Pro-Dex(US:PDEX)2024-02-08 21:01Sales Performance - For the three months ended December 31, 2023, medical device product sales increased by $0.2 million, or 2%, compared to the same period in 2022, while for the six months, the increase was $113,000, or 1%[99] - Repair revenue surged by $1.2 million, or 58%, for the three months ended December 31, 2023, and by $3.0 million, or 68%, for the six months, primarily due to upgrades for the largest customer[101] - The company reported a backlog of approximately $29.1 million as of December 31, 2023, with $18.9 million scheduled for delivery in fiscal 2024[102] Cost and Profitability - Cost of sales increased by $1.1 million, or 13%, for the three months ended December 31, 2023, and by $1.3 million, or 8%, for the six months, consistent with a 12% and 10% increase in revenue, respectively[104] - Gross profit increased by $179,000, or 7%, for the three months ended December 31, 2023, and by $882,000, or 16%, for the six months, primarily due to increased repair revenue[105] - The gross margin for the three months ended December 31, 2023, was 22%, down from 23% in the prior year, while for the six months, it was 26%, up from 25%[104] Operating Expenses - Operating expenses for the three months ended December 31, 2023, totaled $2,025,000, a 36% increase year-over-year, while for the six months, they reached $3,851,000, a 10% increase[107] - Selling expenses decreased by 46% to $37,000 for the three months ended December 31, 2023, and by 48% to $63,000 for the six months, primarily due to reduced sales commissions[107] - General and administrative expenses increased by 26% to $1,200,000 for the three months and by 11% to $2,195,000 for the six months, driven by higher professional fees and personnel costs[108] - Research and development costs rose by 69% to $788,000 for the three months and by 14% to $1,593,000 for the six months, attributed to a reduction in billable customer projects[109] Cash Flow and Financial Position - Cash and cash equivalents decreased by $1.6 million to $1.3 million as of December 31, 2023, compared to $2.9 million at June 30, 2023[118] - Net cash provided by operating activities was $1.1 million for the six months ended December 31, 2023, despite a net loss of $115,000[120] - Net cash used in investing activities was $2.0 million for the six months ended December 31, 2023, primarily for the exercise of a warrant and equipment purchases[122] - Net cash used in financing activities totaled $740,000 for the six months ended December 31, 2023, mainly due to principal payments on loans and stock repurchases[124] - Working capital as of December 31, 2023, was $26.6 million, indicating sufficient funds to meet cash requirements for at least the next 12 months[126] Strategic Initiatives - The company continues to focus on maintaining relationships with current medical device customers and investing in research and development for new products[97] - The Franklin Property, a 25,000 square foot facility, began operations in the fourth quarter of fiscal 2023 to support anticipated growth and manufacturing capacity[96] - The company has patented adaptive torque-limiting software that has been well received in the CMF and thoracic markets, contributing to product development efforts[95] - The company plans to continue investing in development programs that are expected to contribute to profitability while monitoring expenses and cash balances[127] Revenue Decline - Non-recurring and prototype revenue decreased by $145,000, or 30%, for the three months ended December 31, 2023, and by $863,000, or 62%, for the six months, due to fewer billable contracts[100]