Exhibit 99.1
Dynatronics Announces 80% Increase in Sales for Fiscal Year
2018
Cottonwood Heights, Utah (September 27, 2018) –
Dynatronics
Corporation (NASDAQ:DYNT) today announced financial results
for its fiscal fourth quarter and full fiscal year ended June 30,
2018.
Summary Fiscal Year 2018 Results and Accomplishments:
●
80.1% increase in
sales and 77.5% increase in gross profit for fiscal year
2018
●
51.4% increase in
sales and 70.9% increase in gross profit for fiscal 2018 fourth
quarter
●
Acquisition of Bird
& Cronin, the largest acquisition in the company’s
history
●
Christopher R. von
Jako, Ph.D. appointed Chief Executive Officer in June
2018
"Fiscal
2018 has been another year of significant change and growth for
Dynatronics. We successfully completed the acquisition and made
significant progress in the integration of the Bird & Cronin
division, which provided us with additional growth and
profitability, as well as more diversified product offerings and
sales channels,” stated Christopher R. von Jako, CEO of
Dynatronics Corporation. “Internally, we transitioned and
strengthened our leadership. In particular, our Therapy Products
Division, which encompasses the operations of the legacy
Dynatronics business, is benefitting from new leadership and a
focus on improving profitability, which we expect to be reflected
in our financial performance in fiscal year 2019 and
beyond.”
Fiscal 2018 Fourth Quarter Financial Results
Net
sales for the quarter ended June 30, 2018 increased $5.7 million,
or 51.4%, to $16.9 million, compared to $11.2 million in the same
period of the prior fiscal year. Gross profit for the quarter
increased $2.1 million, or 70.9%, to $5.0 million. The increases in
net sales and gross profit were attributable to the company’s
acquisition of Bird & Cronin in the second fiscal quarter of
2018. Bird & Cronin contributed sales of $5.9 million and gross
profit of $2.1 million in the quarter. Gross margin for the quarter
was 29.7% compared to 26.3% in the same period of the prior year.
The increase in gross margin percentage was primarily due to the
inclusion of Bird & Cronin sales, which had a higher gross
margin percentage.
Net
loss for the quarter ended June 30, 2018 was approximately $0.5
million, compared to a loss of $0.7 million in the same period of
the prior fiscal year. Depreciation, amortization, and other
non-cash expenses were $0.3 million in the quarter. The improvement
in net loss was due primarily to the contribution of Bird &
Cronin.
Net
loss attributable to common stockholders for the quarter ended June
30, 2018 was $0.7 million, compared to a loss of $2.5 million in
the same period of the prior fiscal year. The $1.8 million
improvement was due primarily to a $0.2 million reduction of net
loss and a $1.6 million reduction of deemed dividend, as there was
no deemed dividend in the quarter ended June 30, 2018. By
comparison, in the fourth quarter of fiscal year 2017, the company
recognized a non-cash deemed dividend associated with the issuance
of its Series B Convertible Preferred Stock and common stock
purchase warrants in connection with the acquisition of
Hausmann.
Fiscal Year 2018 Financial Results
Net
sales for the fiscal year ended June 30, 2018 increased $28.7
million, or 80.1%, to $64.4 million, compared to $35.8 million in
the prior fiscal year. Gross profit for the fiscal year increased
$8.9 million, or 77.5%, to $20.4 million. The increases in net
sales and gross profit were attributable primarily to the
acquisitions of Hausmann in the fourth quarter of fiscal year 2017
and Bird & Cronin in the second quarter of fiscal year 2018.
These acquired operations accounted for $30.5 million of the
increase in net sales and $10.0 million of the increase in gross
profit. Gross margin for fiscal year 2018 was 31.7% compared to
32.2% in fiscal year 2017. The decrease in gross margin percentage
in fiscal year 2018 was due primarily to the inclusion of Hausmann
sales, which had a lower gross margin percentage, as well as
reduced gross margin attributable to higher freight costs and a
write-down of inventory due to product
rationalization.
Net
loss for the fiscal year ended June 30, 2018 was $1.6 million
compared to a net loss of $1.9 million in the prior fiscal year.
Depreciation, amortization, and other non-cash expenses were
approximately $1.5 million in the fiscal year. In addition,
severance expense of approximately $1.0 million associated
primarily with the separation of our former chief executive officer
and $0.3 million of a one-time charge related to an abandoned
R&D project contributed to the net loss in fiscal year 2018.
Exclusive of these charges, the adjusted net loss was approximately
$0.3 million, or a bottom line improvement of $1.6 million compared
to the prior fiscal year. “Adjusted net loss” is a
non-GAAP performance measure.
Net
loss attributable to common stockholders for the fiscal year ended
June 30, 2018 was $3.5 million ($0.53 per share), compared to $4.3
million ($1.36 per share) for the prior fiscal year. The $0.8
million improvement was due primarily to a $0.3 million reduction
of net loss and a $0.9 million reduction of deemed dividend and
accretion of discount. The company recognized a deemed dividend in
fiscal year 2018 associated with the issuance of its Series C
Non-Voting Convertible Preferred Stock and common stock purchase
warrants in connection with the acquisition of Bird & Cronin.
This deemed dividend was less than the deemed dividends recognized
in the prior fiscal year associated with the issuance of the
company’s Series A 8% Convertible Preferred Stock in December
2016 and Series B Convertible Preferred Stock in April 2017. The
decrease in net loss attributable to common stockholders in fiscal
year 2018 was partially offset by $0.4 million in additional
preferred stock dividends.
Conference Call
Dynatronics
has scheduled a conference call for investors on September 27,
2018, at 8:30 AM ET. Those wishing to participate should call (877)
407-8033 or (201) 689-8033 for international callers.
About Dynatronics Corporation
Dynatronics
designs, manufactures, markets, and distributes orthopedic soft
goods, medical supplies, and physical therapy and rehabilitation
equipment. Through its various distribution channels, the company
markets and sells to orthopedists, physical therapists,
chiropractors, athletic trainers, sports medicine practitioners,
clinics, and hospitals. More information is available at
www.dynatronics.com.
Use of Non-GAAP Financial Measures
Dynatronics
management believes that, to better understand the company's
short-term and long-term financial trends, investors may wish to
consider certain non-GAAP financial measures as a supplement to
financial performance measures prepared in accordance with GAAP.
Non-GAAP measures should be considered in addition to, and not as a
substitute for, financial performance measures in accordance with
GAAP. In this press release, the company has reported non-GAAP
adjusted net loss after adjusting for the impact of one-time
severance payments and a write-off associated with the abandonment
of an R&D project, both in the current period that were
episodic and did not occur in the prior year. The GAAP results are
reported in the press release and in the financial statement tables
included in this press release.
Safe Harbor Notification
This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. Those statements include references to the
company's expectations and similar statements, including, for
example, the statement regarding the improving profitability of the
company’s Therapy Products Division in fiscal year 2019 and
beyond. Our actual results could differ materially from those
projected in these forward-looking statements, which involve a
number of risks and uncertainties, including global economic
conditions generally, competitive factors, inventory risks due to
shifts in market demand, market demand for our products, and
availability of financing at cost-effective rates. The contents of
this press release should be considered in conjunction with the
risk factors, warnings, and cautionary statements that are
contained in our most recent filings with the Securities and
Exchange Commission, including the company’s Annual Report on
Form 10-K for the year ended June 30, 2018 which was filed on
September 27, 2018.
The
following is a summary of operating results for the quarters and
years ended June 30, 2018 and 2017 and balance sheet highlights as
of June 30, 2018 and 2017.
Summary Selected Financial Data
Statement of Operations Highlights
In thousands, except per share amounts
|
|
Quarter
Ended
|
Year
Ended
|
||
|
|
June
30,
|
June
30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
|
|
Net
sales
|
$16,902
|
$11,166
|
$64,415
|
$35,758
|
|
Cost of
sales
|
11,882
|
8,228
|
43,994
|
24,250
|
|
Gross
profit
|
$5,020
|
$2,938
|
$20,421
|
$11,508
|
|
|
|
|
|
|
|
Selling, general,
and admin. expenses
|
$5,332
|
$3,333
|
$20,478
|
$12,102
|
|
Research and
development expenses
|
146
|
262
|
1,194
|
1,081
|
|
Other expense,
net
|
151
|
74
|
422
|
191
|
|
Loss before income
taxes
|
$(609)
|
$(731)
|
$(1,673)
|
$(1,866)
|
|
Income tax
(provision) benefit
|
71
|
0
|
71
|
0
|
|
Net
loss
|
$(538)
|
$(731)
|
$(1,602)
|
$(1,866)
|
|
|
|
|
|
|
|
Deemed dividend on
8% convertible preferred stock and accretion of
discount
|
$0
|
$(1,568)
|
$(1,024)
|
$(1,944)
|
|
Preferred stock
dividend, cash
|
0
|
(16)
|
(105)
|
(17)
|
|
8% convertible
preferred stock dividend
|
(190)
|
(195)
|
(768)
|
(466)
|
|
Net loss
attributable to common stockholders
|
$(728)
|
$(2,510)
|
$(3,499)
|
$(4,293)
|
|
Net loss
attributable to common stockholders per share – basic and
diluted
|
(0.09)
|
(0.65)
|
(0.53)
|
(1.36)
|
|
Weighted-average
common shares outstanding – basic and diluted
|
8,089,398
|
3,869,629
|
6,622,429
|
3,152,425
|
Balance Sheet Highlights
In thousands, except per share amounts
|
|
June 30,
2018
|
June 30,
2017
|
|
|
|
|
|
Cash
and cash equivalents
|
$1,696
|
$255
|
|
Trade
accounts receivable
|
7,811
|
5,281
|
|
Inventories,
net
|
10,988
|
7,398
|
|
Prepaid
& other
|
927
|
537
|
|
Total
current assets
|
$21,422
|
$13,471
|
|
|
|
|
|
Accounts
payable
|
$3,413
|
$2,335
|
|
Accrued
payroll and benefits expense
|
1,929
|
1,473
|
|
Accrued
expenses
|
830
|
657
|
|
Other
current liabilities
|
748
|
705
|
|
Line
of credit
|
6,286
|
2,172
|
|
Current
portion of acquisition holdback
|
1,379
|
295
|
|
Total
current liabilities
|
$14,585
|
$7,637
|
Contact:
Dynatronics
Corporation
Investor
Relations
Jim
Ogilvie
(801)
727-1755
jim.ogilvie@dynatronics.com