[LOGO]
Contact: Mark Murphy, Chief Executive Officer
(949) 769-3200
Jeff Stanlis, Investor Relations
Hayden Investor Relations.
(602) 476-1821
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL SECOND QUARTER 2009 RESULTS
Returns to Profitability
Books Purchase Order for New Product
Record $12.1 Million Backlog as of December 31, 2008
Addition of Dedicated Motion Control Business Development Manager
IRVINE, CA, February 12, 2009 - PRO-DEX, INC. (NASDAQ: PDEX) today
announced financial results for the second fiscal quarter 2009, the period
ending December 31, 2008.
Consolidated net sales for the fiscal second quarter decreased 14% to $5.2
million compared to $6.1 million reported for the fiscal second quarter of 2008.
The decrease was primarily due to the delivery of a single product to a major
medical customer during the second quarter of last fiscal year. These sales were
not repeated in the second quarter of fiscal 2009 as this customer plans to
replace this product with newly developed product that Pro-Dex is forecasting to
begin shipping in the second half of this fiscal year. In addition, the Company
has been exiting the sale of low-profit, non-differentiated products. Lastly,
the second quarter of fiscal year 2008 included customer-funded development fees
that were not repeated this year.
Consolidated gross profit for the quarter ended December 31, 2008
decreased 18% over the same quarter in the previous year to $1.9 million, a 37%
gross profit margin, compared to gross profit of $2.4 million or 38% gross
profit margin last year. The decrease in gross profit dollars was volume related
as margins remained relatively flat. It is important to note that gross margin
profitability was maintained on lower sales dollars as higher costs related to
the Company's new Irvine facility were offset by lower warranty expenses.
Consolidated operating expenses for the fiscal second quarter 2009
decreased by $14,000 (1%) compared to the second fiscal quarter 2008.
As a result, net income for the second fiscal quarter 2009 was $81,000 or
$0.01 per basic and diluted share compared to net income of $305,000 or $0.03
per share on a basic and diluted basis for the three months ended December 31,
2008.
Mark P. Murphy, the Company's President and Chief Executive Officer,
commented, "We indicated to our shareholders last quarter that we were committed
to returning to profitable operations and the generation of cash. Despite a
substantial decrease in top line, we achieved both of those objectives this
quarter, earning a small profit and generating over $400,000 in operating cash.
Our strong bookings in Q2 included a $1.6 million order for a new product
developed by Pro-Dex, evidencing a significant milestone in our rejuvenated
business model and representing future off-set to the decreased sales of the
second quarter. Our record backlog of $12.1 million at quarter-end is also an
indication that strong demand for our products remains intact."
Mr. Murphy added, "We continue to expand our business development
capability across all of our business units in an effort to grow sales and
penetrate new markets. Specifically, Pro-Dex recently hired a Business
Development Manager to focus on worldwide sales of our Motion Control products."
The Company completed the quarter ending December 31, 2008 with cash and
cash equivalents of $406,000 compared to $517,000 as of June 30, 2008. Total
working capital was $6.3 million as of December 31, 2008. At December 31, 2008,
there was $400,000 borrowed against the Company's $4 million credit line
compared to $2.0 million borrowed at June 30, 2008, evidencing our continued
strong cash generation. Subsequent to the year end, Pro-Dex generated sufficient
cash to fully retire the $271,000 balance on its Term Note which was originally
scheduled to be retired in January 2010.
Concluding, Mr. Murphy stated, "We are committed to generating profit at
current sales levels, despite those levels being impacted by shifts in product
mix and market conditions. At the same time, we are committed to building the
top line through continued customer-funded product development and supporting
the infrastructure required to increase top line sales. We have a strong and
clean balance sheet, an ability to produce cash and are on a mission to increase
profitability."
Teleconference Information:
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Investors and all others are invited to listen to a conference call
discussing the second fiscal quarter 2009 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 or directly
at http://www.videonewswire.com/event.asp?id=55887. 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 (877) 356-8625 U.S. and (706) 634-9779
International, conference I.D. 84778840. You may identify the call as the
Pro-Dex Second 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 84778840.
Pro-Dex Inc., with operations in Irvine, 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 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
CONSOLIDATED BALANCE SHEETS
December 31, 2008 June 30,2008
(unaudited) (audited)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 406,000 $ 517,000
Accounts receivable, net of allowance for
doubtful accounts of $139,000 at
December 31, 2008 and $144,000 at
June 30, 2008 2,679,000 2,842,000
Other current receivables 12,000 205,000
Inventories 4,006,000 5,101,000
Prepaid expenses 171,000 214,000
Prepaid income taxes 908,000 860,000
Deferred income taxes 1,183,000 1,176,000
------------ ------------
Total current assets 9,365,000 10,915,000
------------ ------------
Property, plant, equipment, net 6,282,000 6,470,000
------------ ------------
Other assets:
Goodwill 2,997,000 2,997,000
Intangibles - Patents, net 1,172,000 1,221,000
Other 84,000 68,000
------------ ------------
Total other assets 4,253,000 4,286,000
------------ ------------
Total assets $ 19,900,000 $ 21,671,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit Line $ 400,000 $ 2,000,000
Accounts payable 664,000 1,736,000
Accrued expenses 1,258,000 2,053,000
Income taxes payable -- 114,000
Current portion Patent deferred payable 45,000 --
Current portion of term note 250,000 396,000
Current portion of TI loan 400,000 --
Current portion of real estate loan 31,000 30,000
------------ ------------
Total current liabilities 3,048,000 6,329,000
Long-term liabilities:
Term Note 21,000 --
TI Loan 1,567,000 --
Real estate loan 1,544,000 1,560,000
Patent deferred payable -- 44,000
Deferred income taxes 290,000 290,000
Deferred rent 184,000 150,000
------------ ------------
Total long-term liabilities 3,606,000 2,044,000
------------ ------------
Total liabilities 6,654,000 8,373,000
------------ ------------
Shareholders' equity:
Common shares; no par value;
50,000,000 shares authorized;
9,669,277 shares issued and outstanding
December 31, 2008, 9,803,366 shares
issued and outstanding June 30, 2008 16,530,000 16,545,000
Accumulated deficit (3,284,000 (3,247,000)
------------ ------------
Total shareholders' equity 13,246,000 13,298,000
------------ ------------
Total liabilities and shareholders' equity $ 19,900,000 $ 21,671,000
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PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended December 31 (unaudited)
2008 2007
----------- -----------
Net sales $ 5,237,000 $ 6,123,000
Cost of sales 3,305,000 3,769,000
----------- -----------
Gross profit 1,932,000 2,354,000
Operating expenses:
Selling 329,000 352,000
General and administrative expenses 833,000 866,000
Research and development costs 677,000 635,000
----------- -----------
Total operating expenses 1,839,000 1,853,000
----------- -----------
Income from operations 93,000 501,000
Other income (expense):
Other income, net -- 48,000
Royalty income 8,000 14,000
Interest (expense), net (60,000) (40,000)
----------- -----------
Total (52,000) 22,000
----------- -----------
Income before (benefit) provision for income taxes 41,000 523,000
(Benefit) provision for income taxes (40,000) 218,000
----------- -----------
Net Income $ 81,000 $ 305,000
Net Income per share:
----------- -----------
Basic $ 0.01 $ 0.03
----------- -----------
Diluted $ 0.01 $ 0.03
----------- -----------
Weighted average shares outstanding - basic 9,698,913 9,718,366
----------- -----------
Weighted average shares outstanding - diluted 9,714,917 9,888,356
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See notes to condensed consolidated financial statements.
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended December 31 (unaudited)
2008 2007
------------ ------------
Net sales $ 10,893,000 $ 12,114,000
Cost of sales 7,206,000 7,608,000
------------ ------------
Gross profit 3,687,000 4,506,000
Operating expenses:
Selling 673,000 675,000
General and administrative expenses 1,681,000 1,601,000
Research and development costs 1,396,000 1,209,000
------------ ------------
Total operating expenses 3,750,000 3,485,000
------------ ------------
Income from operations (63,000) 1,021,000
Other income (expense):
Other income, net -- 48,000
Royalty income 9,000 20,000
Interest (expense), net (121,000) (82,000)
------------ ------------
Total (112,000) (14,000)
------------ ------------
Income (loss) before (benefit)
provision for income taxes (175,000) 1,007,000
(Benefit) provision for income taxes (138,000) 376,000
------------ ------------
Net income (loss) $ (37,000) $ 631,000
Net Income (loss) per share:
Basic $ (0.00) $ 0.06
------------ ------------
Diluted $ (0.00) $ 0.06
------------ ------------
Weighted average shares outstanding - basic 9,741,160 9,718,366
------------ ------------
Weighted average shares outstanding - diluted 9,741,160 9,926,306
------------ ------------
See notes to condensed consolidated financial statements.
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended December 31 (unaudited)
2008 2007
----------- -----------
Cash Flows from Operating Activities:
Net Income $ (37,000) $ 631,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 417,000 243,000
Stock based compensation 86,000 103,000
(Recovery) of provision for doubtful accounts (5,000) (18,000)
(Decrease) in deferred taxes (7,000) (87,000)
Changes in:
Decrease in accounts receivable 362,000 395,000
Decrease (increase) in inventories 1,095,000 (385,000)
Decrease (increase) in prepaid expenses 43,000 (79,000)
(Increase) in other assets (17,000) (8,000)
(Decrease) increase in accounts payable
and accrued expenses (1,887,000) 417,000
(Decrease) Increase in income taxes payable (106,000) 54,000
Net Cash provided (used) by Operating Activities (56,000) 1,266,000
----------- -----------
Cash Flows From Investing Activities:
Purchases of equipment and leasehold improvements (180,000) (770,000)
----------- -----------
Net Cash used in Investing Activities (180,000) (770,000)
----------- -----------
Cash Flows from Financing Activities:
Net (payments) on line of credit (1,600,000) (300,000)
Principal (payments) on term note (126,000) (125,000)
Principal borrowing on TI Loan 1,967,000 --
Principal (payments) on mortgage (15,000) (14,000)
Principal (payment) on patent deferred payable -- (240,000)
Stock repurchases (101,000) --
----------- -----------
Net Cash provided by Financing Activities 125,000 (679,000)
----------- -----------
Net (decrease) in Cash and Cash Equivalents (111,000) (183,000)
Cash and Cash Equivalents, beginning of period 517,000 403,000
----------- -----------
Cash and Cash Equivalents, end of period $ 406,000 $ 220,000
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Supplemental Information
Cash payments for interest $ 117,000 $ 95,000
Cash payments for income taxes $ - $ 560,000
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See notes to condensed consolidated financial statements.