Full Press Release Details
Murphy, Chief Executive Officer
Stanlis, Investor Relations
Communications, Inc.
ORDERS FROM EXISTING
13, 2008 - PRO-DEX, INC. (NASDAQ: PDEX) today
announced financial results for the first fiscal quarter 2009, the period ending
September 30, 2008. In addition, Pro-Dex announced receiving new purchase
commitments subsequent to the end of the quarter from existing customers for
$4.0 million of product to be delivered throughout calendar year 2009.
net sales for the fiscal first quarter decreased 6% to $5.7 million compared
for the fiscal first quarter of 2008. Consolidated
gross profit for the quarter decreased 19% over the same quarter in the previous
year to $1.7 million, a 31% gross profit margin, compared to gross profit of
$2.2 million or 36% gross profit margin last year.
on top line performance, Mark P. Murphy, the Company's President
and Chief Executive Officer, said, "It's important to understand the specifics
of our top line changes when making year-to-year comparisons. Sales to our
largest customer increased 14% compared to last year and, subsequent to the
of the quarter, this customer placed a new $1.0 million purchase order for
delivery in early 2009.
Conversely, sales to our second-largest customer decreased year-over-year,
accounting for almost the entire consolidated decrease in sales for the quarter.
A year ago, this customer was purchasing a significant amount of component
inventory from us in preparation for manufacturing their own surgical
handpieces. However, given improved relations between our companies, this
customer aborted their own manufacturing efforts, increased their finished
product purchases from us, and hired Pro-Dex to design a next generation product
result, total sales to this customer decreased given the elimination of last
year's component sales. Subsequent
to the end of the Q1, this customer placed a new $3.0 million purchase order
delivery in calendar year 2009.
of the $4.0 million addition, the Company ended October with an $11.2 million
backlog of orders to be shipped over the next 12 months. Pro-Dex also has an
additional $3.2 million in contractual purchase commitments related to new
product development projects, order commitments not reflected in current backlog
numbers. The Company anticipates receipt of purchase orders for this new product
by the end of 2008. Historically, step-function increases in backlog have been
reliable leading indicator to future increases in sales.
operating expenses for the fiscal first quarter 2009 increased by 17% to $1.9
million, compared to $1.6 million in the first fiscal quarter 2008, primarily
labor expenditures, higher costs associated with Sarbanes Oxley compliance,
increased costs associated with new corporate facilities.
on the company's expenses, Mr. Murphy noted, "In the last year, we have built a
significant amount of infrastructure to respond to new product development
opportunities. Although significant contracts have been won and the development
of the associated new products is under way, the increased shipments from these
investments have not yet been realized. While we remain confident that these
sales will begin this fiscal year, we are taking immediate actions to align
cost structure with existing revenues to ensure profitability and positive
flow during the interim."
for the first fiscal quarter 2009 was $118,000 or $(0.01) per basic and diluted
share compared to net income of $326,000 or $0.03 per share on a basic and
diluted basis for the three months ended September 30, 2007.
Murphy concluded, "We've reduced our borrowing under our credit lines by
since the end of Q1, leaving
of $3.7 million of borrowing capacity remaining, if necessary. In addition,
Company repurchased almost 65,000 shares during the first quarter, at a total
cost of approximately $60,000, and we have repurchased an additional 40,000
shares during the early part of the second quarter. Moving forward, we believe
we will post another consecutive year of top line growth. With current
development projects nearing completion and with a filled pipeline of project
cautiously optimistic that we are nearing the inflection point and believe
will make continued progress during the coming quarters."
and all others are invited to listen to a conference call discussing the first
fiscal quarter 2009 results, today at 4:30 p.m. Eastern Time. The call is
scheduled to be broadcast live over the Internet and may be accessed by visiting
the Company's website at http://www.pro-dex.com.
Murphy, Chief Executive Officer and Jeff Ritchey, Chief Financial Officer,
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. 73154118. You may identify
call as the Pro-Dex First Quarter Earnings Call. An online archive of the
broadcast will be available within one hour of the completion of the call and
will be accessible on the Company's website for 30 days. Additionally, a
telephone replay will be available 2 hours after the call for 48 hours by
dialing (800) 642-1687 U.S. or (706) 645-9291 for international callers,
conference I.D. number 73154118.
Inc., with operations in Irvine, 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 globally.
information, visit the Company's website at www.pro-dex.com.
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
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
| PRO-DEX, INC. and SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| September 30, 2008 (unaudited) | June 30,2008 (audited) | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 384,000 | $ | 517,000 | |||
| Accounts receivable, net of allowance for doubtful accounts | |||||||
| of $130,000 at September 30, 2008 and $144,000 at June 30, 2008 | 3,183,000 | 2,842,000 | |||||
| Other current receivables | - | 205,000 | |||||
| Inventories | 4,640,000 | 5,101,000 | |||||
| Prepaid expenses | 265,000 | 214,000 | |||||
| Prepaid income taxes | 869,000 | 860,000 | |||||
| Deferred income taxes | 1,182,000 | 1,176,000 | |||||
| Total current assets | 10,523,000 | 10,915,000 | |||||
| Property, plant, equipment, net | 6,416,000 | 6,470,000 | |||||
| Other assets: | |||||||
| Goodwill | 2,997,000 | 2,997,000 | |||||
| Intangibles - Patents, net | 1,197,000 | 1,221,000 | |||||
| Other | 62,000 | 68,000 | |||||
| Total other assets | 4,256,000 | 4,286,000 | |||||
| Total assets | $ | 21,195,000 | $ | 21,671,000 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Credit Line | $ | 2,600,000 | $ | 2,000,000 | |||
| Accounts payable | 1,303,000 | 1,736,000 | |||||
| Accrued expenses | 1,712,000 | 2,053,000 | |||||
| Income taxes payable | - | 114,000 | |||||
| Current portion of term note | 333,000 | 396,000 | |||||
| Current portion of real estate loan | 31,000 | 30,000 | |||||
| Total current liabilities | 5,979,000 | 6,329,000 | |||||
| Long-term liabilities | |||||||
| Real estate loan | 1,553,000 | 1,560,000 | |||||
| Patent deferred payable | 44,000 | 44,000 | |||||
| Deferred income taxes | 290,000 | 290,000 | |||||
| Deferred rent | 167,000 | 150,000 | |||||
| Total long-term liabilities | 2,054,000 | 2,044,000 | |||||
| Total liabilities | 8,033,000 | 8,373,000 | |||||
| Commitments and contingencies | |||||||
| Shareholders' equity: | |||||||
| Common shares; no par value; 50,000,000 shares authorized; | |||||||
| 9,738,437 shares issued and outstanding September 30, 2008, | |||||||
| 9,803,366 shares issued and outstanding June 30, 2008, | 16,527,000 | 16,545,000 | |||||
| Accumulated deficit | (3,365,000 | ) | (3,247,000 | ) | |||
| Total shareholders' equity | 13,162,000 | 13,298,000 | |||||
| Total liabilities and shareholders' equity | $ | 21,195,000 | $ | 21,671,000 |
| PRO-DEX, INC. and SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| Three months ended September 30 (unaudited) | |||||||
| 2008 | 2007 | ||||||
| Net sales | $ | 5,656,000 | $ | 5,992,000 | |||
| Cost of sales | 3,902,000 | 3,839,000 | |||||
| Gross profit | 1,754,000 | 2,153,000 | |||||
| Operating expenses: | |||||||
| Selling expenses | 344,000 | 323,000 | |||||
| General and administrative expenses | 835,000 | 735,000 | |||||
| Research and development costs | 731,000 | 575,000 | |||||
| Total operating expenses | 1,910,000 | 1,633,000 | |||||
| Income (loss) from operations | (156,000 | ) | 520,000 | ||||
| Other income (expense): | |||||||
| Other expense, net | - | 6,000 | |||||
| Royalty income | 2,000 | 6,000 | |||||
| Interest expense | (61,000 | ) | (47,000 | ) | |||
| Total | (59,000 | ) | (35,000 | ) | |||
| Income (loss) before provision (benefit) for income taxes | (215,000 | ) | 485,000 | ||||
| Provision (benefit) for income taxes | (97,000 | ) | 159,000 | ||||
| Net income (loss) | $ | (118,000 | ) | $ | 326,000 | ||
| Net income (loss) per share: | |||||||
| Basic | $ | (0.01 | ) | $ | 0.03 | ||
| Diluted | $ | (0.01 | ) | $ | 0.03 | ||
| Weighted average shares outstanding - basic | 9,783,407 | 9,718,366 | |||||
| Weighted average shares outstanding - diluted | 9,783,407 | 9,947,884 |
| PRO-DEX, INC. and SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Three months ended September 30 (unaudited) | |||||||
| 2008 | 2007 | ||||||
| Cash Flows from Operating Activities: | |||||||
| Net Income (Loss) | $ | (118,000 | ) | $ | 326,000 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 222,000 | 120,000 | |||||
| Stock based compensation | 42,000 | 48,000 | |||||
| (Recovery of) provision for doubtful accounts | (14,000 | ) | (12,000 | ) | |||
| Provision for slow moving and obsolete inventory | - | 15,000 | |||||
| (Decrease) in deferred taxes | (5,000 | ) | - | ||||
| Changes in: | |||||||
| (Increase) decrease in accounts receivable | (122,000 | ) | 481,000 | ||||
| Decrease in inventories | 461,000 | 172,000 | |||||
| (Increase) in prepaid expenses | (50,000 | ) | (51,000 | ) | |||
| (Increase) decrease in other assets | 5,000 | (12,000 | ) | ||||
| (Decrease) Increase in accounts payable and accrued expenses | (756,000 | ) | 58,000 | ||||
| (Decrease) in income taxes payable | (124,000 | ) | (53,000 | ) | |||
| Net Cash (used by) provided by Operating Activities | (459,000 | ) | 1,092,000 | ||||
| Cash Flows From Investing Activities: | |||||||
| Purchases of equipment and leasehold improvements | (144,000 | ) | (344,000 | ) | |||
| Net Cash used in Investing Activities | (144,000 | ) | (344,000 | ) | |||
| Cash Flows from Financing Activities: | |||||||
| Net borrowing (payments) on line of credit | 600,000 | (300,000 | ) | ||||
| Principal payments on term note | (63,000 | ) | (63,000 | ) | |||
| Principal payments on mortgage | (7,000 | ) | (7,000 | ) | |||
| Stock Repurchases | (60,000 | ) | - | ||||
| Net Cash provided by (used by) Financing Activities | 470,000 | (370,000 | ) | ||||
| Net Increase (decrease) in Cash and Cash Equivalents | (133,000 | ) | 378,000 | ||||
| Cash and Cash Equivalents, beginning of period | 517,000 | 403,000 | |||||
| Cash and Cash Equivalents, end of period | $ | 384,000 | $ | 781,000 | |||
| Supplemental Information | |||||||
| Cash payments for interest | $ | 56,000 | $ | 45,000 | |||
| Cash payments for income taxes | $ | - | $ | 215,000 |