed
the quarter with a backlog of approximately $10.7 million (inclusive of the $1.9
million backlog from the Pro-Dex Astromec operations) up from $7.0 million at
the end of December. We have already begun to see more robust product designs as
a result of the improvements made in our product development, procurement and
manufacturing processes. The system improvements have strengthened our current
product offerings while making us more attractive to both current and
prospective customers. Consequently, our product development efforts continue to
be active as we ended the quarter with six active product development projects,
all expected to launch and produce meaningful revenue in the next fiscal year."
On March 30, the Company completed the $2.2 million purchase of a
20,000 square foot industrial building, associated land and related
improvements, located in Carson City, Nevada, which was a subsequent component
of the Astromec acquisition.
The Company completed the quarter with $408,000 in cash on hand and $1
million of its credit line available. Shareholders' equity increased 7.3 percent
to $11.8 million, compared to $11.1 million as of June 30, 2005.
Investors and all others are invited to listen to a conference call
discussing the third quarter results, today at 4:30 p.m. Eastern Time. The call
will be broadcast over the Internet at www.pro-dex.com. An online replay will be
available for 30 days. Additionally, a telephone replay will be available two
hours after the call for 48-hours by dialing (800) 642-1687 for domestic callers
and (706) 645-9291 for international callers; conference ID# 8872980.
Pro-Dex Inc., with operations in Santa Ana, California, Beaverton,
Oregon and Carson City Nevada, specializes in bringing speed to market in the
development and manufacture of technology-based solutions that incorporate
embedded motion control, miniature rotary drive systems and fractional
horsepower DC motors, serving the medical, dental, semi-conductor, scientific
research and aerospace markets. Pro-Dex's products are found in hospitals,
dental offices, medical engineering labs, scientific research facilities,
commercial and military aircraft, and high tech manufacturing operations
For more information, visit the Company's website at www.pro-dex.com.
Statements herein concerning the Company's plans, growth and strategies may