IRVINE, CA / ACCESSWIRE / November 9, 2017 / PRO-DEX, INC. PDEX today announced financial results for its fiscal 2018 first quarter ended September 30, 2017.
Net sales for the three months ended September 30, 2017 remained approximately flat and totaled $5.2 million, an increase of $33,000, or 1%, from $5.1 million for the three months ended September 30, 2016.
Gross profit for the three months ended September 30, 2017 increased $436,000, or 31%, to $1.9 million, compared to $1.4 million for the year-ago period, primarily due to efficiencies in our manufacturing and assembly operations as well as savings created by in-sourcing previously out-sourced manufactured parts. As a result, gross margin has improved by 8 percentage points to 36% during the three months ended September 30, 2017, compared to 28% 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, 2017 decreased 12% to $1.0 million from $1.1 million in the prior year's corresponding quarter, reflecting primarily the prior year impairment of intangible assets of $113,000 relating to the Huber Precision business acquisition.
Net income for the quarter ended September 30, 2017 was $628,000, or $.15 per share, compared to $286,000 for the quarter ended September 30, 2016, or $0.07 per share.
CEO Comments
Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with our strong earnings growth this quarter, despite relatively flat sales. We plan to continue to focus on our core medical device products and expect to invest more in research and development during the balance of fiscal 2018, especially since we plan to release our Pro-Dex branded thoracic driver later this fiscal year."
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 sells dental instruments and rotary air motors. Its Fineline Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex's products are found in hospitals, dental offices, 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
(Unaudited)
(In thousands, except share amounts)
|
September 30,
2017
|
June 30,
2017
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 5,855 | $ | 4,205 | ||||
|
Investments
|
885 | 718 | ||||||
|
Accounts receivable, net of allowance for doubtful accounts of $3 at September 30, 2017 and at June 30, 2017
|
2,254 | 3,538 | ||||||
|
Deferred costs
|
- | 12 | ||||||
|
Other current assets
|
24 | 86 | ||||||
|
Inventory
|
3,512 | 3,085 | ||||||
|
Notes receivable
|
1,150 | - | ||||||
|
Prepaid expenses
|
108 | 277 | ||||||
|
Total current assets
|
13,788 | 11,921 | ||||||
|
Equipment and leasehold improvements, net
|
1,427 | 1,429 | ||||||
|
Goodwill
|
112 | 112 | ||||||
|
Intangibles, net
|
316 | 320 | ||||||
|
Deferred income taxes, net
|
2,003 | 2,048 | ||||||
|
Notes receivable
|
450 | 450 | ||||||
|
Other assets
|
71 | 71 | ||||||
|
Total assets
|
$ | 18,167 | $ | 16,351 | ||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current Liabilities:
|
||||||||
|
Accounts payable
|
$ | 943 | $ | 1,159 | ||||
|
Accrued expenses
|
763 | 1,344 | ||||||
|
Deferred revenue
|
18 | 19 | ||||||
|
Note payable
|
26 | 26 | ||||||
|
Income taxes payable
|
10 | - | ||||||
|
Capital lease obligations
|
33 | 32 | ||||||
|
Total current liabilities
|
1,793 | 2,580 | ||||||
|
Deferred rent, net of current portion
|
53 | - | ||||||
|
Notes and capital leases payable, net of current portion
|
46 | 61 | ||||||
|
Total non-current liabilities
|
99 | 61 | ||||||
|
Total liabilities
|
1,892 | 2,641 | ||||||
|
Shareholders' equity:
|
||||||||
|
Common shares; no par value; 50,000,000 shares authorized; 4,348,292 and 4,025,193 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively
|
19,750 | 17,704 | ||||||
|
Accumulated other comprehensive income (loss)
|
(76 | ) | 33 | |||||
|
Accumulated deficit
|
(3,399 | ) | (4,027 | ) | ||||
|
Total shareholders' equity
|
16,275 | 13,710 | ||||||
|
Total liabilities and shareholders' equity
|
$ | 18,167 | $ | 16,351 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands, except share and per share amounts)
|
Three Months Ended
September 30,
|
||||||||
|
2017
|
2016
|
|||||||
|
Net sales
|
$ | 5,162 | $ | 5,129 | ||||
|
Cost of sales
|
3,302 | 3,705 | ||||||
|
Gross profit
|
1,860 | 1,424 | ||||||
|
Operating expenses:
|
||||||||
|
Selling expenses
|
87 | 149 | ||||||
|
General and administrative expenses
|
504 | 564 | ||||||
|
Impairment of intangible assets
|
- | 113 | ||||||
|
Research and development costs
|
407 | 304 | ||||||
|
Total operating expenses
|
998 | 1,130 | ||||||
|
Operating income
|
862 | 294 | ||||||
|
Other income (expense):
|
||||||||
|
Interest and miscellaneous income
|
30 | 3 | ||||||
|
Interest expense
|
(2 | ) | (3 | ) | ||||
|
Total other income (expense)
|
28 | - | ||||||
|
Income before income taxes
|
890 | 294 | ||||||
|
Provision for income taxes
|
262 | 7 | ||||||
|
Net income from continuing operations
|
$ | 628 | $ | 287 | ||||
|
Net loss from discontinued operations net of tax of $0
|
- | (1 | ) | |||||
|
Net income
|
$ | 628 | $ | 286 | ||||
|
Other comprehensive loss, net of tax:
|
||||||||
|
Unrealized loss from marketable equity investments, net of taxes
|
(109 | ) | - | |||||
|
Comprehensive income
|
$ | 519 | $ | 286 | ||||
|
Basic and diluted income per share:
|
||||||||
|
Net income from continuing operations
|
$ | 0.15 | $ | 0.07 | ||||
|
Net income from discontinued operations
|
- | - | ||||||
|
Net income
|
$ | 0.15 | $ | 0.07 | ||||
|
Weighted average common shares outstanding:
|
||||||||
|
Basic
|
4,150,099 | 4,062,475 | ||||||
|
Diluted
|
4,189,724 | 4,103,459 | ||||||
|
Common shares outstanding
|
4,348,292 | 4,063,837 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
Three Months Ended
September 30,
|
||||||||
|
2017
|
2016
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net income
|
$ | 628 | $ | 286 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
153 | 139 | ||||||
|
Share-based compensation
|
3 | 2 | ||||||
|
Impairment of intangible assets
|
- | 113 | ||||||
|
Gain on disposal of equipment
|
(12 | ) | (3 | ) | ||||
|
Deferred income tax
|
45 | - | ||||||
|
Bad debt expense (recovery)
|
- | (18 | ) | |||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable and other receivables
|
1,284 | (683 | ) | |||||
|
Deferred costs
|
12 | (255 | ) | |||||
|
Inventory
|
(427 | ) | 203 | |||||
|
Prepaid expenses and other assets
|
89 | 27 | ||||||
|
Accounts payable, accrued expenses and deferred rent
|
(744 | ) | 338 | |||||
|
Deferred revenue
|
(1 | ) | 107 | |||||
|
Income taxes payable
|
10 | (1 | ) | |||||
|
Net cash provided by operating activities
|
1,040 | 255 | ||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases of equipment
|
(139 | ) | (316 | ) | ||||
|
Purchases of investments
|
(297 | ) | - | |||||
|
Income tax effect of unrealized gains and losses
|
21 | - | ||||||
|
Increase in notes receivable
|
(1,150 | ) | - | |||||
|
Increase in intangibles
|
(8 | ) | (13 | ) | ||||
|
Proceeds from disposal of equipment
|
12 | 3 | ||||||
|
Net cash used in investing activities
|
(1,561 | ) | (326 | ) | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Principal payments on capital lease and notes payable
|
(14 | ) | (16 | ) | ||||
|
Borrowings from Summit Loan
|
- | 400 | ||||||
|
Repayments on Summit Loan
|
- | (400 | ) | |||||
|
Proceeds from shares issued under ATM, net of commissions and fees
|
2,169 | - | ||||||
|
Proceeds from ESPP Contributions
|
16 | 10 | ||||||
|
Repurchases of common stock
|
- | (49 | ) | |||||
|
Net cash provided by (used in) financing activities
|
2,171 | (55 | ) | |||||
|
Net increase (decrease) in cash and cash equivalents
|
1,650 | (126 | ) | |||||
|
Cash and cash equivalents, beginning of period
|
4,205 | 2,294 | ||||||
|
Cash and cash equivalents, end of period
|
$ | 5,855 | $ | 2,168 | ||||
Contact:
Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
SOURCE: Pro-Dex, Inc.
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