| Contact: | Richard L. Van Kirk, |
| Chief Executive Officer | |
| (949) 769-3200 |
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL 2015 SECOND QUARTER
AND SIX-MONTH RESULTS
IRVINE, CA, February 10, 2015 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2015 second quarter ended December 31, 2014. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2015 with the Securities and Exchange Commission today.
Quarter Ended December 31, 2014
Net sales for the three months ended December 31, 2014 increased $152,000, or 6%, to $2.8 million from $2.6 million for the three months ended December 31, 2013, due primarily to increases in medical device revenues. Gross profit for the three months ended December 31, 2014 increased $147,000, or 27%, to $696,000 from $549,000 for the same period in 2013. Contributing to this increase were the increase in sales volume, described above, and the decrease in our accrual for anticipated losses from the development services portion of certain contracts, which decreased by $103,000 compared to the corresponding period of the prior fiscal year.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2014 increased 18% to $1.1 million from $925,000 million in the prior year’s corresponding quarter, reflecting primarily our investment in our newly launched engineering services division.
Loss from continuing operations for the quarter ended December 31, 2014 decreased by $136,000 to $202,000, compared to a loss from continuing operations of $338,000 in the corresponding quarter in 2013. Net loss for the quarter ended December 31, 2014 was $192,000, or $0.05 per share, compared to a net loss of $338,000, or $0.10 per share, for the corresponding quarter in 2013.
Six Months Ended December 31, 2014
Net sales for the six months ended December 31, 2014 increased $193,000, or 4%, to $5.4 million from $5.2 million for the six months ended December 31, 2013, due primarily to increases in medical device revenues, which were partially offset by a decrease in dental product revenues.
Gross profit for the six months ended December 31, 2014 remained stable at $1.5 million, consistent with the same period in 2013.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2014 increased 14% to $2.1 million from $1.8 million in the prior year’s corresponding period, reflecting primarily the effects of the Company’s investment in our newly launched engineering services division as well as research and
development costs incurred to launch in-house battery manufacturing and increases in legal expenses associated with acquisitions and other non-routine transactions.
Loss from continuing operations for the six months ended December 31, 2014 was $383,000, compared to a loss from continuing operations of $320,000 for the corresponding period in 2013. Net loss for the six months ended December 31, 2014 was $362,000, or $0.09 per share, compared to a net loss of $126,000, or $0.04 per share, for the corresponding period in 2013.
Future Strategy
The Company has decided to cease hosting earnings conference calls in the foreseeable future. We are a small public company and our current focus is on improvement of our financial performance, which includes developing new revenue streams, improving and cultivating our valued customer relationships, and responding to new opportunities quickly. We will continue to provide timely earnings releases and other press announcements to keep you apprised of our activities and progress.
About Pro-Dex, Inc.:
Pro-Dex, Inc., with operations in California, Michigan 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)
| December 31, 2014 | June 30, 2014 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 1,973 | $ | 3,188 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $26 and $29, respectively | 1,115 | 1,776 | ||||||
| Unbilled receivables | 1,415 | 1,073 | ||||||
| Other current receivables | 22 | 31 | ||||||
| Inventory | 2,880 | 2,600 | ||||||
| Prepaid expenses | 211 | 110 | ||||||
| Notes receivable | 1,205 | — | ||||||
| Deferred income taxes | 146 | 115 | ||||||
| Total current assets | 8,967 | 8,893 | ||||||
| Investments | 1,002 | 1,058 | ||||||
| Equipment and leasehold improvements, net | 1,562 | 1,575 | ||||||
| Intangibles | 334 | 105 | ||||||
| Other assets | 80 | 77 | ||||||
| Total assets | $ | 11,945 | $ | 11,708 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 830 | $ | 744 | ||||
| Accrued expenses | 1,352 | 1,090 | ||||||
| Deferred revenue | 501 | 232 | ||||||
| Income taxes payable | — | 53 | ||||||
| Capital lease obligations | 11 | 8 | ||||||
| Total current liabilities | 2,694 | 2,127 | ||||||
| Deferred income taxes | 146 | 115 | ||||||
| Deferred rent | 221 | 243 | ||||||
| Capital lease obligations, net of current portion | 1 | 7 | ||||||
| Total non-current liabilities | 368 | 365 | ||||||
| Total liabilities | 3,062 | 2,492 | ||||||
| Shareholders’ equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 4,169,481 and 4,211,019 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively | 18,497 | 18,582 | ||||||
| Accumulated other comprehensive income | 316 | 202 | ||||||
| Accumulated deficit | (9,930 | ) | (9,568 | ) | ||||
| Total shareholders’ equity | 8,883 | 9,216 | ||||||
| Total liabilities and shareholders’ equity | $ | 11,945 | $ | 11,708 | ||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales | $ | 2,792 | $ | 2,640 | $ | 5,387 | $ | 5,194 | ||||||||
| Cost of sales | 2,096 | 2,091 | 3,863 | 3,700 | ||||||||||||
| Gross profit | 696 | 549 | 1,524 | 1,494 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | 186 | 139 | 328 | 231 | ||||||||||||
| General and administrative expenses | 459 | 422 | 950 | 878 | ||||||||||||
| Research and development costs | 444 | 364 | 829 | 740 | ||||||||||||
| Total operating expenses | 1,089 | 925 | 2,107 | 1,849 | ||||||||||||
| Operating loss | (393 | ) | (376 | ) | (583 | ) | (355 | ) | ||||||||
| Interest expense | (2 | ) | (2 | ) | (3 | ) | (4 | ) | ||||||||
| Interest income | 4 | 10 | 5 | 10 | ||||||||||||
| Gain (loss) from disposal of equipment | 1 | (6 | ) | 1 | (6 | ) | ||||||||||
| Realized gain on sale of investments | 59 | — | 59 | — | ||||||||||||
| Loss from continuing operations before income taxes | (331 | ) | (374 | ) | (521 | ) | (355 | ) | ||||||||
| Income tax benefit | 129 | 36 | 138 | 35 | ||||||||||||
| Loss from continuing operations | (202 | ) | (338 | ) | (383 | ) | (320 | ) | ||||||||
| Income from discontinued operations, net of income taxes | 10 | — | 21 | 194 | ||||||||||||
| Net loss | $ | (192 | ) | $ | (338 | ) | $ | (362 | ) | $ | (126 | ) | ||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Unrealized gain from marketable equity investments | 162 | 148 | 173 | 204 | ||||||||||||
| Less: Reclassification of realized gains included in net loss | (59 | ) | — | (59 | ) | — | ||||||||||
| Comprehensive income (loss) | $ | (89 | ) | $ | (190 | ) | $ | (248 | ) | $ | 78 | |||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Loss from continuing operations | $ | (0.05 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.10 | ) | ||||
| Income from discontinued operations | — | — | — | 0.06 | ||||||||||||
| Net loss | $ | (0.05 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.04 | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 4,170 | 3,343 | 4,190 | 3,344 | ||||||||||||
| Diluted | 4,170 | 3,343 | 4,190 | 3,344 | ||||||||||||
| Common shares outstanding | 4,170 | 3,343 | 4,170 | 3,344 | ||||||||||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Six Months Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (362 | ) | $ | (126 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 259 | 283 | ||||||
| Gain on sale of investments | (59 | ) | — | |||||
| Gain on sale of real estate held for sale | — | (167 | ) | |||||
| Loss (gain) on retirement of equipment | (1 | ) | 6 | |||||
| Share-based compensation | 11 | 31 | ||||||
| Deferred income tax benefit | (77 | ) | — | |||||
| Allowance for doubtful accounts receivable | (3 | ) | 7 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and other current receivables | 673 | (259 | ) | |||||
| Unbilled receivables | (342 | ) | (367 | ) | ||||
| Inventory | (275 | ) | 282 | |||||
| Prepaid expenses and other assets | (103 | ) | (8 | ) | ||||
| Accounts payable, accrued expenses and deferred rent | 326 | (422 | ) | |||||
| Deferred revenue | 269 | 106 | ||||||
| Income taxes payable | (53 | ) | (6 | ) | ||||
| Net cash provided by (used in) operating activities | 263 | (640 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of investments | (12 | ) | (329 | ) | ||||
| Purchases of equipment and leasehold improvements | (209 | ) | (19 | ) | ||||
| Acquisition of Huber Precision | (209 | ) | — | |||||
| Purchase of notes receivable | (1,205 | ) | — | |||||
| Proceeds from sale of real estate held for sale | — | 900 | ||||||
| Proceeds from sale of equipment | 1 | 4 | ||||||
| Proceeds from sale of investments | 318 | — | ||||||
| Increase in intangibles | (61 | ) | (40 | ) | ||||
| Net cash provided by (used in) investing activities | (1,377 | ) | 516 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Purchase of common stock | (94 | ) | — | |||||
| Payments made for common stock rights offering | (3 | ) | — | |||||
| Principal payments on capital lease | (4 | ) | (2 | ) | ||||
| Net cash used in financing activities | (101 | ) | (2 | ) | ||||
| Net decrease in cash and cash equivalents | (1,215 | ) | (126 | ) | ||||
| Cash and cash equivalents, beginning of period | 3,188 | 1,680 | ||||||
| Cash and cash equivalents, end of period | $ | 1,973 | $ | 1,554 | ||||