Pro-Dex, Inc. Announces Fiscal 2014 First Quarter Results PR Newswire IRVINE, Calif., Nov. 13, 2013 IRVINE, Calif., Nov. 13, 2013 /PRNewswire/ -- PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2014 first quarter ended September 30, 2013. (Logo: http://photos.prnewswire.com/prnh/20111025/LA93174LOGO-c) Sales for the quarter ended September 30, 2013 decreased 26% to $2.6 million from $3.5 million for the corresponding quarter in 2012. This decrease was due primarily to a deferral in the timing of product orders from the Company's current largest powered surgical instrument customer, partially offset by increases in surgical instrument sales to other customers, and to a decrease in motion control product sales. Gross profit for the quarter ended September 30, 2013 decreased to $945,000, compared to gross profit of $1.2 million for the year-ago period, primarily as a result of the sales volume decrease between periods, partially offset by a decrease in product warranty costs. Gross profit as a percentage of sales was 37% for the quarter ended September 30, 2013, as compared to 36% for the corresponding quarter in 2012, resulting primarily from improvements in production efficiency. Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2013 decreased 28% to $924,000 from $1.3 million in the prior year's corresponding quarter, reflecting the effects of the Company's cost reduction program. Income from continuing operations for the quarter ended September 30, 2013 was $18,000, compared to a loss from continuing operations of $59,000 in the corresponding quarter in 2012. Net income for the quarter ended September 30, 2013 was $212,000, or $0.06 per diluted share, compared to a net loss of $17,000, or $0.01 per diluted share, for the corresponding quarter in 2012. The 2013 quarter reflects a $167,000 gain from the previously announced sale in July 2013 of the Company's facility in Carson City, Nevada, that had housed the Company's former Astromec fractional horsepower motor business, which the Company accounts for as a discontinued operation. CEO Comments Harold A. ("Hal") Hurwitz, the Company's President and Chief Executive Officer, commented, "It is good to report profitable operating results again. Certainly, one quarter does not create, nor imply, a trend. Even so, the operating results for the quarter ended September 30, 2013 reflect the long, painful, and now rewarding process of right-sizing our cost footprint to our current revenue base." "Without question, achieving the goal of a rebuilt revenue base is still ahead of us, and we maintain our focus on that goal. During the quarter ended September 30, 2013, we continued to make significant progress on engineering projects, with a goal to deliver to our customers in late fiscal 2014 or early fiscal 2015 a next-generation platform for powered surgical instruments in which we will retain significant intellectual property rights. In addition, we have several active proposals in the hands of existing and prospective customers for similar such projects." "Also during the quarter, we continued engineering work in collaboration with an existing customer on a contract manufacturing project related to a new surgical system, the development phase of which is also expected to culminate in the late fiscal 2014 or early fiscal 2015 time frame." "Fiscal 2014 marks the first year in which the full effect of our cost reduction efforts of the past year will be reflected in our results. This said, our efforts in cost reduction and control are not yet complete. Nonetheless, year-over-year stability of gross margins despite lower sales volumes, together with year-over-year decreases of 66% in selling expenses, 25% in general and administrative expenses, and 8% in research and development expenses, we believe clearly demonstrate how far we have come." Teleconference Information: Investors and analysts are invited to listen to a broadcast review of the Company's fiscal 2014 first quarter financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company's website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S. or Canada. For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on November 28, 2013 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering conference I.D. number 13572779. An online archive of the broadcast will be available on the Company's website www.pro-dex.com for a period of 365 days. About Pro-Dex, Inc.: Pro-Dex, Inc., with operations in California and Oregon, 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 OMS division designs and manufactures embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets. Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations 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) September30,2013 June30,2013 ASSETS Current assets: Cash $ 1,829,000 $ 1,680,000 Accounts receivable, net of allowance for doubtful accounts of $27,000 at 1,361,000 1,339,000 September30, 2013 and $24,000 at June30, 2013 Unbilled receivables 398,000 244,000 Other current receivables 15,000 32,000 Inventories 3,973,000 3,834,000 Prepaid expenses 139,000 157,000 Income taxes receivable 1,000 2,000 Deferred income taxes 60,000 59,000 Total current assets 7,776,000 7, 347,000 Investments 654,000 370,000 Equipment and leasehold improvements, net 1,926,000 2,065,000 Real estate held for sale — 733,000 Intangibles 17,000 — Other assets 80,000 80,000 Total assets $ 10,453,000 $ 10,595,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 482,000 $ 844,000 Accrued expenses 1,147,000 1,276,000 Deferred revenue 212,000 141,000 Income taxes payable 47,000 48,000 Capital lease obligations 6,000 5,000 Total current liabilities 1,894,000 2,314,000 Non-current liabilities: Deferred income taxes 60,000 59,000 Deferred rent 261,000 270,000 Capital lease obligations 14,000 15,000 Total non-current liabilities 335,000 344,000 Total liabilities 2,229,000 2,658,000 Commitments and contingencies Shareholders' equity: Common shares; no par value; 50,000,000 shares authorized; 3,343,988 shares issued 17,031,000 17,012,000 and outstanding at September30, 2013 and June30, 2013 Accumulated other comprehensive income 61,000 5,000 Accumulated deficit (8,868,000) (9,080,000) Total shareholders' equity 8,224,000 7,937,000 Total liabilities and shareholders' equity $ 10,453,000 $ 10,595,000 PRO-DEX, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) FortheThreeMonthsEndedSeptember30, 2013 2012 Net sales $ 2,555,000 $ 3,461,000 Cost of sales 1,610,000 2,225,000 Gross profit 945,000 1,236,000 Operating expenses: Selling expenses 92,000 274,000 General and administrative expenses 457,000 608,000 Research and development costs 375,000 406,000 Total operating expenses 924,000 1,288,000 Income (loss) from continuing 21,000 (52,000) operations before items below Other expense: Interest expense (2,000) (6,000) Total other expense (2,000) (6,000) Income (loss) from continuing operations before provision for 19,000 (58,000) income taxes Provision for income taxes 1,000 1,000 Income (loss) from continuing 18,000 (59,000) operations Income from discontinued operations, net of provision for 194,000 42,000 income taxes of nil in 2013 and $47,000 in 2012 Net income (loss) $ 212,000 $ (17,000) Other comprehensive income, net of tax Unrealized gain from marketable 56,000 — equity investments Total other comprehensive income 56,000 — Comprehensive income (loss) $ 268,000 $ (17,000) Per share data: Income (loss) from continuing operations Basic $ 0.00 $ (0.02) Diluted $ 0.00 $ (0.02) Income from discontinued operations Basic $ 0.06 $ 0.01 Diluted $ 0.06 $ 0.01 Net income (loss) Basic $ 0.06 $ (0.01) Diluted $ 0.06 $ (0.01) Weighted average shares outstanding 3,344,697 3,279,578 - basic Weighted average shares outstanding 3,353,447 3,279,578 - diluted PRO-DEX, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FortheThreeMonthsEndedSeptember30, 2013 2012 Cash flows from operating activities: Net income (loss) $ 212,000 $ (17,000) Adjustments to reconcile net income ( loss) to net cash (used in) operating activities: Depreciation and amortization 132,000 151,000 Gain on sale of real estate held (167,000) — for sale Allowance for doubtful accounts 3,000 (6,000) Share-based compensation 20,000 30,000 Changes in: Accounts receivable and other (9,000) (212,000) current receivables Unbilled receivables (154,000) — Inventories (139,000) (691,000) Prepaid expenses 18,000 20,000 Accounts payable, accrued (500,000) 511,000 expenses and deferred rent Deferred revenue 71,000 — Income taxes receivable and 1,000 42,000 payable Net cash used in operating (512,000) (172,000) activities Cash flows from investing activities: Purchase of investments (228,000) — Purchases of equipment — (41,000) Proceeds from sale of real 900,000 — estate held for sale Proceeds from sale of equipment 6,000 — Increase in intangibles (17,000) — Net cash provided by (used in) 661,000 (41,000) investing activities Cash flows from financing activities: Principal payments on bank term — (774,000) loan Net cash used in financing — (774,000) activities Net increase (decrease) in cash 149,000 (987,000) Cash, beginning of period 1,680,000 4,112,000 Cash, end of period $ 1,829,000 $ 3,125,000 Supplemental Information Cash payments for interest $ 2,000 $ 9,000 Cash payments for income taxes $ — $ — SOURCE Pro-Dex, Inc. Website: http://www.pro-dex.com Contact: Harold A. Hurwitz, Chief Executive Officer, (949) 769-3200
Pro-Dex, Inc. Announces Fiscal 2014 First Quarter Results
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