Pro-Dex, Inc. Announces Fiscal 2024 Second Quarter and Six-Month Results
IRVINE, CA / ACCESSWIRE / February 8, 2024 / PRO-DEX, INC. (NasdaqCM:PDEX) today announced financial results for its fiscal 2024 second quarter ended December 31, 2023. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2024 with the Securities and Exchange Commission today.
Quarter Ended December 31, 2023
Net sales for the three months ended December 31, 2023, increased $1.3 million, or 12%, to $12.6 million from $11.3 million for the three months ended December 31, 2022, due primarily to an increase in repair revenue related to the orthopedic surgical handpiece that we sell to our largest customer. As previously disclosed, we began an enhanced repair program in the prior fiscal year to upgrade our customer's handpieces to the most current revision.
Gross profit for the three months ended December 31, 2023, increased $179,000, or 7%, to $2.8 million from $2.6 million for the same period in fiscal 2023. The improvement in gross margin is primarily because we have seen a reduction in the requirement for us to supply components to our suppliers for our printed circuit board assemblies.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2023 increased $539,000, or 36%, to $2.0 million compared to $1.5 million in the prior fiscal year's corresponding quarter, reflecting in part the reduced number of billable engineering projects in the current fiscal quarter compared to the same period in the prior fiscal year and increased general and administrative expenses mostly due to higher professional fees related to audit and valuation services.
Our operating income for the quarter ended December 31, 2023, decreased $360,000, or 32%, to $777,000 compared to $1.1 million for the prior fiscal year's corresponding quarter. Although sales and gross profit have increased, as described above, our operating expenses have increased at a higher rate.
Net income for the quarter ended December 31, 2023, was $500,000 or $0.14 per diluted share, compared to $2.8 million, or $0.75 per diluted share, for the corresponding quarter in fiscal 2023. Our net income for the three months ended December 31, 2023, contains unrealized losses on our marketable equity investments of $40,000 while our net income for the three months ended December 31, 2022 contains unrealized gains on our marketable equity investments of $2.7 million. All of our investments are recorded at estimated fair value, and the valuation can be highly volatile.
Six Months Ended December 31, 2023
Net sales for the six months ended December 31, 2023, increased $2.2 million, or 10%, to $24.5 million from $22.4 million for the six months ended December 31, 2022, due primarily to increased repair revenue from the orthopedic surgical handpiece that we sell to our largest customer as well as the launch of our second thoracic driver, offset by decreased non-recurring engineering and proto-type revenue.
Gross profit for the six months ended December 31, 2023, increased $882,000, or 16%, compared to the same period in fiscal 2023 due to a decline in the requirement for us to source components at elevated prices on behalf of our suppliers in order to meet delivery requirements of our customers, which we believe was a temporary COVID related disruption that impacted our business.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2023, increased $359,000, or 10%, to $3.9 million compared to $3.5 million in the prior fiscal year's corresponding period. The increase is related to increased research and development costs due to fewer billable projects in the current fiscal year than the prior fiscal year as well as higher general and administrative expenses mostly due to higher professional fees mostly related to audit and valuation services.
Our operating income for six months ended December 31, 2023, increased $523,000, or 25%, to $2.6 million compared to $2.1 million for the corresponding period of the prior fiscal year. The increase in operating income is attributable to higher sales and gross profit offset by the higher operating expenses described above.
Net loss for the six months ended December 31, 2023, was $115,000 or $0.03 per diluted share, compared to net income of $4.0 million, or $1.08 per diluted share for the six months ended December 31, 2022. Our net income for the six months ended December 31, 2023, contains unrealized losses on our marketable equity investments of $2.6 million and our net income for the six months ended December 31, 2022, contains unrealized gains on our marketable equity investments of $3.2 million. All of our investments are recorded at estimated fair value, and the valuation can be highly volatile.
CEO Comments
"We are pleased with our second quarter and year-to-date results." said Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer. "We would also like to share that we have implemented a new stock buy-back program and have begun to decrease our inventory levels." Mr. Van Kirk continued, "We are excited about our continued sales growth as well as our prospects for continued future growth, as we are increasing our investment in our sales channels."
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, Inc. also 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, 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 SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
| December 31, 2023 | June 30, 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents.......................................... | $ | 1,289 | $ | 2,936 | ||||
Investments............................................................... | 5,803 | 1,134 | ||||||
Accounts receivable, net of allowance for expected credit | 13,169 | 9,952 | ||||||
Deferred costs........................................................... | 412 | 494 | ||||||
Inventory................................................................... | 15,026 | 16,167 | ||||||
Prepaid expenses and other current assets.................... | 901 | 296 | ||||||
Total current assets................................................. | 36,600 | 30,979 | ||||||
Land and building, net................................................... | 6,202 | 6,249 | ||||||
Equipment and leasehold improvements, net................... | 5,331 | 5,079 | ||||||
Right-of-use asset, net.................................................... | 1,675 | 1,872 | ||||||
Intangibles, net.............................................................. | 68 | 81 | ||||||
Investments................................................................... | 1,509 | 7,521 | ||||||
Other assets................................................................... | 42 | 42 | ||||||
Total assets................................................................ | $ | 51,427 | $ | 51,823 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable....................................................... | $ | 2,909 | $ | 2,261 | ||||
Accrued liabilities...................................................... | 2,846 | 3,135 | ||||||
Income taxes payable................................................. | 389 | 453 | ||||||
Notes payable............................................................ | 3,846 | 3,827 | ||||||
Total current liabilities............................................ | 9,990 | 9,676 | ||||||
Lease liability, net of current portion............................. | 1,415 | 1,638 | ||||||
Deferred income taxes, net........................................... | 8 | 8 | ||||||
Notes payable, net of current portion............................. | 8,228 | 8,911 | ||||||
Total non-current liabilities..................................... | 9,651 | 10,557 | ||||||
Total liabilities........................................................... | 19,641 | 20,233 | ||||||
Shareholders' equity: | ||||||||
Common stock; no par value; 50,000,000 shares authorized; 3,541,045 and 3,545,309 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively.................................................. | 7,078 | 6,767 | ||||||
Retained earnings ...................................................... | 24,708 | 24,823 | ||||||
Total shareholders' equity....................................... | 31,786 | 31,590 | ||||||
Total liabilities and shareholders' equity............... | $ | 51,427 | $ | 51,823 | ||||
PRO-DEX, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (restated) | (restated) | |||||||||||||||
Net sales................................................................. | $ | 12,588 | $ | 11,282 | $ | 24,526 | $ | 22,369 | ||||||||
Cost of sales .......................................................... | 9,786 | 8,659 | 18,066 | 16,791 | ||||||||||||
Gross profit............................................................. | 2,802 | 2,623 | 6,460 | 5,578 | ||||||||||||
Operating expenses: Selling expenses..................................................... | 37 | 68 | 63 | 122 | ||||||||||||
General and administrative expenses................... | 1,200 | 951 | 2,195 | 1,975 | ||||||||||||
Research and development costs.......................... | 788 | 467 | 1,593 | 1,395 | ||||||||||||
Total operating expenses....................................... | 2,025 | 1,486 | 3,851 | 3,492 | ||||||||||||
Operating income................................................... | 777 | 1,137 | 2,609 | 2,086 | ||||||||||||
Interest expense...................................................... | (139 | ) | (128 | ) | (271 | ) | (258 | ) | ||||||||
Unrealized gain (loss) on marketable equity investments........................................................ | (40 | ) | 2,740 | (2,593 | ) | 3,165 | ||||||||||
Interest and other income...................................... | 22 | 7 | 46 | 225 | ||||||||||||
Gain on sale of investments.................................. | - | - | - | 7 | ||||||||||||
Income (loss) before income taxes....................... | 620 | 3,756 | (209 | ) | 5,225 | |||||||||||
Income tax benefit (expense)................................ | (120 | ) | (1,004 | ) | 94 | (1,270 | ) | |||||||||
Net income (loss)................................................... | $ | 500 | $ | 2,752 | $ | (115 | ) | $ | 3,955 | |||||||
Basic net income (loss) per share: | ||||||||||||||||
Net income (loss).............................................. | $ | 0.14 | $ | 0.77 | $ | (0.03 | ) | $ | 1.10 | |||||||
Diluted net income (loss) per share: | ||||||||||||||||
Net income (loss).............................................. | $ | 0.14 | $ | 0.75 | $ | (0.03 | ) | $ | 1.08 | |||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic................................................................... | 3,547 | 3,574 | 3,547 | 3,595 | ||||||||||||
Diluted................................................................ | 3,612 | 3,652 | 3,547 | 3,672 | ||||||||||||
Common shares outstanding................................. | 3,541 | 3,554 | 3,541 | 3,554 | ||||||||||||
CONTACT:
Richard L. Van Kirk,
Chief Executive Officer
(949) 769-3200
SOURCE: Pro-Dex, Inc.
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