Pro-Dex(PDEX) - 2026 Q1 - Quarterly Report

Financial Performance - For the three months ended September 30, 2025, net sales increased to $18,530,000, a 24% increase from $14,892,000 in the same period of 2024[88] - Gross profit for the same period was $5,367,000, representing 29% of net sales, down from 35% in 2024[88] - Operating income for the three months ended September 30, 2025, was $3,109,000, which is 17% of net sales, compared to 20% in 2024[88] - Net income increased to $4,680,000, or 25% of net sales, compared to $2,466,000 or 17% in the prior year[88] Sales Breakdown - Medical device sales accounted for 77% of total net sales, increasing by $4,470,000 or 45% compared to the prior year[89] - Orthopedic sales specifically rose by $4,400,000 or 65%, primarily due to the launch of the next generation handpiece[90] - Repair revenue decreased by $1,300,000 or 25% due to fewer repairs of legacy orthopedic handpieces[92] Costs and Expenses - Research and development costs were $768,000, representing 4% of net sales, down from 6% in the previous year[88] - For the three months ended September 30, 2025, cost of sales increased by $3.4 million, or 35%, consistent with a 24% increase in revenue for the same period[95] - Gross profit increased by approximately $217,000, or 4%, while gross margin as a percentage of sales decreased by six percentage points due to higher costs[96] - Operating expenses totaled $2.3 million for the three months ended September 30, 2025, reflecting a 6% increase from the prior year[97] - Selling expenses rose by $25,000, or 52%, primarily due to personnel costs related to business development[98] - General and administrative expenses increased by $171,000, or 14%, attributed to higher payroll and personnel expenses from new hires[99] - Research and development costs decreased by $75,000, or 9%, due to lower internal project spending, but a new product is expected to be released in Q2 of fiscal 2026[100] Cash Flow and Liquidity - Cash and cash equivalents increased to $514,000 as of September 30, 2025, from $419,000 at June 30, 2025[106] - Net cash provided by operating activities was $2.3 million for the three months ended September 30, 2025, with a net income of $4.7 million[108] - The company expects to derive liquidity from cash flows from operations and has an available balance of $8.8 million on its revolving loan as of September 30, 2025[114] Future Outlook - The company is negotiating to extend a supply agreement with its largest customer through calendar 2028[84] - The Helios driver for CMF applications, featuring adaptive torque-limiting software, is expected to be released for production in the second quarter of the fiscal year[85] - As of September 30, 2025, the company had a backlog of approximately $46.8 million, with $43.6 million scheduled for delivery during fiscal 2026[94]