Full Press Release Details
Contact: Richard L. Van Kirk,
Chief Executive Officer
PRO-DEX, INC. ANNOUNCES FISCAL 2017 FIRST
IRVINE, CA, November
10, 2016 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2017 first quarter ended September 30,
Net sales for the three
months ended September 30, 2016 totaled $5.4 million, an increase of 32% from $4.1 million for the three months ended September
30, 2015. The increase in revenue is due to expansion of our medical device customer base and is primarily driven by the production
ramp of our largest customer's unique surgical hand piece designed to be used for orthopedic surgical applications. Revenue
from this product totaled $2.2 million and $1.1 million for the three months ended September 30, 2016 and 2015, respectively.
Gross profit for the three
months ended September 30, 2016 increased $550,000, or 52%, to $1.6 million, compared to $1.1 million for the year-ago period,
primarily due to the increase in sales, allowing us to better absorb our overhead costs, as well as a decrease in product costs
as we have gained efficiencies in our manufacturing and assembly operations. As a result, gross margin has improved by 4 percentage
points to 30% during the three months ended September 30, 2016 compared to 26% during the corresponding year-ago period.
Operating expenses (which
include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2016 increased
12% to $1.3 million from $1.2 in the prior year's corresponding quarter, reflecting primarily the impairment of intangible
assets of $113,000 relating to the Huber Precision business acquisition.
Net income for the quarter
ended September 30, 2016 was $286,000 or $.07 per share compared to a net loss of $125,000 for the quarter ended September 30,
2015, or $0.03 per share.
Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with the increase in our
net sales this quarter, the improvement of our product margins, and our continued profitability for four successive quarters. We
continue to focus on cost-reductions related to our newest medical device products and have invested in manufacturing equipment
to increase our operational efficiency."
About Pro-Dex, Inc.:
Pro-Dex, Inc., with operations
in California and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments
used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division designs and manufactures
embedded motion control systems serving the medical, factory automation, semi-conductor and scientific research markets. Its Fineline
Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex's products are found in hospitals, dental
offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world.
Pro-Dex also provides quality
and regulatory consulting services, as well as engineering consulting and placement services through its Engineering Services Division.
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
(In thousands, except share amounts)
| September 30, 2016 | June 30, 2016 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 2,168 | $ | 2,294 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $15 and $20, respectively | 1,542 | 1,469 | ||||||
| Due from factor | 2,119 | 1,419 | ||||||
| Deferred costs | 493 | 238 | ||||||
| Other current receivables | 19 | 91 | ||||||
| Inventory | 3,370 | 3,573 | ||||||
| Prepaid expenses | 107 | 134 | ||||||
| Total current assets | 9,818 | 9,218 | ||||||
| Equipment and leasehold improvements, net | 1,583 | 1,286 | ||||||
| Goodwill | 112 | 112 | ||||||
| Intangibles, net | 336 | 451 | ||||||
| Other assets | 80 | 80 | ||||||
| Total assets | $ | 11,929 | $ | 11,147 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,184 | $ | 841 | ||||
| Accrued expenses | 1,094 | 1,076 | ||||||
| Deferred revenue | 319 | 212 | ||||||
| Notes payable | 26 | 26 | ||||||
| Income taxes payable | - | 1 | ||||||
| Capital lease obligations | 30 | - | ||||||
| Total current liabilities | 2,653 | 2,156 | ||||||
| Deferred rent, net of current portion | 45 | 68 | ||||||
| Notes and capital leases payable, net of current portion | 105 | 46 | ||||||
| Total non-current liabilities | 150 | 114 | ||||||
| Total liabilities | 2,803 | 2,270 | ||||||
| Shareholders' equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 4,063,837 and 4,052,987 shares issued and outstanding at September 30, 2016 and June 30, 2016, respectively | 17,951 | 17,988 | ||||||
| Accumulated deficit | (8,825 | ) | (9,111 | ) | ||||
| Total shareholders' equity | 9,126 | 8,877 | ||||||
| Total liabilities and shareholders' equity | $ | 11,929 | $ | 11,147 |
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share
| Three Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| Net sales | $ | 5,412 | $ | 4,097 | ||||
| Cost of sales | 3,804 | 3,039 | ||||||
| Gross profit | 1,608 | 1,058 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 162 | 214 | ||||||
| General and administrative expenses | 564 | 534 | ||||||
| Impairment of intangible assets | 113 | - | ||||||
| Research and development costs | 476 | 429 | ||||||
| Total operating expenses | 1,315 | 1,177 | ||||||
| Operating income (loss) | 293 | (119 | ) | |||||
| Other income (expense): | ||||||||
| Interest and miscellaneous income | 3 | - | ||||||
| Interest expense | (3 | ) | (6 | ) | ||||
| Total other income (expense) | - | (6 | ) | |||||
| Income (loss) before income taxes | 293 | (125 | ) | |||||
| Provision for income taxes | 7 | - | ||||||
| Net income (loss) | $ | 286 | $ | (125 | ) | |||
| Basic and diluted income (loss) per share: | ||||||||
| Net income (loss) | $ | 0.07 | $ | (0.03 | ) | |||
| Weighted average common shares outstanding: | ||||||||
| Basic | 4,062,475 | 4,140,751 | ||||||
| Diluted | 4,103,459 | 4,140,751 | ||||||
| Common shares outstanding | 4,063,837 | 4,141,504 |
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
| Three Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 286 | $ | (125 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 139 | 169 | ||||||
| Share-based compensation | 2 | 3 | ||||||
| Impairment of intangible assets | 113 | - | ||||||
| Gain on disposal of equipment | (3 | ) | - | |||||
| Allowance for doubtful accounts | (5 | ) | 4 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, due from factor and other receivables | (696 | ) | 118 | |||||
| Deferred costs | (255 | ) | (241 | ) | ||||
| Inventory | 203 | 59 | ||||||
| Prepaid expenses and other assets | 27 | (36 | ) | |||||
| Accounts payable, accrued expenses and deferred rent | 338 | (618 | ) | |||||
| Deferred revenue | 107 | 26 | ||||||
| Income taxes payable | (1 | ) | - | |||||
| Net cash provided by (used in) operating activities | 255 | (641 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of equipment | (316 | ) | - | |||||
| Increase in notes receivable | - | (57 | ) | |||||
| Increase in intangibles | (13 | ) | (1 | ) | ||||
| Proceeds from disposal of equipment | 3 | - | ||||||
| Net cash used in investing activities | (326 | ) | (58 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal payments on capital lease and notes payable | (16 | ) | (9 | ) | ||||
| Borrowings from Summit Loan | 400 | 300 | ||||||
| Repayments on Summit Loan | (400 | ) | (300 | ) | ||||
| Proceeds from note payable | - | 500 | ||||||
| Proceeds from ESPP Contributions | 10 | 4 | ||||||
| Repurchases of common stock | (49 | ) | - | |||||
| Net cash provided by (used in) financing activities | (55 | ) | 495 | |||||
| Net decrease in cash and cash equivalents | (126 | ) | (204 | ) | ||||
| Cash and cash equivalents, beginning of period | 2,294 | 697 | ||||||
| Cash and cash equivalents, end of period | $ | 2,168 | $ | 493 |