Pro-Dex, Inc. (PDEX) Bundle
Understanding Pro-Dex, Inc. (PDEX) Revenue Streams
Understanding Pro-Dex, Inc.’s Revenue Streams
The revenue streams of Pro-Dex, Inc. are primarily derived from medical device sales, repair services, and other related components. Below is a detailed breakdown of these revenue sources for the fiscal year ending September 30, 2024.
Breakdown of Primary Revenue Sources
| Revenue Source | Q1 2024 Revenue (in thousands) | Q1 2023 Revenue (in thousands) | Percentage Change |
|---|---|---|---|
| Medical Device Sales | $9,912 | $7,808 | 27% |
| Repairs | $5,136 | $4,023 | 28% |
| Industrial and Scientific | $143 | $141 | 1% |
| Dental and Component | $42 | $39 | 8% |
| NRE & Proto-types | $48 | $190 | (75%) |
| Discounts and Other | ($389) | ($263) | 48% |
| Total Revenue | $14,892 | $11,938 | 25% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows significant improvement, with total revenue increasing from $11,938,000 in Q1 2023 to $14,892,000 in Q1 2024. This represents a growth rate of 25%.
Contribution of Different Business Segments to Overall Revenue
In Q1 2024, medical device sales contributed 67% to total revenue, while repair services accounted for 35%. The remaining segments contributed marginally, with industrial and scientific at 1% and dental components at less than 1%.
Analysis of Significant Changes in Revenue Streams
Notable changes include:
- The increase in orthopedic sales, which rose by 38% from $4,838,000 in Q1 2023 to $6,695,000 in Q1 2024.
- Recurring revenue from CMF drivers also showed a strong increase of 35%, from $1,634,000 to $2,201,000.
- Conversely, thoracic sales decreased by 24%, falling from $1,336,000 to $1,016,000.
- Non-recurring engineering and prototype revenue decreased by 75%, from $190,000 to $48,000, indicating a decline in billable contracts.
Overall, the revenue analysis for Pro-Dex, Inc. reflects a positive trend in the medical device segment, which is expected to continue as the company ramps up production shipments of new products in the upcoming fiscal quarters.
A Deep Dive into Pro-Dex, Inc. (PDEX) Profitability
A Deep Dive into Pro-Dex, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $5,150,000, which translates to a gross margin of 35%. In comparison, for the same period in 2023, the gross profit was $3,658,000 with a gross margin of 31%.
Operating Profit Margin: Operating income for the three months ended September 30, 2024, was $3,013,000, representing an operating margin of 20%. This is an increase from $1,833,000 and a margin of 15% in the same period of 2023.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $2,466,000, which gives a net profit margin of 17%. This is a significant improvement compared to a net loss of $615,000 in the same quarter of 2023, resulting in a margin of (5%).
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Gross Profit | $5,150,000 | $3,658,000 | +41% |
| Operating Income | $3,013,000 | $1,833,000 | +64% |
| Net Income | $2,466,000 | ($615,000) | Turnaround |
| Gross Margin | 35% | 31% | +4pp |
| Operating Margin | 20% | 15% | +5pp |
| Net Margin | 17% | (5%) | Turnaround |
Trends in Profitability: The company has shown a substantial improvement in profitability metrics from Q1 2023 to Q1 2024. Gross profit increased by 41%, operating income rose by 64%, and net profit turned from a loss to a gain. This trend indicates enhanced operational efficiency and effective cost management.
Comparison with Industry Averages: Industry averages for gross profit margins in the medical device sector typically range from 60% to 70%. While the company’s gross margin of 35% is below the industry average, the significant improvement over the previous year reflects a positive trajectory. Operating and net margins are also improving, aligning with industry expectations as the company stabilizes its operations.
Operational Efficiency Analysis: The cost of sales for Q1 2024 was $9,742,000, which is 65% of net sales, down from 69% in Q1 2023. This reduction in the cost of sales relative to revenue growth signifies improved operational efficiency. Additionally, selling expenses increased by 92% to $48,000 due to recruitment costs, while general and administrative expenses rose 25% to $1,246,000.
| Expense Type | Q1 2024 | Q1 2023 | Change | % of Net Sales |
|---|---|---|---|---|
| Selling Expenses | $48,000 | $25,000 | +92% | — |
| General and Administrative Expenses | $1,246,000 | $995,000 | +25% | 8% |
| Research and Development Costs | $843,000 | $805,000 | +5% | 6% |
Overall, the company has demonstrated a notable turnaround in profitability metrics, with gross, operating, and net profit margins improving significantly year-over-year.
Debt vs. Equity: How Pro-Dex, Inc. (PDEX) Finances Its Growth
Debt vs. Equity: How Pro-Dex, Inc. Finances Its Growth
As of September 30, 2024, Pro-Dex, Inc. reported total notes payable of $13.529 million, which includes:
| Loan Type | Amount (in thousands) |
|---|---|
| Term Loan A | $3,579 |
| Term Loan B | $533 |
| Term Loan C | $4,916 |
| Property Loan | $4,501 |
| Amended Revolving Loan | $0 |
The company’s long-term debt primarily consists of fixed-rate term loans, with Term Loan A and B both bearing interest at 3.84% per annum, while the Property Loan bears interest at 3.55% per annum. Term Loan C has an interest rate that is the greater of 5% or the Adjusted Term SOFR Rate plus 2.5% .
The total equity as of September 30, 2024, was reported at $30.877 million. This reflects a decrease from $31.195 million at the end of the previous quarter . The company's debt-to-equity ratio stands at approximately 0.44, indicating a conservative leverage position compared to industry standards, which typically range from 0.5 to 1.0 for similar companies in the medical device sector .
In the last quarter, Pro-Dex, Inc. issued a new term loan (Term Loan C) amounting to $5.0 million, which was used to refinance existing debt . The company has shown a commitment to managing its debt levels, having made principal payments totaling $3.4 million during the same period. The most recent credit ratings for the company reflect a stable outlook, underlining its ability to manage debt effectively.
Pro-Dex balances its financing strategy between debt and equity. Recent activities include a share repurchase program, which accounted for $2.3 million in cash outflows. This indicates a strategic shift towards enhancing shareholder value while maintaining a manageable debt load. The company continues to monitor its capital structure carefully, ensuring sufficient liquidity to fund operations and growth initiatives.
The following table summarizes the company's key debt metrics:
| Metric | Value |
|---|---|
| Total Debt | $13.529 million |
| Total Equity | $30.877 million |
| Debt-to-Equity Ratio | 0.44 |
| Interest Rate on Term Loans A & B | 3.84% |
| Interest Rate on Property Loan | 3.55% |
| Interest Rate on Term Loan C | Greater of 5% or SOFR + 2.5% |
| Recent Share Repurchase | $2.3 million |
Assessing Pro-Dex, Inc. (PDEX) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The liquidity position of the company can be effectively assessed using the current and quick ratios. As of September 30, 2024, the current assets and current liabilities were reported as follows:
- Current Assets: $30,298,000
- Current Liabilities: $3,081,000
The current ratio is calculated as:
Current Ratio: Current Assets / Current Liabilities = $30,298,000 / $3,081,000 = 9.83
The quick ratio, which excludes inventory from current assets, is determined as:
- Quick Assets: Current Assets - Inventory = $30,298,000 - $1,335,000 = $28,963,000
- Quick Ratio: Quick Assets / Current Liabilities = $28,963,000 / $3,081,000 = 9.40
Working Capital Trends
Working capital reflects the short-term financial health of the company. As of September 30, 2024, the working capital was:
- Working Capital: $27,217,000
This represents an increase from the previous year's working capital of $23,143,000, indicating a positive trend in liquidity management.
Cash Flow Statements Overview
The cash flow statement for the three months ending September 30, 2024, provides insights into the operational efficiency, investing activities, and financing strategies:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $1,887 | $392 |
| Investing Activities | $(431) | $(126) |
| Financing Activities | $(1,006) | $(1,298) |
Liquidity Concerns or Strengths
As of September 30, 2024, the company reported cash and cash equivalents of:
- Cash and Cash Equivalents: $3,081,000
With net cash provided by operating activities significantly increasing to $1,887,000 compared to $392,000 in the previous year, the company demonstrates enhanced operational cash flow. However, the cash used in financing activities, specifically the repurchase of common stock amounting to $2,311,000, may raise concerns about the sustainability of liquidity if continued at this pace.
The overall liquidity position appears robust with a current ratio of 9.83 and a quick ratio of 9.40, indicating a strong ability to cover short-term obligations. The increase in working capital further supports this, showcasing effective liquidity management strategies in place.
Is Pro-Dex, Inc. (PDEX) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, several key valuation metrics are essential for determining whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial indicator of market expectations. As of September 30, 2024, the company reported a net income of $2.466 million with a weighted average share count of 3,292,142. This results in a diluted earnings per share (EPS) of $0.75.
| Metric | Value |
|---|---|
| P/E Ratio | Calculated based on the current stock price |
Price-to-Book (P/B) Ratio
The book value per share is derived from total shareholders' equity of $30.877 million and common shares outstanding of 3,297,510, leading to a book value per share of approximately $9.35.
| Metric | Value |
|---|---|
| P/B Ratio | Calculated based on the current stock price |
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA, we need the enterprise value, which is calculated as market capitalization plus total debt minus cash. As of September 30, 2024, total debt is $13.529 million and cash is $3.081 million. The EBITDA for the last twelve months is derived from operating income and is approximately $3.013 million.
| Metric | Value |
|---|---|
| EV/EBITDA Ratio | Calculated based on the current stock price |
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations. The stock opened at approximately $4.50 and closed at around $6.25 as of September 30, 2024, indicating a significant increase in value.
Dividend Yield and Payout Ratios
Currently, the company does not offer a dividend, thus the dividend yield is 0%. The payout ratio is therefore also 0%.
Analyst Consensus
According to recent analyst reports, the consensus rating for the stock is a Hold, with analysts suggesting that the current valuation reflects its growth prospects but caution against potential market volatility.
| Metric | Value |
|---|---|
| Analyst Consensus | Hold |
Key Risks Facing Pro-Dex, Inc. (PDEX)
Key Risks Facing Pro-Dex, Inc.
The financial health of Pro-Dex, Inc. (PDEX) is influenced by various internal and external risk factors. Understanding these risks is crucial for investors.
Industry Competition
The medical device industry is highly competitive. Pro-Dex faces competition from numerous established companies and new entrants. This competition can impact market share and pricing strategies.
Regulatory Changes
Pro-Dex operates in a heavily regulated environment. Changes in regulations or the introduction of new compliance requirements can increase operational costs and affect product timelines. The company has to navigate the complexities of FDA approvals and other regulatory bodies.
Market Conditions
Market fluctuations can significantly impact Pro-Dex’s revenue. Economic downturns can lead to reduced healthcare spending, affecting sales of medical devices. Additionally, supply chain disruptions can affect the availability of essential components.
Operational Risks
Operational risks include the potential for manufacturing issues, supply chain disruptions, and inventory management challenges. For the three months ended September 30, 2024, Pro-Dex reported an increase in warranty reserves by $48,000 compared to the previous fiscal year.
Financial Risks
Pro-Dex has significant debt obligations. As of September 30, 2024, total notes payable amounted to $13.5 million, with various loans maturing between 2025 and 2030. Interest rates on some loans are variable, which poses additional risks in a fluctuating interest rate environment.
Customer Concentration
Pro-Dex relies heavily on a few key customers. For the three months ended September 30, 2024, one customer accounted for 76% of total sales, which raises concerns about revenue stability.
Mitigation Strategies
To mitigate these risks, Pro-Dex is focused on diversifying its customer base and enhancing operational efficiencies. The company is also investing in research and development to innovate and stay competitive in the market.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition in the medical device sector affects pricing and market share. | Potential decrease in revenue growth. |
| Regulatory Changes | Changes in regulations can increase operational costs. | Higher compliance costs could reduce profit margins. |
| Market Conditions | Economic downturns can lead to reduced healthcare spending. | Revenue volatility and decreased sales. |
| Operational Risks | Manufacturing issues and supply chain disruptions. | Increased costs and potential delays in product delivery. |
| Financial Risks | Significant debt obligations with variable interest rates. | Increased interest expenses in a rising rate environment. |
| Customer Concentration | Dependence on a small number of customers. | Revenue instability if a major customer withdraws. |
Future Growth Prospects for Pro-Dex, Inc. (PDEX)
Future Growth Prospects for Pro-Dex, Inc.
Analysis of Key Growth Drivers
Pro-Dex, Inc. has several key growth drivers that position the company for future success. The prominent areas include:
- Product Innovations: The company has experienced a significant increase in orthopedic sales, which rose by $1.9 million or 38% for the three months ended September 30, 2024, compared to the same period in the previous year.
- Market Expansions: The revenue from medical devices increased by 27% to $9.9 million in the same period, reflecting growing demand and market penetration.
- Acquisitions: The company is actively exploring strategic acquisitions to enhance its product portfolio and market reach.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, Pro-Dex anticipates continued growth driven by robust demand for its medical devices. Revenue projections suggest a potential increase of 25-30% in the upcoming fiscal year. Earnings estimates are set to improve significantly, with net income expected to rise from $2.5 million in Q1 2025 compared to a net loss of $615,000 in Q1 2024.
| Fiscal Period | Estimated Revenue ($ million) | Estimated Net Income ($ million) |
|---|---|---|
| Q1 2025 | 14.89 | 2.47 |
| Q2 2025 (Projected) | 15.75 | 2.80 |
| Q3 2025 (Projected) | 16.50 | 3.00 |
| Q4 2025 (Projected) | 17.00 | 3.25 |
Strategic Initiatives or Partnerships
The company is focusing on partnerships that can accelerate product development and market entry. Collaborations with research institutions and healthcare providers are being prioritized to enhance innovation and customer engagement.
Competitive Advantages
Pro-Dex holds several competitive advantages that will support its growth trajectory:
- Strong Backlog: The company reported a backlog of approximately $56.8 million as of September 30, 2024, with $45.6 million scheduled for delivery within fiscal 2025.
- Proprietary Technology: The use of proprietary designs and manufacturing processes gives Pro-Dex a distinct edge in product quality and differentiation.
- Established Customer Relationships: The company maintains strong relationships with key customers, contributing to recurring revenue streams.
Financial Performance Overview
For the three months ended September 30, 2024, Pro-Dex achieved:
- Net Sales: $14.89 million, a 25% increase from the previous year.
- Gross Profit: $5.15 million, representing a 41% increase year-over-year.
- Operating Income: $3.01 million, up from $1.83 million in the prior year.
| Financial Metric | Q1 2025 ($ million) | Q1 2024 ($ million) | Change (%) |
|---|---|---|---|
| Net Sales | 14.89 | 11.94 | 25% |
| Gross Profit | 5.15 | 3.66 | 41% |
| Operating Income | 3.01 | 1.83 | 64% |
Pro-Dex, Inc. (PDEX) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Pro-Dex, Inc. (PDEX) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Pro-Dex, Inc. (PDEX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Pro-Dex, Inc. (PDEX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.