Attached files
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| 8-K - FORM 8-K - PRO DEX INC | d347701d8k.htm |
Exhibit 99.1
| Contact: Michael J. Berthelot, Chief Executive Officer (949) 769-3200 |
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL THIRD QUARTER AND NINE MONTH RESULTS
IRVINE, CA, May 4, 2012 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal third quarter and nine months ended March 31, 2012.
Pro-Dex, Inc. (the “Company”) reported a loss from continuing operations of $513,000, or $0.16 per diluted share, for the quarter ended March 31, 2012 compared to income from continuing operations of $909,000, or $0.28 per diluted share, in the same period of fiscal 2011. The net loss for the third quarter of fiscal 2012 was $487,000 or $0.15 per diluted share, compared to net income of $868,000 or $0.26 per diluted share in the third quarter of fiscal 2011. Sales for the quarter ended March 31, 2012 decreased 34% to $4.5 million from $6.9 million for the corresponding quarter in 2011, and decreased 21% to $13.6 million from $17.3 million for the nine months ended March 31, 2012 and 2011, respectively. For the nine months ended March 31, 2012, the net loss was $332,000, or $0.10 per diluted share, as compared to net income of $1.6 million, or $0.49 per diluted share for the corresponding period in 2011. As the Company has disclosed previously, the decrease in sales and the resulting net losses were primarily the result of the continuation of a reduction in purchases of the Company’s medical device products by its largest customer. The results from continuing operations for the 2012 and 2011 periods exclude the results of the Company’s former Astromec product line, which was sold in February 2012 as previously announced.
Gross profit for the quarter ended March 31, 2012 was $1.2 million, or 27%, compared to gross profit of $2.8 million, or 41%, for the year-ago period. For the nine months ended March 31, 2012 gross profit was $4.6 million, or 34%, compared to $7.2 million and 42%, respectively, for the corresponding nine-month period in 2011. These decreases resulted primarily from the year-over-year decrease in sales and a commensurate change in sales mix to products with lower gross margins. Also contributing to the 2012 gross margin decreases in the three-month period were reductions in manufacturing efficiencies due to the lower sales volume. In addition, higher warranty expenses contributed to the decreased gross margin in the 2012 nine-month period due to higher estimated per-unit repair costs for units that remain under warranty.
As previously announced by the Company, Mark P. Murphy, formerly the Company’s Chief Executive Officer and a director, resigned all of his positions with the Company and its subsidiary on April 20, 2012. Under the terms of the Separation Agreement entered into with Mr. Murphy, the Company agreed to pay him severance and to continue health insurance coverage for a period of one year, the aggregate cost of which was $339,000 and which was included in general and administrative expenses during the quarter ended March 31, 2012. The Company also entered into a six month consulting agreement with Mr. Murphy at a cost of $5,000 per month.
Operating expenses, which include selling, general and administrative, and research and development expenses for the third fiscal quarter of 2012 increased 20% to $1,875,000 from $1,568,000 in the prior year’s quarter. The increase was primarily attributable to the payment of the severance costs associated with the previously noted change in chief executive officers and $58,000 of trade show and advertising expenses which were partially offset by reductions in employee related costs of $125,000. For the nine months ended March 31, 2012, operating expenses increased from the prior year’s nine month period by $330,000, or 7%. This increase was generally due to the previously noted severance costs in the third quarter of 2012, increases in advertising, trade show and travel expenses of $168,000, increased spending for small motor development of $65,000, and share-based compensation expense of $44,000, which were partially offset by reductions in website costs of $121,000 and employee related costs of $232,000.
The pre-tax loss from continuing operations was $680,000 for the quarter, compared to income from continuing operations of $1.2 million in the corresponding 2011 period.
Michael J. Berthelot, the Company’s President and Chief Executive Officer, commented, “I would like to thank Mark for all he has done for Pro-Dex over the past six years. He has left us with a strong balance sheet, a growing portfolio of new and under-development products, a solid management team and a top rate work force.”
“Our Company is at a transition point,” Mr. Berthelot continued, “We have a host of opportunities to pursue, but we must do so with care and excellence in execution. We have identified several initiatives which we believe will help us focus our resources on those actions that will provide significant and sustainable returns over both the short and long term. As we move forward we plan to emphasize the effectiveness of our sales process; our ability to exceed customer expectations for development and delivery; our commitment to innovation and quality; and, to constantly assess our cost structure.”
“I am very excited and proud to be part of Pro-Dex’s leadership team. We have a lot of hard work to do and a tight schedule within which to accomplish it, but I have confidence that our associates at every level are up to the challenge of providing sustainable value to our customers, our people and our shareholders.”
Teleconference Information:
Investors and analysts are invited to listen to a broadcast review of the Company’s fiscal 2012 third quarter financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company’s website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S. or Canada.
For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on May 22, 2012 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering account number 286 and conference I.D. number 393235. An online archive of the broadcast will be available on the Company’s website www.pro-dex.com for a period of 365 days.
Pro-Dex, Inc., with operations in California and Oregon, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate powered surgical device drive and embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets. Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations 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. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| March 31, 2012 | June 30, 2011 | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 4,879,000 | $ | 4,689,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $13,000 at March 31, 2012 and $7,000 at June 30, 2011 |
2,228,000 | 3,128,000 | ||||||
| Other receivables |
88,000 | 12,000 | ||||||
| Inventories |
3,059,000 | 3,703,000 | ||||||
| Prepaid expenses |
193,000 | 145,000 | ||||||
| Income taxes receivable |
407,000 | — | ||||||
| Deferred income taxes |
162,000 | 163,000 | ||||||
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| Total current assets |
11,016,000 | 11,840,000 | ||||||
| Property, plant, equipment and leasehold improvements, net |
2,597,000 | 3,661,000 | ||||||
| Real estate held for sale |
733,000 | — | ||||||
| Other assets |
54,000 | 60,000 | ||||||
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| Total assets |
$ | 14,400,000 | $ | 15,561,000 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 1,029,000 | $ | 1,207,000 | ||||
| Accrued expenses |
1,995,000 | 2,379,000 | ||||||
| Income taxes payable |
— | 78,000 | ||||||
| Current portion of bank term loan |
357,000 | 357,000 | ||||||
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| Total current liabilities |
3,381,000 | 4,021,000 | ||||||
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| Non-current liabilities: |
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| Bank term loan |
506,000 | 774,000 | ||||||
| Deferred income taxes |
162,000 | 163,000 | ||||||
| Deferred rent |
286,000 | 279,000 | ||||||
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| Total non-current liabilities |
954,000 | 1,216,000 | ||||||
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| Total liabilities |
4,335,000 | 5,237,000 | ||||||
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| Commitments and contingencies |
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| Shareholders’ equity: |
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| Common shares; no par value; 50,000,000 shares authorized; 3,272,350 shares issued and outstanding at March 31, 2012 and at June 30, 2011 |
16,817,000 | 16,744,000 | ||||||
| Accumulated deficit |
(6,752,000 | ) | (6,420,000 | ) | ||||
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| Total shareholders’ equity |
10,065,000 | 10,324,000 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 14,400,000 | $ | 15,561,000 | ||||
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PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For The Three Months Ended March 31, |
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| 2012 | 2011 | |||||||
| Net sales |
$ | 4,539,000 | $ | 6,876,000 | ||||
| Cost of sales |
3,336,000 | 4,082,000 | ||||||
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| Gross profit |
1,203,000 | 2,794,000 | ||||||
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| Operating expenses: |
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| Selling expenses |
450,000 | 422,000 | ||||||
| General and administrative expenses |
939,000 | 675,000 | ||||||
| Research and development costs |
486,000 | 471,000 | ||||||
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| Total operating expenses |
1,875,000 | 1,568,000 | ||||||
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| Income (loss) from continuing operations before items below |
(672,000 | ) | 1,226,000 | |||||
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| Other expense: |
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| Interest expense, net |
(8,000 | ) | (55,000 | ) | ||||
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| Total other expense |
(8,000 | ) | (55,000 | ) | ||||
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| Income (loss) from continuing operations before provision for income taxes |
(680,000 | ) | 1,171,000 | |||||
| Provision for (benefit from) income taxes |
(167,000 | ) | 262,000 | |||||
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| Income (loss) from continuing operations |
(513,000 | ) | 909,000 | |||||
| Income (loss) from discontinued operations |
26,000 | (41,000 | ) | |||||
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| Net income (loss) |
$ | (487,000 | ) | $ | 868,000 | |||
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| Net income (loss) per share: |
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| Basic |
$ | (0.15 | ) | $ | 0.27 | |||
| Diluted |
$ | (0.15 | ) | $ | 0.26 | |||
| Weighted average shares outstanding — basic |
3,272,350 | 3,272,350 | ||||||
| Weighted average shares outstanding — diluted |
3,272,350 | 3,289,324 | ||||||
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Nine Months Ended March 31, |
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| 2012 | 2011 | |||||||
| Net sales |
$ | 13,601,000 | $ | 17,314,000 | ||||
| Cost of sales |
9,043,000 | 10,092,000 | ||||||
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| Gross profit |
4,558,000 | 7,222,000 | ||||||
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| Operating expenses: |
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| Selling expenses |
1,192,000 | 1,197,000 | ||||||
| General and administrative expenses |
2,375,000 | 2,205,000 | ||||||
| Research and development costs |
1,555,000 | 1,390,000 | ||||||
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| Total operating expenses |
5,122,000 | 4,792,000 | ||||||
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| Income from operations |
(564,000 | ) | 2,430,000 | |||||
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| Other income (expense): |
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| Interest expense, net |
(28,000 | ) | (135,000 | ) | ||||
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| Total other income (expense) |
(28,000 | ) | (135,000 | ) | ||||
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| Income (loss) from continuing operations before items below |
(592,000 | ) | 2,295,000 | |||||
| Provision for (benefit from) income taxes |
(165,000 | ) | 426,000 | |||||
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| Income (loss) from continuing operations |
(427,000 | ) | $ | 1,869,000 | ||||
| Income (loss) from discontinued operations |
95,000 | (258,000 | ) | |||||
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| Net income (loss) |
$ | (332,000 | ) | $ | 1,611,000 | |||
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| Net income (loss) per share: |
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| Basic |
$ | (0.10 | ) | $ | 0.49 | |||
| Diluted |
$ | (0.10 | ) | $ | 0.49 | |||
| Weighted average shares outstanding — basic |
3,272,350 | 3,262,474 | ||||||
| Weighted average shares outstanding — diluted |
3,272,350 | 3,270,549 | ||||||
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For The Nine Months Ended March 31, |
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| 2012 | 2011 | |||||||
| Cash flows from operating activities: |
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| Net income (loss) |
$ | (332,000 | ) | $ | 1,611,000 | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| Depreciation and amortization |
493,000 | 508,000 | ||||||
| Allowance for doubtful accounts |
7,000 | (17,000 | ) | |||||
| Share-based compensation |
73,000 | 28,000 | ||||||
| Changes in: |
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| Accounts receivable |
817,000 | (415,000 | ) | |||||
| Inventories |
644,000 | (188,000 | ) | |||||
| Prepaid expenses |
(48,000 | ) | (56,000 | ) | ||||
| Other assets |
8,000 | 17,000 | ||||||
| Accounts payable and accrued expenses |
(555,000 | ) | 166,000 | |||||
| Income taxes payable |
(486,000 | ) | 158,000 | |||||
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| Net cash provided by (used in) operating activities |
621,000 | 1,812,000 | ||||||
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| Cash flows from investing activities: |
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| Purchases of equipment and leasehold improvements |
(245,000 | ) | (181,000 | ) | ||||
| Proceeds from sale of equipment |
82,000 | — | ||||||
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| Net cash used in investing activities |
(163,000 | ) | (181,000 | ) | ||||
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| Cash flows from financing activities: |
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| Principal payments on term loan |
(268,000 | ) | (296,000 | ) | ||||
| Net proceeds from bank term loan refinancing |
— | 150,000 | ||||||
| Principal payments on mortgage |
— | (1,528,000 | ) | |||||
| Proceeds from exercise of stock options |
— | 27,000 | ||||||
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| Net cash used in financing activities |
(268,000 | ) | (1,647,000 | ) | ||||
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| Net increase (decrease) in cash and cash equivalents |
190,000 | (16,000 | ) | |||||
| Cash and cash equivalents, beginning of period |
4,689,000 | 3,794,000 | ||||||
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| Cash and cash equivalents, end of period |
$ | 4,879,000 | $ | 3,778,000 | ||||
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| Supplemental Information | ||||||||
| Cash payments for interest |
$ | 25,000 | $ | 151,000 | ||||
| Cash payments for income taxes |
$ | 54,000 | $ | 205,000 | ||||