IRVINE, CA / ACCESSWIRE / August 30, 2018 / PRO-DEX, INC. (NASDAQ: PDEX) today announced financial results for its fiscal 2018 fourth quarter and full-year ended June 30, 2018.

Quarter Ended June 30, 2018

Net sales for the three months ended June 30, 2018 increased $650,000, or 12%, to $6.2 million from $5.6 million for the three months ended June 30, 2017, due primarily to increased medical device sales to our largest customer of a product used in orthopedic surgical applications. Gross profit for the three months ended June 30, 2018 increased $398,000, or 20%, to $2.4 million from $2.0 million for the same period in 2017. The increase in gross margin is due to better absorption of our fixed costs due to higher sales volumes, as well as manufacturing efficiencies derived this fiscal year from higher volumes and continued investment in new machinery.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended June 30, 2018 increased 59% to $1.9 million from $1.2 million in the prior year's corresponding quarter, reflecting the impairment of our entire $800,000 investment in Monogram Orthopaedics Inc. ("Monogram"). While we do not expect to recover our investment, all of our contractual rights related to Monogram remain intact and we remain hopeful that Monogram will ultimately meet its capital funding requirements and reach production stage so that we may eventually monetize our contractual right to manufacture certain of its products.

Income from continuing operations for the quarter ended June 30, 2018 decreased by $550,000, to $168,000, compared to $718,000 in the corresponding quarter in 2017. Net income for the quarter ended June 30, 2018 was $168,000, or $0.04 per share, a decrease of 77%, compared to net income of $716,000, or $0.18 per share, for the corresponding quarter in 2017. Excluding the impact of the Monogram impairment discussed above adjusted net income would be $968,000, or $0.22 per diluted share, for the quarter ended June 30, 2018.

Year Ended June 30, 2018

Net sales for the fiscal year ended June 30, 2018 increased $522,000, or 2%, to $22.5 million from $21.9 million for the fiscal year ended June 30, 2017, due primarily to increases in medical device revenues. Specifically, our largest customer accounted for an increase of $1.6 million in revenue during fiscal 2018. Offsetting this increase, sales to one of our CMF customers decreased by approximately $1.1 million, from $1.4 million in fiscal 2017 to $253,000 in fiscal 2018. We anticipate that we will enter into a new development agreement with this customer to make the next generation of their CMF driver; however, we are still in negotiations.

Gross profit for the fiscal year ended June 30, 2018 increased $757,000, or 11%, to $7.9 million compared to $7.2 million for fiscal 2017, due to increased revenues and manufacturing efficiencies.

Operating expenses (which include selling, general and administrative, and research and development expenses) for the fiscal year ended June 30, 2018 increased 25% to $5.6 million from $4.5 million in the prior fiscal year, reflecting impairment charges related to our Monogram investment as well as our Fineline Molds division, which we sold in May 2018.

Income from continuing operations before income taxes for the fiscal year ended June 30, 2018 was $2.6 million compared to $2.8 million for fiscal 2017. During fiscal 2017, we eliminated the valuation allowance against our deferred tax asset, after having achieved cumulative earnings over a three year look back period, which is the primary contributor to the $2.1 million tax benefit recorded in fiscal 2017. Net income for the fiscal year ended June 30, 2018 was $1.6 million, or $0.37 per share, compared to $5.1 million, or $1.25 per share, for fiscal 2017. Excluding the impact of the Monogram impairment discussed above adjusted net income would be $2.4 million, or $0.56 per diluted share, for the year ended June 30, 2018.

Although the Company has released its earnings prior to the filing of its annual Form 10-K with the Securities and Exchange Commission, we are able to do this because we are a smaller reporting company and we 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 13, 2018.

CEO Comments

Richard L. ("Rick") Van Kirk, the Company's President and Chief Executive Officer, commented, "We are pleased with our fiscal 2018 results, especially our higher sales volumes and improved margins. In addition to ramping up manufacturing volumes for our largest customer in fiscal 2018, we recently completed the development of our thoracic driver and entered a supply agreement with one of our existing customers to private-label the product. We anticipate sales of the driver and accessories to begin in late fiscal 2019."

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, spine, 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, 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.

CONTACT:

Richard L. Van Kirk, Chief Executive Officer
(949) 769-3200

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PRO-DEX, INC. AND SUBSIDIARIES
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Supplemental Information - Reconciliation of GAAP to Non-GAAP Financial Measures

We have supplemented the reporting of our financial information determined under accounting principles generally accepted in the United States ("GAAP") with certain non-GAAP financial measures, including adjusted net income and adjusted net income per diluted share. We believe that these non-GAAP measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes adjusted net income is an important indicator of our operations because it excludes the Monogram impairment charge which is a non-routine one-time charge, which had no tax benefit in the period it was recorded.

The following reconciles the GAAP financial measures to the non-GAAP financial measures discussed above.

SOURCE: PRO-DEX, Inc.