IRVINE, CA / ACCESSWIRE / February 6, 2020 / PRO-DEX, INC. PDEX today announced financial results for its fiscal 2020 second quarter ended December 31, 2019. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2020 with the Securities and Exchange Commission today.
Quarter Ended December 31, 2019
Net sales for the three months ended December 31, 2019, increased $1.6 million, or 24%, to $8.0 million from $6.4 million for the three months ended December 31, 2018, due primarily to increased repair revenue generated from our largest customer.
Gross profit for the three months ended December 31, 2019, increased $615,000, or 27%, to $2.9 million from $2.2 million for the same period in fiscal 2019, due to the increase in sales described above and our ability to better absorb and maintain the level of our fixed manufacturing costs.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2019, increased $140,000, or 13%, to $1.2 million compared to the prior fiscal year's corresponding quarter, reflecting our planned investments in research and development, selling, and general and administrative expenses in an effort to release new products and garner new customer relationships.
Net income for the quarter ended December 31, 2019, was $1.2 million, or $0.31 per diluted share, compared to $1.2 million, or $0.28 per diluted share, for the corresponding quarter in fiscal 2019.
Six Months Ended December 31, 2019
Net sales for the six months ended December 31, 2019, increased $1.9 million, or 14%, to $15.2 million from $13.3 million for the six months ended December 31, 2018, due primarily to increases in repair revenue generated from our largest customer.
Gross profit for the six months ended December 31, 2019, increased $669,000, or 13%, compared to the same period in fiscal 2019 due to the increase in sales described above.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2019, increased 21% to $2.5 million from $2.1 million in the prior fiscal year's corresponding period, reflecting our planned investments in research and development, selling, and general and administrative expenses in an effort to release new products and garner new customer relationships.
Net income for the six months ended December 31, 2019 was $2.4 million, or $0.58 per diluted share, compared to $2.5 million, or $0.59 per diluted share, for the corresponding period in fiscal 2019.
CEO Comments
Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with our second quarter and year-to-date results and our net sales growth." Mr. Van Kirk continued, "We expect the momentum to continue. Additionally, we are pleased that the private-labeled thoracic driver and related accessories are on track to ship in our third quarter of this fiscal year."
The amount spent on projects under development as well as the estimated market launch date and estimated future annual revenue is summarized below (in thousands):
| Three and Six Months ended December 31, 2019 | Three and Six Months ended December 31, 2018 | Market Launch | Est Annual Revenue | ||||||||||||||||||||||
Total Research & Development costs: | $ | 397 | $ | 881 | $ | 326 | $ | 735 | |||||||||||||||||
Products in development: | |||||||||||||||||||||||||
Thoracic Driver | $ | 17 | $ | 37 | $ | 33 | $ | 107 | 03/20 | $ | 4,000 | ||||||||||||||
Arthroscopic Shaver(1) | 3 | 11 | 38 | 60 | 06/21 | $ | 600 | ||||||||||||||||||
ENT Shaver | 66 | 155 | - | - | 01/21 | $ | 2,000 | ||||||||||||||||||
Arthroscopic Attachment | - | - | 9 | 16 | (2) | $ | 150 | ||||||||||||||||||
CMF Driver | 29 | 46 | 2 | 3 | 06/20 | $ | 350 | ||||||||||||||||||
Sustaining & Other | 282 | 632 | 244 | 549 | |||||||||||||||||||||
Total | $ | 397 | $ | 881 | $ | 326 | $ | 735 | |||||||||||||||||
Customer CMF Driver (3) | $ | 81 | $ | 181 | $ | 152 | $ | 217 | 06/20 | $ | 2,500 | ||||||||||||||
(1)This project has been internally pushed back to focus on our new internal Pro-Dex branded ENT shaver.
(2)Internal development of this project is now complete, but we are looking for the most attractive sales channel.
(3)Costs incurred related to customer contracts are included in costs of sales and deferred costs and are not included in research and development costs.
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 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, (including, but not limited to, estimated product launch dates and estimated future revenue), 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.
(tables follow)
PRO-DEX, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
| December 31, 2019 | June 30, 2019 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 6,175 | $ | 7,742 | ||||
Investments | 3,540 | 2,649 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $17 and $0 at December 31, 2019 and at June 30, 2019, respectively | 2,683 | 4,100 | ||||||
Deferred costs | 492 | 430 | ||||||
Inventory | 7,808 | 6,239 | ||||||
Prepaid expenses and other current assets | 193 | 623 | ||||||
Total current assets | 20,891 | 21,783 | ||||||
Equipment and leasehold improvements, net | 2,768 | 2,726 | ||||||
Right of use asset, net | 3,107 | - | ||||||
Intangibles, net | 145 | 129 | ||||||
Deferred income taxes, net | 163 | 260 | ||||||
Investments | 1,610 | 582 | ||||||
Other assets | 42 | 40 | ||||||
Total assets | $ | 28,726 | $ | 25,520 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,672 | $ | 1,996 | ||||
Accrued expenses | 1,287 | 1,437 | ||||||
Deferred revenue | 360 | 215 | ||||||
Note payable and capital lease obligations | 633 | 622 | ||||||
Total current liabilities | 3,952 | 4,270 | ||||||
Deferred rent | - | 146 | ||||||
Lease liability, net of current portion | 2,937 | - | ||||||
Income taxes payable | 352 | 162 | ||||||
Notes and capital leases payable, net of current portion | 3,613 | 3,934 | ||||||
Total non-current liabilities | 6,902 | 4,242 | ||||||
Total liabilities | 10,854 | 8,512 | ||||||
Shareholders' equity: | ||||||||
Common shares; no par value; 50,000,000 shares authorized; 3,884,098 and 4,039,491 shares issued and outstanding at December 31, 2019 and June 30, 2019, respectively | 13,634 | 15,815 | ||||||
Accumulated other comprehensive income (loss) | 100 | (549 | ) | |||||
Retained earnings | 4,138 | 1,742 | ||||||
Total shareholders' equity | 17,872 | 17,008 | ||||||
Total liabilities and shareholders' equity | $ | 28,726 | $ | 25,520 | ||||
PRO-DEX, INC.
CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
Net sales | $ | 7,961 | $ | 6,399 | $ | 15,201 | $ | 13,314 | ||||||||
Cost of sales | 5,097 | 4,150 | 9,557 | 8,339 | ||||||||||||
Gross profit | 2,864 | 2,249 | 5,644 | 4,975 | ||||||||||||
Operating (income) expenses: Selling expenses | 135 | 97 | 277 | 130 | ||||||||||||
General and administrative expenses | 664 | 633 | 1,327 | 1,197 | ||||||||||||
Gain from disposal of equipment | - | - | - | (7 | ) | |||||||||||
Research and development costs | 397 | 326 | 881 | 735 | ||||||||||||
Total operating expenses | 1,196 | 1,056 | 2,485 | 2,055 | ||||||||||||
Operating income | 1,668 | 1,193 | 3,159 | 2,920 | ||||||||||||
Interest expense | (63 | ) | (69 | ) | (122 | ) | (89 | ) | ||||||||
Interest and other income | 33 | 93 | 68 | 168 | ||||||||||||
Gain on sale of investments | - | 356 | - | 356 | ||||||||||||
Income from operations before income taxes | 1,638 | 1,573 | 3,105 | 3,355 | ||||||||||||
Income tax expense | (389 | ) | (394 | ) | (751 | ) | (827 | ) | ||||||||
Net income | $ | 1,249 | $ | 1,179 | $ | 2,354 | $ | 2,528 | ||||||||
Other comprehensive income (loss), net of tax: Unrealized income (loss) from marketable equity investments | 705 | (494 | ) | 649 | (349 | ) | ||||||||||
Comprehensive income | $ | 1,954 | $ | 685 | $ | 3,003 | $ | 2,179 | ||||||||
Basic net income per share: | ||||||||||||||||
Net income | $ | 0.32 | $ | 0.28 | $ | 0.59 | $ | 0.59 | ||||||||
Diluted net income per share: | ||||||||||||||||
Net income | $ | 0.31 | $ | 0.28 | $ | 0.58 | $ | 0.59 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 3,950 | 4,195 | 3,979 | 4,263 | ||||||||||||
Diluted | 4,053 | 4,242 | 4,082 | 4,303 | ||||||||||||
Common shares outstanding | 3,884 | 4,143 | 3,884 | 4,143 | ||||||||||||
PRO-DEX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Six Months Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 2,354 | $ | 2,528 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 282 | 195 | ||||||
Gain from disposal of equipment | - | (7 | ) | |||||
Share-based compensation | 19 | 18 | ||||||
Non-cash lease expense | 22 | - | ||||||
Amortization of loan fees | 4 | - | ||||||
Gain on sale of investments | - | (356 | ) | |||||
Deferred income taxes | 97 | 742 | ||||||
Bad debt expense (recovery) | 17 | (13 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and other current receivables | 1,400 | (838 | ) | |||||
Deferred costs | (62 | ) | (143 | ) | ||||
Inventory | (1,569 | ) | (147 | ) | ||||
Prepaid expenses and other assets | 430 | (46 | ) | |||||
Accounts payable and accrued expenses | (771 | ) | (301 | ) | ||||
Deferred revenue | 145 | (1 | ) | |||||
Income taxes payable | 190 | (123 | ) | |||||
Net cash provided by operating activities | 2,558 | 1,508 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of investments | (1,271 | ) | (1,365 | ) | ||||
Purchases of equipment and leasehold improvements | (317 | ) | (540 | ) | ||||
Proceeds from sale of investments | - | 1,905 | ||||||
Proceeds from sale of equipment | - | 7 | ||||||
Increase in intangibles | (23 | ) | (14 | ) | ||||
Net cash used in investing activities | (1,611 | ) | (7 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repurchases of common stock | (2,215 | ) | (2,560 | ) | ||||
Proceeds from exercise of options and ESPP contributions | 15 | 17 | ||||||
Payment of employee payroll taxes on net issuance of common stock | - | (101 | ) | |||||
Proceeds from Minnesota Bank & Trust long-term debt, net of fees | - | 4,942 | ||||||
Principal payments on notes payable and capital lease | (314 | ) | (116 | ) | ||||
Net cash provided by (used in) financing activities | (2,514 | ) | 2,182 | |||||
Net increase (decrease) in cash and cash equivalents | (1,567 | ) | 3,683 | |||||
Cash and cash equivalents, beginning of period | 7,742 | 5,188 | ||||||
Cash and cash equivalents, end of period | $ | 6,175 | $ | 8,871 | ||||
Contact:
Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
SOURCE: Pro-Dex, Inc.
https://www.accesswire.com/575434/Pro-Dex-Inc-Announces-Fiscal-2020-Second-Quarter-and-Six-Month-Results
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