Exhibit 99.1
Contact: Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL 2016
THIRD QUARTER
AND NINE-MONTH RESULTS
IRVINE, CA, May 12, 2016 - PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal 2016 third quarter ended March 31, 2016. The Company also filed its Quarterly Report on Form 10-Q for the third quarter of fiscal year 2016 with the Securities and Exchange Commission today.
Quarter Ended March 31, 2016
Net sales for the three months ended March 31, 2016 increased $1.4 million, or 36%, to $5.3 million from $3.9 million for the three months ended March 31, 2015, due primarily to increases in medical device revenues as well as an additional medical device product launch during the second quarter of fiscal 2016. Gross profit for the three months ended March 31, 2016 increased $315,000, or 30%, to $1.4 million from $1.1 million for the same period in fiscal 2015, primarily as a result of the increase in sales volume, described above.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended March 31, 2016 decreased $125,000 or 9% to $1.3 million compared to the prior fiscal year’s corresponding quarter. During the quarter ended March 31, 2016 we recorded an impairment charge in the amount of $245,000 relating to Fineline Molds goodwill and intangible assets, as a result of our annual impairment test. This impairment charge, included in operating expenses, is offset by reduced legal and professional fees in the current fiscal year in the amount of $172,000 recorded in general and administrative expenses and a reduction in personnel and related costs primarily of our Engineering Services Division in the amount of $168,000.
Income from continuing operations for the quarter ended March 31, 2016 increased by $460,000 to $368,000, compared to a loss from continuing operations of $92,000 in the corresponding quarter in fiscal 2015. Net income for the quarter ended March 31, 2016 was $368,000, or $0.09 per share, compared to a net loss of $76,000, or $0.02 per share, for the corresponding quarter in fiscal 2015.
Nine Months Ended March 31, 2016
Net sales for the nine months ended March 31, 2016 increased $5.5 million, or 60%, to $14.9 million from $9.3 million for the nine months ended March 31, 2015, due primarily to increases in medical device revenues, which represents approximately 71% of our revenue for the nine months ended March 31, 2016.
Gross profit for the nine months ended March 31, 2016 increased $1.4 million, or 54% compared to the same period in fiscal 2015, primarily as a result of the increase in sales volume, described above.
Operating expenses (which include selling, general and administrative, and research and development expenses) for the nine months ended March 31, 2016 increased 2% to $3.6 million from
$3.5 million in the prior fiscal year’s corresponding period, reflecting primarily the goodwill and long-lived asset impairment charge relating to our Fineline Molds division, a business we acquired in the third quarter of fiscal 2015.
Income from continuing operations for the nine months ended March 31, 2016 was $633,000, compared to a loss from continuing operations of $475,000 for the corresponding period in fiscal 2015. Net income for the nine months ended March 31, 2016 was $633,000, or $0.15 per share, compared to a net loss of $438,000, or $0.10 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 pleased with our continued positive sales growth and have continued our earnings momentum with two consecutive quarters of profitability and I want to thank the Pro-Dex team as our results are reflective of their efforts. In addition, our gain on the Ramsey property is indicative of Pro-Dex’s willingness to be open minded and flexible while looking for opportunities to increase shareholder value,” continued Mr. Van Kirk.
“Although we recorded an impairment charge related to our Fineline Molds business, we gained valuable insight related to business acquisitions and integration and have made management changes that we believe will positively impact the division going forward. In the near term, however, we will be focusing our efforts on organic sales growth. Finally,” concluded Mr. Van Kirk, “during the third quarter, the USPTO issued a long awaited patent, which we use in several of our medical device products, and protects one of our key technologies, which we believe has the potential to be used in many diverse applications. We also have a number of significant proposals outstanding with customers for new projects and in fact believe that we are close to finalizing terms on a new engineering project for our medical device core business. This business development activity has us encouraged about further growth for our core business as we take this turn around to the next level.”
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)
| March 31, 2016 | June 30, 2015 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 1,452 | $ | 697 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $18 and $36, respectively | 2,169 | 2,326 | ||||||
| Due from factor | 1,581 | — | ||||||
| Unbilled receivables | 123 | 853 | ||||||
| Other current receivables | 113 | 28 | ||||||
| Inventory | 4,118 | 4,310 | ||||||
| Prepaid expenses | 129 | 124 | ||||||
| Deferred income taxes | — | 70 | ||||||
| Total current assets | 9,685 | 8,408 | ||||||
| Equipment and leasehold improvements, net | 1,198 | 1,470 | ||||||
| Investment in Ramsey property and related notes receivable | — | 1,652 | ||||||
| Goodwill | 112 | 353 | ||||||
| Intangibles | 442 | 547 | ||||||
| Other assets | 80 | 86 | ||||||
| Total assets | $ | 11,517 | $ | 12,516 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,132 | $ | 1,867 | ||||
| Accrued expenses | 892 | 1,202 | ||||||
| Deferred revenue | 117 | 594 | ||||||
| Income taxes payable | 3 | — | ||||||
| Note payable | 24 | 24 | ||||||
| Capital lease obligations | — | 7 | ||||||
| Total current liabilities | 2,168 | 3,694 | ||||||
| Deferred income taxes | — | 70 | ||||||
| Deferred rent | 157 | 204 | ||||||
| Note payable, net of current portion | 52 | 70 | ||||||
| Total non-current liabilities | 209 | 344 | ||||||
| Total liabilities | 2,377 | 4,038 | ||||||
| Shareholders’ equity: | ||||||||
| Common shares; no par value; 50,000,000 shares authorized; 4,152,139 and 4,139,579 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively | 18,440 | 18,411 | ||||||
| Accumulated deficit | (9,300 | ) | (9,933 | ) | ||||
| Total shareholders’ equity | 9,140 | 8,478 | ||||||
| Total liabilities and shareholders’ equity | $ | 11,517 | $ | 12,516 | ||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net sales | $ | 5,337 | $ | 3,922 | $ | 14,873 | $ | 9,310 | ||||||||
| Cost of sales | 3,977 | 2,877 | 10,916 | 6,741 | ||||||||||||
| Gross profit | 1,360 | 1,045 | 3,957 | 2,569 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | 195 | 363 | 665 | 691 | ||||||||||||
| General and administrative expenses | 420 | 592 | 1,407 | 1,542 | ||||||||||||
| Impairment of goodwill and long-lived assets | 245 | — | 245 | — | ||||||||||||
| Research and development costs | 450 | 480 | 1,313 | 1,309 | ||||||||||||
| Total operating expenses | 1,310 | 1,435 | 3,630 | 3,542 | ||||||||||||
| Operating income (loss) | 50 | (390 | ) | 327 | (973 | ) | ||||||||||
| Interest expense | (10 | ) | (1 | ) | (36 | ) | (4 | ) | ||||||||
| Interest income | — | 1 | — | 6 | ||||||||||||
| Gain from sale of Investment in Ramsey Property | 340 | — | 340 | — | ||||||||||||
| Gain from disposal of equipment | 4 | 1 | 18 | 1 | ||||||||||||
| Realized gain on sale of investments | — | 395 | — | 455 | ||||||||||||
| Income (loss) from continuing operations before income taxes | 384 | 6 | 649 | (515 | ) | |||||||||||
| Income tax (expense) benefit | (16 | ) | (98 | ) | (16 | ) | 40 | |||||||||
| Income (loss) from continuing operations | 368 | (92 | ) | 633 | (475 | ) | ||||||||||
| Income from discontinued operations, net of income taxes | — | 16 | — | 37 | ||||||||||||
| Net income (loss) | $ | 368 | $ | (76 | ) | $ | 633 | $ | (438 | ) | ||||||
| Basic and diluted net income (loss) per share: | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.09 | $ | (0.02 | ) | $ | 0.15 | $ | (0.11 | ) | ||||||
| Income from discontinued operations | — | — | — | 0.01 | ||||||||||||
| Net income (loss) | $ | 0.09 | $ | (0.02 | ) | $ | 0.15 | $ | (0.10 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 4,151 | 4,158 | 4,145 | 4,179 | ||||||||||||
| Diluted | 4,195 | 4,158 | 4,169 | 4,179 | ||||||||||||
| Common shares outstanding | 4,152 | 4,140 | 4,152 | 4,140 | ||||||||||||
PRO-DEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 633 | $ | (438 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 481 | 398 | ||||||
| Gain on sale of investments | — | (455 | ) | |||||
| Gain on sale of investment in Ramsey | (340 | ) | — | |||||
| Gain on disposal of equipment | (18 | ) | (1 | ) | ||||
| Impairment of goodwill and long-lived assets | 245 | — | ||||||
| Share-based compensation | 4 | 14 | ||||||
| Deferred income tax benefit | — | 5 | ||||||
| Bad debt expense (recovery) | (18 | ) | 1 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, due from factor and other current receivables | (1,382 | ) | (313 | ) | ||||
| Unbilled receivables | 730 | (324 | ) | |||||
| Inventory | 192 | (839 | ) | |||||
| Prepaid expenses and other assets | — | (83 | ) | |||||
| Accounts payable, accrued expenses and deferred rent | (1,092 | ) | 1,352 | |||||
| Deferred revenue | (477 | ) | 298 | |||||
| Income taxes payable | 3 | (53 | ) | |||||
| Net cash used in operating activities | (1,039 | ) | (438 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of investments | — | (12 | ) | |||||
| Purchases of equipment and leasehold improvements | (106 | ) | (242 | ) | ||||
| Business acquisitions | — | (865 | ) | |||||
| Purchase of notes receivable | — | (1,236 | ) | |||||
| Purchase of Investment in Ramsey property and related notes receivable | (87 | ) | — | |||||
| Proceeds from sale of investment in Ramsey | 1,970 | — | ||||||
| Proceeds from sale of equipment | 18 | 1 | ||||||
| Proceeds from sale of investments | — | 1,324 | ||||||
| Increase in intangibles | (1 | ) | (50 | ) | ||||
| Net cash provided by (used in) investing activities | 1,794 | (1,080 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Purchase of common stock | (2 | ) | (154 | ) | ||||
| Proceeds from exercise of stock options and ESPP contributions | 27 | — | ||||||
| Repurchase of stock options | — | (32 | ) | |||||
| Borrowings from Summit loan | 2,050 | — | ||||||
| Repayments on Summit loan | (2,050 | ) | — | |||||
| Payments made for common stock rights offering | — | (3 | ) | |||||
| Proceeds from note payable | 500 | |||||||
| Principal payments on notes payable and capital lease | (525 | ) | (6 | ) | ||||
| Net cash used in financing activities | — | (195 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 755 | (1,713 | ) | |||||
| Cash and cash equivalents, beginning of period | 697 | 3,188 | ||||||
| Cash and cash equivalents, end of period | $ | 1,452 | $ | 1,475 | ||||