Full Press Release Details
Contact: Mark Murphy, Chief Executive Officer
Brett Maas, Investor Relations
Hayden Communications, Inc.
PRO-DEX, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2006 RESULTS
SALES INCREASE 27% FOR THE QUARTER, 23% FOR THE YEAR; EARNINGS AT HIGH-END
OF RANGE PROVIDED AUGUST 14
BACKLOG REACHES $11.7 MILLION AS OF JUNE 30, 2006
SANTA ANA, CA, September 27, 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 fourth quarter and full-year period ending June 30, 2006. The audited annual
results met the revenue expectations for the year and the earnings were at the
high-end of the Company's preliminary earnings outlook provided August 14, 2006.
Consolidated net sales for the fourth quarter were $5.3 million, a
sequential increase of 27 percent compared to the third quarter and an increase
of 22 percent compared to the $4.4 million reported during the fourth quarter of
fiscal 2005. For the fiscal year ended June 30, 2006, the Company reported
revenues of $17.1 million, 23% higher than the $13.8 million reported for fiscal
Net income for the fourth quarter was $231,000, or $0.02 per basic and
diluted share, compared to net income of $6,000, or $0.00 per basic and diluted
share for the third quarter and compared to net income of $928,000, or $0.09 per
basic and diluted share for the three months ended June 30, 2005. The Company
reported net income for the year of $827,000, or $0.09 per basic and $0.08 per
fully diluted share, compared to net income of $1.9 million, or $0.20 per basic
and $0.19 per fully diluted share last year. Last year's fourth quarter earnings
included a $227,000 favorable reversal of an income tax valuation reserve that
was not repeated this year. In calculating earnings per share for fiscal year
2006, the Company utilized 10.0 million fully diluted shares compared to 9.7
million fully diluted shares for the fiscal year 2005.
Mark Murphy, the Company's President and Chief Executive Officer,
commented, "We reported top and bottom line improvements in our fourth quarter
results compared to last quarter, but recognize the pressing need to make
further adjustments in our processes and our organizational structure to fully
realize the Company's earnings potential. We continue to see strong demand for
our expertise in helping customers accelerate the development of their products.
Our goal is to increase our quality and engineering capacity to meet this
growing demand in a more efficient manner with high standards for quality.
During fiscal 2006, we made two strategic asset acquisitions, strengthening our
product line by adding a high impact specialty dental product and a component
supplier with a majority of its sales to the aerospace market. These
acquisitions are expected to provide additional capacity for growth and a
high-margin product for us to market directly to the dental industry. We remain
excited by the potential of these two acquisitions and believe that we can
leverage these new assets to benefit shareholders."
Gross profit for the fourth quarter was $1.7 million, or 31.9 percent
of sales, compared to gross profit of $2.0 million, or 44.8 percent of sales for
the fourth quarter last year. The fourth quarter gross profit this year was
unfavorably impacted by $155,000 in warranty costs and $230,000 excess inventory
costs. Gross profit for the year was $6.6 million, or 38.5 percent of sales,
compared to gross profit of $7.1 million, or 51.2 percent of sales last year.
Gross profit for the year was impacted by over $700,000 in warranty costs and
over $500,000 in obsolete inventory costs.
Operating expenses increased by 21 percent to $1,468,000 compared to
$1,208,000 in the fourth quarter last year, due to expenses associated with the
Intraflow product launch of $150,000 and by incurring the normal operating costs
acquired with the Astromec acquisition of $161,000. For the full fiscal year,
operating expense increased 13.4 percent to $5.4 million from $4.8 million last
year, but as a percentage of sales, was reduced from 34.1 percent to 31.9
Mr. Murphy continued, "We completed the year with a backlog of $11.7
million compared with a backlog of $10.7 million at March 31, 2006 and $7.9
million at June 30, 2005 and recorded over $17 million in new order bookings
during fiscal year 2006, demonstrating ongoing demand for our expertise. The
quality issues we faced did not result in the loss of any customers,
demonstrating the Company's commitment to deliver on its promises. We look
forward to meeting the challenges which face our business today, and believe we
can build an even stronger Company, with more consistent revenue growth and
profitability, as we fully integrate our speed to market capability with
industry leading quality."
We completed the fiscal year with cash and cash equivalents of $358,000
compared to cash and cash equivalents of $2.6 million as of June 30, 2005, with
the decrease due to the acquisitions made during the year. We generated over
$200,000 in operating cash during the fourth quarter and reduced our credit line
borrowings by $100,000 during that period, leaving $1.1 million of our credit
line available at the end of the quarter. Total working capital was $6.1 million
as of June 30, 2006 compared to $8.3 million on June 30, 2005. Shareholder's
equity increased 8.6 percent to $12.1 million from $11.1 million as of June 30,
For fiscal 2007, the Company does not currently plan to provide sales
and earnings guidance.
TELECONFERENCE INFORMATION:
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Investors and all others are invited to listen to a conference call
discussing the fourth quarter and fiscal 2006 results, today at 4:30 p.m.
Eastern Time. The call is scheduled to be broadcast live over the Internet on
Wednesday, September 27, 2006 at 4:30 p.m. Eastern Time and may be accessed by
visiting the Company's website at www.pro-dex.com. Mark Murphy, Chief Executive
Officer and Jeff Ritchey, Chief Financial Officer, plan to host the call. If you
would like to join the call, dial (866) 323-3543 U.S. and (706) 679-0672
International, conference I.D. 7132629. You may identify the call as the Pro-Dex
Fourth Quarter Earnings Call.
Pro-Dex Inc., with operations in Santa Ana, California and Beaverton,
Oregon, specializes in bringing speed to market in the development and
manufacture of technology-based solutions that incorporate embedded motion
control and miniature rotary drive systems, serving the medical, dental, factory
automation, and scientific research markets. Pro-Dex's products are found in
hospitals, dental offices, medical engineering labs, scientific research
facilities and high tech manufacturing operations around the world.
For more information, visit the Company's website at www.pro-dex.com.
Statements herein concerning the Company's plans, growth and strategies may