Pro-Dex, Inc. Announces Fiscal 2014 First Quarter Results

          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
 
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