IRVINE, CA / ACCESSWIRE / May 10, 2018 / PRO-DEX, INC. (NASDAQ: PDEX) today announced financial results for its fiscal 2018 third quarter ended March 31, 2018. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2018 with the Securities and Exchange Commission today.
Quarter Ended March 31, 2018
Net sales for the three months ended March 31, 2018 decreased $1.1 million, or 17%, to $5.5 million from $6.6 million for the three months ended March 31, 2017, due primarily to the completion in the prior year of an engineering project for a new product for one of our medical device customers allowing us to record approximately $750,000 in non-recurring engineering service revenue coupled with the shipment of the initial product order of both batteries and handpieces in the amount of approximately $600,000. We had no similar product development launches in the third quarter of fiscal 2018.
Gross profit for the three months ended March 31, 2018 decreased $486,000, or 20%, to $2.0 million from $2.5 million for the same period in fiscal 2017. The decrease in gross profit is reflective of the decline in revenue discussed above.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2018 increased $230,000, or 20%, to 1.3 million from 1.1 million for the same period in fiscal 2017. This increase is primarily attributable to $227,000 in expenses associated with our ongoing internal development of a Pro-Dex branded thoracic driver utilizing our adaptive torque-limiting technology. We commenced development of this driver in March, 2017 and the corresponding expense for the quarter ended March 31, 2017 was less than $10,000.
Income from continuing operations for the quarter ended March 31, 2018 decreased by $223,000 to $480,000, compared to $703,000 in the corresponding quarter in fiscal 2017. Net income for the quarter ended March 31, 2018 was $480,000, or $0.11 per share, compared to $888,000, or $0.22 per share, for the corresponding quarter in fiscal 2017.
Nine Months Ended March 31, 2018
Net sales for the nine months ended March 31, 2018 decreased $129,000, or 1%, to $16.2 million from $16.3 million for the nine months ended March 31, 2017, due primarily to increases in medical device product revenues to three significant distributors, offset by sales of our most recently launched CMF driver during the third quarter of fiscal 2017 discussed above.
Gross profit for the nine months ended March 31, 2018 increased $358,000 or 7% compared to the same period in fiscal 2017. The gross profit increase is due to reduced lower margin non-recurring engineering services as well as management of our fixed manufacturing costs.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2018 increased 13% to $3.7 million from $3.3 million in the prior fiscal year’s corresponding period, reflecting primarily increased research and development costs as we focus development efforts on a Pro-Dex branded thoracic driver described above.
Income from continuing operations for the nine months ended March 31, 2018 was $1.5 million, compared to $4.1 million for the corresponding period in fiscal 2017. The decrease reflects the tax benefit recorded in the second quarter of fiscal 2017 due to the release of the valuation allowance against our deferred tax assets. Net income for the nine months ended March 31, 2018 was $1.5 million, or $0.34 per share, compared to $4.4 million, or $1.07 per share, for the corresponding period in fiscal 2017.
CEO Comments
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, which align with our expectations and internal plan, as well as the progress we are making on our internally developed thoracic driver, which will be available for sale in the first quarter of fiscal 2019. We continue to reinvest and focus our growth on our core medical device product and service revenue."
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.
Contact:
Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
| March 31,2018 | June 30,2017 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,099 | $ | 4,205 | ||||
| Investments | 1,438 | 718 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $4 and $3, at March 31, 2018 and June 30, 2017, respectively | 3,434 | 3,538 | ||||||
| Deferred costs | — | 12 | ||||||
| Assets held for sale | 178 | 363 | ||||||
| Inventory | 3,382 | 3,084 | ||||||
| Notes receivable | 1,150 | — | ||||||
| Prepaid expenses and other current assets | 201 | 363 | ||||||
| Total current assets | 14,882 | 12,283 | ||||||
| Equipment and leasehold improvements, net | 1,739 | 1,350 | ||||||
| Deferred income taxes | 1,845 | 2,048 | ||||||
| Notes receivable | 800 | 450 | ||||||
| Intangibles, net | 145 | 149 | ||||||
| Other assets | 71 | 71 | ||||||
| Total assets | $ | 19,482 | $ | 16,351 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 873 | $ | 1,159 | ||||
| Accrued expenses | 972 | 1,344 | ||||||
| Deferred revenue | 76 | 19 | ||||||
| Notes payable | — | 26 | ||||||
| Capital lease obligations | 35 | 32 | ||||||
| Total current liabilities | 1,956 | 2,580 | ||||||
| Deferred rent, net of current portion | 82 | — | ||||||
| Notes and capital leases payable, net of current portion | 15 | 61 | ||||||
| Total non-current liabilities | 97 | 61 | ||||||
| Total liabilities | 2,053 | 2,641 | ||||||
| Shareholders’ equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 4,361,479 and 4,025,193 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively | 20,034 | 17,704 | ||||||
| Accumulated other comprehensive income | (31 | ) | 33 | |||||
| Accumulated deficit | (2,574 | ) | (4,027 | ) | ||||
| Total shareholders’ equity | 17,429 | 13,710 | ||||||
| Total liabilities and shareholders’ equity | $ | 19,482 | $ | 16,351 | ||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)
| Three Months EndedMarch 31, | Nine Months EndedMarch 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net sales | $ | 5,494 | $ | 6,618 | $ | 16,217 | $ | 16,346 | ||||||||
| Cost of sales | 3,518 | 4,156 | 10,663 | 11,150 | ||||||||||||
| Gross profit | 1,976 | 2,462 | 5,554 | 5,196 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | 83 | 132 | 257 | 439 | ||||||||||||
| General and administrative expenses | 701 | 725 | 1,781 | 1,894 | ||||||||||||
| Impairment of goodwill and long-lived assets | — | — | 230 | 113 | ||||||||||||
| Research and development costs | 560 | 257 | 1,445 | 839 | ||||||||||||
| Total operating expenses | 1,344 | 1,114 | 3,713 | 3,285 | ||||||||||||
| Operating income | 632 | 1,348 | 1,841 | 1,911 | ||||||||||||
| Interest expense | (2 | ) | (3 | ) | (6 | ) | (10 | ) | ||||||||
| Interest income | 73 | 8 | 166 | 19 | ||||||||||||
| Gain from disposal of equipment | — | — | 16 | 3 | ||||||||||||
| Income from continuing operations before income taxes | 703 | 1,353 | 2,017 | 1,923 | ||||||||||||
| Income tax (expense) benefit | (223 | ) | (650 | ) | (564 | ) | 2,202 | |||||||||
| Income from continuing operations | 480 | 703 | 1,453 | 4,125 | ||||||||||||
| Income from discontinued operations,net of income taxes | — | 185 | — | 243 | ||||||||||||
| Net income | $ | 480 | $ | 888 | $ | 1,453 | $ | 4,368 | ||||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Unrealized gain (loss) from marketable equity investments, net of income taxes | 59 | 6 | (86 | ) | — | |||||||||||
| Comprehensive income | $ | 539 | $ | 894 | $ | 1,367 | $ | 4,368 | ||||||||
| Basic net income per share: | ||||||||||||||||
| Income from continuing operations | $ | 0.11 | $ | 0.17 | $ | 0.34 | $ | 1.02 | ||||||||
| Income from discontinued operations | — | 0.05 | — | 0.06 | ||||||||||||
| Net income | $ | 0.11 | $ | 0.22 | $ | 0.34 | $ | 1.08 | ||||||||
| Diluted net income per share: | ||||||||||||||||
| Income from continuing operations | $ | 0.11 | $ | 0.17 | $ | 0.34 | $ | 1.01 | ||||||||
| Income from discontinued operations | — | 0.05 | — | 0.06 | ||||||||||||
| Net income | $ | 0.11 | $ | 0.22 | $ | 0.34 | $ | 1.07 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 4,363 | 4,021 | 4,290 | 4,047 | ||||||||||||
| Diluted | 4,403 | 4,055 | 4,330 | 4,085 | ||||||||||||
| Common shares outstanding | 4,361 | 4,014 | 4,361 | 4,014 | ||||||||||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months EndedMarch 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 1,453 | $ | 4,368 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 472 | 418 | ||||||
| Gain on disposal of equipment | (16 | ) | (3 | ) | ||||
| Gain on sale of OMS | — | (327 | ) | |||||
| Share-based compensation | 191 | 3 | ||||||
| Impairment of goodwill and long-lived assets | 230 | 113 | ||||||
| Deferred income taxes | 203 | (2,232 | ) | |||||
| Income tax effect of unrealized gains and losses | 21 | — | ||||||
| Bad debt recovery | — | (16 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, due from factor and other current receivables | 103 | (981 | ) | |||||
| Deferred costs | 12 | 235 | ||||||
| Assets held for sale | (84 | ) | (27 | ) | ||||
| Inventory | (298 | ) | 389 | |||||
| Prepaid expenses and other assets | 21 | (117 | ) | |||||
| Accounts payable, accrued expenses and deferred rent | (576 | ) | 118 | |||||
| Deferred revenue | 57 | (153 | ) | |||||
| Income taxes payable | — | 132 | ||||||
| Net cash provided by operating activities | 1,789 | 1,920 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of investments | (806 | ) | (336 | ) | ||||
| Purchases of equipment and leasehold improvements | (820 | ) | (552 | ) | ||||
| Increase in notes receivable | (1,500 | ) | — | |||||
| Proceeds from liquidation of Ramsey assets | — | 86 | ||||||
| Proceeds from sale of OMS | — | 636 | ||||||
| Proceeds from sale of equipment | 30 | 3 | ||||||
| Increase in intangibles | (11 | ) | (20 | ) | ||||
| Net cash used in investing activities | (3,107 | ) | (183 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repurchases of common stock | (18 | ) | (312 | ) | ||||
| Proceeds from shares issued under ATM, net of commissions and fees | 2,262 | — | ||||||
| Proceeds from exercise of options and ESPP contributions | 38 | 24 | ||||||
| Borrowings from Summit Loan | — | 600 | ||||||
| Repayments on Summit Loan | — | (600 | ) | |||||
| Principal payments on notes payable and capital lease | (70 | ) | (44 | ) | ||||
| Net cash provided by (used in) financing activities | 2,212 | (332 | ) | |||||
| Net increase in cash and cash equivalents | 894 | 1,405 | ||||||
| Cash and cash equivalents, beginning of period | 4,205 | 2,294 | ||||||
| Cash and cash equivalents, end of period | $ | 5,099 | $ | 3,699 | ||||
SOURCE: Pro-Dex, Inc.
