Full Press Release Details
| Contact: | Patrick Johnson, President & CEO (714) 241-4411 |
| Matthew Hayden, Investor Relations Hayden Communications, Inc. (858) 456 - 4533 |
PRO-DEX, INC. ANNOUNCES SECOND FISCAL QUARTER AND
53% increase in first-half
earnings and 10% increase in gross margin
Record Number of New Product
Development Projects
Backlog Increases Subsequent to Quarter End -
Currently Totals $8.4 million
February 14, 2005 - PRO-DEX, INC. (NASDAQ: PDEX), a provider of embedded
motion control and miniature rotary drive systems, serving the medical, dental,
factory automation, and scientific research markets, today
announced financial results for the second quarter and six-month periods ending
sales for the second quarter were $2.9 million compared to $3.7 million for the
three months ended December 31, 2003. The decrease is
partially related to the Company's previously announced shift to a royalty
agreement with its HealOzone product, and to delays in the scheduled release of
three new products. Gross profit for the second quarter was $1.6 million
compared to $1.7 million for the second quarter of last year. Gross profit as a percentage of sales increased to
56 percent for the quarter compared to 46.1 percent for the second fiscal
quarter of last year and 55.9 percent for the first fiscal quarter of this year.
Operating expenses remained flat with the year ago
period at $1.3 million. Net income for the quarter was $183,000, or
$0.02 per diluted share, as compared to a net income of $230,000 or $0.02 per diluted
share, for the three months ended December 31, 2003. Backlog at the end of the second quarter was $4.7 million compared to $4.0 million at the end of the
second quarter of last year and $4.3 million at the end the first quarter of
this year. Subsequent to the quarter end, the Company received orders totaling more
than $4.0 million, which have increased the current backlog to $8.4 million.
Commenting on the Company's financial
performance, Pro-Dex's President and Chief Executive Officer, Patrick Johnson
said, "Our results reflect a substantial improvement in gross
profitability and cash flow, the result of a conscious effort to focus on developing
and manufacturing higher-quality, higher-margin products for our customers,
coupled with considerable operating efficiencies in our manufacturing facility.
A year ago we had only six active product development
projects, three customer-funded and three funded by the Company. As we closed
the first half of this fiscal year, our total portfolio of product development
projects had more than doubled to 13, eight funded by our customers and five
funded by the Company. We estimate the customer funded projects for new
products represent a potential of $5 million to Pro-Dex in first-year revenue.
In addition, the Company-funded projects are all targeted at current customers
and we expect sales to emanate from those products when development is
completed. While not reflected in the financial results for the second quarter,
the substantial increase in the number of product development projects has the
Company far better positioned than a year ago for on-going success, as we
expect these projects to translate into incremental increases in sales and
For the six months ended December 31, 2004, consolidated net sales were $6.2 million compared to $7.2 million for the same period in
the prior year. Gross profit was $3.5 million compared to $3.2 million for
the same period in the prior year. For the six months, gross profit as a
percent of sales increased to 55.9 percent compared to 44.9 percent in the same
period in the prior year. Operating expense decreased $42,000 to $2.5 million compared
to the same six months in the prior year. The Company reported net income for
the six months ended December 31, 2004 of $646,000 or $0.07 per diluted share,
as compared to a net income of $422,000 or $0.05 per diluted share, for the six
months ended December 31, 2003. This represents an increase of $224,000 or 53
percent over the previous year.
Highlights from and subsequent to the end of the second
The Company completed the quarter with 13 active product
development projects, including eight funded by customers. Revenue from some of
these is expected during the next several quarters.
On January 7, Pro-Dex announced receiving a substantial follow-on
order from Walter Lorenz Surgical, a wholly-owned subsidiary of Biomet, Inc.
(Nasdaq: BMET). The order was for delivery of 500 battery-powered cranial
screwdrivers, an innovative product Pro-Dex previously developed exclusively
for Lorenz. This new order follows the initial 500-unit order received in July
Subsequent to the end of the quarter, the Company received
additional orders from new and existing customers for products in active
development increasing the backlog to $8.4 million.
Subsequent to the end of the quarter, the Company began to ship two
new products and expects to launch a third before March 30, 2005, products
originally scheduled to launch during the second quarter, representing approximately
$365,000 in new sales revenue or 12 percent of second quarter sales.
"During the past year, we have reallocated
more than $100,000 in previously spent administration expenses to fund
increased sales, marketing and product development efforts," Mr. Johnson continued. "We've recently made key organizational
changes that we believe will accelerate our top-line performance and we plan to
add additional personnel to bolster our R&D and product development
capabilities. All of these activities are intended to support sales and earnings
growth while maintaining or increasing our profit margins. Our business model
is built on developing and launching new products for
diversified global companies, a process that is sometimes challenging and
sometimes out of our complete control. This was certainly the case in the
second quarter. Last year, we focused on improving our manufacturing
capabilities and matching those capabilities to a shifting product mix. At the
same time, we initiated conversations with several high-profile customers
regarding the development of new and innovative products. Those conversations
have now transitioned into a record number of product development projects and
order backlog which we anticipate will translate into increased future sales
and improved profitability. Creating speed to market for our customers is challenging,
and our ability to meet this challenge is the key reason customers choose
Pro-Dex and the factor that truly differentiates us from our competitors."
Management is adjusting its revenue guidance
slightly and expects sales in the range of $14.5 million to $16 million for its
fiscal year (which ends June 30th), compared to the previously
stated expectation of between $15 and $17 million, recognizing that delays
encountered during the year will impact the top line. Improvements in the
Company's operating margins provides increased confidence that Pro-Dex will be
able to meet its previously stated fiscal 2005 earnings goal of between $0.18
Earnings Conference Call
Investors and all others are
invited to listen to a conference call discussing the second quarter and fiscal