Earnings Transcript for PDEX - Q3 Fiscal Year 2013

Executives: Harold A. Hurwitz - Chief Executive Officer, President, Chief Financial Officer, Principal Accounting Officer, Treasurer and Corporate Secretary

Operator: Greetings, and welcome to the Pro-Dex Fiscal 2013 Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hal Hurwitz, Chief Executive Officer of Pro-Dex. Thank you, sir. You may now begin.

Harold A. Hurwitz: Thank you, Jesse, and thank you, all, for joining us to review the results for the third quarter and first 9 months of fiscal year 2013. On today's call, I will provide a synopsis of our operating results, as well as some comments. Then, as Jesse mentioned, we will open up the call to your questions. Before beginning, however, I ask our participants and listeners to note that the comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends and the company's plans, products, perspectives and strategies, both preliminary and projected. Actual results or trends could differ materially. We undertake no obligation to revise or publicly revise the results of any revision to the forward-looking statements in light of new information or future events. For more information, please refer to the risk factors discussed in the company's Form 10-K as amended for the year ended June 30, 2012, the Form 10-Q filed with the SEC today and the Form 8-K filed with the SEC today, along with the attached press release issued today, all of which can be obtained from the SEC or by visiting our website at www.pro-dex.com. My discussion of our results for the fiscal 2013 third quarter and the first 9 months will relate to our continuing operations, meaning that the results of our former Astromec motor product line, which was sold in February 2012, will be excluded. First, let's cover third quarter results. Sales for the quarter ended March 31, 2013, decreased 33% to $3.1 million from $4.5 million for the corresponding quarter in 2012. This decrease was primarily the result of previously disclosed reductions in purchases of the company's powered surgical instrument products by its former largest customer, partially offset by increases in surgical instrument sales to other customers. Excluding sales to the company's former largest customer, which represented a reduction of $1.7 million in the quarter ended March 31, 2013, from the corresponding quarter in 2012, surgical instrument sales increased $310,000 or 19% in the quarter ended March 31, 2013, compared to the same quarter in 2012, nearly all of which arose from increased sales to the company's current largest customer. Gross profit for the quarter ended March 31, 2013 was $883,000 or 29%, compared to gross profit of $1.2 million or 27% for the year ago period. This increase in gross profit as a percentage of sales was due primarily to improvements in manufacturing efficiencies, partially offset by increased warranty accruals related to product mix. Operating expenses, which include selling, general and administrative and research and development expenses, for the quarter ended March 31, 2013, decreased 13% to $1.7 million from $1.9 million in the prior year's corresponding quarter. Included in operating expenses for the quarter ended March 31, 20 thing were

Operator: [Operator Instructions] Mr. Hurwitz, it appears we have no questions at this time. I would like to turn the floor back over to you for any concluding comments.

Harold A. Hurwitz: Okay. Thank you, Jesse. And my thanks to all of you for joining me today. All of us at Pro-Dex appreciate your interest, your time and your support of the company. And we look forward to speaking with you in September, when we report our fourth quarter and full fiscal year financial results. Thank you.

Operator: Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.