Nov 5, 2003
Pro-Dex, Inc.
(714) 241-4411
Pro-Dex, Inc. Announces Significantly Improved First
Quarter Financial Results; Sales Increase 30% from Prior Year; Earnings Increase
72% from Previous Quarter
Pro-Dex, Inc.
PDEX today announced financial results for the quarter ended September 30,
2003. The Company reported net income for the three months ended September 30,
2003 of $193,000 or $0.02 per share on a basic and $0.02 per share on a diluted
basis, as compared to a net (loss) of ($6,000) or ($0.00) per share on a basic
and ($0.00) per share on a diluted basis, for the three months ended September
30, 2002. This represents an increase in reported net income of $199,000 over
the previous year and a sequential increase of $81,000 or 72% over the previous
quarter, producing the fifth consecutive increase in quarterly net profit.
Consolidated net sales increased $811,000
or 30% to $3,528,000 for the three months ended September 30, 2003, compared
to the three months ended September 30, 2002. On a sequential basis, consolidated
sales increased $226,000 or 6.8% for the three months ended September 30, 2003
compared to the fourth quarter of fiscal 2003. This represents the Company's
eighth consecutive quarter of increased sales.
Commenting on the Company's financial performance,
Pro-Dex's President and CEO, Patrick Johnson said, "We're very pleased to report
another quarter of improved financial performance, having built on the successes
of the past year in transforming Pro-Dex into a company that any shareholder
would be proud to own. We've continued to grow our top-line sales and the gross
margin produced by those sales. At the same time, we've controlled our operating
expenses, continue to invest in new product development and reduce our overall
corporate expenses. All of these efforts have resulted in improved bottom-line
profitability, both year over year and quarter over quarter. We're very pleased
with the end result."
At the Company's Micro Motors subsidiary,
sales increased to $731,000 or 35% to $2,807,000 for the three months ended
September 30, 2003, compared to the same period of the prior year. This also
represents a sequential quarter-to-quarter increase in sales of $233,000 or
8.9%. "Micro Motors has focused on a strategy of incrementally growing its dental
product business, while looking for exponential growth in its medical device
business and that strategy is continuing to work," stated Mr. Johnson. "For
the quarter, our core dental sales increased 14% over last year and at the same
time our medical device sales increased 149%. We're encouraged that our independent
sales representatives are really beginning to create some momentum in the sales
of our branded dental products and we anticipate continued growth from that
segment. We're also looking for growth out of several of the new medical devices
we launched last year as those products become approved for sale in the U.S."
Revenue from the Company's Oregon Micro Systems
(OMS) subsidiary increased 13% to $721,000 for the three months ended September
30, 2003 compared to the previous year. "OMS had strong new order bookings in
the fourth quarter of last year which continued into this year with the receipt
of a $500,000 blanket purchase order from a leading manufacturer of semi-conductor
manufacturing equipment," reported Mr. Johnson. "Unfortunately, restructuring
in that customer's own manufacturing organization has delayed initial shipments
against this order, which are now scheduled to commence at the end of the second
quarter. The good news is that despite the delayed shipment of those orders,
OMS still hit its internal sales and profit targets for the quarter, providing
a sizable backlog going into the middle of the year."
The Company's consolidated gross profit for
the three months ended September 30, 2003 increased 34% or $391,000 compared
to the same three months in the previous year. Gross profit as a percentage
of sales increased to 43.7% for the three months ended September 30, 2003 compared
to 42.3% for the three months ended September 30, 2002 and compared to a gross
margin percentage of 40.1% for the previous quarter.
Operating expenses increased 4.7% to $1,206,000
for the three months ended September 30, 2003 from $1,152,000 for the three
months ended September 30, 2002. This increase was due primarily to the expenses
related to the Company's annual audit and increased selling expenses at Micro
Motors. Mr. Johnson stated, "Our annual audit went so smoothly this year, expenses
that have traditionally been incurred in the second quarter of the year, hit
during the first quarter this year which are significant expenses for a company
our size. This shift in expenses should however result in the Company having
more favorable expenses in the second quarter of the year."
Addressing the Company's on-going operations,
Mr. Johnson noted, "We're really feeling like we are in the groove, making incremental
progress every month and every quarter. We are now focusing on improving the
efficiencies of our manufacturing operations, trying to improve the gross margin
of existing sales while continuing to develop new sales." Commenting on the
Company's near term prospects, Mr. Johnson said, "Our efforts over the past
five quarters have positioned the Company extremely well for continued growth
in both top and bottom line performance. In no way are we resting on our laurels
nor do we believe that we've come close to tapping the potential of the business,
but we are proud that we've already turned some of the Company's potential into
tangible results and we intend to continue that positive trend into the second
quarter and beyond."
Investors and all others are invited to listen
to a conference call discussing the first quarter and fiscal 2004 outlook, today
at 4:30 p.m. Eastern Time. The call will be broadcast over the Internet at www.pro-dex.com.
An online replay will be available for 30 days. Additionally, a telephone replay
will be available two hours after the call for 48-hours by dialing (800) 642-1687
for domestic callers and (706) 645-9291 for international callers; conference
ID# 3714624.
Pro-Dex, Inc., is a California-based holding
company with the following wholly-owned operating subsidiaries: Micro Motors,
Inc., located in Santa Ana, California, manufactures miniature electric, pneumatic
and battery powered rotary drive systems for use in the high tech medical, dental
and industrial industries; and Oregon Micro Systems, Inc., located in Beaverton,
Oregon, manufactures motion control products used in factory automation and
the semiconductor industries.
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.
PRO-DEX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30,
2003 2002
----------- -----------
Net sales $3,528,000 $2,717,000
Cost of sales 1,987,000 1,567,000
----------- -----------
Gross profit 1,541,000 1,150,000
Operating expenses:
Selling 205,000 147,000
General and administrative expenses 614,000 588,000
Research and development costs 387,000 385,000
Amortization - 32,000
----------- -----------
Total operating expenses 1,206,000 1,152,000
----------- -----------
Income (loss) from operations 335,000 (2,000)
Other income (expense):
Other income, net 6,000 6,000
Interest (expense) (19,000) (13,000)
----------- -----------
Total (13,000) (7,000)
Income (loss) before provision for income
taxes (credits) 322,000 (9,000)
Provision (credit) for income taxes 129,000 (3,000)
----------- -----------
Net income (loss) $193,000 $(6,000)
=========== ===========
Net income (loss) per share, basic $0.02 $-
Net income (loss) per share, diluted $0.02 $-
Weighted average shares outstanding - basic 8,776,000 8,785,000
Weighted average shares outstanding -
diluted 9,413,506 8,785,000
PRO-DEX, INC.
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
2003 2003
(unaudited) (audited)
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $609,000 $795,000
Accounts receivable, net of allowance
for doubtful accounts of $50,000
and $30,000 2,251,000 1,620,000
Inventories, net 3,067,000 2,835,000
Prepaid expenses 126,000 81,000
Deferred taxes 750,000 770,000
------------ -----------
Total current assets 6,803,000 6,101,000
Equipment and leasehold improvements, net 1,040,000 1,040,000
------------ -----------
Other assets:
Goodwill 1,110,000 1,110,000
Deferred taxes 833,000 833,000
Other 11,000 20,000
------------ -----------
Total other assets 1,954,000 1,963,000
------------ -----------
Total assets $9,797,000 $9,104,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt to
shareholder $60,000 $65,000
Credit line payable 716,000 432,000
Accounts payable 545,000 642,000
Accrued expenses 508,000 349,000
Income taxes payable 158,000 29,000
------------ -----------
Total current liabilities 1,987,000 1,517,000
Long-term debt to a shareholder, net of
current portion 134,000 145,000
------------ -----------
Total liabilities 2,121,000 1,662,000
------------ -----------
Commitments and contingencies
Shareholders' equity:
Series A convertible preferred shares; no
par value; liquidation preference of
$3.60 per share; 10,000,000 shares
authorized; 78,129 shares issued
and outstanding 283,000 283,000
Common shares; no par value; 50,000,000
shares authorized; 8,776,600 and
8,711,600 shares issued and outstanding,
respectively 15,033,000 14,999,000
Accumulated deficit (7,596,000) (7,789,000)
------------ -----------
7,720,000 7,493,000
Receivable for stock purchase (44,000) (51,000)
------------ -----------
Total shareholders' equity 7,676,000 7,442,000
Total liabilities and shareholders'
equity $9,797,000 $9,104,000
============ ===========
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
2003 2002
--------- ---------
Cash Flows from Operating Activities:
Net (loss) $193,000 $(6,000)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Depreciation and amortization 90,000 113,000
(Recovery) provision for doubtful accounts 20,000 (4,000)
Reserve for obsolete inventory (122,000) (14,000)
Non-cash compensation 6,000 7,000
Deferred taxes 20,000 -
Changes in:
(Increase) decrease in accounts receivable (651,000) 35,000
(Increase) decrease in inventories (110,000) 223,000
(Increase) in prepaid expenses (12,000) (45,000)
(Increase) decrease in other assets 9,000 (21,000)
(Decrease) increase in accounts payable
and accrued expense 34,000 (476,000)
(Decrease) increase in income taxes payable 129,000 (4,000)
--------- ---------
Net Cash (used in) Operating Activities (393,000) (192,000)
--------- ---------
Cash Flows From Investing Activities:
Proceeds from sale of discontinued operations - 688,000
Purchases of equipment and leasehold
improvements (90,000) (24,000)
--------- ---------
Net Cash provided by (used in) Investing
Activities (90,000) 664,000
--------- ---------
Cash Flows from Financing Activities:
Principal payments on long-term shareholder
borrowings (22,000) (65,000)
Net borrowings (payments) on line of credit 284,000 (462,000)
Proceeds from warrant exercise 35,000 -
Common stock repurchases - (2,000)
--------- ---------
Net Cash provided by (used in) Financing
Activities 297,000 (529,000)
--------- ---------
Net (decrease) in Cash and Cash Equivalents (186,000) (57,000)
Cash and Cash Equivalents, beginning of period 795,000 236,000
--------- ---------
Cash and Cash Equivalents, end of period $609,000 $179,000
========= =========
Supplemental Information
Cash payments for interest 21,000 7,000
Cash payments for income taxes 4,000 2,000
Contact Information: Pro-Dex, Inc. Patrick Johnson, President
& CEO, 714-241-4411
or Kehoe, White & Co., Inc. Jim White, Investor Relations, 562-437-0655
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