Contact: | Mark Murphy, Chief Executive Officer | |
(714) 241-4411 | ||
Jeff Stanlis, Investor Relations | ||
Hayden Communications, Inc. | ||
(602) 476-1821 |
For Immediate Release
PRO-DEX, INC. ANNOUNCES
SECOND QUARTER 2008 RESULTS
Sales increase 32% for the quarter
Backlog reaches $11.7 million as of December 31, 2007
SANTA ANA, CA, February 14, 2008 - PRO-DEX, INC. (NASDAQ: PDEX) a developer and manufacturer of embedded motion control, miniature rotary drive systems and fractional horsepower DC motors, which enables speed-to-market for customers who serve the medical, dental, factory automation, scientific research, aerospace and military markets, today announced financial results for the second fiscal quarter and six month period for fiscal 2008, the periods ending December 31, 2007.
Consolidated net sales for the second quarter were $6.1 million, an increase of 32% compared to the $4.6 million reported for the second quarter of fiscal 2007. For the six months ended December 31, 2007, consolidated net sales were $12.1 million, an increase of 23% compared to $9.9 million for the year ago period.
Net income for the second quarter was $305,000 or $0.03 per basic and diluted share (based on 9.7 and 9.9 million shares, respectively) compared to a net loss of $(138,000) or $(0.01) loss per basic and diluted share for the second quarter last year. The Company reported net income for the six months of $631,000 or $0.06 per basic and diluted share compared to net income of $103,000, or $0.01 per basic and fully diluted share for the year-ago period.
Mark P. Murphy, the Company’s President and Chief Executive Officer, commented, “We have completed a strong start to fiscal 2008 and significantly improved our financial performance compared to last year. I am confident we have set the stage for continued improvements, establishing a solid baseline of performance upon which we can build. In the short-term, we will complete our move into a new corporate headquarters, providing the space and efficiency to support our growth. The move is currently scheduled to occur in mid-April, impacting our fourth fiscal quarter by $250,000 to $350,000 in related non-recurring expenses and inefficiencies. Other than this anticipated one-time charge, we look forward to continued strength in our operating performance.”
Consolidated gross profit for the quarter ended December 31, 2007 increased $988,000 or 73% over the same quarter in the previous year. Gross profit for the second quarter was $2.4 million, or 38% gross profit margin, compared to gross profit of $1.4 million, or 30% gross profit margin last year, primarily due to the higher level of sales and increased profitability in medical products. Gross profit for the six months was $4.5 million, or 37% gross profit margin compared to gross profit of $3.4 million, or 34% gross profit margin for the year-ago period. Higher development fees as well as greater manufacturing efficiencies and cost controls had a positive impact on gross profit in the first half of fiscal 2008.
Second quarter operating expenses increased by 11% to $1.9 million, compared to $1.7 million in the second quarter last year, but as a percentage of sales was reduced from 36% to 30%. For the six months, operating expense increased 8% to $3.5 million from $3.2 million in the year-ago period, but as a percentage of sales, was reduced from 33% to 29%.
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Mr. Murphy continued, “Our backlog at the end of the second fiscal quarter was $11.7 million, unchanged from the backlog as of December 31, 2006. This demonstrates the progress we have made in landing new business, while increasing shipments. With our new Vice President of Engineering, Dick Corrington, on board we are fully staffed and ready to refine and grow our value proposition.”
The Company completed the December 31, 2007 quarter with cash and cash equivalents of $220,000 compared to cash and cash equivalents of $403,000 as of June 30, 2007. Total working capital was $6.4 million as of December 31, 2007. Shareholders’ equity increased 5.1 percent to $13.5 million from $12.9 million as of June 30, 2007.
Teleconference Information:
Investors and all others are invited to listen to a conference call discussing the second fiscal quarter 2008 results, today at 4:30 p.m. Eastern Time. The call is scheduled to be broadcast live over the Internet and may be accessed by visiting the Company's website at http://www.pro-dex.com. Mark Murphy, Chief Executive Officer and Jeff Ritchey, Chief Financial Officer plan to host the call. If you would like to join the call, dial (866) 323-3543 U.S. and (706) 679-0672 international, conference I.D. 34459746. You may identify the call as the Pro-Dex Second Quarter Earnings Call. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible on the Company's website for 30 days. Additionally, a telephone replay will be available 2 hours after the call for 48 hours by dialing (800) 642-1687 U.S. or (706) 645-9291 for international callers, conference I.D. number 3459746.
Pro-Dex Inc., with operations in Santa Ana, California; Beaverton, Oregon; and Carson City Nevada, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate embedded motion control, miniature rotary drive systems and fractional horsepower DC motors, serving the medical, dental, semi-conductor, scientific research and aerospace markets. Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, scientific research facilities, commercial and military aircraft, and high tech manufacturing operations globally.
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.
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PRO-DEX, INC. and SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
December 31, 2007 (unaudited) | June 30,2007 (audited) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 220,000 | $ | 403,000 | |||
Accounts receivable, net of allowance for doubtful | |||||||
accounts of $135,000 at December 31 and $153,000 at June 30 | 3,059,000 | 3,436,000 | |||||
Inventories, net | 5,007,000 | 4,622,000 | |||||
Prepaid expenses | 284,000 | 205,000 | |||||
Deferred income taxes | 1,178,000 | 1,091,000 | |||||
Total current assets | 9,748,000 | 9,757,000 | |||||
Property, plant, equipment and leasehold improvements, net | 4,355,000 | 3,778,000 | |||||
Other assets: | |||||||
Goodwill | 2,997,000 | 2,997,000 | |||||
Intangibles - Patents, net | 1,271,000 | 1,321,000 | |||||
Deferred income taxes | 229,000 | 229,000 | |||||
Other | 33,000 | 25,000 | |||||
Total other assets | 4,530,000 | 4,572,000 | |||||
Total assets | $ | 18,633,000 | $ | 18,107,000 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Credit Line | $ | - | $ | 300,000 | |||
Accounts payable | 1,319,000 | 1,110,000 | |||||
Accrued expenses | 1,467,000 | 1,183,000 | |||||
Income taxes payable | 212,000 | 158,000 | |||||
Current portion of term note | 250,000 | 250,000 | |||||
Current portion of real estate loan | 29,000 | 26,000 | |||||
Current portion of "patent" deferred payable | - | 82,000 | |||||
Total current liabilities | 3,277,000 | 3,109,000 | |||||
Long-term liabilities | |||||||
Term note | 271,000 | 396,000 | |||||
Real estate loan | 1,576,000 | 1,593,000 | |||||
Patent deferred payable | - | 158,000 | |||||
Total long-term liabilities | 1,847,000 | 2,147,000 | |||||
Total liabilities | 5,124,000 | 5,256,000 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Common shares; no par value; 50,000,000 shares authorized; | |||||||
9,718,366 shares issued and outstanding December 31, 2007, | |||||||
9,718,366 shares issued and outstanding June 30, 2007, | 16,443,000 | 16,340,000 | |||||
Accumulated deficit | (2,934,000 | ) | (3,489,000 | ) | |||
Total shareholders’ equity | 13,509,000 | 12,851,000 | |||||
Total liabilities and shareholders’ equity | $ | 18,633,000 | $ | 18,107,000 |
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PRO-DEX, INC. and SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Three months ended December 31 (unaudited) | |||||||
2007 | 2006 | ||||||
Net sales | $ | 6,123,000 | $ | 4,631,000 | |||
Cost of sales | 3,769,000 | 3,262,000 | |||||
Gross profit | 2,354,000 | 1,369,000 | |||||
Operating expenses: | |||||||
Selling | 352,000 | 340,000 | |||||
General and administrative expenses | 866,000 | 746,000 | |||||
Research and development costs | 635,000 | 579,000 | |||||
Total operating expenses | 1,853,000 | 1,665,000 | |||||
(Loss) income from operations | 501,000 | (296,000 | ) | ||||
Other income (expense): | |||||||
Other income (expense), net | 48,000 | ||||||
Royalty income | 14,000 | 18,000 | |||||
Interest income (expense) | (40,000 | ) | (58,000 | ) | |||
Total | 22,000 | (40,000 | ) | ||||
(Loss) income before (benefit) provision for income taxes | 523,000 | (336,000 | ) | ||||
(Benefit) provision for income taxes | 218,000 | (198,000 | ) | ||||
Net (loss) income | $ | 305,000 | $ | (138,000 | ) | ||
Net (loss) income per share: | |||||||
Basic | $ | 0.03 | $ | (0.01 | ) | ||
Diluted | $ | 0.03 | $ | (0.01 | ) | ||
Weighted average shares outstanding - basic | 9,718,366 | 9,550,521 | |||||
Weighted average shares outstanding - diluted | 9,888,356 | 9,550,521 |
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PRO-DEX, INC. and SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Six months ended December 31 (unaudited) | |||||||
2007 | 2006 | ||||||
Net sales | $ | 12,114,000 | $ | 9,864,000 | |||
Cost of sales | 7,608,000 | 6,514,000 | |||||
Gross profit | 4,506,000 | 3,350,000 | |||||
Operating expenses: | |||||||
Selling | 675,000 | 678,000 | |||||
General and administrative expenses | 1,601,000 | 1,316,000 | |||||
Research and development costs | 1,209,000 | 1,226,000 | |||||
Total operating expenses | 3,485,000 | 3,220,000 | |||||
Income from operations | 1,021,000 | 130,000 | |||||
Other income (expense): | |||||||
Other income (expense), net | 48,000 | - | |||||
Royalty income | 20,000 | 25,000 | |||||
Interest income (expense ) | (82,000 | ) | (112,000 | ) | |||
Total | (14,000 | ) | (87,000 | ) | |||
Income before (benefit) provision for income taxes | 1,007,000 | 43,000 | |||||
(Benefit) provision for income taxes | 376,000 | (60,000 | ) | ||||
Net income | $ | 631,000 | $ | 103,000 | |||
Net Income per share: | |||||||
Basic | $ | 0.06 | $ | 0.01 | |||
Diluted | $ | 0.06 | $ | 0.01 | |||
Weighted average shares outstanding - basic | 9,718,366 | 9,545,757 | |||||
Weighted average shares outstanding - diluted | 9,926,305 | 9,769,444 |
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PRO-DEX, INC. and SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Six months ended December 31 (unaudited) | |||||||
2007 | 2006 | ||||||
Cash Flows from Operating Activities: | |||||||
Net Income | $ | 631,000 | $ | 103,000 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 243,000 | 232,000 | |||||
Stock based compensation | 103,000 | 85,000 | |||||
(Recovery) provision for doubtful accounts | (18,000 | ) | 77,000 | ||||
Reserve reduction (provision) for obsolete inventory | (173,000 | ) | 200,000 | ||||
(Decrease) increase in deferred taxes | (87,000 | ) | (305,000 | ) | |||
Changes in: | |||||||
Decrease in accounts receivable | 395,000 | 422,000 | |||||
(Increase) in inventories | (212,000 | ) | (963,000 | ) | |||
(Increase) in prepaid expenses | (79,000 | ) | (90,000 | ) | |||
(Increase) in other assets | (8,000 | ) | (30,000 | ) | |||
Increase in accounts payable and accrued expenses | 417,000 | 346,000 | |||||
Increase in income taxes payable | 54,000 | 127,000 | |||||
Net Cash provided by Operating Activities | 1,266,000 | 204,000 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to Astromec acquisition cost | - | (66,000 | ) | ||||
Additions to Intangible assets - Patents related to Intraflow | - | (2,000 | ) | ||||
Purchases of equipment and leasehold improvements | (770,000 | ) | (217,000 | ) | |||
Net Cash used in Investing Activities | (770,000 | ) | (285,000 | ) | |||
Cash Flows from Financing Activities: | |||||||
Net (payments) borrowing on line of credit | (300,000 | ) | 300,000 | ||||
Principal (payments) on term note | (125,000 | ) | (125,000 | ) | |||
Principal (payments) on mortgage | (14,000 | ) | (13,000 | ) | |||
Principal (payment) on patent deferred payable | (240,000 | ) | (76,000 | ) | |||
Proceeds from option exercise | - | 3,000 | |||||
Net Cash provided by Financing Activities | (679,000 | ) | 89,000 | ||||
Net Increase (decrease) in Cash and Cash Equivalents | (183,000 | ) | 8,000 | ||||
Cash and Cash Equivalents, beginning of period | 403,000 | 358,000 | |||||
Cash and Cash Equivalents, end of period | $ | 220,000 | $ | 366,000 | |||
Supplemental Information | |||||||
Cash payments for interest | $ | 95,000 | $ | 150,000 | |||
Cash payments for income taxes | $ | 560,000 | $ | 137,000 |
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