Pro-Dex, Inc. Announces Fiscal First Quarter 2008 Financial Results and New $2.4
Million Purchase Agreement From Existing Customer
Sales increase 14% year-over-year
Free cash flow improves 58% over year-ago period to $1.1 million
Company expands credit agreement with Wells Fargo
SANTA ANA, Calif., Nov. 13 /PRNewswire-FirstCall/ -- PRO-DEX, INC.
(Nasdaq: PDEX) today announced financial results for the fiscal first quarter
2008 for the period ending September 30, 2007
Consolidated net sales for first quarter 2008 were $6.0 million, an
increase of 14.0% compared to $5.2 million reported during the first quarter of
fiscal 2007. The increase was due to continued growth in medical products
shipped out of our Santa Ana facility. Net income for the three months ended
September 30, 2007 was $326,000 or $0.03 per share on a basic and diluted basis
compared to net income of $242,000 or $0.03 per share on a basic and $0.02 per
share on a diluted basis for the year-ago period.
Mark Murphy, the Company's Chief Executive Officer, commented, "We have
maintained the momentum that began in our last fiscal year, enjoying recent
success in business development that has added to our backlog. I have indicated
that this year would be critical to solidifying our value proposition and
believe we have made a very good start on that promise as reflected in the solid
growth, profitability and cash generation we delivered."
Gross profit for the first quarter increased 9% to $2.15 million from
$1.98 million in the same quarter last year. Gross profit as a percentage of
sales decreased to 36% for the quarter ended September 30, 2007 compared to 38%
in the year-ago period due to continued warranty costs.
Operating expenses increased by 5.0% to $1.63 million for the first
quarter of 2008, compared to $1.55 million in the first fiscal quarter of last
year. As a percentage of sales, the expenses remained relatively stable at 18%
of sales for the current quarter compared to 17% of sales for the prior year's
first quarter.
At September 30, 2007, backlog, which includes orders for delivery beyond
60 days, was $9.4 million compared with a backlog of $9.1 million at September
30, 2006 and $10.1 million at June 30, 2007.
Subsequent to the end of the quarter, Pro-Dex received a new purchase
commitment from an existing customer for $2.4 million of product to be delivered
throughout calendar year 2008. Last year, this same customer had informed
Pro-Dex of its plans to take in-house the repair and production of two products
that Pro-Dex had historically produced for them. The new purchase commitment
increases the Company's backlog to nearly $11.5 million at the present time. In
addition, Pro-Dex continues to define the next generation of product for this
same customer and is actively negotiating a new Development and Supply
Agreement. "This commitment is concrete evidence of the progress we have made,
both in terms of improving quality and enhancing customer relationships," Mr.
Murphy added. "In fact, this commitment demonstrates the shift in our customer's
perception of Pro-Dex. After planning to transition the business in-house, the
customer is now expanding its relationship with us, solidifying our role as
their strategic partner."
Working capital at September 30, 2007 increased to $6.6 million compared
to $6.2 million at September 30, 2006 and was the same as the $6.6 million at
June 30, 2007. Cash flow provided by operations was $1.1 million in the quarter
ended September 30, 2007 compared to $691,000 for the quarter ended September
30, 2006. Cash was generated through continued profitability, improvements in
accounts receivable collections and decreases in inventory.
In another recent development, the Company entered into an expanded credit
agreement with Wells Fargo Bank raising its total borrowing capacity to above
$6.6 million at reduced interest rates, up from the $2.6 million in borrowing
capacity in the prior agreement. The Company doubled the size of the credit line
to $4 million for potential working capital needs and added up to $2 million in
availability to fund tenant improvements at the their new Irvine location. Jeff
Ritchey, the Company's CFO commented that, "this substantially increased credit
facility indicates the improved financial stability of Pro-Dex in addition to
providing us with considerable head-room for growth."
Teleconference Information:
Investors and all others are invited to listen to a conference call
discussing the first quarter 2008 results today at 4:30 p.m. Eastern Time. The
call is scheduled to be broadcast live over the Internet and may be accessed by
visiting the Company's website at http://www.pro-dex.com. Mark Murphy, Chief
Executive Officer and Jeff Ritchey, Chief Financial Officer, plan to host the
call. If you would like to join the call, dial (866) 323-3543 U.S. and (706)
679-0672 International, conference I.D. 24019796. You may identify the call as
the Pro-Dex First Quarter Earnings Call. An online archive of the broadcast will
be available within one hour of the completion of the call and will be
accessible on the Company's website for 30 days. Additionally, a telephone
replay will be available 2 hours after the call for 48 hours by dialing (800)
642-1687 U.S. or (706) 645-9291 for international callers, conference I.D.
number 24019796.
Pro-Dex Inc., with operations in Santa Ana, California, Beaverton, Oregon
and Carson City Nevada, specializes in bringing speed to market in the
development and manufacture of technology-based solutions that incorporate
embedded motion control, miniature rotary drive systems and fractional
horsepower DC motors, serving the medical, dental, semi-conductor, scientific
research and aerospace markets. Pro-Dex's products are found in hospitals,
dental offices, medical engineering labs, scientific research facilities,
commercial and military aircraft, and high tech manufacturing operations
globally.
For more information, visit the Company's website at
http://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.
PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2007 June 30, 2007
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 781,000 $ 403,000
Accounts receivable, net of
allowance for doubtful accounts of
$141,000 at Sept. 30, 2007 and
$153,000 at June 30, 2007 2,967,000 3,436,000
Inventories, net 4,434,000 4,622,000
Prepaid expenses 257,000 205,000
Deferred income taxes 1,168,000 1,091,000
Total current assets 9,607,000 9,757,000
Property, plant, equipment and
leasehold improvements, net 4,027,000 3,778,000
Other assets:
Goodwill 2,997,000 2,997,000
Intangibles - patents, net 1,296,000 1,321,000
Deferred income taxes 229,000 229,000
Other 37,000 25,000
Total other assets 4,559,000 4,572,000
Total assets $ 18,193,000 $ 18,107,000
PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2007 June 30, 2007
(unaudited) (audited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit line $ -- $ 300,000
Accounts payable 1,096,000 1,110,000
Accrued expenses 1,187,000 1,183,000
Income taxes payable 342,000 158,000
Current portion of term note 250,000 250,000
Current portion of mortgage 29,000 26,000
Current portion of patent deferred
payable 82,000 82,000
Total current liabilities 2,986,000 3,109,000
Long-term liabilities
Term note 333,000 396,000
Mortgage 1,584,000 1,593,000
Patent deferred payable 158,000 158,000
Total long-term liabilities 2,075,000 2,147,000
Total liabilities 5,061,000 5,256,000
Commitments and contingencies
Shareholders' equity:
Common shares; no par value;
50,000,000 shares authorized;
9,718,366 shares issued and
outstanding September 30, 2007,
9,718,366 shares issued and
outstanding June 30, 2007 16,388,000 16,340,000
Accumulated deficit (3,256,000) (3,489,000)
Total shareholders' equity 13,132,000 12,851,000
Total liabilities and
shareholders' equity $ 18,193,000 $ 18,107,000
See notes to consolidated financial statements.
PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended September 30 (unaudited)
2007 2006
Cash Flows from Operating Activities:
Net Income $ 326,000 $ 242,000
Adjustments to reconcile net income
to net cash provided by in operating
activities:
Depreciation and amortization 120,000 114,000
Allowance for doubtful accounts (12,000) 31,000
Stock based compensation 48,000 26,000
Reserve for slow moving and
obsolete inventory 15,000 90,000
Changes in:
Decrease in accounts
receivable 481,000 395,000
Decrease (Increase)
in inventories 172,000 (421,000)
Increase in prepaid
expenses (51,000) (107,000)
Increase in other
assets (12,000) (19,000)
Increase in accounts
payable and accrued
expenses 58,000 205,000
(Decrease) Increase in
income taxes receivable (53,000) 135,000
Net Cash provided by Operating Activities 1,092,000 691,000
Cash Flows From Investing Activities:
Additions to Astromec acquisition
cost -- (66,000)
Additions to Intangible assets -
Patents related to Intraflow -- (2,000)
Purchases of equipment and leasehold
improvements (344,000) (120,000)
Net Cash used in Investing Activities (344,000) (188,000)
Cash Flows from Financing Activities:
Net payments on line of credit (300,000) (500,000)
Principal payments on term note (63,000) (63,000)
Principal payments on mortgage (7,000) (6,000)
Proceeds from option exercise -- 3,000
Net Cash used in Financing Activities (370,000) (566,000)
Net Increase (Decrease) in Cash and Cash
Equivalents 378,000 (63,000)
Cash and Cash Equivalents, beginning of
year 403,000 358,000
Cash and Cash Equivalents, end of period $ 781,000 $ 295,000
Supplemental Information
Cash payments for interest $ 45,000 $ 70,000
Cash payments for income taxes $ 215,000 $ --