EXHIBIT 99.1
Contact: Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL 2022
FOURTH QUARTER AND FULL-YEAR RESULTS
IRVINE, CA, August 25, 2022 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2022 fourth quarter and full-year ended June 30, 2022.
Quarter Ended June 30, 2022
Net sales for the three months ended June 30, 2022 increased $3.2 million, or 34%, to $12.6 million from $9.4 million for the three months ended June 30, 2021, due primarily to increased medical device sales and repair revenue. Gross profit for the three months ended June 30, 2022 increased $0.3 million, or 10%, to $3.4 million from $3.1 million for the same period in 2021. Although gross profit increased, our gross margin fell from 33% for the three months ended June 30, 2021 to 27% for the three months ended June 30, 2022, due to continued price increases in many of our purchased components oftentimes out pacing our ability to pass along these increases to our customers.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended June 30, 2022 decreased 11% to $2.3 million from $2.5 million in the prior year’s corresponding quarter, due primarily to decreased expenditures of $474,000 in research and development costs as much of our engineering efforts shifted to billable customer contracts in the current fiscal year.
Net income for the quarter ended June 30, 2022 increased by $0.6 million to $1.4 million, or $0.38 per diluted share, compared to $0.8 million, or $0.20 per diluted share, in the corresponding quarter in 2021.
Year Ended June 30, 2022
Net sales for the fiscal year ended June 30, 2022 increased $4.0 million, or 11%, to $42.0 million from $38.0 million for the fiscal year ended June 30, 2021, due primarily to increases in medical device revenues and repair revenues. Specifically, we generated an increase in sales of $3.8 million in fiscal 2022 over fiscal 2021 due to the orthopedic device we sell to our largest customer, in part due to fulfilling orders for the launch of their next generation handpiece.
Gross profit for the fiscal year ended June 30, 2022 decreased $0.4 million, or 3%, to $13.1 million compared to $13.6 million for fiscal 2021, due to increased cost of sales.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the fiscal year ended June 30, 2022 decreased 12% to $8.0 million from $9.1 million in the prior fiscal year. Of the total decrease in operating expenses, $1.4 million relates to a decrease in research and development costs from fiscal 2021 to fiscal 2022 resulting from a shift in engineering efforts from internally developed products to billable customer projects.
Net income for the fiscal year ended June 30, 2022 was $3.9 million, or $1.02 per diluted share, compared to $5.8 million, or $1.48 per diluted share, for fiscal 2021.
Although we have released our earnings prior to our Annual Report on Form 10-K with the Securities and Exchange Commission, we are able to do this because we are a non-accelerated filer and as a result have more time to do so at fiscal year-end. During our quarterly reporting periods, we anticipate that our earnings releases will continue to be released at the same time as our Form 10-Q’s are filed with the Securities and Exchange Commission. We anticipate filing our Form 10-K with the Securities and Exchange Commission on September 8, 2022.
Guidance
Pro-Dex typically does not provide sales, earnings, or other guidance, and while the COVID-19 pandemic did not materially adversely affect our financial results in our fiscal year ended June 30, 2022, we did experience disruptions in our supply chain in the form of delayed shipments, longer lead times, and higher prices, much of which our suppliers indicate have been caused by the pandemic. If any of these conditions persist or are exacerbated in the future, we could be negatively impacted. We have and continue to implement plans and processes to mitigate these challenges that many manufacturers similarly face. Our prospects remain positive with additional capacity forthcoming to allow for continued sales growth through our aggressive product development efforts.
CEO Comments
“We are very pleased with our continued year-over-year sales growth, especially given the challenging environment we faced related to sourcing components this fiscal year, as well as the progress we have made in our validation efforts at our new building.” said the Company’s President and Chief Executive Officer Richard L. (“Rick”) Van Kirk. “With our new building and additional capacity coming online this year, combined with our focus on new business development and technology, we are excited about the continued growth we expect to see in the next fiscal year and beyond.”
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, thoracic, 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 sells rotary air motors. 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, the potential future impact of the COVID-19 pandemic, the Company’s ability to mitigate supply chain issues, and prospects for future growth) 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 risks of the Company set forth in the Company's filings with the Securities and Exchange Commission.
(tables follow)
PRO-DEX, INC. AND SUBSIDIARIES
(In thousands, except share data)
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 849 | $ | 3,721 | ||||
| Investments | 755 | 1,295 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $0 and $2 at June 30, 2022 and 2021, respectively | 15,384 | 10,933 | ||||||
| Deferred costs | 710 | 193 | ||||||
| Inventory | 12,678 | 8,437 | ||||||
| Prepaid expenses and other current assets | 790 | 434 | ||||||
| Total current assets | 31,166 | 25,013 | ||||||
| Land and building, net | 6,343 | 6,437 | ||||||
| Equipment and improvements, net | 4,833 | 3,845 | ||||||
| Right of use asset, net | 2,248 | 2,605 | ||||||
| Intangibles, net | 118 | 186 | ||||||
| Deferred income taxes, net | 797 | 463 | ||||||
| Investments | 1,779 | 1,704 | ||||||
| Other assets | 42 | 67 | ||||||
| Total assets | $ | 47,326 | $ | 40,320 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,761 | $ | 2,288 | ||||
| Accrued liabilities | 2,751 | 2,198 | ||||||
| Deferred revenue | 1,013 | 150 | ||||||
| Notes payable | 3,285 | 1,236 | ||||||
| Total current liabilities | 10,810 | 5,872 | ||||||
| Non-current liabilities: | ||||||||
| Lease liability, net of current portion | 2,054 | 2,432 | ||||||
| Income taxes payable | 544 | 397 | ||||||
| Notes payable, net of current portion | 10,250 | 11,535 | ||||||
| Total non-current liabilities | 12,848 | 14,364 | ||||||
| Total liabilities | 23,658 | 20,236 | ||||||
| Commitments and Contingencies: | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock, no par value, 50,000,000 shares authorized; 3,596,131 and 3,645,660 shares issued and outstanding at June 30, 2022 and 2021, respectively | 7,682 | 7,953 | ||||||
| Retained earnings | 15,986 | 12,131 | ||||||
| Total shareholders’ equity | 23,668 | 20,084 | ||||||
| Total liabilities and shareholders’ equity | $ | 47,326 | $ | 40,320 | ||||
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share data)
| Three Months Ended June 30, (Unaudited) | Years Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net sales | $ | 12,615 | $ | 9,435 | $ | 42,041 | $ | 38,029 | ||||||||
| Cost of sales | 9,173 | 6,316 | 28,909 | 24,454 | ||||||||||||
| Gross profit | 3,442 | 3,119 | 13,132 | 13,575 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | 12 | 175 | 91 | 590 | ||||||||||||
| General and administrative expenses | 1,501 | 1,154 | 4,903 | 4,076 | ||||||||||||
| Loss on disposal of equipment | 21 | — | 35 | — | ||||||||||||
| Research and development costs | 726 | 1,200 | 2,980 | 4,384 | ||||||||||||
| Total operating expenses | 2,260 | 2,529 | 8,009 | 9,050 | ||||||||||||
| Operating profit | 1,182 | 590 | 5,123 | 4,525 | ||||||||||||
| Interest expense | (115 | ) | (121 | ) | (464 | ) | (352 | ) | ||||||||
| Unrealized gain (loss) on marketable equity investments | 370 | (94 | ) | (57 | ) | 1,371 | ||||||||||
| Gain on sale of investments | 28 | 533 | 28 | 1,327 | ||||||||||||
| Interest and dividend income | 26 | 23 | 76 | 126 | ||||||||||||
| Income before income taxes | 1,491 | 931 | 4,706 | 6,997 | ||||||||||||
| Income tax expense | 86 | 173 | 851 | 1,176 | ||||||||||||
| Net income | $ | 1,405 | $ | 758 | $ | 3,855 | $ | 5,821 | ||||||||
| Basic & Diluted income per share: | ||||||||||||||||
| Basic net income per share | $ | 0.39 | $ | 0.21 | $ | 1.06 | $ | 1.53 | ||||||||
| Diluted net income per share | $ | 0.38 | $ | 0.20 | $ | 1.02 | $ | 1.48 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 3,608,610 | 3,656,052 | 3,635,894 | 3,796,516 | ||||||||||||
| Diluted | 3,731,419 | 3,796,056 | 3,763,345 | 3,936,194 | ||||||||||||
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Years Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 3,855 | $ | 5,821 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 726 | 686 | ||||||
| Unrealized (gain) loss on marketable equity investments | 57 | (1,371 | ) | |||||
| Gain on sale of investments | (28 | ) | (1,327 | ) | ||||
| Impairment of long-lived assets | 84 | — | ||||||
| Non-cash lease expense | 13 | 26 | ||||||
| Gain on sale or disposal of equipment | 35 | — | ||||||
| Amortization of loan fees | 9 | 49 | ||||||
| Share-based compensation | 1,275 | 901 | ||||||
| Deferred income taxes | (334 | ) | (181 | ) | ||||
| Bad debt expense (recovery) | (2 | ) | 5 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,449 | ) | (5,783 | ) | ||||
| Deferred costs | (517 | ) | (38 | ) | ||||
| Inventory | (4,241 | ) | (199 | ) | ||||
| Prepaid expenses and other assets | (331 | ) | (314 | ) | ||||
| Accounts payable and accrued expenses | 1,991 | 105 | ||||||
| Deferred revenue | 863 | (50 | ) | |||||
| Income taxes payable | 147 | (408 | ) | |||||
| Net cash used in operating activities | (847 | ) | (2,078 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of equipment and improvements | (1,638 | ) | (1,769 | ) | ||||
| Purchase of land and building | — | (6,499 | ) | |||||
| Proceeds from sale of investments | 770 | 4,596 | ||||||
| Increase in intangibles | (33 | ) | (38 | ) | ||||
| Purchase of investments | (334 | ) | — | |||||
| Net cash used in investing activities | (1,235 | ) | (3,710 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal payments on notes payable | (1,244 | ) | (351 | ) | ||||
| Borrowing from Minnesota Bank & Trust, net of loan origination fees | 2,000 | 9,139 | ||||||
| Repurchases of common stock | (1,606 | ) | (5,537 | ) | ||||
| Payments of employee taxes on net issuance of common stock | — | (259 | ) | |||||
| Proceeds from exercise of stock options and ESPP contributions | 60 | 96 | ||||||
| Net cash provided by (used in) financing activities | (790 | ) | 3,088 | |||||
| Net decrease in cash and cash equivalents | (2,872 | ) | (2,700 | ) | ||||
| Cash and cash equivalents, beginning of year | 3,721 | 6,421 | ||||||
| Cash and cash equivalents, end of year | $ | 849 | $ | 3,721 | ||||