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