Full Press Release Details
Contact: Patrick Johnson, President & CEO
Matthew Hayden, Investor Relations
Hayden Communications, Inc.
PRO-DEX, INC. ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
Sales Increase 30% over prior year quarter and 21% year to date
Net Income Increases 79% over prior year quarter and 25% over prior quarter
SANTA ANA, CA, February 9, 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 second quarter ending December 31, 2005.
Consolidated net sales for the second quarter were $3.8 million, up 30
percent compared to the $2.9 million reported for the second quarter last year
and $3.8 million in the prior quarter. Net income for the quarter increased 79
percent to $327,000, or $0.03 per basic and diluted share, as compared to a net
income of $183,000 or $0.02 per basic and diluted share, for the three months
ended December 31, 2004. For purposes of calculating diluted earnings per share,
approximately 10 million shares were used for the quarter ending December 31,
2005, compared to approximately 9.5 million shares for the prior year.
Pro-Dex's President and CEO, Patrick Johnson commented, "This was
operationally a solid quarter as we successfully completed two acquisitions and
continued our recovery from vendor-related quality issues reported in the first
quarter. We reported approximately $3.8 million in sales for the quarter,
representing a 30 percent increase over the second quarter last year. Included
in these sales was approximately $200,000 in shipments of a new medical device
for an existing customer, a product which is anticipated to contribute $400,000
to $800,000 in revenue through the first fiscal quarter of 2007. The Company
also grew its recurring sales revenue by approximately $1 million compared to
the second quarter of last year as we continued to increase the conversion of
development efforts into long-term manufacturing supply agreements for new
As previously announced, the Company reversed approximately $250,000 in
sales made to Intravantage during the fiscal year prior to its acquisition.
Excluding this acquisition related adjustment, gross sales for the quarter were
approximately $4.0 million, a 38 percent increase over the second quarter last
year and a 6.2 percent increase over the prior quarter, reflecting the growth in
total product shipped during the second quarter. We have participated in several
industry trade shows and the reception and feedback for the IntraFlow Anesthesia
Delivery System product has been extremely encouraging. Currently, management is
in discussions with several prospective distribution partners to focus on both
the domestic and international markets.
For the three months ended December 31, 2005, the Company's
consolidated gross profit increased 7 percent, or $109,000, to $1.7 million
compared to the same three months in the previous year and remained constant
with $1.7 million in the prior quarter. Gross profit as a percentage of sales
decreased to 46.1 percent for the three months ended December 31, 2005 compared
to 55.8 percent for the three months ended December 30, 2004 and increased from
a gross margin percentage of 44.8 percent for the previous quarter. Similar to
the first quarter, margins were impacted by the blend of products manufactured
during the quarter despite a moderate increase in sales of factory automation
products. In addition, approximately $125,000 in costs directly related to the
repair and upgrade of product shipped during fiscal 2005, which contained faulty
vendor-supplied components, also contributed to the decline in margins.
Excluding this expense, gross profit as a percentage of sales would have
approached the aggregate gross margins seen last fiscal year.
Total operating expenses for the quarter ended December 31, 2005
decreased $84,000 or 6.4 percent to $1.2 million, compared to $1.3 million for
the three months ended December 30, 2004 and $1.3 in the prior quarter. The
decrease was the result of a general lower level of spending in all expense
areas. As a percentage of sales, operating expenses during the second quarter
decreased to 33 percent compared to 45 percent last year and 34 percent in the
Consolidated net sales for the six months ending December 31, 2005 were
$7.5 million, up 21 percent compared to the $6.2 million reported for the same
period last year. Gross profit for the six months ending December 31, 2005 was
$3.4 million compared to $3.5 million in the same period last year. This
decrease was directly related to the impact of approximately $234,000 in
unplanned warranty and accrued costs incurred during the first half of the
fiscal year associated with faulty vendor-supplied components. Total operating
expenses for the six months ending December 31, 2005 remained flat at $2.5
million compared to the same period last year. As a result, net income for the
six months ending December 31, 2005 decreased 9 percent to $589,000, or $0.06
per basic and diluted share, as compared to a net income of $646,000 or $0.07
per basic and diluted share, for the six months ended December 31, 2004.
Addressing the Company's ongoing operations, Mr. Johnson noted, "New
order bookings were solid during the second quarter, resulting in a total order
backlog of approximately $7.0 million at the end of December, compared to $4.7
million last year, representing a 49 percent year-over-year increase and
compared to $7.6 million at the end of the previous quarter. In this
calculation, it's important to note that we eliminated approximately $900,000 of
backlog during the second quarter in connection with our acquisition of the
IntraVantage patents. Subsequent to the quarter end, and resulting from the
Astromec acquisition, backlog now stands at approximately $10.2 million.
Included in this backlog is $1.7 million in orders for Astromec product and a
newly received purchase order commitment in excess of $1 million from the same
customer who was impacted by the quality issues related faulty vendor-supplied
components. Receipt of this new blanket order is not only indicative of the
resolution of the quality issues but Pro-Dex's ability to maintain strong
customer relationships through responsiveness and creative problem solving. The
current backlog also includes new orders that will drive an estimated 15 percent
increase in production volume for our newly acquired Pro-Dex/Astromec business
unit during the next 12 months, validating the synergistic value of the
acquisition. We are confident in our ability to expand Astromec's presence in
the medical device industry by integrating their specialized motor manufacturing
technology into our existing medical device division, thus providing expanded
capabilities to both current and new customers."
Commenting on the Company's near term prospects, Mr. Johnson said, "We
ended the quarter with eight active product development projects representing
potential first year revenue of $6.8 million, which continues a trend towards
higher quality projects that carry the potential for larger first year revenue
contributions. We are actively engaged in discussions with both current and