EXHIBIT 99.1

ProDexLogoAndTag_High Res

 

 

Contact: Richard L. Van Kirk, Chief Executive Officer

(949) 769-3200

For Immediate Release

 

PRO-DEX, INC. ANNOUNCES FISCAL 2021

FOURTH QUARTER AND FULL-YEAR RESULTS

 

IRVINE, CA, August 26, 2021 - PRO-DEX, INC. (NasdaqCM: PDEX)

today announced financial results for its fiscal 2021 fourth quarter and full-year ended June 30, 2021.

 

Quarter Ended June 30, 2021

 

Net sales for the three months ended June 30, 2021 decreased $1.7 million, or 15%, to $9.4 million from $11.1 million for the three months ended June 30, 2020, due primarily to decreased medical device sales. This is due to two product launches in the prior fiscal year which had high initial sales volumes, which is typical, as our customers generally order in higher volumes in the beginning of a product introduction. Also, six to twelve months following launch our customers typically begin reordering these products on a quarterly basis and these orders continue to help facilitate our year-over-year growth. Gross profit for the three months ended June 30, 2021 decreased $1.2 million, or 27%, to $3.1 million from $4.3 million for the same period in 2020. The decrease in gross margin is due to a decline in 4th quarter sales of the two aforementioned product launches, as well as price concessions to our largest customer, coupled with under-absorption of our fixed costs resulting, in part, from lower sales volumes.

 

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended June 30, 2021 increased 21% to $2.5 million from $2.1 million in the prior year’s corresponding quarter, due primarily to increased expenditures of $385,000 in research and development costs to support our continued efforts to further grow our business.

 

Net income for the quarter ended June 30, 2021 decreased by $1.7 million to $0.9 million, or $0.22 per diluted share, compared to $2.5 million, or $0.64 per diluted share, in the corresponding quarter in 2020.

 

Year Ended June 30, 2021

 

Net sales for the fiscal year ended June 30, 2021 increased $3.2 million, or 9%, to $38.0 million from $34.8 million for the fiscal year ended June 30, 2020, due primarily to increases in medical device revenues. Specifically, we generated an increase in sales of $4.8 million in fiscal 2021 over fiscal 2020 due to the new thoracic driver we launched to our second largest customer in the prior fiscal year, much of which represented the fulfillment of their initial launch orders.

 

Gross profit for the fiscal year ended June 30, 2021 increased $0.4 million, or 3%, to $13.6 million compared to $13.1 million for fiscal 2020, due to increased revenues.

 

Operating expenses (which include selling, general and administrative, and research and development expenses) for the fiscal year ended June 30, 2021 increased 49% to $9.1 million from $6.1 million in the prior fiscal year. Of the total increase in operating expenses, $887,000 relates to an increase in general and administrative expenses primarily due to increased non-cash stock compensation expense in the amount of $615,000 as well as $267,000 in expenses related to our newly acquired commercial building. Our $2.1 million increase in research and development costs from fiscal 2020 to fiscal 2021 reflects our continued investment in new product development as well as our commitment to continuous improvement of our existing products.

 

Net income for the fiscal year ended June 30, 2021 was $4.5 million, or $1.13 per diluted share, compared to $6.1 million, or $1.50 per diluted share, for fiscal 2020.

 

 
 

Although we have released our earnings prior to our Annual Report on Form 10-K with the Securities and Exchange Commission, we are able to do this because we are a non-accelerated filer and as a result have more time to do so at fiscal year-end. During our quarterly reporting periods, we anticipate that our earnings releases will continue to be released at the same time as our Form 10-Q’s are filed with the Securities and Exchange Commission. We anticipate filing our Form 10-K with the Securities and Exchange Commission on September 9, 2021.

 

Guidance

 

Pro-Dex typically does not provide sales, earnings, or other guidance, and while the COVID-19 pandemic did not materially adversely affect our financial results in our fiscal year ended June 30, 2021, we did experience under-absorbed manufacturing costs, due in part from compensated absences related to COVID-19, a portion of which we expect to recover from amended payroll tax returns, as prescribed by the Families First Coronavirus Response Act. Additionally, during calendar 2021, we began to see some challenges in our supply chain in the form of delayed shipments, longer lead times, and surcharges, much of which our suppliers indicate have been caused by the pandemic. If any of these conditions persist or are exacerbated in the future, we could be negatively impacted. We have and continue to implement plans and processes to mitigate these challenges that many manufacturers similarly face. Our prospects remain positive with additional capacity forthcoming to allow for continued sales growth through our aggressive product development efforts.

 

CEO Comments

 

“We are very pleased with our continued year-over-year sales growth, as well as the progress we have made in readying our new building for move-in.” said the Company’s President and Chief Executive Officer Richard L. (“Rick”) Van Kirk. “While we are unable to predict the total impact of the COVID-19 pandemic, we remain vigilant in our efforts to provide a safe workplace for our employees, excellent service to our customers, and continue to focus on strategic investments in plant and equipment and product development efforts to continue to grow our business. With our new building and additional capacity coming online this year, combined with our focus on new business development and technology, we are excited about fulfilling the potential of the new building and growing our business significantly for years to come.”

 

R&D Projects

 

The amount spent on projects under development is summarized below (in thousands):

 

   Years Ended June 30,  

Expected

Market Launch(1)

  

Estimated Annual

Revenue

 
   2021   2020         
   Dollars in thousands         
Total Research and Development costs:  $4,384   $2,315           
                     
Products in development:                    
     ENT Shaver    829    475    Q4 2021   $1,000 
     CMF Driver    826    194    (2)   $1,000 
     Vital Ventilator    191        Q1 2022   $1,500 
     Sustaining & Other    2,538    1,646           
    Total   $4,384   $2,315           

 

(1)Represents the calendar quarter of expected market launch.
(2)The CMF Driver was completed in the third quarter of fiscal 2021 and shipped to our existing largest customer under a distribution agreement we executed in the first quarter of fiscal 2021. We generated revenue of $220,000 related to these initial shipments during the third quarter ended March 31, 2021. This project is now complete and future engineering expenses related to this project will be included in sustaining and other engineering expenses.

 

 
 

As we introduce new products into the market, we expect to see an increase in sustaining and other engineering expenses. Typical examples of sustaining engineering activities include, but are not limited to, end-of life component replacement, especially in electronic components found in our PCB assemblies, analysis of customer complaint data to improve process and design, replacement and enhancement of tooling and fixtures used in our machine shop, assembly operations and inspection areas to improve efficiency and through-put. Additionally, these costs include development projects that may be in their infancy and may or may not result in a full-fledged product development effort.

 

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. 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, the potential future impact of the COVID-19 pandemic, the timing of expected market launches, and the estimated annual revenue from new product launches) 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

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

   June 30, 
   2021   2020 
ASSETS          
Current assets:          
Cash and cash equivalents  $3,721   $6,421 
Investments   1,295    2,560 
Accounts receivable, net of allowance for doubtful accounts of $2 and $6 at June 30, 2021 and 2020, respectively   10,933    5,155 
Deferred costs   193    155 
Inventory   8,437    8,238 
Prepaid expenses and other current assets   434    145 
Total current assets   25,013    22,674 
Land and building, net   6,437     
Equipment and improvements, net   3,845    2,686 
Right of use asset, net   2,605    2,943 
Intangibles, net   186    162 
Deferred income taxes, net   463    259 
Investments   1,704    2,360 
Other assets   67    42 
Total assets  $40,320   $31,126 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $2,288   $1,965 
Accrued liabilities   2,198    2,411 
Deferred revenue   150    200 
Notes payable   1,236    651 
Total current liabilities   5,872    5,227 
Non-current liabilities:          
Lease liability, net of current portion   2,432    2,750 
Income taxes payable   397    804 
Notes payable, net of current portion   11,535    3,283 
Total non-current liabilities   14,364    6,837 
Total liabilities   20,236    12,064 
           
Commitments and Contingencies:          
           
Shareholders’ equity:          
Common stock, no par value, 50,000,000 shares authorized; 3,645,660 and 3,811,137 shares issued and outstanding at June 30, 2021 and 2020, respectively   7,953    12,752 
Accumulated other comprehensive loss   (215)   (1,586)
Retained earnings   12,346    7,896 
Total shareholders’ equity   20,084    19,062 
Total liabilities and shareholders’ equity  $40,320   $31,126 

 

 

 

 
 

PRO-DEX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

  

Three Months Ended
June 30,

(Unaudited)

   Years Ended
June 30,
 
   2021   2020   2021   2020 
                 
Net sales  $9,435   $11,125   $38,029   $34,834 
Cost of sales   6,316    6,837    24,454    21,692 
Gross profit   3,119    4,288    13,575    13,142 
                     
Operating (income) expenses:                    
Selling expenses   175    138    590    577 
General and administrative expenses   1,154    1,137    4,076    3,189 
Gain from disposal of equipment       (5)       (5)
Research and development costs   1,200    815    4,384    2,315 
Total operating expenses   2,529    2,085    9,050    6,076 
                     
Operating profit   590    2,203    4,525    7,066 
Interest expense   (121)   (56)   (352)   (236)
Other income       935        952 
Gain on sale of investments   533    25    1,327    25 
Interest and dividend income   23    35    126    95 
                     
Income before income taxes   1,025    3,142    5,626    7,902 
Income tax expense   173    596    1,176    1,790 
Net income  $852   $2,546   $4,450   $6,112 
                     
Basic & Diluted income per share:                    
Basic net income per share  $0.23   $0.67   $1.17   $1.56 
                     
Diluted net income per share  $0.22   $0.64   $1.13   $1.50 
                     
Weighted average shares outstanding:                    
Basic   3,656,052    3,812,145    3,796,516    3,910,940 
Diluted   3,796,056    3,979,944    3,936,194    4,078,087 

 

 
 

PRO-DEX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

   Years Ended June 30, 
   2021   2020 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $4,450   $6,112 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   686    573 
Gain on collection of note receivable       (952)
Gain on sale of investments   (1,327)   (25)
Non-cash lease expense   26    41 
Gain on sale or disposal of equipment       (5)
Amortization of loan fees   49    9 
Share-based compensation   901    286 
Deferred income taxes   (181)   (22)
Bad debt expense   5    6 
Changes in operating assets and liabilities:          
Accounts receivable   (5,783)   (1,061)
Deferred costs   (38)   275 
Inventory   (199)   (1,999)
Prepaid expenses and other assets   (314)   476 
Accounts payable, accrued expenses and deferred rent   105    604 
Deferred revenue   (50)   (15)
Income taxes payable   (408)   642 
Net cash provided by (used in) operating activities   (2,078)   4,945 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of equipment and leasehold improvements   (1,769)   (519)
Purchase of land and building   (6,499)    
Proceeds from dividend reclassified as return of principal       15 
Proceeds from sale of equipment       5 
Proceeds from collection of notes receivable       952 
Proceeds from sale of investments   4,596    128 
Increase in intangibles   (38)   (46)
Purchase of investments       (2,822)
Net cash used in investing activities   (3,710)   (2,287)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Principal payments on notes payable   (352)   (630)
Borrowing from Minnesota Bank & Trust, net of loan origination fees   9,139     
Repurchases of common stock   (5,537)   (3,388)
Payments of employee taxes on net issuance of common stock   (259)    
Proceeds from exercise of stock options and ESPP contributions   97    39 
Net cash provided by (used in) financing activities   3,088    (3,979)
           
Net decrease in cash and cash equivalents   (2,700)   (1,321)
Cash and cash equivalents, beginning of year   6,421    7,742 
Cash and cash equivalents, end of year  $3,721   $6,421 

 

 


The following information was filed by Pro Dex Inc (PDEX) on Thursday, August 26, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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