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Feeling was right on PDEX. A huge quarter! Doubt it's sustainable, but stock should get a nice pop tomorrow.


Pro-Dex, Inc. Announces Fiscal 2016 Second Quarter And Six-Month Results
PR Newswire Pro-Dex, Inc.


IRVINE, Calif., Feb. 11, 2016 /PRNewswire/ -- PRO-DEX, INC. (PDEX) today announced financial results for its fiscal 2016 second quarter ended December 31, 2015. The Company also filed its Quarterly Report on Form 10-Q for the second quarter of fiscal year 2016 with the Securities and Exchange Commission today.


Net sales for the three months ended December 31, 2015 increased $2.6 million, or 95%, to $5.4 million from $2.8 million for the three months ended December 31, 2014, due primarily to increases in medical device revenues as well as an additional medical device product launch during the quarter. Gross profit for the three months ended December 31, 2015 increased $843,000, or 121%, to $1.5 million from $696,000 for the same period in fiscal 2015. Contributing to this increase were the increase in sales volume, described above, and improved absorption of our fixed manufacturing overhead as compared to the corresponding quarter in fiscal 2015.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended December 31, 2015 increased $54,000 or 5% to $1.1 million compared to the prior fiscal year's corresponding quarter, reflecting primarily increased selling expenses.

Income from continuing operations for the quarter ended December 31, 2015 increased by $593,000 to $391,000, compared to a loss from continuing operations of $202,000 in the corresponding quarter in fiscal 2015. Net income for the quarter ended December 31, 2015 was $391,000, or $0.09 per share, compared to a net loss of $192,000, or $0.05 per share, for the corresponding quarter in fiscal 2015.

Six Months Ended December 31, 2015

Net sales for the six months ended December 31, 2015 increased $4.1 million, or 77%, to $9.5 million from $5.4 million for the six months ended December 31, 2014, due primarily to increases in medical device revenues, which represents approximately 70% of our revenue for the six months ended December 31, 2015.

Gross profit for the six months ended December 31, 2015 increased $1.1 million, or 70% compared to the same period in fiscal 2015.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the six months ended December 31, 2015 increased 10% to $2.3 million from $2.1 million in the prior fiscal year's corresponding period, reflecting primarily increased selling expenses associated with our Fineline Molds division, a business we acquired in the third quarter of fiscal 2015, and increased general and administrative expenses mostly related to our investment in real property located in Ramsey, Minnesota as well as increased research and development personnel costs to assist with our growing portfolio of medical drivers.

Income from continuing operations for the six months ended December 31, 2015 was $265,000, compared to a loss from continuing operations of $383,000 for the corresponding period in fiscal 2015. Net income for the six months ended December 31, 2015 was $265,000, or $0.06 per share, compared to a net loss of $248,000, or $0.09 per share, for the corresponding period in fiscal 2015.

CEO Comments

Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are extremely pleased with our second quarter results as our turnaround continues and gains momentum. I commend the entire Pro-Dex team for their success in making timely shipments to our key customers and completing the design of another important surgical driver which marks the third completed product development project in the last nine months. In addition, we remain excited about our strong backlog as well as new opportunities in our core medical device business as we look to grow the company further."

"While we are excited to have announced a return to profitability, and appreciate the patience of our shareholders while we have made numerous changes, we believe strongly in continuous improvement. To that end we anticipate making appropriate and measured investments to continue to strengthen our team and operations."

About Pro-Dex, Inc.:

Pro-Dex, Inc., with operations in California and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division designs and manufactures embedded motion control systems serving the medical, factory automation, semi-conductor and scientific research markets. Its Fineline Molds division manufactures plastic injection molding for a variety of industries. Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world.

Pro-Dex also provides quality and regulatory consulting services, as well as engineering consulting and placement services through its Engineering Services Division. 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)



December 31,
2015

June 30,
2015
ASSETS







Current Assets:







Cash and cash equivalents

$
1,053

$
697

Accounts receivable, net of allowance for doubtful accounts of $20 and $36, respectively


1,831


2,326

Due from factor


912


—

Unbilled receivables


108


853

Other current receivables


10


28

Inventory


4,481


4,310

Prepaid expenses


122


124

Investment in Ramsey property and related notes receivable


1,461


—

Deferred income taxes


43


70

Total current assets


10,021


8,408

Equipment and leasehold improvements, net


1,225


1,470

Investment in Ramsey property and related notes receivable


—


1,652

Goodwill


353


353

Intangibles


480


547

Other assets


88


86

Total assets

$
12,167

$
12,516









LIABILITIES AND SHAREHOLDERS' EQUITY







Current Liabilities:







Accounts payable

$
1,286

$
1,867

Accrued expenses


1,036


1,202

Deferred revenue


282


594

Notes payable


522


24

Capital lease obligations


1


7

Total current liabilities


3,127


3,694

Deferred income taxes


43


70

Deferred rent


173


204

Note payable, net of current portion


58


70

Total non-current liabilities


274


344

Total liabilities


3,401


4,038

Shareholders' equity:







Common shares; no par value; 50,000,000 shares authorized; 4,149,004 and 4,139,579 shares issued and outstanding at December 31, 2015 and June 30, 2015, respectively


18,434


18,411

Accumulated deficit


(9,668)


(9,933)

Total shareholders' equity


8,766


8,478

Total liabilities and shareholders' equity

$
12,167

$
12,516











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







Three Months Ended
December 31,

Six Months Ended
December 31,


2015

2014

2015

2014













Net sales

$
5,439

$
2,792

$
9,535

$
5,387
Cost of sales


3,900


2,096


6,938


3,863
Gross profit


1,539


696


2,597


1,524













Operating expenses:
Selling expenses


256


186


470


328
General and administrative expenses


452


459


986


950
Research and development costs


435


444


863


829
Total operating expenses


1,143


1,089


2,319


2,107













Operating income (loss)


396


(393)


278


(583)
Interest expense


(20)


(2)


(26)


(3)
Interest income


1


4


—


5
Gain from disposal of equipment


14


1


14


1
Realized gain on sale of investments


—


59


—


59













Income (loss) from continuing operations before income taxes


391


(331)


266


(521)
Income tax (expense) benefit


—


129


(1)


138













Income (loss) from continuing operations


391


(202)


265


(383)
Income from discontinued operations,
net of income taxes


—


10


—


21
Net income (loss)

$
391

$
(192)

$
265

$
(362)
Other comprehensive income, net of tax:
Unrealized gain from marketable equity investments


—


162


—


173
Less: Reclassification of realized gains included in net loss


—


(59)


—


(59)
Comprehensive income (loss)

$
391

$
(89)

$
265

$
(248)













Basic and diluted net income (loss) per share:












Income (loss) from continuing operations

$
0.09

$
(0.05)

$
0.06

$
(0.09)
Income from discontinued operations


—


—


—


—
Net income (loss)

$
0.09

$
(0.05)

$
0.06

$
(0.09)













Weighted average common shares outstanding:












Basic


4,143


4,170


4,142


4,190
Diluted


4,165


4,170


4,161


4,190
Common shares outstanding


4,149


4,170


4,149


4,170


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





Six Months Ended
December 31,


2015

2014
CASH FLOWS FROM OPERATING ACTIVITIES:






Net income (loss)

$
265

$
(362)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:






Depreciation and amortization


334


259
Gain on sale of investments


—


(59)
Gain from disposal of equipment


(14)


(1)
Share-based compensation


2


11
Deferred income tax benefit


—


(77)
Bad debt expense (recovery)


(16)


(3)
Changes in operating assets and liabilities:






Accounts receivable, due from factor and other current receivables


(383)


673
Unbilled receivables


745


(342)
Inventory


(171)


(275)
Prepaid expenses and other assets


(2)


(103)
Accounts payable, accrued expenses and deferred rent


(778)


326
Deferred revenue


(312)


269
Income taxes payable


—


(53)
Net cash provided by (used in) operating activities


(328)


263







CASH FLOWS FROM INVESTING ACTIVITIES:






Purchases of investments


—


(12)
Purchases of equipment and leasehold improvements


(21)


(209)
Acquisition of Huber Precision


—


(209)
Purchase of Investment in Ramsey property and related notes receivable


(86)


(1,205)
Proceeds from liquidation of Ramsey assets


277


—
Proceeds from sale of equipment


14


1
Proceeds from sale of investments


—


318
Increase in intangibles


(1)


(61)
Net cash provided by (used in) investing activities


183


(1,377)







CASH FLOWS FROM FINANCING ACTIVITIES:






Purchase of common stock


—


(94)
Proceeds from note payable


500


—
Proceeds from exercise of options and ESPP contributions


21


—
Payments made for common stock rights offering


—


(3)
Borrowings from Summit Loan


1,600


—
Repayments on Summit Loan


(1,600)


—
Principal payments on notes payable and capital lease


(20)


(4)
Net cash provided by (used in) financing activities


501


(101)







Net increase (decrease) in cash and cash equivalents


356


(1,215)
Cash and cash equivalents, beginning of period


697


3,188
Cash and cash equivalents, end of period

$
1,053

$
1,973









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