Pro-Dex, Inc. Announces Fiscal 2021 Second Quarter and Six-Month Results
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Pro-Dex, Inc. Announces Fiscal 2021 Second Quarter and Six-Month Results

Thursday, February 4, 2021 4:00 PM
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Earnings

IRVINE, CA / ACCESSWIRE / February 4, 2021 / PRO-DEX, INC. (NASDAQ:PDEX) today announced financial results for its fiscal 2021 second quarter ended December 31, 2020. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2021 with the Securities and Exchange Commission today.

Quarter Ended December 31, 2020
Net sales for the three months ended December 31, 2020, increased $304,000, or 4%, to $8.3 million from $8.0 million for the three months ended December 31, 2019, due primarily to sales of our newest product, a thoracic driver, to an existing customer.

Gross profit for the three months ended December 31, 2020, decreased $268,000, or 9%, to $2.6 million from $2.9 million for the same period in fiscal 2020, due to under-absorbed fixed manufacturing costs and warranty accruals. Our under-absorbed fixed manufacturing costs increased during the three months ended December 31, 2020 compared to the corresponding period of the prior fiscal year due in part to COVID-19 related paid absences in our machine shop, assembly, and quality operations that did not occur in the corresponding quarter of fiscal 2020.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2020, increased $879,000, or 74%, to $2.1 million compared to $1.2 million in the prior fiscal year's corresponding quarter, reflecting our planned investments in research and development, selling, and general and administrative expenses in an effort to release new products and garner new customer relationships.

Net income for the quarter ended December 31, 2020, was $337,000, or $0.08 per diluted share, compared to $1.2 million, or $0.31 per diluted share, for the corresponding quarter in fiscal 2020.

Six Months Ended December 31, 2020
Net sales for the six months ended December 31, 2020, increased $1.6 million, or 11%, to $16.9 million from $15.2 million for the six months ended December 31, 2019, due primarily to sales of our new thoracic driver.

Gross profit for the six months ended December 31, 2020, increased $427,000, or 8%, compared to the same period in fiscal 2020 due to the increase in sales described above.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2020, increased $1.5 million, or 61% to $4.0 million from $2.5 million in the prior fiscal year's corresponding period, reflecting our planned investments in research and development in an effort to release new products as well as increases in general and administrative expenses, in part due to expenses related to the new facility that we acquired in November, 2020, as we continue its build-out to ready it for our employees.

Net income for the six months ended December 31, 2020 was $1.6 million, or $0.40 per diluted share, compared to $2.4 million, or $0.58 per diluted share, for the corresponding period in fiscal 2020.

CEO Comments
Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with our second quarter and year-to-date results and our net sales growth." Mr. Van Kirk continued, "We believe this will be a year of transition, as we complete the build-out of our new building and continue to make investments in facilities, personnel, and engineering projects to expand our foundation and allow for continued growth."

The amount spent on projects under development as well as the estimated market launch date and estimated future annual revenue is summarized below (in thousands):

 

 
  Three and Six Months ended December 31, 2020     Three and Six Months ended December 31, 2019     Est Market Launch(1)     Est Annual Revenue  
Total Research & Development costs:
  989     2,080     397     881              
 
                                           
Products in development:
                                           
ENT Shaver...........................................................
    76       258       66       155       Q4 2021     1,000  
Vital Ventilator......................................................
    8       65       -       -       Q1 2022     1,500  
CMF Driver...........................................................
    279       468       29       46       Q3 2021     1,000  
Sustaining & Other.................................................
    626       1,289       302       680                  
Total.....................................................................
  989     2,080     397     881                  
  1. Represents the calendar quarter of expected market launch.

We are nearing completion of an additional round of verification and validation of a new CMF driver, which we will be selling to our existing largest customer under a distribution agreement, that we executed in the first quarter of fiscal 2021. Additionally, as previously disclosed, we anticipate the release to manufacture of a new ENT Shaver in the fall of 2021 and our Director of Business Development is working with a promising medical device distributor to potentially commercialize this product.

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 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 (including, but not limited to, estimated product launch dates and estimated future revenue), 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.

PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)

 
 
December 31,
2020
   
June 30,
2020
 
ASSETS
           
Current Assets:
           
Cash and cash equivalents...........................................
  $ 5,523     $ 6,421  
Investments...............................................................
    2,884       2,560  
Accounts receivable, net of allowance for doubtful accounts of $4 and $6 at December 31, 2020 and at June 30, 2020, respectively......................................
    4,621       5,155  
Deferred costs...........................................................
    138       155  
Inventory...................................................................
    9,152       8,238  
Prepaid expenses and other current assets....................
    392       145  
Total current assets.................................................
    22,710       22,674  
Land and building, net....................................................
    6,484       -  
Equipment and leasehold improvements, net...................
    2,704       2,686  
Right of use asset, net....................................................
    2,777       2,943  
Intangibles, net..............................................................
    158       162  
Deferred income taxes, net.............................................
    259       259  
Investments...................................................................
    3,238       2,360  
Other assets...................................................................
    42       42  
Total assets................................................................
  $ 38,372     $ 31,126  
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Current Liabilities:
               
Accounts payable.......................................................
  $ 2,470     $ 1,965  
Accrued expenses.......................................................
    1,785       2,411  
Deferred revenue........................................................
    200       200  
Note payable and capital lease obligations...................
    479       651  
Total current liabilities............................................
    4,934       5,227  
Lease liability, net of current portion..............................
    2,609       2,750  
Income taxes payable...................................................
    615       804  
Notes and capital leases payable, net of current portion...
    8,375       3,283  
Total non-current liabilities.....................................
    11,599       6,837  
Total liabilities...........................................................
    16,533       12,064  
Shareholders' equity:
               
Common shares; no par value; 50,000,000 shares authorized; 3,860,639 and 3,811,137 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively...................................................
    12,621       12,752  
Accumulated other comprehensive income (loss).........
    (280 )     (1,586 )
Retained earnings ......................................................
    9,498       7,896  
Total shareholders' equity.......................................
    21,839       19,062  
Total liabilities and shareholders' equity...............
  $ 38,372     $ 31,126  
 
               

PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)

 
  Three Months Ended
December 31,
    Six Months Ended
December 31
,
 
 
  2020     2019     2020     2019  
 
                       
Net sales.................................................................
  $ 8,265     $ 7,961     $ 16,855     $ 15,201  
Cost of sales ..........................................................
    5,669       5,097       10,784       9,557  
Gross profit.............................................................
    2,596       2,864       6,071       5,644  
 
                               
Operating expenses:
Selling expenses.....................................................
    150       135       280       277  
General and administrative expenses...................
    936       664       1,641       1,327  
Research and development costs..........................
    989       397       2,080       881  
Total operating expenses.......................................
    2,075       1,196       4,001       2,485  
 
                               
Operating income...................................................
    521       1,668       2,070       3,159  
Interest expense......................................................
    (75 )     (63 )     (129 )     (122 )
Interest and other income......................................
    20       33       61       68  
Gain on sale of investments..................................
    -       -       12       -  
Income from operations before income taxes......
    466       1,638       2,014       3,105  
Income tax expense...............................................
    (129 )     (389 )     (412 )     (751 )
Net income.............................................................
  $ 337     $ 1,249     $ 1,602     $ 2,354  
Other comprehensive income, net of tax:
Unrealized income from marketable equity investments........................................................
    1,413       705       1,306       649  
Comprehensive income.........................................
  $ 1,750     $ 1,954     $ 2,908     $ 3,003  
 
                               
Basic net income per share:
                               
Net income.........................................................
  $ 0.09     $ 0.32     $ 0.42     $ 0.59  
Diluted net income per share:
                               
Net income........................................................
  $ 0.08     $ 0.31     $ 0.40     $ 0.58  
 
                               
 
                               
Weighted average common shares outstanding:
                               
Basic...................................................................
    3,861       3,950       3,856       3,979  
Diluted................................................................
    4,012       4,053       4,014       4,082  
Common shares outstanding.................................
    3,861       3,884       3,861       3,884  

CONTACT:
Richard L. Van Kirk
Chief Executive Officer
(949) 769-3200

SOURCE: Pro-Dex, Inc.

Pro-Dex, Inc.
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