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PD

PRO DEX INC (PDEX)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $17.49M, up 16% YoY, but gross margin compressed to 20% due to unfavorable mix and initial tariff costs; diluted EPS was $0.36, down from $0.46 YoY .
  • Against Wall Street consensus, Q4 missed on revenue ($17.90M est) and EPS ($0.47 est), as well as EBITDA ($2.60M est), reflecting margin pressure from tariffs and product mix; prior quarters showed strong beats, highlighting the Q4 inflection in profitability dynamics* .
  • Management emphasized late-quarter resumption of next‑gen handpiece shipments and a robust $50.4M backlog, supporting an outlook for continued revenue and operating income growth into FY2026 .
  • Key catalysts: normalization of next‑gen handpiece production levels, tariff cost‑sharing discussions with customers, and execution on operational improvements and management depth .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Strong top-line: Net sales grew 16% YoY to $17.49M, driven by increased revenue from the top three customers .
  • Next‑gen product ramp resuming: “Late in the fourth quarter, we resumed production and shipment of their next generation handpiece as they released their product hold and returned us to full production,” supporting forward momentum .
  • Backlog and outlook: “We expect fiscal 2026 to continue our trend of revenue and operating income growth… as evidenced by our June 30th backlog in the amount of $50.4 million” .

What Went Wrong

  • Margin compression: Gross margin fell to 20% from 27% YoY, reflecting unfavorable mix and higher indirect manufacturing costs, including initial tariff costs .
  • Profitability declined YoY: Operating income declined 43% to $1.34M and diluted EPS fell to $0.36, down from $0.46, despite higher revenue .
  • Estimates miss in Q4: Revenue ($17.90M est), EPS ($0.47 est), and EBITDA ($2.60M est) were all below consensus as tariffs and mix weighed on gross profit* .

Values retrieved from S&P Global*

Financial Results

Quarterly Trend (Actuals)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$16.79 $17.41 $17.49
Gross Profit ($USD Millions)$5.07 $5.80 $3.49
Gross Margin %30% 33.3% (calc: $5.80/$17.41) 20%
Operating Income ($USD Millions)$2.69 $3.64 $1.34
Operating Margin %16.0% (calc: $2.69/$16.79) 20.9% (calc: $3.64/$17.41) 7.7% (calc: $1.34/$17.49)
Net Income ($USD Millions)$2.04 $3.28 $1.20
Diluted EPS ($)$0.61 $0.98 $0.36

Q4 YoY Comparison

MetricQ4 2024Q4 2025YoY Change
Revenue ($USD Millions)$15.03 $17.49 +16.6%
Gross Margin %27% 20% -700 bps
Operating Income ($USD Millions)$2.35 $1.34 -43.0%
Net Income ($USD Millions)$1.59 $1.20 -24.5%
Diluted EPS ($)$0.46 $0.36 -$0.10

Consensus vs Actual (Q2–Q4 FY2025)

MetricQ2 2025 EstimateQ2 2025 ActualBeat/MissQ3 2025 EstimateQ3 2025 ActualBeat/MissQ4 2025 EstimateQ4 2025 ActualBeat/Miss
Revenue ($USD)$13.80M*$16.79M Beat*$17.70M*$17.41M Miss*$17.90M*$17.49M Miss*
Primary EPS ($)$0.38*$0.61 Beat*$0.47*$0.98 Beat*$0.47*$0.36 Miss*
EBITDA ($USD)$2.10M*$3.01M (company OI + D&A proxy) Beat*$2.50M*$3.95M (company OI + D&A proxy) Beat*$2.60M*$1.66M (company OI + D&A proxy) Miss*

Values retrieved from S&P Global*
Note: EBITDA actuals are approximations derived from reported operating income plus depreciation and amortization where available in period disclosures (see cash flow/income statement detail); emphasis reflects beat/miss vs consensus .

KPIs and Balance Sheet Highlights (FY2025 Year-End)

KPIValueCommentary
Backlog ($USD Millions)$50.4 Supports FY2026 growth narrative
Inventory ($USD Millions)$22.21 Inventory up vs FY2024, aligned with production ramp
Accounts Receivable ($USD Millions)$16.43 Higher with stronger shipments
Cash and Equivalents ($USD Millions)$0.42 Lower cash; financing activity and WC impacts
Notes Payable (Current/Non‑current, $USD Millions)$6.15 / $9.25 Debt increased YoY; funding growth
Gross Margin % (FY)29% FY2025 vs 27% FY2024 Full-year mix favorable despite Q4 compression

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2026None quantitativeExpect continued revenue growth Maintained qualitative growth narrative
Operating IncomeFY2026None quantitativeExpect continued operating income growth Maintained qualitative growth narrative
Tariff Cost SharingFY2026+Not previously highlightedBegun working with customers to share tariff costs New initiative
Next‑Gen Handpiece ShipmentsQ4 FY2025 into FY2026Ramp in progress (Q2/Q3 commentary) Resumed late Q4; returned to full production Improved operational status

No numerical ranges for revenue, margins, OpEx, OI&E, or tax rate were provided in Q4 materials .

Earnings Call Themes & Trends

(Company did not publish an earnings call transcript for Q4 FY2025; themes reflect press release disclosures.)

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Next‑gen handpiece rampBegan production shipments; staffing ramp $6.2M next‑gen shipments; favorable mix Resumed late Q4; full production status restored Improving
Tariffs/macroNot emphasizedNot emphasizedInitial wave of tariff costs compressed GM Emerging headwind
Product mixFavorable mix lifted GM Favorable mix lifted GM Unfavorable mix pressured GM Deteriorated in Q4
Backlog/visibilityBacklog increased; staffing to meet commitments Tracking to record revenue Backlog $50.4M; confident FY2026 growth Strong visibility
Operating leverageOI up sharply YoY OI up 65% YoY OI down 43% YoY on margin pressure Mixed (Q4 dip)

Management Commentary

  • “We are very pleased with our fiscal 2025 performance including increasing sales by 24% and an increase of $3.5 million in operating income.”
  • “While this fiscal year included disruption in transitioning to our largest customer’s next generation handpiece, we continued to meet our customers’ requests by nimbly shifting assembly schedules to their requested mix of legacy and new product.”
  • “We expect fiscal 2026 to continue our trend of revenue and operating income growth, especially as evidenced by our June 30th backlog in the amount of $50.4 million. We have also begun working with customers on sharing of tariff costs…”

Q&A Highlights

No Q4 FY2025 earnings call transcript was available; there were no published Q&A disclosures to clarify guidance or discuss tariff pass‑through details [ListDocuments: none for earnings‑call‑transcript in period].

Estimates Context

  • Q4 missed consensus across revenue ($17.49M actual vs $17.90M est), EPS ($0.36 vs $0.47), and EBITDA ($1.66M vs $2.60M), driven by lower gross margin from unfavorable mix and initial tariff costs; contrasts with Q2/Q3 beats that benefited from favorable mix and next‑gen ramp* .
  • Estimate models likely need to reflect tariff headwinds and mix risks near term; medium‑term revenue/operating income assumptions may remain intact given backlog and resumption of next‑gen shipments* .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Q4 delivered healthy YoY revenue growth but a sharp margin reset (GM to 20%), leading to misses vs consensus on revenue, EPS, and EBITDA as tariffs and mix weighed on profitability .
  • The late‑quarter resumption of next‑gen handpiece shipments and full production status should support sequential margin recovery as mix normalizes in FY2026 .
  • Backlog of $50.4M underpins forward visibility and management’s qualitative growth outlook for FY2026 revenue and operating income .
  • Tariffs are a new, tangible headwind; management is pursuing cost‑sharing with customers, which is a key variable for margin stabilization .
  • Balance sheet shows higher inventories and receivables alongside increased notes payable, consistent with scaling operations; liquidity was lower at year‑end, implying focus on working capital discipline .
  • Net income volatility is influenced by unrealized gains/losses on marketable investments; investors should anchor on operating income and margin trajectory to assess core performance .
  • Near‑term: watch gross margin cadence and tariff pass‑through; medium‑term: backlog conversion and next‑gen execution are the key drivers for sustained operating leverage .