Pro-Dex, Inc. (Pro-Dex) has reported a consolidated net sales of $5.2 million for the second quarter of fiscal 2009, down 14%, compared with the consolidated net sales of $6.1 million in the year ago quarter. It reported a net income of $81,000 or $0.01 per share, for the second quarter of fiscal 2009, compared with the net income of $0.30 million, or $0.03 per share, in the year ago quarter.
The decrease in net sales was primarily due to the delivery of a single product to a major medical customer during the second quarter of last fiscal year. These sales were not repeated in the second quarter of fiscal 2009 as this customer plans to replace this product with newly developed product that Pro-Dex is forecasting to begin shipping in the second half of this fiscal year. In addition, the company has been exiting the sale of low-profit, non-differentiated products. Lastly, the second quarter of fiscal year 2008 included customer-funded development fees that were not repeated this year.
Consolidated gross profit for the second quarter ended December 31, 2008 decreased 18% over the same quarter in the previous year to $1.9 million, a 37% gross profit margin, compared to gross profit of $2.4 million or 38% gross profit margin last year. The decrease in gross profit dollars was volume related as margins remained relatively flat. It is important to note that gross margin profitability was maintained on lower sales dollars as higher costs related to the company’s new Irvine facility were offset by lower warranty expenses.
Consolidated operating expenses for the fiscal second quarter 2009 decreased by $14,000 (1%) compared to the second fiscal quarter 2008.
Mark P. Murphy, the company’s president and chief executive officer, commented, “We indicated to our shareholders last quarter that we were committed to returning to profitable operations and the generation of cash. Despite a substantial decrease in top line, we achieved both of those objectives this quarter, earning a small profit and generating over $400,000 in operating cash. Our strong bookings in Q2 included a $1.6 million order for a new product developed by Pro-Dex, evidencing a significant milestone in our rejuvenated business model and representing future off-set to the decreased sales of the second quarter. Our record backlog of $12.1 million at quarter-end is also an indication that strong demand for our products remains intact.”
Murphy added, “We continue to expand our business development capability across all of our business units in an effort to grow sales and penetrate new markets. Specifically, Pro-Dex recently hired a Business Development Manager to focus on worldwide sales of our Motion Control products.”
The company completed the quarter ending December 31, 2008 with cash and cash equivalents of $406,000 compared to $517,000 as of June 30, 2008. Total working capital was $6.3 million as of December 31, 2008. At December 31, 2008, there was $400,000 borrowed against the company’s $4 million credit line compared to $2.0 million borrowed at June 30, 2008, evidencing our continued strong cash generation. Subsequent to the year end, Pro-Dex generated sufficient cash to fully retire the $271,000 balance on its Term Note which was originally scheduled to be retired in January 2010.
Concluding, Murphy stated, “We are committed to generating profit at current sales levels, despite those levels being impacted by shifts in product mix and market conditions. At the same time, we are committed to building the top line through continued customer-funded product development and supporting the infrastructure required to increase top line sales. We have a strong and clean balance sheet, an ability to produce cash and are on a mission to increase profitability.”