Full Press Release Details
Contact: Richard L. Van Kirk, Chief Executive Officer
PRO-DEX, INC. ANNOUNCES FISCAL 2019 THIRD QUARTER
AND NINE-MONTH RESULTS
IRVINE, CA, May 9, 2019 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2019 third quarter ended March 31, 2019. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2019 with the Securities and Exchange Commission today.
Quarter Ended March 31, 2019
Net sales for the three months ended March 31, 2019 increased $1.4 million, or 25%, to $6.9 million from $5.5 million for the three months ended March 31, 2018, due to increased sales of our medical device products to our largest customer.
Gross profit for the three months ended March 31, 2019 increased $287,000, or 15%, to $2.3 million from $2.0 million for the same period in fiscal 2018.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2019 remained fairly constant compared to the same period in fiscal 2018.
Net income for the quarter ended March 31, 2019 was $732,000, or $0.17 per diluted share, compared to $480,000, or $0.11 per diluted share, for the corresponding quarter in fiscal 2018.
Nine Months Ended March 31, 2019
Net sales for the nine months ended March 31, 2019 increased $4.0 million, or 24%, to $20.2 million from $16.2 million for the nine months ended March 31, 2018, due primarily to increases in medical device product revenues to three significant distributors.
Gross profit for the nine months ended March 31, 2019 increased $1.7 million or 30% compared to the same period in fiscal 2018. The gross profit increase is directly related to our 24% increase in revenue and our ability to better absorb our fixed manufacturing costs.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2019 decreased 8% to $3.4 million from $3.7 million in the prior fiscal year s corresponding period, because the prior year amounts included an asset impairment charge in the amount of $230,000, related to the Fineline goodwill and intangible assets, which did not recur in the current fiscal year.
Net income for the nine months ended March 31, 2019 was $3.3 million or $0.75 per diluted share compared to $1.5 million, or $0.34 per diluted share.
Richard L. ( Rick ) Van Kirk, the Company s President and Chief Executive Officer, commented, We are pleased with our third quarter and year-to-date results, expanding upon our multi-year momentum. We continue to reinvest and focus our growth on our core medical device product and service revenue. Our product development roadmap continues to offer us exciting opportunities to build upon our existing product offerings.
About Pro-Dex, Inc.:
Pro-Dex, Inc. specializes in the design, development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic and maxocranial facial markets. We have patented adoptive torque-limiting software and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. Pro-Dex also manufactures and sells rotary air motors to a wide range of industries. Pro-Dex's products are found in hospitals and medical engineering labs 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
| March 31, 2019 | June 30, 2018 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 9,661 | $ | 5,188 | ||||
| Investments | 2,814 | 2,220 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $0 and $14 at March 31, 2019 and at June 30, 2018, respectively | 3,742 | 2,955 | ||||||
| Deferred costs | 267 | 32 | ||||||
| Inventory | 4,805 | 4,393 | ||||||
| Notes receivable | 65 | 1,176 | ||||||
| Prepaid expenses and other current assets | 707 | 269 | ||||||
| Total current assets | 22,061 | 16,233 | ||||||
| Equipment and leasehold improvements, net | 2,511 | 1,755 | ||||||
| Intangibles, net | 133 | 140 | ||||||
| Deferred income taxes, net | 652 | 1,678 | ||||||
| Investments | 234 | |||||||
| Notes receivable, net of current portion | 43 | |||||||
| Other assets | 40 | 68 | ||||||
| Total assets | $ | 25,631 | $ | 19,917 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,543 | $ | 1,083 | ||||
| Accrued expenses | 1,121 | 1,266 | ||||||
| Deferred revenue | 200 | 31 | ||||||
| Note payable and capital lease obligations | 622 | 35 | ||||||
| Income taxes payable | 265 | 123 | ||||||
| Total current liabilities | 3,751 | 2,538 | ||||||
| Deferred rent | 135 | 97 | ||||||
| Notes and capital leases payable, net of current portion | 4,091 | 6 | ||||||
| Total non-current liabilities | 4,226 | 103 | ||||||
| Total liabilities | 7,977 | 2,641 | ||||||
| Shareholders equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 4,136,191 and 4,331,089 shares issued and outstanding at March 31, 2019 and June 30, 2018, respectively | 17,116 | 19,835 | ||||||
| Accumulated other comprehensive loss | (316 | ) | (153 | ) | ||||
| Retained earnings (accumulated deficit) | 854 | (2,406 | ) | |||||
| Total shareholders equity | 17,654 | 17,276 | ||||||
| Total liabilities and shareholders equity | $ | 25,631 | $ | 19,917 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(In thousands, except per share amounts)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net sales | $ | 6,854 | $ | 5,494 | $ | 20,168 | $ | 16,217 | ||||||||
| Cost of sales | 4,591 | 3,518 | 12,930 | 10,663 | ||||||||||||
| Gross profit | 2,263 | 1,976 | 7,238 | 5,554 | ||||||||||||
| Operating (income) expenses: | ||||||||||||||||
| Selling expenses | 122 | 83 | 252 | 257 | ||||||||||||
| General and administrative expenses | 641 | 701 | 1,838 | 1,781 | ||||||||||||
| Impairment of goodwill and long-lived assets | 230 | |||||||||||||||
| Gain from disposal of equipment | (7 | ) | (16 | ) | ||||||||||||
| Research and development costs | 603 | 560 | 1,337 | 1,445 | ||||||||||||
| Total operating expenses | 1,366 | 1,344 | 3,420 | 3,697 | ||||||||||||
| Operating income | 897 | 632 | 3,818 | 1,857 | ||||||||||||
| Interest expense | (67 | ) | (2 | ) | (156 | ) | (6 | ) | ||||||||
| Gain on sale of investments | 356 | |||||||||||||||
| Interest and other income | 93 | 73 | 261 | 166 | ||||||||||||
| Income before income taxes | 923 | 703 | 4,279 | 2,017 | ||||||||||||
| Income tax expense | (191 | ) | (223 | ) | (1,019 | ) | (564 | ) | ||||||||
| Net income | $ | 732 | $ | 480 | $ | 3,260 | $ | 1,453 | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Unrealized gain (loss) from marketable equity investments, net of income taxes | 33 | 60 | (163 | ) | (64 | ) | ||||||||||
| Comprehensive income | $ | 765 | $ | 540 | $ | 3,097 | $ | 1,389 | ||||||||
| Basic net income per share: | ||||||||||||||||
| Net income | $ | 0.18 | $ | 0.11 | $ | 0.77 | $ | 0.34 | ||||||||
| Diluted net income per share: | ||||||||||||||||
| Net income | $ | 0.17 | $ | 0.11 | $ | 0.75 | $ | 0.34 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 4,143 | 4,363 | 4,224 | 4,290 | ||||||||||||
| Diluted | 4,257 | 4,403 | 4,338 | 4,330 | ||||||||||||
| Common shares outstanding | 4,136 | 4,361 | 4,136 | 4,361 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 3,260 | $ | 1,453 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 309 | 472 | ||||||
| Amortization of loan fees | 5 | |||||||
| Gain on disposal of equipment | (7 | ) | (16 | ) | ||||
| Gain on sale of investments | (356 | ) | ||||||
| Share-based compensation | 28 | 191 | ||||||
| Impairment of goodwill and long-lived assets | 230 | |||||||
| Deferred income taxes | 1,026 | 224 | ||||||
| Bad debt recovery | (14 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (773 | ) | 103 | |||||
| Deferred costs | (235 | ) | 12 | |||||
| Assets held for sale | (84 | ) | ||||||
| Inventory | (412 | ) | (298 | ) | ||||
| Prepaid expenses and other assets | (410 | ) | 21 | |||||
| Accounts payable, accrued expenses and deferred rent | 353 | (576 | ) | |||||
| Deferred revenue | 169 | 57 | ||||||
| Income taxes payable | 142 | |||||||
| Net cash provided by operating activities | 3,085 | 1,789 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of investments | (2,562 | ) | (806 | ) | ||||
| Purchases of equipment and leasehold improvements | (1,048 | ) | (820 | ) | ||||
| Proceeds from dividend reclassified as return of principal | 23 | |||||||
| Increase in notes receivable | (1,500 | ) | ||||||
| Proceeds from collection of notes receivable | 1,154 | |||||||
| Proceeds from sale of investments | 1,905 | |||||||
| Proceeds from sale of equipment | 7 | 30 | ||||||
| Increase in intangibles | (11 | ) | (11 | ) | ||||
| Net cash used in investing activities | (532 | ) | (3,107 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repurchases of common stock | (2,675 | ) | (18 | ) | ||||
| Proceeds from shares issued under ATM, net of commissions and fees | 2,262 | |||||||
| Proceeds from exercise of options and ESPP contributions | 29 | 38 | ||||||
| Borrowings from Minnesota Bank & Trust, net of loan origination fees | 4,940 | |||||||
| Payments of employee payroll taxes on net issuance of common stock | (101 | ) | ||||||
| Principal payments on notes payable and capital lease | (273 | ) | (70 | ) | ||||
| Net cash provided by financing activities | 1,920 | 2,212 | ||||||
| Net increase in cash and cash equivalents | 4,473 | 894 | ||||||
| Cash and cash equivalents, beginning of period | 5,188 | 4,205 | ||||||
| Cash and cash equivalents, end of period | $ | 9,661 | $ | 5,099 |