SOURCE: Pro-Dex, Inc.

Pro-Dex, Inc.

May 12, 2016 16:05 ET

Pro-Dex, Inc. Announces Fiscal 2016 Third Quarter and Nine-Month Results

IRVINE, CA--(Marketwired - May 12, 2016) - PRO-DEX, INC. (NASDAQ: PDEX) today announced financial results for its fiscal 2016 third quarter ended March 31, 2016. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2016 with the Securities and Exchange Commission today.

Quarter Ended March 31, 2016

Net sales for the three months ended March 31, 2016 increased $1.4 million, or 36%, to $5.3 million from $3.9 million for the three months ended March 31, 2015, due primarily to increases in medical device revenues as well as an additional medical device product launch during the second quarter of fiscal 2016. Gross profit for the three months ended March 31, 2016 increased $315,000, or 30%, to $1.4 million from $1.1 million for the same period in fiscal 2015, primarily as a result of the increase in sales volume, described above.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2016 decreased $125,000 or 9% to $1.3 million compared to the prior fiscal year's corresponding quarter. During the quarter ended March 31, 2016 we recorded an impairment charge in the amount of $245,000 relating to Fineline Molds goodwill and intangible assets, as a result of our annual impairment test. This impairment charge, included in operating expenses, is offset by reduced legal and professional fees in the current fiscal year in the amount of $172,000 recorded in general and administrative expenses and a reduction in personnel and related costs primarily of our Engineering Services Division in the amount of $168,000.

Income from continuing operations for the quarter ended March 31, 2016 increased by $460,000 to $368,000, compared to a loss from continuing operations of $92,000 in the corresponding quarter in fiscal 2015. Net income for the quarter ended March 31, 2016 was $368,000, or $0.09 per share, compared to a net loss of $76,000, or $0.02 per share, for the corresponding quarter in fiscal 2015.

Nine Months Ended March 31, 2016

Net sales for the nine months ended March 31, 2016 increased $5.5 million, or 60%, to $14.9 million from $9.3 million for the nine months ended March 31, 2015, due primarily to increases in medical device revenues, which represents approximately 71% of our revenue for the nine months ended March 31, 2016.

Gross profit for the nine months ended March 31, 2016 increased $1.4 million, or 54% compared to the same period in fiscal 2015, primarily as a result of the increase in sales volume, described above.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2016 increased 2% to $3.6 million from $3.5 million in the prior fiscal year's corresponding period, reflecting primarily the goodwill and long-lived asset impairment charge relating to our Fineline Molds division, a business we acquired in the third quarter of fiscal 2015.

Income from continuing operations for the nine months ended March 31, 2016 was $633,000, compared to a loss from continuing operations of $475,000 for the corresponding period in fiscal 2015. Net income for the nine months ended March 31, 2016 was $633,000, or $0.15 per share, compared to a net loss of $438,000, or $0.10 per share, for the corresponding period in fiscal 2015. 

CEO Comments

Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with our continued positive sales growth and have continued our earnings momentum with two consecutive quarters of profitability and I want to thank the Pro-Dex team as our results are reflective of their efforts. In addition, our gain on the Ramsey property is indicative of Pro-Dex's willingness to be open minded and flexible while looking for opportunities to increase shareholder value," continued Mr. Van Kirk. 

"Although we recorded an impairment charge related to our Fineline Molds business, we gained valuable insight related to business acquisitions and integration and have made management changes that we believe will positively impact the division going forward. In the near term, however, we will be focusing our efforts on organic sales growth. Finally," concluded Mr. Van Kirk, "during the third quarter, the USPTO issued a long awaited patent, which we use in several of our medical device products, and protects one of our key technologies, which we believe has the potential to be used in many diverse applications. We also have a number of significant proposals outstanding with customers for new projects and in fact believe that we are close to finalizing terms on a new engineering project for our medical device core business. This business development activity has us encouraged about further growth for our core business as we take this turn around to the next level."

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.

(tables follow)

   
PRO-DEX, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(In thousands, except share amounts)  
   
   
  March 31,
2016
    June 30,
2015
 
ASSETS          
  Current Assets:          
    Cash and cash equivalents $ 1,452     $ 697  
    Accounts receivable, net of allowance for doubtful accounts of $18 and $36, respectively   2,169       2,326  
    Due from factor   1,581       --  
    Unbilled receivables   123       853  
    Other current receivables   113       28  
    Inventory   4,118       4,310  
    Prepaid expenses   129       124  
    Deferred income taxes   --       70  
      Total current assets   9,685       8,408  
  Equipment and leasehold improvements, net   1,198       1,470  
  Investment in Ramsey property and related notes receivable   --       1,652  
  Goodwill   112       353  
  Intangibles   442       547  
  Other assets   80       86  
    Total assets $ 11,517     $ 12,516  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
  Current Liabilities:              
    Accounts payable $ 1,132     $ 1,867  
    Accrued expenses   892       1,202  
    Deferred revenue   117       594  
    Income taxes payable   3       --  
    Note payable   24       24  
  Capital lease obligations   --       7  
    Total current liabilities   2,168       3,694  
  Deferred income taxes   --       70  
  Deferred rent   157       204  
    Note payable, net of current portion   52       70  
      Total non-current liabilities   209       344  
  Total liabilities   2,377       4,038  
               
Shareholders' equity:              
    Common shares; no par value; 50,000,000 shares authorized; 4,152,139 and 4,139,579 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively   18,440       18,411  
    Accumulated deficit   (9,300 )     (9,933 )
      Total shareholders' equity   9,140       8,478  
        Total liabilities and shareholders' equity $ 11,517     $ 12,516  
               
               
               
PRO-DEX, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(In thousands, except per share amounts)  
   
  Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
  2016     2015     2016     2015  
                               
Net sales $ 5,337     $ 3,922     $ 14,873     $ 9,310  
Cost of sales   3,977       2,877       10,916       6,741  
Gross profit   1,360       1,045       3,957       2,569  
                               
Operating expenses:                              
Selling expenses   195       363       665       691  
General and administrative expenses   420       592       1,407       1,542  
Impairment of goodwill and long-lived assets   245       --       245       --  
Research and development costs   450       480       1,313       1,309  
Total operating expenses   1,310       1,435       3,630       3,542  
                               
Operating income (loss)   50       (390 )     327       (973 )
Interest expense   (10 )     (1 )     (36 )     (4 )
Interest income   --       1       --       6  
Gain from sale of Investment in Ramsey Property   340       --       340       --  
Gain from disposal of equipment   4       1       18       1  
Realized gain on sale of investments   --       395       --       455  
                               
Income (loss) from continuing operations before income taxes   384       6       649       (515 )
Income tax (expense) benefit   (16 )     (98 )     (16 )     40  
                               
Income (loss) from continuing operations   368       (92 )     633       (475 )
Income from discontinued operations, net of income taxes   --       16       --       37  
Net income (loss) $ 368     $ (76 )   $ 633     $ (438 )
                               
Basic and diluted net income (loss) per share:                              
  Income (loss) from continuing operations $ 0.09     $ (0.02 )   $ 0.15     $ (0.11 )
  Income from discontinued operations   --       --       --       0.01  
  Net income (loss) $ 0.09     $ (0.02 )   $ 0.15     $ (0.10 )
                               
Weighted average common shares outstanding:                              
  Basic   4,151       4,158       4,145       4,179  
  Diluted   4,195       4,158       4,169       4,179  
Common shares outstanding   4,152       4,140       4,152       4,140  
                               
                               
                               
PRO-DEX, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
(In thousands)  
   
  Nine Months Ended
March 31,
 
  2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net income (loss) $ 633     $ (438 )
Adjustments to reconcile net loss to net cash used in operating activities:              
  Depreciation and amortization   481       398  
  Gain on sale of investments   --       (455 )
  Gain on sale of investment in Ramsey   (340 )     --  
  Gain on disposal of equipment   (18 )     (1 )
  Impairment of goodwill and long-lived assets   245       --  
  Share-based compensation   4       14  
  Deferred income tax benefit   --       5  
  Bad debt expense (recovery)   (18 )     1  
  Changes in operating assets and liabilities:              
    Accounts receivable, due from factor and other current receivables   (1,382 )     (313 )
    Unbilled receivables   730       (324 )
    Inventory   192       (839 )
    Prepaid expenses and other assets   --       (83 )
    Accounts payable, accrued expenses and deferred rent   (1,092 )     1,352  
    Deferred revenue   (477 )     298  
    Income taxes payable   3       (53 )
Net cash used in operating activities   (1,039 )     (438 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
  Purchases of investments   --       (12 )
  Purchases of equipment and leasehold improvements   (106 )     (242 )
  Business acquisitions   --       (865 )
  Purchase of notes receivable   --       (1,236 )
  Purchase of Investment in Ramsey property and related notes receivable   (87 )     --  
  Proceeds from sale of investment in Ramsey   1,970       --  
  Proceeds from sale of equipment   18       1  
  Proceeds from sale of investments   --       1,324  
  Increase in intangibles   (1 )     (50 )
Net cash provided by (used in) investing activities   1,794       (1,080 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
  Purchase of common stock   (2 )     (154 )
  Proceeds from exercise of stock options and ESPP contributions   27       --  
  Repurchase of stock options   --       (32 )
  Borrowings from Summit loan   2,050       --  
  Repayments on Summit loan   (2,050 )     --  
  Payments made for common stock rights offering   --       (3 )
  Proceeds from note payable   500          
  Principal payments on notes payable and capital lease   (525 )     (6 )
Net cash used in financing activities   --       (195 )
               
Net increase (decrease) in cash and cash equivalents   755       (1,713 )
Cash and cash equivalents, beginning of period   697       3,188  
Cash and cash equivalents, end of period $ 1,452     $ 1,475  
               

Contact Information

  • Contact:
    Richard L. Van Kirk
    Chief Executive Officer
    (949) 769-3200