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PD

PRO DEX INC (PDEX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 delivered strong YoY growth: revenue $16.8M (+33% YoY), gross margin 30% (+800 bps YoY), operating income $2.7M (+247% YoY), and diluted EPS $0.61; sequentially, revenue rose vs Q1 ($14.9M) and Q4 FY2024 ($15.0M) though gross margin compressed vs Q1’s 35% .
  • Mix shift and new product ramp were the catalysts: $3.1M of shipments of the largest customer’s next-gen orthopedic handpiece and +$1.6M repair revenue drove the quarter; management anticipates Q3 and Q4 revenue increases vs prior year as production shipments continue .
  • Operating leverage was evident despite higher OpEx (+18% YoY to $2.4M, driven by R&D and G&A/personnel), with operating income expanding to $2.7M and net income to $2.0M .
  • Management tone was confident, citing backlog and staffing ramp to meet commitments, positioning near‑term catalysts around continued shipments and margin durability as mix improves .

What Went Well and What Went Wrong

What Went Well

  • Significant revenue acceleration from new handpiece shipments and repairs: $3.1M next‑gen handpiece shipments; repair revenue +$1.6M; six‑month shipments of $4.7M and +$2.7M repair revenue underscored sustained demand momentum .
  • Material margin improvement YoY: gross margin rose to 30% (+800 bps YoY) on increased sales and favorable product mix, lifting gross profit +81% to $5.1M .
  • Operating leverage: operating income climbed to $2.7M (+247% YoY) on volume and mix improvements; net income reached $2.0M (diluted EPS $0.61) .
  • CEO confidence and backlog: “We are ramping up our staff to meet the commitments of our increased backlog… excited about our continued sales growth” .

What Went Wrong

  • Sequential margin compression vs Q1: gross margin fell to 30% from 35% in Q1 as mix/volume shifted and OpEx rose; this tempers the quarter’s strength relative to Q1 .
  • Operating expenses increased 18% YoY to $2.4M (R&D and G&A/personnel costs), diluting some operating leverage vs the very strong gross profit expansion .
  • Non‑operating volatility persists: unrealized gains/losses on marketable equity investments can materially affect GAAP net income; management highlights the valuation can be highly volatile .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Revenue ($USD Millions)$15.03 $14.89 $16.79
Gross Profit ($USD Millions)$4.09 $5.15 $5.07
Gross Margin (%)27% 35% 30%
Operating Expenses ($USD Millions)$1.74 $2.14 $2.38
Operating Income ($USD Millions)$2.35 $3.01 $2.69
Net Income ($USD Millions)$1.59 $2.47 $2.04
Diluted EPS ($USD)$0.46 $0.75 $0.61

Year-over-Year Quarterly Comparison

MetricQ2 FY2024Q2 FY2025
Revenue ($USD Millions)$12.59 $16.79
Gross Profit ($USD Millions)$2.80 $5.07
Gross Margin (%)22% 30%
Operating Expenses ($USD Millions)$2.03 $2.38
Operating Income ($USD Millions)$0.78 $2.69
Net Income ($USD Millions)$0.50 $2.04
Diluted EPS ($USD)$0.14 $0.61

Revenue Drivers (disclosed items)

DriverQ1 FY2025Q2 FY20256M FY2025
Next‑gen handpiece shipments ($USD Millions)Limited market release; not quantified (narrative) $3.1 $4.7
Repair revenue increase ($USD Millions)+$1.1 +$1.6 +$2.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (directional)Q3 FY2025“Expect to ship production volumes of the new handpiece during the second half” “Anticipate Q3 and Q4 revenue increases vs prior year due to continued production shipments of the next generation handpiece” Raised (qualitative)
Revenue (directional)Q4 FY2025“Expect to ship production volumes of the new handpiece during the second half” “Anticipate Q3 and Q4 revenue increases vs prior year due to continued production shipments” Raised (qualitative)
Formal quantitative guidanceFY2025None disclosed None disclosed Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024 and Q1 FY2025)Current Period (Q2 FY2025)Trend
Product ramp – next‑gen handpieceQ4 FY2024: increased sales/new units to largest customer; repair program drove volumes . Q1 FY2025: shipped next‑gen handpiece for limited market release .Began production shipments; $3.1M shipments this quarter; expect continued shipments driving Q3/Q4 revenue increases .Strengthening
Repair programQ4 FY2024: +$1.4M repair revenue in quarter; repair program highlighted . Q1 FY2025: +$1.1M repair revenue YoY .+$1.6M repair revenue YoY; sustained momentum .Strengthening
MarginsQ4 FY2024: Gross margin 27% amid price pressures and increased indirect labor . Q1 FY2025: Gross margin 35% on favorable mix .Gross margin 30%; improved YoY on mix and volume, though down vs Q1 .Improving YoY; mixed sequential
OpEx and staffingQ4 FY2024: Engineering spend higher, G&A lower . Q1 FY2025: G&A/personnel and bonus accruals higher .OpEx +18% YoY on R&D and G&A/personnel; staffing ramp to meet backlog .Increasing to support growth
Non‑operating investment impactFY2024: large unrealized losses vs FY2023 gains . Q1 FY2025: unrealized gains aided net income .Q2 includes unrealized gains; management cautions valuation volatility .Ongoing volatility

Management Commentary

  • “We are pleased with our second quarter and year‑to‑date results. We are ramping up our staff to meet the commitments of our increased backlog. We are excited about our continued sales growth and looking forward to the challenges ahead.” — Richard L. (“Rick”) Van Kirk, President & CEO .
  • Prior quarter setup: “We… facilitated the initial shipment of the next generation handpiece to our largest customer… expect to ship production volumes of the new handpiece during the second half of this fiscal year.” — CEO .
  • FY2024 context: “We are very pleased with our performance including increasing sales and an increase of $1.4 million in operating income… we continued to grow the business” — CEO .

Q&A Highlights

  • No earnings call transcript for Q2 FY2025 was available in our document catalog during the relevant period; therefore, Q&A themes and clarifications could not be assessed from a transcript [ListDocuments result: 0 transcripts returned].

Estimates Context

  • Wall Street consensus (S&P Global) could not be retrieved at the time of analysis due to SPGI daily request limit; as a result, we cannot quantify beat/miss vs estimates for Q2 FY2025. If/when available, compare reported revenue $16.8M and diluted EPS $0.61 to consensus to assess revisions potential .

Key Takeaways for Investors

  • Volume/mix tailwind: Continued production shipments of the next‑gen handpiece and robust repair demand are driving revenue acceleration; management expects Q3/Q4 revenue increases vs prior year as shipments continue .
  • Margin trajectory: Gross margin expanded materially YoY (30% vs 22%), aided by mix; watch sequential margin dynamics vs Q1’s 35% as volumes scale and staffing ramps .
  • Operating leverage intact: Operating income rose to $2.7M; despite higher OpEx, profit growth suggests leverage as the ramp continues .
  • Backlog and execution: Staffing ramp to meet backlog indicates visibility and execution focus; near‑term catalysts center on shipment cadence and mix .
  • Non‑operating volatility: Unrealized investment gains/losses can materially swing GAAP net income; focus on operating metrics for core performance tracking .
  • Trend analysis: Sequential revenue growth from Q4→Q1→Q2 (15.0→14.9→16.8) with strong YoY expansion sets up favorable comps for Q3/Q4 .
  • Estimates check: Obtain/monitor consensus to gauge potential upward revisions given the strong YoY performance; absent consensus data here, anchor on reported trajectory and disclosed shipment outlook .