Pro-Dex(PDEX) - 2024 Q4 - Annual Report

Financial Performance - Net sales for fiscal 2024 increased by $7.8 million, or 17%, to $53.8 million compared to $46.1 million in fiscal 2023[119] - Gross profit for fiscal 2024 was $14.6 million, representing 27% of net sales, compared to $12.7 million or 28% in fiscal 2023[117] - Operating income for fiscal 2024 was $7.2 million, maintaining 13% of net sales, consistent with fiscal 2023[117] - Income before income taxes decreased to $2.6 million, or 5% of net sales, down from $9.4 million, or 20%, in fiscal 2023[117] - Net income for fiscal 2024 was $2.1 million, or 4% of net sales, compared to $7.1 million, or 15%, in fiscal 2023[117] Revenue Breakdown - Medical device revenue rose by $6.2 million, or 20%, to $37.0 million, driven by increased sales in orthopedic and CMF products[120] - Repair revenue increased by approximately $3.9 million, or 31%, to $16.5 million, attributed to refurbishments requested by the largest customer[124] - NRE and prototype services revenue decreased by $1.9 million, or 71%, due to a reduction in billable engagements[121] Expenses and Costs - Total operating expenses increased to $7.4 million, or 14% of net sales, from $7.0 million, or 15%, in fiscal 2023[117] - Total cost of sales increased by $6.0 million, or 18%, in fiscal 2024, primarily due to a 17% increase in net sales, with product costs accounting for $38.1 million, or 71% of net sales[126] - Operating expenses totaled $7.4 million in fiscal 2024, representing 14% of net sales, with selling expenses decreasing by 25% to $117,000[128] - Research and development costs rose by 14% to $3.2 million, accounting for 6% of net sales, driven by increased spending on internal product development[130] Cash Flow and Liquidity - Cash provided by operating activities was $6.2 million in fiscal 2024, with a net income of $2.1 million, despite $4.1 million in unrealized losses on equity investments[138] - As of June 30, 2024, working capital was $23.7 million, with cash and cash equivalents at $2.6 million, indicating sufficient liquidity for the next 12 months[143] Share Repurchase and Tax Rate - The company repurchased 184,901 shares at a total cost of $3.5 million during fiscal 2024, increasing total repurchases since 2013 to 1,381,349 shares at a cost of $20.7 million[147] - The effective tax rate decreased to 19% in fiscal 2024 from 25% in fiscal 2023, attributed to federal and state research credits[136] Manufacturing Costs and Backlog - The company experienced $74,000 of over-absorption of manufacturing costs in fiscal 2024, compared to $1.7 million of under-absorption in fiscal 2023[126] - The backlog as of June 30, 2024, was $19.8 million, down from $41.6 million on June 30, 2023, indicating a decline in firm purchase orders[125] Future Outlook - The company expects continued demand for enhanced repairs in fiscal 2025, although no assurances can be made regarding the volume[124] - Cash used in investing activities was $2.2 million in fiscal 2024, primarily for the exercise of the Monogram Warrant and equipment purchases[141]