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Old 12-05-2016, 03:56 PM   #151
BCI23
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Re: PDEX - My Largest Position

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Originally Posted by FloppinPairs View Post
I read in the quarterly that they may be releasing the valuation allowance on their deferred tax assets in the next year. Am I right in thinking this means we can expect an extra 3.7m added to book value?

Who are PDEX competitors? Wanted to compare multiples that were applied to similar companies, and also try to get an idea of what sort of beta to use for PDEX.
Its just an accounting adjustment but yes the valuation allowance will eventually be reversed. There are no great public comparables, Integar Holdings (ITGR) is probably the best comp. Their competitors are small private companies and the internal R&D departments of their customers.
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Old 12-12-2016, 05:05 PM   #152
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Re: PDEX - My Largest Position

Looks like the new buyback plan just became effective December 8th according to the new 8-k out today.

Seems they been busy buying up shares past 3 trading days I noticed a lot of activity.
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Old 12-12-2016, 07:19 PM   #153
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Re: PDEX - My Largest Position

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Looks like the new buyback plan just became effective December 8th according to the new 8-k out today.

Seems they been busy buying up shares past 3 trading days I noticed a lot of activity.
Interesting, I've noticed the same. Typically the bid/ask will show small-ish lots (100 to 1000 shares) on each side, but the past few days I've noticed lots on the bid side around 50 (5000 shares) which I had assumed to be company purchases.
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Old 12-13-2016, 12:49 AM   #154
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Re: PDEX - My Largest Position

I went to the annual meeting, there was only one other shareholder there. Management feels good, morale appears very high, lots of opportunities in new surgical applications for their torque limiting IP outside of the CMF (craniomaxillofacial) space. Even within CMF there are several players without a torque limiting driver offering they are going after. Robotic surgery is an emerging area they expect to be involved in over the next few years. All of the non-core businesses (ESD, fineline, OMS) seem to be pointed in the right direction. They will find out if they picked up another supply agreement in early 2017, which would lead to another new product launch. The other shareholder asked if they had plans or thoughts of selling the company, Nick's reply was "We haven't even thought about it, we are focused on growing this into a $100m company". Management thinks with the improved manufacturing processes and higher average selling price of the products they are selling, they could do $55-$60m of annual sales out of their Irvine facility (had previously said $35-40m). Rick said he loves coming to work everyday. My thoughts are largely unchanged, 2017 should be a great year for the company, I think the stock is a great bargain in the $4-$4.50 range.
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Old 12-13-2016, 12:45 PM   #155
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Re: PDEX - My Largest Position

Glad to hear you were able to make the annual meeting, really appreciate you updating the thread with how it went.
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Old 12-29-2016, 03:25 PM   #156
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Re: PDEX - My Largest Position

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The numbers look strong. Maybe the three are just disgruntled employees, but does this concern anyone?

https://www.glassdoor.com/Reviews/Pr...iews-E5003.htm
I'm not concerned. Company has changed a lot in the last 2 years. See press release from a couple weeks ago.

https://finance.yahoo.com/news/pro-d...210000050.html

Pro-Dex, Inc. Announces Top Workplace Recognition and Placement as a Fastest Growing Orange County Company

Accesswire AccesswireDecember 13, 2016Comment

IRVINE, CA / ACCESSWIRE / December 13, 2016 / PRO-DEX, INC. (PDEX) today announced that on December 9, 2016 Pro-Dex was named one of the 2016 Top Work Places in Orange County in the small company category by the Orange County Register. This announcement follows being recognized by the Orange County Business Journal as number 11 among the fastest growing small public company list, published on November 1, 2016.

"The recognition by our employees as a Top Work Place in Orange County reflects positively on our culture and our values," said Richard L. ("Rick") Van Kirk. "We have assembled a team of experienced associates in Operations, Quality, Engineering, and Management, who have collaborated to create a work environment we all enjoy."

"We believe that our performance among the fastest growing small public companies has been fueled by the perseverance, teamwork, patience and drive of our employees and I would like to acknowledge and thank them for their individual contributions to these successes."
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Old 01-17-2017, 04:58 PM   #157
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Re: PDEX - My Largest Position

A sell-side analyst picked up coverage of PDEX recently with a $7 price target. Their estimate for the next quarter is $6.24m revenue according to Yahoo Finance. I think this is way too high, I struggle to see how they will post revenue higher than $5.7m in February and lots of scenarios where they could post something like $4.8m-$5.5m depending on a few factors. Long run doesn't matter cause May earnings is when things should start looking good with $6.5m+ rev, margin expansion on higher selling price, and additional operating leverage in the cost structure.
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Old 01-28-2017, 05:45 AM   #158
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Re: PDEX - My Largest Position

So it looks like PDEX are planning to raise capital by issuing more shares or preferred stock according to their filing yesterday? Seems like the price jumped shortly after too.
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Old 01-29-2017, 01:07 AM   #159
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Re: PDEX - My Largest Position

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So it looks like PDEX are planning to raise capital by issuing more shares or preferred stock according to their filing yesterday? Seems like the price jumped shortly after too.
I don't know anything about anything. But I see a month and a half ago they started a share buyback. Now they are looking to raise more money? Why would they do that? I have my own speculation on it, just curious what someone else has to say.
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Old 01-29-2017, 06:09 AM   #160
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Re: PDEX - My Largest Position

Its possible they took out a short term loan for the buyback and can make some profit turning it. I thought it was illegal to do buybacks with the sole purpose of driving up stock price but I imagine its easy to come up with legitimate reasons for doing a buyback/resell.
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Old 01-29-2017, 11:15 AM   #161
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Re: PDEX - My Largest Position

I think I remember that they posted a similar vague filling around 1-3 months back about the options the company has with raising capital, etc.

I don't see anything new in this one. They didn't list out a exact date for any of these options but they could use in the future.

Are they required to do filling like this?

i imagine they are buying back stock now because it's very cheap with the backlog the company currently has. Seems like the stock should double in price through the summer
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Old 01-29-2017, 12:55 PM   #162
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Re: PDEX - My Largest Position

They are required to file a 10-k or 10-q or 8-k summarizing their repurchasing plan to avoid insider trading allegations. Not sure about issuing new shares but it seems likely they have to do the same thing.
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Old 01-30-2017, 12:19 PM   #163
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Re: PDEX - My Largest Position

So I noticed on 12/9/2016 they also did a S-3 filing.

Between 12/9/2016 and the 1/27/2017 S-3/A filing I noticed the total outstanding shares dropped from 4,055,187 to 4,022,042 shares. So they are actually cancelling some of the shares they are buying.

I'm still learning and not really sure what all this means with these s-3 filings or maybe it's to keep the stock lower while the company tries to buy back more stock at lower prices or to keep out big buyers till after the May report.
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Old 01-30-2017, 01:43 PM   #164
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Re: PDEX - My Largest Position

I haven't talked to the company since annual meeting and probably won't until after February earnings here but i'm pretty sure the S-8 and S-3 filings were related to the 2016 Equity Plan proposal that was voted on at the annual meeting. I want to say the old equity plans were terminated by the board in 2014 so in order to offer equity incentives again they need to re-register these plans with the SEC. I could be wrong, I will clarify with them next time I talk to the company but i'm definitely not viewing this as "omg we are about to be diluted by 30%!!". If the company is buying back stock at current prices, they certainly aren't going to be looking to raise capital by issuing equity or acquiring a company with stock unless it was going to be extremely accretive.

AllinPoker, good catch with the sharecount, i wish they were buying back even more, hopefully they get a significant amount before May.
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Old 01-30-2017, 05:32 PM   #165
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Re: PDEX - My Largest Position

Announced that they sold the OMS Division tonight for $640k. Personally, not super surprised. Price not great, not horrible. OMS hadn't been much of an EBITDA contributor so really no impact there. Should accelerate EBITDA margin rate improvement but also increases their already high customer concentration.

https://www.sec.gov/Archives/edgar/d...050/ex99-1.htm
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Old 01-31-2017, 11:49 AM   #166
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Re: PDEX - My Largest Position

BCI23,

I hope they buy back a lot more shares as well! I feel the numbers will be a lot bigger. Out of curiosity, as I'm still learning. As the third party broker buys back stock, at what point does the company's total outstanding shares count get reduced? They get removed from the public float? Do they have to cancel them first?
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Old 02-01-2017, 03:06 PM   #167
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Re: PDEX - My Largest Position

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BCI23,

I hope they buy back a lot more shares as well! I feel the numbers will be a lot bigger. Out of curiosity, as I'm still learning. As the third party broker buys back stock, at what point does the company's total outstanding shares count get reduced? They get removed from the public float? Do they have to cancel them first?
Normally the purpose of a buyback is to immediately cancel the shares to reduce the float but there are some companies that buyback shares and don't cancel them. In the case of PdEX, I expect the shares to be cancelled basically immediately.
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Old 02-06-2017, 09:39 PM   #168
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Re: PDEX - My Largest Position

Company will likely report this week, probably Thursday. Really don't know what to expect this quarter, could see revenue anywhere from 4.8-5.7m, 300-550k of ebitda. All depends how many of the orthopedic hand pieces they ship out really. Lower rev will probably push down gross margin % as well this quarter. Year over year comp won't be great because of a 600k one-time revenue item in Q2 last year.
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Old 02-09-2017, 05:21 PM   #169
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Re: PDEX - My Largest Position

BCI was right.....company reported today.

Looks like revenue was $4.6 million. Huge income tax benefit of $2.9 million with a NI of $3.2 million. Backing out the income tax benefit leaves a NI figure of $329,000, or about $0.08/share. Overall EPS was $0.78.
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Old 02-09-2017, 06:03 PM   #170
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Re: PDEX - My Largest Position

They moved the OMS results to discontinued operations, which was 381k of rev. Didn't consider that in my rev estimate, so apples to apples I said $4.8-5.7m, actual was $4.6m + 381k = $4.981m. Dental, Fineline, and ESD revs all came in lower than I was expecting but sales to largest customer were higher.
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Old 02-22-2017, 02:09 PM   #171
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Re: PDEX - My Largest Position

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I haven't talked to the company since annual meeting and probably won't until after February earnings here but i'm pretty sure the S-8 and S-3 filings were related to the 2016 Equity Plan proposal that was voted on at the annual meeting. I want to say the old equity plans were terminated by the board in 2014 so in order to offer equity incentives again they need to re-register these plans with the SEC. I could be wrong, I will clarify with them next time I talk to the company but i'm definitely not viewing this as "omg we are about to be diluted by 30%!!". If the company is buying back stock at current prices, they certainly aren't going to be looking to raise capital by issuing equity or acquiring a company with stock unless it was going to be extremely accretive.

AllinPoker, good catch with the sharecount, i wish they were buying back even more, hopefully they get a significant amount before May.
Ok so the S-3 filing was to set up an At The Market sale program with an investment bank. This filing gives the company the ability to sell shares in the open market to raise capital. This doesn't mean they are for sure going to raise capital, but it does provide them the option to do so if they feel it is beneficial. If any other company was doing this I wouldn't feel comfortable with it but I think I understand the thought process here and Nick/Ray have proven themselves to have a strong track record buying and selling stocks. Given that they were recently buying stock at $4.5-$5, I don't expect them to start selling stock now at $5. They own 43% of the shares which they bought with their own money, they are perfectly aligned with us.
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Old 02-22-2017, 09:39 PM   #172
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Re: PDEX - My Largest Position

what do you think is the thought process behind it?
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Old 03-21-2017, 10:27 AM   #173
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Re: PDEX - My Largest Position

Still holding out for May results?
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Old 03-21-2017, 05:22 PM   #174
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Still holding out for May results?
Yes, expecting $5-$5.7m revenue and $700-$850k of EBITDA in May depending on how much of the new product they are launching in Q1 ends up shipping out in the quarter. My Rev estimate has come down with the sale of the OMS segment and what appears to be a softening sales in their non-medical device segments. I will be pretty surprised if the stock is not materially by mid November. I don't think the market understands what the increase in volume and ASP of the large orthopedic hand piece will do to their operating margins. May, Sept, and Nov earnings are the events to drive the stock higher here. If they rattle off 3 quarters of $800k ebitda to a run rate of $3.2m/yr and get a 10x multiple, they will have $5m cash on hand come november, no debt, $3.2m * 10 + $5m cash / 4m shares = $9.25/share
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Old 03-21-2017, 09:23 PM   #175
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Re: PDEX - My Largest Position

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Yes, expecting $5-$5.7m revenue and $700-$850k of EBITDA in May depending on how much of the new product they are launching in Q1 ends up shipping out in the quarter. My Rev estimate has come down with the sale of the OMS segment and what appears to be a softening sales in their non-medical device segments. I will be pretty surprised if the stock is not materially by mid November. I don't think the market understands what the increase in volume and ASP of the large orthopedic hand piece will do to their operating margins. May, Sept, and Nov earnings are the events to drive the stock higher here. If they rattle off 3 quarters of $800k ebitda to a run rate of $3.2m/yr and get a 10x multiple, they will have $5m cash on hand come november, no debt, $3.2m * 10 + $5m cash / 4m shares = $9.25/share

+1 Thanks for the update. Appreciate the willingness to share.
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