Pro-Dex(PDEX) - 2025 Q4 - Annual Results

Fiscal 2025 Fourth Quarter Results PRO-DEX, INC. saw increased net sales in Q4 FY2025, but gross profit and net income declined due to unfavorable product mix and rising costs Fiscal 2025 Fourth Quarter Financial Highlights (YoY) | Metric | Q4 2025 (in thousands) | Q4 2024 (in thousands) | Change | % Change | | :-------------------------- | :--------------------- | :--------------------- | :----- | :------- | | Net sales | $17,494 | $15,025 | +$2,469 | +16% | | Gross profit | $3,490 | $4,089 | -$599 | -15% | | Gross margin | 20% | 27% | -7 pp | - | | Operating expenses | $2,146 | $1,737 | +$409 | +24% | | Operating income | $1,344 | $2,352 | -$1,008 | -43% | | Net income | $1,196 | $1,587 | -$391 | -25% | | Diluted EPS | $0.36 | $0.46 | -$0.10 | -22% | - Gross margin decreased from 27% to 20% due to unfavorable product mix and higher indirect manufacturing costs, including initial tariff costs[3] - Operating expenses increased primarily due to higher personnel costs in selling, general and administrative, and engineering to support continued growth[4] Fiscal 2025 Full-Year Results Full-year FY2025 net sales and profitability grew substantially, driven by a key product and favorable mix Fiscal 2025 Full-Year Financial Highlights (YoY) | Metric | FY 2025 (in thousands) | FY 2024 (in thousands) | Change | % Change | | :-------------------------- | :--------------------- | :--------------------- | :----- | :------- | | Net sales | $66,593 | $53,844 | +$12,749 | +24% | | Gross profit | $19,510 | $14,551 | +$4,959 | +34% | | Gross margin | 29% | 27% | +2 pp | - | | Operating expenses | $8,821 | $7,378 | +$1,443 | +20% | | Operating income | $10,689 | $7,173 | +$3,516 | +49% | | Net income | $8,978 | $2,127 | +$6,851 | +322% | | Diluted EPS | $2.67 | $0.60 | +$2.07 | +345% | - Net sales increase primarily due to $12.0 million in sales of the next-generation handpiece to the largest customer[7] - Net income for FY2025 includes $1.5 million in unrealized gains on marketable equity investments, contrasting with $4.1 million in unrealized losses in FY2024, significantly impacting net income growth[11] Management Commentary CEO satisfied with FY2025 performance, expects continued revenue and operating income growth in FY2026 - CEO pleased with fiscal 2025 performance, including a 24% increase in sales and a $3.5 million increase in operating income[12] - Fiscal 2025 included disruption during the transition to the largest customer's next-generation handpiece, but customer requests were met by adapting assembly schedules[12] - Expects continued revenue and operating income growth in fiscal 2026, supported by a June 30 backlog of $50.4 million, and is working on tariff cost sharing and manufacturing system improvements[12] About Pro-Dex, Inc. Pro-Dex, Inc. specializes in surgical drivers and shavers for orthopedic markets, serving distributors - Specializes in the design, development, and manufacture of autoclavable, battery-powered, and electric multi-function surgical drivers and shavers[13] - Products are primarily used in orthopedic, thoracic, and maxocranial facial markets, featuring patented adoptive torque-limiting software and proprietary sealing solutions[13] - Primary customers are medical device distributors; rotary air motors represent a de minimis portion of total revenue[13] Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties; refer to SEC filings for details Consolidated Financial Statements Presents audited consolidated Balance Sheets, Income Statements, and Cash Flows for fiscal years 2025 and 2024 Consolidated Balance Sheets The Balance Sheets detail the company's financial position, showing increases in total assets, liabilities, and equity Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | Total assets | $61,192 | $52,477 | +$8,715 | | Total liabilities | $24,560 | $21,610 | +$2,950 | | Total shareholders' equity | $36,632 | $30,867 | +$5,765 | | Cash and cash equivalents | $419 | $2,631 | -$2,212 | | Investments (total) | $6,888 | $5,780 | +$1,108 | | Inventory | $22,213 | $15,269 | +$6,944 | | Accounts receivable | $16,433 | $13,887 | +$2,546 | Consolidated Income Statements Income Statements show strong annual sales and profitability growth, but a quarterly decline due to cost and mix factors Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Net sales | $17,494 | $15,025 | $66,593 | $53,844 | | Cost of sales | $14,004 | $10,936 | $47,083 | $39,293 | | Gross profit | $3,490 | $4,089 | $19,510 | $14,551 | | Total operating expenses | $2,146 | $1,737 | $8,821 | $7,378 | | Operating income | $1,344 | $2,352 | $10,689 | $7,173 | | Income before income taxes | $1,599 | $1,930 | $12,058 | $2,634 | | Net income | $1,196 | $1,587 | $8,978 | $2,127 | | Diluted net income per share | $0.36 | $0.46 | $2.67 | $0.60 | Consolidated Statements of Cash Flows Cash Flow Statements detail cash sources and uses, showing a net cash outflow from operating activities in FY2025 Consolidated Statements of Cash Flows Summary (in thousands) | Metric | FY 2025 | FY 2024 | Change | | :----------------------------------- | :------ | :------ | :----- | | Net cash provided by (used in) operating activities | $(1,682) | $6,224 | -$7,906 | | Net cash used in investing activities | $(238) | $(2,233) | +$1,995 | | Net cash used in financing activities | $(292) | $(4,296) | +$4,004 | | Net increase (decrease) in cash and cash equivalents | $(2,212) | $(305) | -$1,907 | | Cash and cash equivalents, end of year | $419 | $2,631 | -$2,212 | - Operating activities shifted from providing $6.2 million in cash in FY2024 to using $1.7 million in FY2025, largely due to changes in working capital, including a significant increase in inventory[21]