Full Press Release Details
PRO-DEX, INC. ANNOUNCES FOURTH FISCAL QUARTER AND FISCAL 2005 RESULTS
SALES INCREASE 19% FOR THE QUARTER
NET INCOME UP 112% FOR THE QUARTER, 65% FOR THE YEAR
BACKLOG REACHES 7.9 MILLION AS OF JUNE 30, 2005
SANTA ANA, Calif., Sept. 6 /PRNewswire-FirstCall/ -- PRO-DEX, INC.
(Nasdaq: PDEX), a developer and manufacturer 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 fourth quarter and full-year period ending June 30, 2005.
Consolidated net sales for the fourth quarter were $4.4 million, up 19
percent compared to the $3.7 million reported for the fourth quarter last year
and a 35 percent sequential increase compared to the $3.2 million reported for
the third quarter. For the year ended June 30, 2005, consolidated net sales were
$13.8 million compared to $14.2 million for the same period last year, a
decrease of 2.5 percent. Last year's revenues included approximately $675,000 in
product sales (4.2 percent of total sales), which has subsequently transitioned
to a royalty agreement as previously announced by the Company.
Net income for the quarter was $928,000, or $0.09 per diluted share, as
compared to a net income of $437,000 or $0.05 per diluted share, for the three
months ended June 30, 2004. This represents an increase of $491,000, or 112
percent, compared to the prior year's fourth quarter. The Company reported net
income for the year of $1.8 million, or $0.20 per basic and $0.19 per fully
diluted share, compared to net income of $1.1 million, or $0.13 per basic and
$0.12 per fully diluted share, last year. This represents an increase of
$729,000, or 65 percent, over the previous year, despite the decrease in
Net income for the fourth quarter and the year was positively impacted by a
tax benefit of $332,000, with $227,000 resulting from the reversal of a reserve
against the Company's deferred tax asset and $103,000 resulting from the use of
a state tax credit. The net result of both tax matters was a $0.03 increase in
earnings per share for the year. In calculating earnings per share for the
quarter, the Company utilized 10.0 million fully diluted shares compared to 9.3
million diluted shares for the fourth quarter of fiscal year 2004. For the 2005
and 2004 fiscal years, 9.6 million and 9.3 million fully diluted shares were
utilized in the calculations respectively.
Commenting on the Company's financial performance for the quarter and the
year, Pro-Dex's President and Chief Executive Officer, Patrick Johnson said, "We
are pleased with our financial performance, especially knowing the fourth
quarter was going to be challenging. Given the substantial increase in new
orders received during the third quarter of the year, we recognized that the
fourth quarter would provide the inflection point to guide the Company to the
next level of revenue and profitability. However, significantly increasing
production output is a complicated proposition in the short term, as our
business model is based on a diverse, high-mix/low-volume product composition.
In the case of the fourth quarter, that rapid increase in production included
two new medical products, and overall, this ramp-up impacted our efficiency.
However, having reached and sustained this new level of production, we expect
gross profit to trend back toward the levels seen earlier in the year."
Gross profit for the fourth quarter was $2.0 million, or 44.8 percent of
sales, compared to gross profit of $2.0 million, or 53.3 percent of sales for
the fourth quarter last year. The fourth quarter gross profit was impacted by
$241,000 in unfavorable manufacturing variances resulting from the 35 percent
increase in production output. In addition, gross profit was further diluted by
a $145,000 in non-recurring inventory disposal and reserve adjustments. Gross
profit for the year was $7.1 million, or 51.2 percent of sales, compared to
gross profit of $6.8 million, or 47.9 percent of sales, last year.
Operating expenses decreased by 19.3 percent to $1,007,000 compared to
$1,248,000 in the fourth quarter last year, due to decreases in Company-funded
research and development projects and decreases in administrative expenses
following management's consolidation of the Company at the end of last year. For
the full fiscal year, operating expense decreased 4 percent to $4.7 million
compared to $5.0 million last year.
During the fourth quarter, the Company received royalty income of $30,400
compared to $58,000 last year. For the full fiscal year, the Company received
royalty income of $76,800 compared to $98,000 last year.
Mr. Johnson continued, "In reflecting on our performance in the fourth
quarter and the full fiscal year, I think the momentum we gained is just as
important, if not more important, than what was achieved. In comparing how we
finished the fourth quarter this year to last year, all indicators are trending
up. Sales were up by 19 percent for the quarter, a pace we expect to continue
into the new fiscal year as we have expanded the product mix from which we
derive recurring revenue. Gross profit was up for the year by nearly 4 margin
points, despite the non-reoccurring charges we saw in the fourth quarter, a
trend that bodes well for gross profitability in the coming fiscal year.
Expenses were down despite increases in product development, sales and marketing
activities, all drivers of future sales. As a result, operating income was up 36
percent for the quarter and 25 percent for the year, further evidence of a
"In addition, new order bookings were up by $700,000 in the fourth quarter
compared to the prior quarter, pushing our total order backlog to $7.9 million
at the end of the year, a $2.8 million or 52 percent increase over the end of
last year," Mr. Johnson continued. "We ended the year with nine active product
development projects, only one more project than last year, but those nine
projects represent a potential first year revenue of $6.5 million compared to
just $4 million the eight projects represented last year. This is an indication
that we are bidding on and winning incrementally larger development projects,
projects that will help drive our top-line sales and maintain our leverage in
generating increased profitability. Finally, the Company remained debt free and
we increased our cash on hand to $2.6 million, strengthening our position to
fund future acquisitions. Given this momentum, we believe that we are trending
in the right direction."
Other highlights from the fiscal fourth quarter included:
-- The Company hired two industry veterans to fill key positions. Mr. Ajay
Kumar was appointed Vice President of Product Development. Mr. Kumar
served as Director of New Product Development for Zimmer, in the Dental
Division, manager of the R&D Department and Projects for Nobel Biocare,
and R&D Engineer for Steri-Oss. Mr. Kumar has an MBA from the University
of California, Irvine and a Masters in Biomedical Engineering from
Rutgers University. In addition, he has a MSME from the University of
Southern Illinois and a BSME from the National Institute of Technology,
-- Mr. Mark Bennett was named Director of Sales for the Company's Factory
Automation products. Mr. Bennett joins Pro-Dex from Encoder Products