Full Press Release Details
PRO-DEX, INC. ANNOUNCES FISCAL SECOND QUARTER AND SIX MONTH RESULTS
Revenues Up 6% and Operating Profit Up 165% For Comparative Six-Month Periods
Company Announces New Credit Facility with Union Bank
IRVINE, CA, February 10, 2011 PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal second quarter and six months ended December 31, 2010.
Sales for the quarter ended December 31, 2010 increased 8% to $6.2 million from $5.7 million for the corresponding quarter in 2009,
resulting primarily from growth in sales of the Company s medical device products to its largest customer, and from growth in sales of dental products. For the six months ended December 31, 2010, sales increased 6% to $12.0 million from
$11.3 million for the corresponding period in 2009, resulting from growth in sales of the Company s medical device and motion control products.
Operating income was $571,000 for the quarter, a 333% improvement from $132,000 in the corresponding 2009 period. For the six months ended December 31, 2010, operating income improved 165% to
$977,000 from $369,000 for the corresponding six-month period in 2009.
Net income for the 2010 quarter was $401,000, or $0.12
per fully-diluted share, which represents a 31% decrease from net income of $580,000, or $0.18 per fully-diluted share, in the corresponding 2009 quarter which included recognition of deferred tax credits of $499,000. For the six months ended
December 31, 2010, net income was $743,000, a decrease of 3% from net income of $763,000 for the corresponding period in 2009 which included recognition of deferred tax credits of $494,000. The 2009 deferred tax credits were attributable to
income tax benefits recognized in 2009 resulting from utilization of net operating loss carryovers.
Gross profit for the
quarter ended December 31, 2010 grew to $2.4 million, a 39% gross profit margin, compared to gross profit of $2.0 million, a 35% gross profit margin, for the year-ago period. The increase in gross profit as a percentage of sales during this
three-month period was due to a change in mix toward sales of medical device products with relatively higher margins, and to cost reductions. For the six months ended December 31, 2010, gross profit was $4.6 million, a 38% gross profit margin,
compared to gross profit and margin of $3.9 million and 34%, respectively, for the corresponding six-month period in 2009. The increase in gross profit as a percentage of sales during this six-month period was due to a change in mix toward sales of
medical device and motion control products at relatively higher margins, and to cost reductions.
Company s President and Chief Executive Officer, commented, We are very pleased with the results for the first half of fiscal 2011. Sales for both quarters in this period increased sequentially and year-over-year. This performance,
combined with improved gross margins and control
over operating expenses resulted in income from operations at significantly higher levels than in the corresponding periods of last year.
Bank Credit Facility
On February 4, 2011, the Company entered into a credit facility agreement with Union Bank that replaced its previously existing Wells Fargo Bank credit facility. The Union Bank facility consists of
(a) a revolving credit line of up to $1.5 million based on eligible accounts receivable and inventories, (b) a non-revolving credit line of up to $350,000 for the acquisition of equipment, which will convert to a 3-year term loan in one
year, unless sooner converted based on amounts borrowed under the line, and (c) a 3 1/2-year term loan that replaced the previously existing term loan with Wells Fargo Bank.
Mr. Murphy remarked, Our new relationship with Union Bank gives us expanded credit capacity and is an important step in pursuit of our strategic objectives.
Teleconference Information:
Investors and analysts are invited to listen to a broadcast review of the Company s fiscal 2011 second quarter financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be
accessed by visiting the Company s website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via
telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S.
For those who cannot access the
live broadcast, a replay will be available from two hours after the completion of the call until midnight (Eastern Time) on February 25, 2011 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S., and then
entering account number 286 and conference I.D. number 366897. An online archive of the broadcast will be available on the Company s website www.pro-dex.com for a period of 365 days.
Pro-Dex, Inc., with operations in California, Oregon and Nevada, specializes in bringing speed to market in the development and
manufacture of technology-based solutions that incorporate miniature rotary drive systems, embedded motion control 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, commercial and military aircraft, 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 include
forward-looking statements within the context of the federal securities laws. Statements regarding the Company s future events, developments and future performance, as well as management s expectations, beliefs, plans,
estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company s actual results may differ materially from those suggested as a result of various factors. Interested parties should
refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company s filings with the Securities and Exchange Commission.
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2010 | June 30, 2010 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,019,000 | $ | 3,794,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $15,000 at December 31, 2010 and $25,000 at June 30, 2010 | 2,566,000 | 2,682,000 | ||||||
| Other current receivables | 22,000 | |||||||
| Inventories | 3,906,000 | 3,228,000 | ||||||
| Prepaid expenses | 205,000 | 174,000 | ||||||
| Deferred income taxes | 209,000 | 209,000 | ||||||
| Total current assets | 8,905,000 | 10,109,000 | ||||||
| Property, plant, equipment and leasehold improvements, net | 3,767,000 | 4,092,000 | ||||||
| Other assets | 60,000 | 78,000 | ||||||
| Total assets | $ | 12,732,000 | $ | 14,279,000 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 935,000 | $ | 1,279,000 | ||||
| Accrued expenses | 1,681,000 | 1,947,000 | ||||||
| Income taxes payable | 74,000 | 79,000 | ||||||
| Current portion of bank term loan | 331,000 | 400,000 | ||||||
| Current portion of real estate loan | 35,000 | |||||||
| Total current liabilities | 3,021,000 | 3,740,000 | ||||||
| Long-term liabilities: | ||||||||
| Bank term loan | 836,000 | 967,000 | ||||||
| Real estate loan | 1,493,000 | |||||||
| Deferred income taxes | 209,000 | 209,000 | ||||||
| Deferred rent | 270,000 | 255,000 | ||||||
| Total long-term liabilities | 1,315,000 | 2,924,000 | ||||||
| Total liabilities | 4,336,000 | 6,664,000 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 3,272,350 shares issued and outstanding at December 31, 2010 3,251,850 shares issued and outstanding at June 30, 2010 | 16,714,000 | 16,675,000 | ||||||
| Accumulated deficit | (8,318,000 | ) | (9,060,000 | ) | ||||
| Total shareholders equity | 8,396,000 | 7,615,000 | ||||||
| Total liabilities and shareholders equity | $ | 12,732,000 | $ | 14,279,000 |
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| For The Three Months Ended December 31, (unaudited) | ||||||||
| 2010 | 2009 | |||||||
| Net sales | $ | 6,157,000 | $ | 5,696,000 | ||||
| Cost of sales | 3,733,000 | 3,696,000 | ||||||
| Gross profit | 2,424,000 | 2,000,000 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 351,000 | 353,000 | ||||||
| General and administrative expenses | 897,000 | 799,000 | ||||||
| Impairment of intangible asset | 140,000 | |||||||
| Research and development costs | 605,000 | 576,000 | ||||||
| Total operating expenses | 1,853,000 | 1,868,000 | ||||||
| Income from operations | 571,000 | 132,000 | ||||||
| Other income (expense): | ||||||||
| Royalty income | 2,000 | |||||||
| Interest expense | (22,000 | ) | (53,000 | ) | ||||
| Total other income (expense) | (22,000 | ) | (51,000 | ) | ||||
| Income before provision (benefit) for income taxes | 549,000 | 81,000 | ||||||
| Provision (benefit) for income taxes | 148,000 | (499,000 | ) | |||||
| Net income | $ | 401,000 | $ | 580,000 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.12 | $ | 0.18 | ||||
| Diluted | $ | 0.12 | $ | 0.18 | ||||
| Weighted average shares outstanding basic | 3,263,437 | 3,222,890 | ||||||
| Weighted average shares outstanding diluted | 3,272,152 | 3,231,839 |
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| For the Six Months Ended December 31, (unaudited) | ||||||||
| 2010 | 2009 | |||||||
| Net sales | $ | 11,986,000 | $ | 11,329,000 | ||||
| Cost of sales | 7,378,000 | 7,456,000 | ||||||
| Gross profit | 4,608,000 | 3,873,000 | ||||||
| Operating expenses: | ||||||||
| Selling expense | 775,000 | 641,000 | ||||||
| General and administrative expenses | 1,660,000 | 1,526,000 | ||||||
| Impairment of intangible asset | 140,000 | |||||||
| Research and development costs | 1,196,000 | 1,197,000 | ||||||
| Total operating expenses | 3,631,000 | 3,504,000 | ||||||
| Income from operations | 977,000 | 369,000 | ||||||
| Other income (expense): | ||||||||
| Royalty income | 3,000 | |||||||
| Interest expense | (80,000 | ) | (103,000 | ) | ||||
| Total other income (expense) | (80,000 | ) | (100,000 | ) | ||||
| Income before provision (benefit) for income taxes | 897,000 | 269,000 | ||||||
| Provision (benefit) for income taxes | 154,000 | (494,000 | ) | |||||
| Net income | $ | 743,000 | $ | 763,000 | ||||
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.23 | $ | 0.24 | ||||
| Diluted | $ | 0.23 | $ | 0.24 | ||||
| Weighted average shares outstanding basic | 3,257,643 | 3,222,890 | ||||||
| Weighted average shares outstanding diluted | 3,263,654 | 3,228,777 |
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For The Six Months Ended December 31, (unaudited) | ||||||||
| 2010 | 2009 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 743,000 | $ | 763,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 342,000 | 371,000 | ||||||
| Impairment of intangible asset | 140,000 | |||||||
| (Decrease) increase in allowance for doubtful accounts | (10,000 | ) | 5,000 | |||||
| Stock based compensation | 12,000 | 71,000 | ||||||
| Decrease in deferred taxes | (525,000 | ) | ||||||
| Changes in: | ||||||||
| Decrease in accounts receivable and other current receivables | 148,000 | 226,000 | ||||||
| (Increase) decrease in inventories | (678,000 | ) | 148,000 | |||||
| (Increase) in prepaid expenses | (30,000 | ) | (185,000 | ) | ||||
| Decrease in other assets | 17,000 | |||||||
| (Decrease) in accounts payable and accrued expenses | (597,000 | ) | (68,000 | ) | ||||
| (Decrease) increase in income taxes payable | (5,000 | ) | 25,000 | |||||
| Net cash (used in) provided by operating activities | (58,000 | ) | 971,000 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment and leasehold improvements | (16,000 | ) | (90,000 | ) | ||||
| Net cash used in investing activities | (16,000 | ) | (90,000 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments on bank term loan | (200,000 | ) | (200,000 | ) | ||||
| Principal payments on real estate loan | (1,528,000 | ) | (16,000 | ) | ||||
| Proceeds from exercise of stock options | 27,000 | |||||||
| Net cash used in financing activities | (1,701,000 | ) | (216,000 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (1,775,000 | ) | 665,000 | |||||
| Cash and cash equivalents, beginning of period | 3,794,000 | 1,125,000 | ||||||
| Cash and cash equivalents, end of period | $ | 2,019,000 | $ | 1,790,000 | ||||
| Supplemental Information | ||||||||
| Cash payments for interest | $ | 21,000 | $ | 105,000 | ||||
| Cash payments for income taxes | $ | 159,000 | $ | 6,000 |