PRO DEX INC (PDEX)·Q1 2026 Earnings Summary

Executive Summary

• Q1 FY26 revenue rose 24% YoY to $18.53M on the resumption of shipments of the largest customer’s next‑gen handpiece; gross margin fell 6ppt YoY to 29% on higher costs including tariffs not fully passed through .
• Diluted EPS was $1.40 vs $0.75 YoY, driven largely by $3.299M of unrealized gains on marketable equity investments tied to Monogram’s sale to Zimmer Biomet ($4.04/share; $8.9M proceeds), masking underlying margin pressure .
• Versus S&P Global consensus, revenue beat ($18.53M actual vs $15.30M*) and EPS beat ($1.40 vs $0.50*), but the EPS beat is primarily non‑operating due to investment gains.*
• Management expects recurring shipment levels to its largest customer to continue in Q2 and beyond; combined with a $50.4M year‑end backlog and ongoing tariff cost sharing efforts, the setup supports revenue and operating income growth into FY26, though gross margin is a watch item .

What Went Well and What Went Wrong

• What Went Well

  • Resumption of largest customer next‑gen handpiece shipments to recurring levels by September, lifting revenue to $18.53M (+24% YoY) .
  • Strong operating execution: operating income increased to $3.11M vs $3.01M YoY despite higher OpEx, supported by volume recovery .
  • Balance sheet flexibility: $8.9M cash proceeds from Monogram investment exit; CEO: “We are…pleased with the recent cash infusion… and are thoughtfully considering how to best utilize it for our continued growth and strategic objectives.” .

• What Went Wrong

  • Gross margin compression to 29% from 35% YoY due to higher costs including tariffs not yet fully passed through, offsetting some volume gains .
  • Operating expenses up 6% YoY to $2.26M on higher personnel costs in HR, IT, and facilities, adding pressure to operating leverage .
  • Quality of EPS: $3.299M unrealized gains on investments inflated GAAP net income and EPS; core earnings power should be assessed via revenue/operating income trend and margin trajectory .

Financial Results

Headline metrics (quarterly)

Estimate comparison (Q1 FY2026)

Notes:

• EPS quality: Q1 included $3.299M unrealized gains on investments, materially boosting GAAP EPS .
• Major revenue driver: resumption of next‑gen handpiece shipments to recurring levels by September .
• Gross margin headwind: higher costs including tariffs not fully passed through .
• Values with asterisk are retrieved from S&P Global.*

Prior two quarters (trend context)

Segment/KPIs

• Segments: Not applicable; company primarily designs and manufactures surgical drivers/shavers for OEM customers; rotary air motors are de minimis .
• Backlog context: $50.4M as of June 30, 2025 year‑end (pre‑Q1 reference) .

Guidance Changes

No quantitative guidance ranges were provided in Q1 FY26 materials .

Earnings Call Themes & Trends

Management Commentary

• “We are pleased with our first quarter results and excited to have resumed shipment of our largest customer’s next generation handpiece at the recurring levels we expect to deliver in our second fiscal quarter and beyond.” — Richard L. (“Rick”) Van Kirk, CEO .
• “We are also pleased with the recent cash infusion generated from our investment in Monogram and are thoughtfully considering how to best utilize it for our continued growth and strategic objectives.” — CEO .
• Prior quarter context: “We expect fiscal 2026 to continue our trend of revenue and operating income growth… evidenced by our June 30th backlog of $50.4 million. We have also begun working with customers on sharing of tariff costs.” — CEO (FY25 results) .

Q&A Highlights

• No Q1 FY26 earnings call transcript was found in company filings or our document set; we did not identify a published Q&A to summarize for this quarter.

Estimates Context

• Revenue beat: $18.53M actual vs $15.30M consensus* for Q1 FY26 .
• EPS beat: $1.40 actual vs $0.50 consensus* for Q1 FY26 .
• Forward look (consensus*): Q2 FY26 revenue $17.30M*, EPS $0.59*; FY26 revenue $70.0M*, EPS $2.38*.
• Important: Q1 EPS outperformance was primarily non‑operating due to $3.299M unrealized gains; we expect analysts to adjust focus toward revenue trajectory and operating income/gross margin trends when updating models .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Core topline recovery is underway: resumption of the largest customer’s next‑gen shipments drove revenue to $18.53M and should support Q2+ volumes .
• Watch gross margins: 29% gross margin (‑6ppt YoY) reflects tariff passthrough lag; management is working on cost‑sharing with customers, but timing is uncertain .
• EPS quality caution: Q1’s $1.40 EPS includes $3.299M unrealized investment gains; use operating income ($3.11M) and gross margin as cleaner signals of run‑rate performance .
• Liquidity/capital deployment: $8.9M cash from Monogram exit provides optionality for growth investments or balance sheet strengthening .
• Near‑term setup: With shipments at recurring levels and a previously disclosed $50.4M backlog, revenue and operating income growth into FY26 remain supported, but margin normalization is key for sustained EPS leverage .
• Trading implications: Expect the stock to respond to confirmation of sustained volume in Q2 and any evidence of tariff passthrough improving margins; conversely, persistent margin pressure could mute operating leverage despite healthy sales .

Appendix: Additional Context

• Q4 FY25 snapshot (prior quarter): Revenue $17.49M; gross margin 20%; operating income $1.34M; diluted EPS $0.36 .
• Q3 FY25 snapshot (two quarters prior): Revenue $17.41M; operating income $3.64M; diluted EPS $0.98 .

References:

• Q1 FY26 8‑K/Press Release and financial tables .
• FY25 8‑K (Q4 and full year) .
• Q3 FY25 8‑K .