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Press release content from ACCESSWIRE. The AP news staff was not involved in its creation.

PRO-DEX, INC. Announces Fiscal 2020 First Quarter Results

November 7, 2019
IRVINE, CA / ACCESSWIRE / November 7, 2019 / PRO-DEX, INC. (NasdaqCM:PDEX) today announced financial results for its fiscal 2020 first quarter ended September 30, 2019. Net sales for the three months ended September 30, 2019, increased $324,000, ...
IRVINE, CA / ACCESSWIRE / November 7, 2019 / PRO-DEX, INC. (NasdaqCM:PDEX) today announced financial results for its fiscal 2020 first quarter ended September 30, 2019. Net sales for the three months ended September 30, 2019, increased $324,000, ...

IRVINE, CA / ACCESSWIRE / November 7, 2019 / PRO-DEX, INC. (NasdaqCM:PDEX) today announced financial results for its fiscal 2020 first quarter ended September 30, 2019.

Net sales for the three months ended September 30, 2019, increased $324,000, or 5%, to $7.2 million from $6.9 million for the three months ended September 30, 2018. The increase is driven by increased sales to our largest customer, primarily increased repair revenue.

Gross profit for the three months ended September 30, 2019, remained fairly flat, increasing $53,000, or 2%, to $2.8 million, compared to $2.7 million for the year-ago period. Gross margin decreased by 1 percentage point to 38% during the three months ended September 30, 2019, compared to 39% 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, 2019 increased $290,000 from the corresponding year-ago period. We are increasing these expenditures in an effort to release new products and garner new customer relationships.

Net income for the quarter ended September 30, 2019, was $1.1 million, or $0.27 per diluted share, compared to $1.3 million or $0.31 per diluted share, for the quarter ended September 30, 2018.

CEO Comments

Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our first quarter results, which include another record-breaking sales level in excess of $7 million. We continue to reinvest our profits in both research and development and business development to continue to grow our core medical device business. Finally,” concluded Mr. Van Kirk, “we have experienced delays in our planned product launches as we modify our thoracic driver to meet our customer’s specific needs.”

The amount spent on projects under development, along with the current estimated commercial launch date and estimated recurring annual revenue is summarized below (in thousands):

For the Three Months Ended September 30,
20192018Market LaunchEst. Annual Revenue

Total Research & Development costs:

$484$408

Products in development:

Thoracic Driver

$19$7503/20$4,000

Arthroscopic Shaver.

62206/20$600

Arthroscopic Attachment

-612/19$150

CMF Driver

17-06/20$350

Sustaining & Other

442305

Total.

$484$408

Customer CMF Driver (1)

$99$5412/19$2,500

The completion of our thoracic driver is currently a priority for our engineering team. The costs in the table above represent our costs related to our Pro-Dex branded driver, which is substantially complete. As we previously discussed, in early fiscal 2019 we entered a development contract with a current significant customer to private-label this driver for their unique specifications. We have had technical delays related to performance of this driver with a specific customer attachment. We currently believe we will launch this product in the third quarter of this fiscal year and have delayed the anticipated launch of most other products to focus on the completion of this thoracic driver.

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 that appeal to our customers, primarily medical device distributors. Pro-Dex also sells compact pneumatic air motors for a variety of industrial applications. 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. CONDENSED BALANCE SHEETS (Unaudited) (In thousands, except share amounts)

September 30, 2019

June 30,

2019

ASSETS

Current Assets:

Cash and cash equivalents

$6,502$7,742

Investments

3,1272,649

Accounts receivable, net of allowance for doubtful accounts of $12 and $0 at September 30, 2019 and at June 30, 2019, respectively

3,1574,100

Deferred costs

493430

Inventory

6,8446,239

Prepaid expenses and other current assets

232623

Total current assets

20,35521,783

Equipment and leasehold improvements, net

2,6532,726

Right of use asset, net

3,187-

Intangibles, net

129129

Deferred income taxes, net

301260

Investments

1,306582

Other assets

4040

Total assets

$27,971$25,520

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$1,376$1,996

Accrued expenses

1,3061,437

Deferred revenue

240215

Note payable and capital lease obligations

624622

Total current liabilities

3,5464,270

Deferred rent

-146

Lease liability, net of current portion

3,015-

Income taxes payable

191162

Notes and capital leases payable, net of current portion

3,7753,934

Total non-current liabilities

6,9814,242

Total liabilities

10,5278,512

Shareholders' equity:

Common shares; no par value; 50,000,000 shares authorized; 3,990,995 and 4,039,491 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively

15,16115,815

Accumulated other comprehensive loss

(606)(549)

Retained earnings

2,8891,742

Total shareholders' equity

17,44417,008

Total liabilities and shareholders' equity

$27,971$25,520

PRO-DEX, INC. CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) (In thousands, except share and per share amounts)

Three Months Ended September 30,
20192018

Net sales

$7,240$6,916

Cost of sales

4,4604,189

Gross profit

2,7802,727

Operating (income) expenses:

Selling expenses

14233

General and administrative expenses

663565

Gain on disposal of equipment

-(7)

Research and development costs

484408

Total operating expenses

1,289999

Operating income

1,4911,728

Other income (expense):

Interest and miscellaneous income

3574

Interest expense

(59)(20)

Total other income (expense)

(24)54

Income before income taxes

1,4671,782

Provision for income taxes

363433

Net income

1,1041,349

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) from marketable equity investments, net of taxes

(57)298

Comprehensive income

$1,047$1,647

Basic and diluted income per share:

Basic net income per share

$0.28$0.31

Diluted net income per share

$0.27$0.31

Weighted average common shares outstanding:

Basic

4,008,0174,330,636

Diluted

4,110,4144,372,893

Common shares outstanding

3,990,9954,249,548

PRO-DEX, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)

Three Months Ended

September 30,

20192018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$1,104$1,349

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

Depreciation and amortization

13888

Share-based compensation

1210

Non-cash lease expense

13-

Amortization of loan fees

2-

Gain on disposal of equipment

-(7)

Deferred income tax

(41)404

Bad debt expense (recovery)

12(13)

Changes in operating assets and liabilities:

Accounts receivable and other receivables

931(655)

Deferred costs

(63)(50)

Inventory

(605)(172)

Prepaid expenses and other assets

391(152)

Accounts payable and accrued expenses

(1,040)(82)

Deferred revenue

2539

Income taxes payable

29(123)

Net cash provided by operating activities

908636

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of equipment

(61)(477)

Purchases of investments

(1,258)(824)

Decrease (increase) in intangibles

(4)1

Proceeds from disposal of equipment

-7

Net cash used in investing activities

(1,323)(1,293)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on capital lease and notes payable

(159)(10)

Borrowings from Minnesota Bank & Trust

-5,000

Payment of employee payroll taxes on net issuance of common stock

-(101)

Proceeds from ESPP Contributions

1510

Repurchases of common stock

(681)(1,115)

Net cash provided by (used in) financing activities

(825)3,784

Net increase (decrease) in cash and cash equivalents

(1,240)3,127

Cash and cash equivalents, beginning of period

7,7425,188

Cash and cash equivalents, end of period

$6,502$8,315

CONTACT:

Richard L. Van Kirk,

Chief Executive Officer

(949) 769-3200

SOURCE: PRO-DEX, INC.

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