CEO Rick Van Kirk
WSA: Good day from Wall Street, this is Juan Costello senior analyst with the Wall Street Analyzer. Joining us today is Rick Van Kirk, CEO for Pro-Dex Incorporated, the company trades on NASDAQ ticker symbol is PDEX. Thanks for joining us today Rick.
Rick Van Kirk: My pleasure, thanks for having me.
WSA: Great, so starting off please give us a history and overview of the company for some of our listeners that didn’t catch our last interview from about six months ago.
Rick Van Kirk: Okay, Pro-Dex has been around about 40 years, we are a medical device company. We manufacture surgical instruments for the operating room. We also help with engineering services for our customers and do some other things as well. We have a staffing division, we have a little bit of diversity here, but the core of our business is medical device and we manufacture those here in our headquarters in Irvine, California. We have a couple of satellite divisions in Oregon and San Dimas, California but most of our core business happens here in Irvine.
WSA: And can you bring us up to speed on your recent Q4 and full year results as well some of your other key news there?
Rick Van Kirk: Yes, I’d be happy to. So June was the end of our fiscal year. We had a very nice year, a profitable fourth quarter and we finished the year with about $822,000 in net income so it was really an exciting thing for us. It was our first profitable year in five years. We completed a $2.6 million turnaround in the last three years going from a $1.8 million loss to $800,000 gain this last year. So we’re really happy with the effort everybody put in and the results so far, which we’re expecting to continue. In other really nice news in the last quarter, and this is in our press release as well, we signed a two year $24 million contract with one of our customers which really provides us a nice foundation and security for our backlogs for a couple of years. We were a $20 million company last year and from now going forward in the next couple of years we booked $12 million a year with one particular customer, that’s a great start for the next couple of years. So we feel really good about that, the results, and just kind of keeping things rolling here.
WSA: Good, so what are the key trends that you’re focusing on right now in the sector and how is the company position to capitalize?
Rick Van Kirk: Well some things that you’d expect. There’s always a drive for lowering costs and so we try to just keep the cost down of our driver or find ways to make things easier in the operating room for surgeons with some of the technologies that we now offer.. The need for power in some devices where people have to do a lot of things manually—our products make it easier for them to finish their surgeries. There’s more of a demand for that,which we’re trying to meet and also it’s kind of a “Me too” industry. When someone’s got a cool product, their competitors want something similar and we are able to help some of our customers kind of keep up or catch up with their competitors with some of the things that we’ve developed in recent years here.
WSA: What are the key factors you feel make your product and overall the company unique from some of the other players in the sector?
Rick Van Kirk: Well, we have a proprietary technology that I don’t want to go into a whole lot of details about, it basically makes it easier for the doctors to handle the device and relieves a lot of wear and tear and stress on them physically and it’s been very well received. It’s out there in a couple of different arenas right now. We’re negotiating to produce more similar products for different parts of the body, where doctors are used to manually screwing in difficult screws into hard bone and we can provide some power assistance to that to make the surgeries go faster and easier. So that’s one of the ways that we can help. We’ve also been assisting customers with their engineering departments as well. Maybe they don’t have the capacity to finish certain projects. We can come in and help them with design efforts or design for manufacturing efforts and these are other ways where we help them get to their revenue stream more quickly.
WSA: What are the key goals and milestones that you’re hoping to accomplish over the next 6 to 12 months?
Rick Van Kirk: We want to continue growing the business. We also are focusing on margin improvement this year. We’ve had tremendous growth the last couple of years and the sales revenue line is up in the healthy range and we want to just do the best job we can with that in terms of providing a quality product on time to the customers and minimizing our cost. There’s a lot of focus on that here. We’ll see that in the upcoming results. We are working very hard at our business development efforts to bring in new projects to supplement what we have got here, continue to assist our customers and we just want to keep this momentum rolling. It’s been a really nice year and a half in terms of the turnaround. We feel we’ve got a lot of good things going in terms of top line and process improvement to really keep things rolling here.
WSA: Sounds good, and can you talk a little bit about your background experience Rick as well as that of the key management team once again for some of our listeners that might have not tuned into our last interview.
Rick Van Kirk: Yes,, I’ve been in the manufacturing arena in southern California for a little over 30 years. I’ve been with Pro-Dex for the last 11 years starting off in the manufacturing group and kind of working up through the operations side of the organization until becoming CEO almost two years ago on January 15th. We have a nice mix in our management team of people that have been here for a long time and know the process, know the players, know the building, know each other and a couple management team members that are relatively new and bring in some new and fresh ideas, so you have got a nice mix there of continuity and for some new thoughts. Everyone whether new or old, is highly experienced and strong in their field. It’s a pretty flat organization. There’s me and then there’s the CFO and directors that handle all the function areas so they are experienced and also hands-on working managers who try to keep things lean.. So I’m really happy with the management team, it’s functioned as a team, worked well together. It’s hasn’t always been the case in my 10 years with Pro-Dex, but now we do have the chemistry and people are aligned and I think that has got a lot to do with some of the good results we’re seeing.
WSA: Right and so when it comes to investors and the financial community, what are some of your main drivers that you wish perhaps they better understood about Pro-Dex?
Rick Van Kirk: What’s invisible maybe to the outside world besides the strength and momentum I keep talking about and our improving results is, we really have worked hard and have developed an environment and culture here where people want to be here, they like working with each other, they’re excited about growth opportunities, not just for the company, but for themselves. We try to really focus on individual development here so people can advance in their careers and advance our company’s and our customers’ interests. It’s a really healthy mix now. It took a little while to impart that culture and get the right players, but it’s a nice foundation that continues the growth and improvement here when you’ve got what I would call a nicely functioning team. So that’s something that might be helpful for investors to know that sometimes I sound kind of corny, but you won’t read that in the 10Ks and 10Qs or press releases but we’ve done a lot of work here to make it a highly functioning group. That’s one thing I would probably want to share and not just the management team, but also as part of this environment have a what I would say is a good mix of experienced and new [team members]. We don’t have to relearn old hard lessons, but we can bring in some new ideas also in the factory area and not just in the management area here. So that’s the type of thing that I think that might be helpful for investors to understand.
WSA: Well great, and once again joining us today is Rick Van Kirk, president and CEO for Pro-Dex Incorporated which trades in NASDAQ sticker Symbol PDEX currently trading at $4.58 a share market cap is about $20 million. And before we conclude here Rick to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Rick Van Kirk: Well in addition to some of the stuff I just rambled through, we also have got a very solid healthy backlog, a nice list of business development opportunities that we’re pursuing and proposals that we’re waiting feedback on. We have made great strides and continue improvement type programs as well to figure out a healthy balance from a metrics type point of view and we’re coming off the momentum of our first profitable year in five years and a nice turnaround and we expect that to continue.
WSA: Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress and we’d like to thank you for taking the time to join us today Rick and update our investor audience on Pro-Dex. It’s always good to have you guys on.
Rick Van Kirk: My absolute pleasure, happy to do it anytime.