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 2017 THIRD QUARTER

AND NINE-MONTH RESULTS


IRVINE, CA, May 11, 2017 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2017 third quarter ended March 31, 2017. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2017 with the Securities and Exchange Commission today.


Quarter Ended March 31, 2017


Net sales for the three months ended March 31, 2017 increased $1.4 million, or 28%, to $6.6 million from $5.2 million for the three months ended March 31, 2016, due primarily to the completion 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.


Gross profit for the three months ended March 31, 2017 increased $1.1 million, or 88%, to $2.5 million from $1.3 million for the same period in fiscal 2016.  The increase in gross profit is reflective of cost-cutting measures that were implemented during the second quarter of fiscal 2017.


Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2017 remained flat compared to the prior fiscal year’s corresponding quarter.  The prior year amounts included a $245,000 impairment charge related to the goodwill and long-lived intangibles of the Fineline Molds division.  The current quarter of fiscal 2017 did not have any similar impairment charges, but included bonus accruals, which were not accrued for in the prior fiscal year.


Income from continuing operations for the quarter ended March 31, 2017 increased by $209,000 to $703,000, compared to $494,000 in the corresponding quarter in fiscal 2016. Net income for the quarter ended March 31, 2017 was $888,000, or $0.22 per share, compared to $368,000, or $0.09 per share, for the corresponding quarter in fiscal 2016.


Nine Months Ended March 31, 2017


Net sales for the nine months ended March 31, 2017 increased $2.1 million, or 15%, to $16.3 million from $14.2 million for the nine months ended March 31, 2016, due primarily to increases in medical device product revenues, including the newly launched CMF driver discussed above, offset by reduced repair revenue and legacy dental product sales.




 


Gross profit for the nine months ended March 31, 2017 increased $1.6 million, or 43% compared to the same period in fiscal 2016.  The gross profit increase is due to increased net sales of 15% as well as improved margins due to our investment in machinery and equipment.


Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2017 increased 8% to $3.3 million from $3.0 million in the prior fiscal year’s corresponding period, reflecting primarily increased general and administrative expenses mostly related to bonus accruals and our ongoing litigation related to our former investment in real property located in Ramsey, Minnesota.


Income from continuing operations for the nine months ended March 31, 2017 was $4.1 million, compared to $903,000 for the corresponding period in fiscal 2016.  This increase also reflects the tax benefit recorded in the second quarter due to the release of the valuation allowance against our deferred tax assets. Net income for the nine months ended March 31, 2017 was $4.4 million, or $1.07 per share, compared to $633,000, or $0.15 per share, for the corresponding period in fiscal 2016.  


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 as well as having released our newest medical device, which contains our patented adaptive torque-limiting technology.  We look forward to continuing our focus on our core medical device product and service revenue. Additionally, we recently invested in a medical device start-up company which, although long-term in nature, is an investment we believe will further enhance our technological capabilities and lead to additional manufacturing opportunities.”


About Pro-Dex, Inc.:


Pro-Dex, Inc. 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 Fineline Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex's products are found in hospitals, dental offices, 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.


 (tables follow)



 


PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)


 

 

March 31,
2017

 

 

June 30,

2016

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,699

 

 

$

2,294

 

Investments

 

 

337

 

 

 

—

 

Accounts receivable, net of allowance for doubtful accounts of $4 and $20, at March 31, 2017 and June 30, 2016,  respectively

 

 

3,885

 

 

 

1,469

 

Due from factor

 

 

—

 

 

 

1,419

 

Deferred costs

 

 

3

 

 

 

238

 

Assets held for sale

 

 

—

 

 

 

287

 

Other current assets

 

 

9

 

 

 

91

 

Inventory

 

 

2,975

 

 

 

3,364

 

Prepaid expenses

 

 

242

 

 

 

129

 

Total current assets

 

 

11,150

 

 

 

9,291

 

Equipment and leasehold improvements, net

 

 

1,504

 

 

 

1,222

 

Deferred income taxes

 

 

2,232

 

 

 

—

 

Goodwill

 

 

112

 

 

 

112

 

Intangibles, net

 

 

320

 

 

 

451

 

Other assets

 

 

71

 

 

 

71

 

Total assets

 

$

15,389

 

 

$

11,147

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

946

 

 

$

841

 

Accrued expenses

 

 

1,157

 

 

 

1,076

 

Deferred revenue

 

 

59

 

 

 

212

 

Notes payable

 

 

25

 

 

 

26

 

Income taxes payable

 

 

133

 

 

 

1

 

Capital lease obligations

 

 

32

 

 

 

—

 

Total current liabilities

 

 

2,352

 

 

 

2,156

 

Deferred rent, net of current portion

 

 

—

 

 

 

68

 

Notes and capital leases payable, net of current portion

 

 

76

 

 

 

46

 

Total non-current liabilities

 

 

76

 

 

 

114

 

Total liabilities

 

 

2,428

 

 

 

2,270

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares; no par value; 50,000,000 shares authorized; 4,014,186 and 4,052,987 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively

 

 

17,704

 

 

 

17,988

 

Accumulated deficit

 

 

(4,743

)

 

 

(9,111

)

Total shareholders’ equity

 

 

12,961

 

 

 

8,877

 

Total liabilities and shareholders’ equity

 

$

15,389

 

 

$

11,147

 




 


PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share amounts)


 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

6,618

 

 

$

5,176

 

 

$

16,346

 

 

$

14,199

 

Cost of sales

 

 

4,156

 

 

 

3,863

 

 

 

11,150

 

 

 

10,557

 

Gross profit

 

 

2,462

 

 

 

1,313

 

 

 

5,196

 

 

 

3,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

132

 

 

 

171

 

 

 

439

 

 

 

564

 

General and administrative expenses

 

 

725

 

 

 

420

 

 

 

1,894

 

 

 

1,407

 

Impairment of goodwill and long-lived assets

 

 

—

 

 

 

245

 

 

 

113

 

 

 

245

 

Research and development costs

 

 

257

 

 

 

301

 

 

 

839

 

 

 

829

 

Total operating expenses

 

 

1,114

 

 

 

1,137

 

 

 

3,285

 

 

 

3,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,348

 

 

 

176

 

 

 

1,911

 

 

 

597

 

Interest expense

 

 

(3

)

 

 

(10

)

 

 

(10

)

 

 

(36

)

Interest income

 

 

8

 

 

 

—

 

 

 

19

 

 

 

—

 

Gain from sale of Investment in Ramsey Property

 

 

—

 

 

 

340

 

 

 

—

 

 

 

340

 

Gain from disposal of equipment

 

 

—

 

 

 

4

 

 

 

3

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

1,353

 

 

 

510

 

 

 

1,923

 

 

 

919

 

Income tax (expense) benefit

 

 

(650

)

 

 

(16

)

 

 

2,202

 

 

 

(16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

703

 

 

 

494

 

 

 

4,125

 

 

 

903

 

Income (loss) from discontinued operations, net of income taxes

 

 

185

 

 

 

(126

)

 

 

243

 

 

 

(270

)

Net income

 

$

888

 

 

$

368

 

 

$

4,368

 

 

$

633

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain from marketable equity investments, net of income taxes

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

Comprehensive income

 

$

894

 

 

$

368

 

 

$

4,368

 

 

$

633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.17

 

 

$

0.12

 

 

$

1.02

 

 

$

0.22

 

Income (loss) from discontinued operations

 

 

0.05

 

 

 

(0.03

)

 

 

0.06

 

 

 

(0.07

)

Net income

 

$

0.22

 

 

$

0.09

 

 

$

1.08

 

 

$

0.15

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.17

 

 

$

0.12

 

 

$

1.01

 

 

$

0.22

 

Income (loss) from discontinued operations

 

 

0.05

 

 

 

(0.03

)

 

 

0.06

 

 

 

(0.07

)

Net income

 

$

0.22

 

 

$

0.09

 

 

$

1.07

 

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

4,021

 

 

 

4,151

 

 

 

4,047

 

 

 

4,145

 

Diluted

 

 

4,055

 

 

 

4,195

 

 

 

4,085

 

 

 

4,169

 

Common shares outstanding

 

 

4,014

 

 

 

4,152

 

 

 

4,014

 

 

 

4,152

 




 


PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


 

 

Nine Months Ended
March 31,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income 

 

$

4,368

 

 

$

633

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

418

 

 

 

481

 

Gain on sale of investment in Ramsey

 

 

—

 

 

 

(340

)

Gain on disposal of equipment

 

 

(3

)

 

 

(18

)

Gain on sale of OMS

 

 

(327

)

 

 

—

 

Share-based compensation

 

 

3

 

 

 

4

 

Impairment of goodwill and long-lived assets

 

 

113

 

 

 

245

 

Deferred income tax benefit

 

 

(2,232

)

 

 

—

 

Bad debt recovery

 

 

(16

)

 

 

(18

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, due from factor and other current receivables

 

 

(981

)

 

 

(1,382

)

Deferred costs

 

 

235

 

 

 

730

 

Assets held for sale

 

 

(27

)

 

 

—

 

Inventory

 

 

389

 

 

 

192

 

Prepaid expenses and other assets

 

 

(117

)

 

 

—

 

Accounts payable, accrued expenses and deferred rent

 

 

118

 

 

 

(1,092

)

Deferred revenue

 

 

(153

)

 

 

(477

)

Income taxes payable

 

 

132

 

 

 

3

 

Net cash provided by (used in) operating activities 

 

 

1,920

 

 

 

(1,039

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(336

)

 

 

—

 

Purchases of equipment and leasehold improvements

 

 

(552

)

 

 

(106

)

Investment in Ramsey property and related notes receivable

 

 

—

 

 

 

(87

)

Proceeds from liquidation of Ramsey assets

 

 

86

 

 

 

1,970

 

Proceeds from sale of OMS

 

 

636

 

 

 

—

 

Proceeds from sale of equipment

 

 

3

 

 

 

18

 

Increase in intangibles

 

 

(20

)

 

 

(1

)

Net cash provided by (used in) investing activities 

 

 

(183

)

 

 

1,794

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

(312

)

 

 

(2

)

Proceeds from Note Payable

 

 

—

 

 

 

500

 

Proceeds from exercise of options and ESPP contributions

 

 

24

 

 

 

27

 

Borrowings from Summit Loan

 

 

600

 

 

 

2,050

 

Repayments on Summit Loan

 

 

(600

)

 

 

(2,050

)

Principal payments on notes payable and capital lease

 

 

(44

)

 

 

(525

)

Net cash used in financing activities 

 

 

(332

)

 

 

—

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents 

 

 

1,405

 

 

 

755

 

Cash and cash equivalents, beginning of period 

 

 

2,294

 

 

 

697

 

Cash and cash equivalents, end of period 

 

$

3,699

 

 

$

1,452