EX-99.1 2 pdex_ex99z1.htm PRESS RELEASE Press Release

 


EXHIBIT 99.1

[pdex_ex99z1001.jpg]


Contact:  Richard L. Van Kirk, Chief Executive Officer

(949) 769-3200


For Immediate Release


PRO-DEX, INC. ANNOUNCES FISCAL 2020 THIRD QUARTER

AND NINE-MONTH RESULTS


IRVINE, CA, May 7, 2020 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2020 third quarter ended March 31, 2020. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2020 with the Securities and Exchange Commission today.


Quarter Ended March 31, 2020


Net sales for the three months ended March 31, 2020 increased $1.6 million, or 24%, to $8.5 million from $6.9 million for the three months ended March 31, 2019, due  primarily to the launch or our thoracic driver to one of our existing CMF driver customers.  This product launch represents the expansion of our adoptive torque-limiting software algorithm into a surgical driver other than the maxocranial market.


Gross profit for the three months ended March 31, 2020 increased $947,000, or 42%, to $3.2 million from $2.3 million for the same period in fiscal 2019.


Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2020 increased $140,000 or 10% compared to the same period in fiscal 2019.


Net income for the quarter ended March 31, 2020 was $1.2 million or $0.30 per diluted share, compared to $732,000, or $0.17 per diluted share, for the corresponding quarter in fiscal 2019.


Nine Months Ended March 31, 2020


Net sales for the nine months ended March 31, 2019 increased $3.5 million, or 18%, to $23.7 million from $20.2 million for the nine months ended March 31, 2019, due primarily to increased repair revenues generated from our largest customer.


Gross profit for the nine months ended March 31, 2020 increased $1.6 million or 22% compared to the same period in fiscal 2019.  The gross profit increase is directly related to our 18% increase in revenue and our ability to better absorb our fixed manufacturing costs.


Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2020 increased 17% to $4.0 million from $3.4 million in the prior fiscal year’s corresponding period.


Net income for the nine months ended March 31, 2020 was $3.6 million or $0.88 per diluted share compared to $3.3 million, or $0.75 per diluted share.



 


CEO Comments


 “While we are pleased with our third quarter and year-to-date results, and the shipment of the thoracic driver, Pro-Dex’s priorities, in response to COVID-19, are the health and safety of our employees, our communities, customers and suppliers,” said the Company’s President and Chief Executive Officer Richard L. (“Rick”) Van Kirk.  “While we cannot predict the total impact caused by the pandemic, we remain committed to our strategy to continue to provide excellent service to our existing customers and leverage our adaptive torque-limiting and other proprietary capabilities to expand our product portfolio.”


R&D Projects


The amount spent on projects under development is summarized below (in thousands):


 

 

Three and Nine Months ended
March 31, 2020

 

 

Three and Nine Months ended
March 31, 2019

 

 

Market Launch

 

 

Est Annual Revenue

 

Total Research & Development costs:

 

$

620

 

 

$

1,501

 

 

$

603

 

 

$

1,337

 

 

 

 

 

 

 

 

 

 

 

 

                     

  

  

 

                     

  

  

 

                     

  

  

 

                     

  

  

 

                     

  

  

 

                     

 

Products in development:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arthroscopic Shaver(1)

 

 

—

 

 

 

11

 

 

 

160

 

 

 

221

 

 

 

06/21

 

 

$

600

 

ENT Shaver

 

 

136

 

 

 

291

 

 

 

—

 

 

 

—

 

 

 

01/21

 

 

$

2,000

 

Arthroscopic Attachment

 

 

—

 

 

 

—

 

 

 

1

 

 

 

17

 

 

 

(2)

 

 

$

150

 

CMF Driver

 

 

60

 

 

 

106

 

 

 

—

 

 

 

3

 

 

 

06/20

 

 

$

350

 

Sustaining & Other

 

 

424

 

 

 

1,093

 

 

 

442

 

 

 

1,096

 

 

 

 

 

 

 

 

 

Total

 

$

620

 

 

$

1,501

 

 

$

603

 

 

$

1,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer CMF Driver (3)

 

$

121

 

 

$

303

 

 

$

63

 

 

$

289

 

 

 

06/20

 

 

$

2,500

 


(1)

This project has been internally pushed back to focus on our new internal Pro-Dex branded ENT shaver.

(2)

Internal development of this project is now complete, but we are looking for the most attractive sales channel.

(3)

Costs incurred related to customer contracts are included in costs of sales and deferred costs and are not included in research and development costs.


As we previously discussed, in early fiscal 2019 we entered a development contract with a current significant customer to private-label our thoracic driver for their unique specifications. We shipped initial launch quantities of this product during the third quarter ended March 31, 2020.


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 (including but not limited to uncertainties related to the COVID-19 pandemic), 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.

CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)


 

 

March 31,
2020

 

 

June 30,
2019

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,378

 

 

$

7,742

 

Investments

 

 

2,771

 

 

 

2,649

 

Accounts receivable, net of allowance for doubtful accounts of $6 and $0 at March 31, 2020 and at June 30, 2019, respectively

 

 

4,170

 

 

 

4,100

 

Deferred costs

 

 

391

 

 

 

430

 

Inventory

 

 

8,643

 

 

 

6,239

 

Prepaid expenses and other current assets

 

 

225

 

 

 

623

 

Total current assets

 

 

20,578

 

 

 

21,783

 

Equipment and leasehold improvements, net

 

 

2,732

 

 

 

2,726

 

Right of use asset, net

 

 

3,026

 

 

 

—

 

Intangibles, net

 

 

138

 

 

 

129

 

Deferred income taxes, net

 

 

53

 

 

 

260

 

Investments

 

 

1,659

 

 

 

582

 

Other assets

 

 

42

 

 

 

40

 

Total assets

 

$

28,228

 

 

$

25,520

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,912

 

 

$

1,996

 

Accrued expenses

 

 

1,524

 

 

 

1,437

 

Deferred revenue

 

 

360

 

 

 

215

 

Note payable and capital lease obligations

 

 

642

 

 

 

622

 

Total current liabilities

 

 

4,438

 

 

 

4,270

 

Deferred rent

 

 

—

 

 

 

146

 

Lease liability, net of current portion

 

 

2,857

 

 

 

—

 

Income taxes payable

 

 

325

 

 

 

162

 

Notes and capital leases payable, net of current portion

 

 

3,449

 

 

 

3,934

 

Total non-current liabilities

 

 

6,631

 

 

 

4,242

 

Total liabilities

 

 

11,069

 

 

 

8,512

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares; no par value; 50,000,000 shares authorized; 3,837,490 and 4,039,491 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively

 

 

12,970

 

 

 

15,815

 

Accumulated other comprehensive loss

 

 

(1,162

)

 

 

(549

)

Retained earnings

 

 

5,351

 

 

 

1,742

 

Total shareholders’ equity

 

 

17,159

 

 

 

17,008

 

Total liabilities and shareholders’ equity

 

$

28,228

 

 

$

25,520

 





 


PRO-DEX, INC.

CONDENSED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share amounts)


 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

8,508

 

 

$

6,854

 

 

$

23,710

 

 

$

20,168

 

Cost of sales

 

 

5,298

 

 

 

4,591

 

 

 

14,855

 

 

 

12,930

 

Gross profit

 

 

3,210

 

 

 

2,263

 

 

 

8,855

 

 

 

7,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (income) expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

161

 

 

 

122

 

 

 

438

 

 

 

252

 

General and administrative expenses

 

 

725

 

 

 

641

 

 

 

2,052

 

 

 

1,838

 

Gain from disposal of equipment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7

)

Research and development costs

 

 

620

 

 

 

603

 

 

 

1,501

 

 

 

1,337

 

Total operating expenses

 

 

1,506

 

 

 

1,366

 

 

 

3,991

 

 

 

3,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,704

 

 

 

897

 

 

 

4,864

 

 

 

3,818

 

Interest expense

 

 

(58

)

 

 

(67

)

 

 

(180

)

 

 

(156

)

Interest and other income

 

 

9

 

 

 

93

 

 

 

77

 

 

 

261

 

Gain on sale of investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations before income taxes

 

 

1,655

 

 

 

923

 

 

 

4,761

 

 

 

4,279

 

Income tax expense

 

 

(442

)

 

 

(191

)

 

 

(1,194

)

 

 

(1,019

)

Net income

 

$

1,213

 

 

$

732

 

 

$

3,567

 

 

$

3,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized income (loss) from marketable equity investments

 

 

(1,262

)

 

 

33

 

 

 

(613

)

 

 

(163

)

Comprehensive income (loss)

 

$

(49

)

 

$

765

 

 

$

2,954

 

 

$

3,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.31

 

 

$

0.18

 

 

$

0.90

 

 

$

0.77

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.30

 

 

$

0.17

 

 

$

0.88

 

 

$

0.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,871

 

 

 

4,143

 

 

 

3,944

 

 

 

4,224

 

Diluted

 

 

3,999

 

 

 

4,257

 

 

 

4,071

 

 

 

4,338

 

Common shares outstanding

 

 

3,837

 

 

 

4,136

 

 

 

3,837

 

 

 

4,136

 





 


PRO-DEX, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


 

 

Nine Months Ended
March 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

3,567

 

 

$

3,260

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

426

 

 

 

309

 

Amortization of loan fees

 

 

6

 

 

 

5

 

Gain from disposal of equipment

 

 

—

 

 

 

(7

)

Share-based compensation

 

 

93

 

 

 

28

 

Non-cash lease expense

 

 

31

 

 

 

—

 

Gain on sale of investments

 

 

—

 

 

 

(356

)

Deferred income taxes

 

 

207

 

 

 

1,026

 

Bad debt expense (recovery)

 

 

6

 

 

 

(14

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and other current receivables

 

 

(76

)

 

 

(773

)

Deferred costs

 

 

39

 

 

 

(235

)

Inventory

 

 

(2,404

)

 

 

(412

)

Prepaid expenses and other assets

 

 

396

 

 

 

(410

)

Accounts payable and accrued expenses

 

 

(301

)

 

 

353

 

Deferred revenue

 

 

145

 

 

 

169

 

Income taxes payable

 

 

163

 

 

 

142

 

Net cash provided by operating activities

 

 

2,298

 

 

 

3,085

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(1,827

)

 

 

(2,562

)

Purchases of equipment and leasehold improvements

 

 

(422

)

 

 

(1,048

)

Proceeds from sale of investments

 

 

—

 

 

 

1,905

 

Proceeds from dividend reclassification as return of principal

 

 

15

 

 

 

23

 

Proceeds from collection of notes receivable

 

 

—

 

 

 

1,154

 

Proceeds from sale of equipment

 

 

—

 

 

 

7

 

Increase in intangibles

 

 

(19

)

 

 

(11

)

Net cash used in investing activities

 

 

(2,253

)

 

 

(532

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

(2,977

)

 

 

(2,675

)

Proceeds from exercise of options and ESPP contributions

 

 

39

 

 

 

29

 

Payment of employee payroll taxes on net issuance of common stock

 

 

—

 

 

 

(101

)

Proceeds from Minnesota Bank & Trust long-term debt, net of fees

 

 

—

 

 

 

4,940

 

Principal payments on notes payable and capital lease

 

 

(471

)

 

 

(273

)

Net cash provided by (used in) financing activities

 

 

(3,409

)

 

 

1,920

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

(3,364

)

 

 

4,473

 

Cash and cash equivalents, beginning of period

 

 

7,742

 

 

 

5,188

 

Cash and cash equivalents, end of period

 

$

4,378

 

 

$

9,661