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Pro Dex Inc (PDEX) SEC Filing 8-K Material Event for the period ending Thursday, February 3, 2022

Pro Dex Inc

CIK: 788920 Ticker: PDEX

 

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 2022 SECOND QUARTER

AND SIX-MONTH RESULTS

 

IRVINE, CA,

February 3, 2022 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2022 second quarter ended December 31, 2021. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2022 with the Securities and Exchange Commission today.

 

Quarter Ended December 31, 2021

 

Net sales for the three months ended December 31, 2021, increased $1.9 million, or 23%, to $10.2 million from $8.3 million for the three months ended December 31, 2020, due primarily to sales of the orthopedic surgical handpiece that we sell to our largest customer.

 

Gross profit for the three months ended December 31, 2021, increased $808,000, or 31%, to $3.4 million from $2.6 million for the same period in fiscal 2021, due primarily to increased sales. We also had fewer COVID-19 related paid absences in our machine shop, assembly, and quality operations in the second quarter of fiscal 2022 compared to the same period of the prior fiscal year.

 

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2021, decreased $273,000, or 13%, to $1.8 million compared to $2.1 million in the prior fiscal year’s corresponding quarter, reflecting in part the higher number of billable engineering projects in the current fiscal quarter compared to the same period in the prior fiscal year.

 

Net income for the quarter ended December 31, 2021, was $925,000, or $0.25 per diluted share, compared to $1.8 million, or $0.44 per diluted share, for the corresponding quarter in fiscal 2021.

 

Six Months Ended December 31, 2021

 

Net sales for the six months ended December 31, 2021, increased $3.3 million, or 20%, to $20.2 million from $16.9 million for the six months ended December 31, 2020, due primarily to sales of the orthopedic surgical handpiece that we sell to our largest customer.

 

Gross profit for the six months ended December 31, 2021, increased $761,000, or 13%, compared to the same period in fiscal 2021 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, 2021, remained fairly flat compared to the prior fiscal year’s corresponding period.

 

Net income for the six months ended December 31, 2021, was $2.0 million, or $0.52 per diluted share, compared to $2.9 million, or $0.72 per diluted share, for the corresponding period in fiscal 2021.

 

 

 
 

 

 

Guidance

 

Pro-Dex, Inc. typically does not provide sales, earnings, or other guidance, however, 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 COVID-19 pandemic. During early calendar 2022, we are seeing these conditions persist and worsen such that we expect them to negatively impact our financial performance in the third quarter and possibly the fourth quarter of fiscal 2022, reflected as a reduction in net sales. We continue to implement plans and processes to mitigate these challenges that many manufacturers similarly face. Our long-term prospects remain positive and we believe these challenges will negatively impact us only in the short-term.

 

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 especially because our net sales growth reflects a $40M annual run rate and we are encouraged by our strong operating income for the quarter.” Mr. Van Kirk continued, “In addition, we have been engaged by several customers to provide various non-recurring engineering projects. To focus on these secured customer contracts, we have transferred resources from our internal research and development projects thus delaying the launch of our internal products.”

 

The amount spent on internal 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, 2021   Three and Six Months Ended December 31, 2020   Est
Market Launch(1)
   Est
Annual Revenue
 
Total Research & Development costs:  $615   $1,596   $989   $2,080           
                               
Products in development:                              
ENT Shaver   32    263    76    258   Q4 2022   $1,000 
Vital Ventilator       108    8    65   Q1 2023   $1,500 
CMF Driver           279    468   (2)   $1,000 
Sustaining & Other   583    1,225    626    1,289           
Total  $615   $1,596   $989   $2,080           

 

(1)Represents the calendar quarter of expected market launch. The internal projects currently under development have been delayed because we have been engaged by our customers to complete several billable non-recurring engineering projects.
(2)The CMF Driver was completed in the third quarter of fiscal 2021 and began shipping to our existing largest customer under a distribution agreement we executed in the first quarter of fiscal 2021.

 

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 printed circuit board assemblies, analysis of customer complaint data to improve process and design, replacement and enhancement of tooling and fixtures used in the 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, Inc. 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.

 

(tables follow)

 

 

 

 
 

 

 

PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

 

   December 31,
2021
   June 30,
2021
 
ASSETS          
Current Assets:          
Cash and cash equivalents  $5,252   $3,721 
Investments   1,241    1,295 
Accounts receivable, net of allowance for doubtful accounts of $4 and $2 at December 31, 2021 and at June 30, 2021, respectively   8,850    10,933 
Deferred costs   424    193 
Inventory   9,285    8,437 
Prepaid expenses and other current assets   1,036    434 
Total current assets   26,088    25,013 
Land and building, net   6,390    6,437 
Equipment and leasehold improvements, net   4,605    3,845 
Right-of-use asset, net   2,429    2,605 
Intangibles, net   157    186 
Deferred income taxes, net   463    463 
Investments   1,940    1,704 
Other assets   42    67 
Total assets  $42,114   $40,320 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current Liabilities:          
Accounts payable  $2,315   $2,288 
Accrued expenses   1,812    2,198 
Deferred revenue   584    150 
Note payable   1,260    1,236 
Total current liabilities   5,971    5,872 
Lease liability, net of current portion   2,248    2,432 
Income taxes payable   991    397 
Notes payable, net of current portion   10,899    11,535 
Total non-current liabilities   14,138    14,364 
Total liabilities   20,109    20,236 
           
Shareholders’ Equity:          
Common shares; no par value; 50,000,000 shares authorized; 3,641,983 and 3,645,660 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively   7,886    7,953 
Retained earnings   14,119    12,131 
Total shareholders’ equity   22,005    20,084 
Total liabilities and shareholders’ equity  $42,114   $40,320 

 

 

 
 

 

PRO-DEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

   Three Months Ended
December 31,
   Six Months Ended
December 31,
 
   2021   2020   2021   2020 
                 
Net sales  $10,173   $8,265   $20,161   $16,855 
Cost of sales   6,769    5,669    13,329    10,784 
Gross profit   3,404    2,596    6,832    6,071 
                     
Operating expenses:                    
Selling expenses   22    150    59    280 
General and administrative expenses   1,165    936    2,257    1,641 
Research and development costs   615    989    1,596    2,080 
Total operating expenses   1,802    2,075    3,912    4,001 
                     
Operating income   1,602    521    2,920    2,070 
Interest expense   (117)   (75)   (237)   (129)
Unrealized gain (loss) on marketable equity investments   (300)   1,413    (152)   1,306 
Interest and other income   25    20    49    61 
Gain on sale of investments               12 
Income from operations before income taxes   1,210    1,879    2,580    3,320 
Income tax expense   (285)   (129)   (592)   (412)
Net income  $925   $1,750   $1,988   $2,908 
                     
Basic net income per share:                    
Net income  $0.25   $0.45   $0.54   $0.75 
Diluted net income per share:                    
Net income  $0.25   $0.44   $0.53   $0.72 
                     
                     
Weighted average common shares outstanding:                    
Basic   3,657    3,861    3,654    3,856 
Diluted   3,767    4,012    3,774    4,014 
Common shares outstanding   3,642    3,861    3,642    3,861 

 

 

 

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Ticker: PDEX
CIK: 788920
Form Type: 8-K Corporate News
Accession Number: 0001553350-22-000088
Submitted to the SEC: Thu Feb 03 2022 4:06:18 PM EST
Accepted by the SEC: Thu Feb 03 2022
Period: Thursday, February 3, 2022
Industry: Surgical And Medical Instruments And Apparatus
Events:
  1. Earnings Release
  2. Financial Exhibit

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