PRO DEX INC - FORM 8-K - EX-99.1 - PRESS RELEASE - November 9, 2017

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Exhibit 99.1

[pdex_ex99z1001.jpg]




Contact:  Richard L. Van Kirk, Chief Executive Officer

(949) 769-3200


For Immediate Release


PRO-DEX, INC. ANNOUNCES FISCAL 2018 FIRST QUARTER RESULTS


IRVINE, CA, November 9, 2017 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2018 first quarter ended September 30, 2017.


Net sales for the three months ended September 30, 2017 remained approximately flat and totaled $5.2 million, an increase of $33,000 or 1% from $5.1 million for the three months ended September 30, 2016.


Gross profit for the three months ended September 30, 2017 increased $436,000, or 31%, to $1.9 million, compared to $1.4 million for the year-ago period, primarily due to efficiencies in our manufacturing and assembly operations as well as savings created by in-sourcing previously out-sourced manufactured parts.  As a result, gross margin has improved by 8 percentage points to 36% during the three months ended September 30, 2017 compared to 28% during the corresponding year-ago period.


Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2017 decreased 12% to $1.0 million from $1.1 million in the prior year’s corresponding quarter, reflecting primarily the prior year impairment of intangible assets of $113,000 relating to the Huber Precision business acquisition.


Net income for the quarter ended September 30, 2017 was $628,000 or $.15 per share compared to $286,000 for the quarter ended September 30, 2016, or $0.07 per share.


CEO Comments


Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our strong earnings growth this quarter, despite relatively flat sales.  We plan to continue to focus on our core medical device products and expect to invest more in research and development during the balance of fiscal 2018, especially since we plan to release our Pro-Dex branded thoracic driver later this fiscal year.”






 


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 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 dental instruments and rotary air motors. Its Fineline Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex's products are found in hospitals, dental offices, 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 SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)


 

 

September 30,
2017

 

 

June 30,

2017

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,855

 

 

$

4,205

 

Investments

 

 

885

 

 

 

718

 

Accounts receivable, net of allowance for doubtful accounts of $3 at September 30, 2017 and at June 30, 2017

 

 

2,254

 

 

 

3,538

 

Deferred costs

 

 

—

 

 

 

12

 

Other current assets

 

 

24

 

 

 

86

 

Inventory

 

 

3,512

 

 

 

3,085

 

Notes receivable

 

 

1,150

 

 

 

—

 

Prepaid expenses

 

 

108

 

 

 

277

 

Total current assets

 

 

13,788

 

 

 

11,921

 

Equipment and leasehold improvements, net

 

 

1,427

 

 

 

1,429

 

Goodwill

 

 

112

 

 

 

112

 

Intangibles, net

 

 

316

 

 

 

320

 

Deferred income taxes, net

 

 

2,003

 

 

 

2,048

 

Notes receivable

 

 

450

 

 

 

450

 

Other assets

 

 

71

 

 

 

71

 

Total assets

 

$

18,167

 

 

$

16,351

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

943

 

 

$

1,159

 

Accrued expenses

 

 

763

 

 

 

1,344

 

Deferred revenue

 

 

18

 

 

 

19

 

Note payable

 

 

26

 

 

 

26

 

Income taxes payable

 

 

10

 

 

 

—

 

Capital lease obligations

 

 

33

 

 

 

32

 

Total current liabilities

 

 

1,793

 

 

 

2,580

 

Deferred rent, net of current portion

 

 

53

 

 

 

—

 

Notes and capital leases payable, net of current portion

 

 

46

 

 

 

61

 

Total non-current liabilities

 

 

99

 

 

 

61

 

Total liabilities

 

 

1,892

 

 

 

2,641

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares; no par value; 50,000,000 shares authorized; 4,348,292 and 4,025,193 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively

 

 

19,750

 

 

 

17,704

 

Accumulated other comprehensive income (loss)

 

 

(76

)

 

 

33

 

Accumulated deficit

 

 

(3,399

)

 

 

(4,027

)

Total shareholders’ equity

 

 

16,275

 

 

 

13,710

 

Total liabilities and shareholders’ equity

 

$

18,167

 

 

$

16,351

 




 


PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except share and per share amounts)


 

 

Three Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

Net sales 

 

$

5,162

 

 

$

5,129

 

Cost of sales 

 

 

3,302

 

 

 

3,705

 

Gross profit 

 

 

1,860

 

 

 

1,424

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling expenses 

 

 

87

 

 

 

149

 

General and administrative expenses 

 

 

504

 

 

 

564

 

Impairment of intangible assets 

 

 

—

 

 

 

113

 

Research and development costs 

 

 

407

 

 

 

304

 

Total operating expenses 

 

 

998

 

 

 

1,130

 

Operating income 

 

 

862

 

 

 

294

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest and miscellaneous income 

 

 

30

 

 

 

3

 

Interest expense 

 

 

(2

)

 

 

(3

)

Total other income (expense) 

 

 

28

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Income before income taxes 

 

 

890

 

 

 

294

 

Provision for income taxes 

 

 

262

 

 

 

7

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations 

 

$

628

 

 

$

287

 

Net loss from discontinued operations net of tax of $0

 

 

—

 

 

 

(1

)

Net income 

 

$

628

 

 

$

286

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

Unrealized loss from marketable equity investments, net of taxes

 

 

(109

)

 

 

—

 

Comprehensive income 

 

$

519

 

 

$

286

 

 

 

 

 

 

 

 

 

 

Basic and diluted income per share:

 

 

 

 

 

 

 

 

Net income from continuing operations 

 

$

0.15

 

 

$

0.07

 

Net income from discontinued operations 

 

 

—

 

 

 

—

 

Net income 

 

$

0.15

 

 

$

0.07

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

4,150,099

 

 

 

4,062,475

 

Diluted

 

 

4,189,724

 

 

 

4,103,459

 

Common shares outstanding 

 

 

4,348,292

 

 

 

4,063,837

 




 


PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


 

 

Three Months Ended

September 30,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income 

 

$

628

 

 

$

286

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

153

 

 

 

139

 

Share-based compensation

 

 

3

 

 

 

2

 

Impairment of intangible assets

 

 

—

 

 

 

113

 

Gain on disposal of equipment

 

 

(12

)

 

 

(3

)

Deferred income tax

 

 

45

 

 

 

—

 

Bad debt expense (recovery)

 

 

—

 

 

 

(18

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and other receivables 

 

 

1,284

 

 

 

(683

)

Deferred costs 

 

 

12

 

 

 

(255

)

Inventory 

 

 

(427

)

 

 

203

 

Prepaid expenses and other assets 

 

 

89

 

 

 

27

 

Accounts payable, accrued expenses and deferred rent

 

 

(744

)

 

 

338

 

Deferred revenue 

 

 

(1

)

 

 

107

 

Income taxes payable 

 

 

10

 

 

 

(1

)

Net cash provided by operating activities 

 

 

1,040

 

 

 

255

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of equipment

 

 

(139

)

 

 

(316

)

Purchases of investments

 

 

(297

)

 

 

—

 

Income tax effect of unrealized gains and losses

 

 

21

 

 

 

—

 

Increase in notes receivable

 

 

(1,150

)

 

 

—

 

Increase in intangibles

 

 

(8

)

 

 

(13

)

Proceeds from disposal of equipment

 

 

12

 

 

 

3

 

Net cash used in investing activities 

 

 

(1,561

)

 

 

(326

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Principal payments on capital lease and notes payable

 

 

(14

)

 

 

(16

)

Borrowings from Summit Loan

 

 

—

 

 

 

400

 

Repayments on Summit Loan

 

 

—

 

 

 

(400

)

Proceeds from shares issued under ATM, net of commissions and fees

 

 

2,169

 

 

 

—

 

Proceeds from ESPP Contributions

 

 

16

 

 

 

10

 

Repurchases of common stock

 

 

—

 

 

 

(49

)

Net cash provided by (used in) financing activities 

 

 

2,171

 

 

 

(55

)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents 

 

 

1,650

 

 

 

(126

)

Cash and cash equivalents, beginning of period 

 

 

4,205

 

 

 

2,294

 

Cash and cash equivalents, end of period 

 

$

5,855

 

 

$

2,168

 







PRO DEX INC Reports