Pro-Dex(PDEX) - 2026 Q2 - Quarterly Report

Sales Performance - Medical device product sales increased by $2.9 million, or 24%, for the three months ended December 31, 2025, and by $7.4 million, or 33%, for the six months ended December 31, 2025, compared to the prior fiscal year[99]. - Orthopedic sales rose by $2.6 million, or 27%, for the three months and by $6.9 million, or 43%, for the six months ended December 31, 2025, primarily due to the launch of a next-generation handpiece[99]. - Recurring revenue from CMF drivers increased by $1.3 million, or 69%, for the three months and by $1.9 million, or 47%, for the six months ended December 31, 2025[99]. - Thoracic sales decreased by $880,000, or 83%, for the three months and by $1.4 million, or 67%, for the six months ended December 31, 2025[99]. - Non-recurring and prototype revenue increased by $108,000, or 263%, for the three months and by $536,000, or 602%, for the six months ended December 31, 2025, due to an increase in billable contracts[100]. - Repair revenue decreased by $1.7 million, or 35%, for the three months and by $3.0 million, or 30%, for the six months ended December 31, 2025, attributed to fewer repairs of legacy orthopedic handpieces[101]. Financial Position - The company had a backlog of approximately $37.4 million as of December 31, 2025, with $32.5 million scheduled for delivery in fiscal 2026[102]. - Cash and cash equivalents increased to $8.0 million as of December 31, 2025, from $419,000 at June 30, 2025[113]. - Working capital as of December 31, 2025, was $37.0 million, with sufficient funds expected to meet cash requirements for at least the next 12 months[120]. Operating Expenses - Cost of sales for the three months ended December 31, 2025, increased by $1.2 million, or 10%, compared to the same period in the prior fiscal year, while revenue increased by 11%[103]. - Gross profit increased by $671,000, or 13%, for the three months ended December 31, 2025, with a gross margin of 31%, up 1 percentage point from the prior year[104]. - Operating expenses for the three months ended December 31, 2025, totaled $2.5 million, representing 13% of net sales, with general and administrative expenses increasing by $322,000[105]. - Research and development costs decreased by $208,000, or 22%, for the three months ended December 31, 2025, compared to the prior year, primarily due to shifts in project expenses[107]. Cash Flow - Net cash provided by operating activities was $5.9 million for the six months ended December 31, 2025, driven by net income of $6.9 million[115]. - Net cash generated from investing activities was $8.8 million, primarily from the proceeds of the Monogram investment[117]. - Net cash used in financing activities totaled $7.1 million, mainly due to principal payments on loans and share repurchases[118]. Strategic Initiatives - The company is actively pursuing the acquisition of a significant supplier to meet increased demand following a contract extension with its largest customer[95]. - The Helios driver for CMF applications, featuring adaptive torque-limiting software, is expected to be released for production later this fiscal year[96]. - The company continues to focus on expanding manufacturing capacity at the Franklin Property to support anticipated growth[98]. Taxation - The effective tax rate for the three months ended December 31, 2025, was 25%, up from 21% in the prior year[112].