Exhibit 99.1
Dynatronics Corporation Reports Third Quarter Results
EAGAN, MN / ACCESSWIRE / May 13, 2021 / Dynatronics
Corporation (NASDAQ:DYNT),
a leading manufacturer of athletic training, physical therapy, and
rehabilitation products, today announced financial results for its
third quarter of fiscal year 2021 for the period ended March 31,
2021.
Q3 FY’21 Financial Highlights
●
Net
sales of $11.5 million compared to $13.7 million in the same
quarter last year.
●
Gross
profit margin of 28.8% compared to 28.8% in the same quarter last
year.
●
Q3
FY’21 gross profit margin continued to be impacted by lower
sales and changes in the mix of sales between the company’s
major product categories.
●
Selling,
general, and administrative expenses decreased 20% to $3.9 million
compared to the same quarter last year.
●
Net
income of $0.1 million compared to net loss of $1.1 million in the
same quarter last year.
●
The
company’s third quarter financial results benefitted from a
$1.0 million Employee Retention Credit.
●
Excluding
this Employee Retention Credit benefit, gross profit margin would
have been 28.2% of net sales, SG&A would have been $4.0
million, and net loss would have been $0.8 million for the
quarter.
●
Cash
of $4.5 million at the end of Q3 FY’21, up 103% from June 30,
2020.
●
Zero
balance on line of credit and a borrowing base of approximately
$4.5 million as of the end of Q3 FY’21.
Recent Business Highlights
●
On
April 22, 2021, Dynatronics announced actions to advance the
company’s product portfolio optimization plan to improve
overall financial performance. The actions announced target
delivering higher gross margin, operating income, cash flow from
operations, and EBITDA in FY ’22 relative to FY
’21.
●
On
April 6, 2021, the company announced it had entered into a purchase
and sale agreement for the $1.75 million sale of former Tennessee
manufacturing facility expected to close no later than June 30,
2021.
●
On
February 24, 2021, Dynatronics announced extension of a
distribution agreement with Intalere, one of the leading national
group purchasing organizations in the healthcare industry. The new
agreement extends the partnership through January
2024.
●
On
February 1, 2021, the company received notification from NASDAQ
that DYNT shares have regained compliance with minimum bid price
listing requirements.
●
On
January 28, 2021, Dynatronics announced launch of two new Hausmann
tables with initial orders.
CEO Commentary
“Our
business optimization plans remained our top priority during the
quarter, with a focus on driving organic revenue growth,
profitability and cash flow,” said John Krier, Chief
Executive Officer of Dynatronics. “Less than a month ago, we
announced actions taken to eliminate low-margin distributed
products and associated support costs, enabling us to leverage our
own manufacturing capabilities and brands, exclusively utilizing
dealer channels. These strategic actions lay the groundwork for
additional business opportunities as well as strategic acquisition
opportunities in existing and adjacent markets that we will
continue to pursue.”
“While
our Q3 FY’21 financial results continued to be negatively
impacted by COVID-related costs and disruptions throughout the
supply chain, we are encouraged that certain areas of our business
have begun to recover to pre-COVID levels, and our balance sheet is
in better shape than it has been in recent years, with cash of $4.5
million and additional liquidity from our line of credit. The
company also is expecting future cash infusions coming from the
sale of our Tennessee facility, receipt of proceeds from the
Employee Retention Credit, and cash flow from
operations.”
“Overall,
we anticipate good progress in FY’22, with revenues that
benefit from our growing markets, gross and EBITDA margins that we
expect to improve and opportunities to accelerate our plans through
M&A. We’re excited to be moving the company in a
direction that we believe will both reward our shareholders and
better align us with our customers,” concluded
Krier.
Summary of Product Portfolio
Optimization Plan Changes Announced on April 22nd,
2021
●
Drive
sales growth and better partner with customers by eliminating
approximately 1,600 SKUs of low-margin, third-party distributed
products, which are unprofitable, low growth, and add
complexity.
●
Focus
sales and marketing resources on products manufactured by the
company.
●
Streamline
sales exclusively to dealers, thereby eliminating perceived
competition with customers from historic direct sales
efforts.
●
Expand
margins and profitability by focusing on higher margin,
differentiated products manufactured by the company.
●
Target
significant increases to EBITDA and profitability through
optimization plan.
●
Strengthen
balance sheet through sustainable cash flow from operations, to
support additional investments or M&A strategies in target
markets.
Q4 FY’21 Outlook
The company expects to record approximately $1.2 million in
restructuring charges, of which $0.4 million is expected to result
in cash expenditures. The majority of these costs will be incurred
in its Q4 FY '21 financial results.
The company and its customers expect to experience continued
challenges due to COVID-19, including reduced capacity and
operating hours, supply chain disruptions, and extended handling
times. We expect some continued volatility ahead due to the ongoing
pandemic and the business changes announced in April 2021. As a
result, the company will continue its recent practice of not
providing forward looking guidance.
FY’22 Outlook
Most of the optimization initiatives announced on April 22, 2021
are projected to be completed before the start of the new fiscal
year beginning on July 1, 2021. Management estimates that the
elimination of low-margin, distributed products will result in an
approximately $11 million annual net sales reduction in FY '22
results relative to FY '21, but also expects that the company will
deliver higher annual gross margin, operating income and EBITDA in
FY '22 relative to FY '21.
In addition to the $1.75 million pending (gross) sale of the former
Tennessee manufacturing facility, the company will not renew
expiring facility leases in Michigan and Texas and is actively
working to reduce its Utah facility footprint by approximately 75
percent. The combination of these facility moves is expected to
result in a 40 percent reduction in square footage under occupancy
compared to the beginning of FY '21.
Conference Call and Webcast
The company will hold a conference call and live audio webcast,
consisting of prepared remarks, a question-and-answer session and
accompanied slide presentation, beginning at 8:30 AM ET on
Thursday, May 13, 2021 to discuss the results.
Interested persons may access the live call by dialing 888-506-0062
(U.S./Canada callers) or 973-528-0011 (international callers),
using passcode 582571. It is recommended that participants call or
login 10 minutes ahead of the scheduled start time to ensure proper
connection. An audio replay will be available one hour after the
live call until Midnight on May 20, 2021, by dialing 877-481-4010,
using passcode 41100.
The
live webcast and slide presentation can be accessed on the
company’s Investor
webpage under the Events &
Presentations tab at https://irdirect.net/DYNT/corporate_document/1982.
The webcast will be archived on the website for future
viewing.
About Dynatronics Corporation
Dynatronics Corporation is a leading medical device company
committed to providing high-quality restorative products designed
to accelerate achieving optimal health. The company designs,
manufactures, and sells a broad range of products for clinical use
in physical therapy, rehabilitation, pain management, and athletic
training. Through its distribution channels, Dynatronics markets
and sells to orthopedists, physical therapists, chiropractors,
athletic trainers, sports medicine practitioners, clinics,
hospitals, and consumers. The company's products are marketed under
a portfolio of high-quality, well-known industry brands including
Bird & Cronin®,
Dynatron Solaris®,
Hausmann™, Physician's Choice®,
and PROTEAM™, among others. More information is available
at www.dynatronics.com.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Those statements
include references to the company's expectations and similar
statements. Such forward-looking statements reflect the views of
management at the time such statements are made. These statements
include our statements regarding expected improvement in overall
performance, anticipated recovery in revenues, improvements in cash
flows and operating margins, rapid organic growth in existing and
adjacent markets, expected costs and expenditures associated with
the restructuring, outlook for Q4 FY’21, estimated reductions
in revenues year-over-year in FY’22 operating results,
expectations that the company will deliver higher annual gross
margins, operating income and EBITDA in FY ’22 compared to FY
’21, expectations regarding reduction in occupied space in FY
’22, and uncertainties involving the impact of the COVID-19
pandemic on the company’s results of operations and financial
condition.
These forward-looking statements are subject to a number of risks,
uncertainties, estimates, and assumptions that may cause actual
results to differ materially from current expectations. The
contents of this release should be considered in conjunction with
the risk factors, warnings, and cautionary statements that are
contained in the company's annual, quarterly and other reports
filed with the Securities and Exchange Commission. Dynatronics does
not undertake to update its forward-looking statements, whether as
a result of new information, future events, or
otherwise.
EBITDA as used in this press release is a non-GAAP measure as
defined under the rules of the Securities and Exchange Commission.
We define EBITDA as net income (loss) before interest expense,
income taxes, depreciation and amortization.
Summary Financial Results
Following is a summary of operating results for the periods ended
March 31, 2021 and 2020, the balance sheet highlights at March 31,
2021 and June 30, 2020 and cash flow for quarters ended March 31,
2021 and 2020.
|
Summary
Selected Financial Data
|
||||
|
Statement
of Operation Highlights
|
||||
|
In thousands, except share and per share amounts
|
||||
|
|
|
|
|
|
|
|
Quarter Ended
|
Nine Months Ended
|
||
|
|
March 31,
|
March 31,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
Net
sales
|
$11,460
|
$13,706
|
$35,561
|
$45,293
|
|
Cost
of sales
|
8,155
|
9,762
|
25,013
|
31,609
|
|
Gross
profit
|
3,305
|
3,944
|
10,548
|
13,684
|
|
|
28.8%
|
28.8%
|
29.7%
|
30.2%
|
|
Selling,
general, and admin. expenses
|
3,905
|
4,907
|
12,089
|
14,450
|
|
Other
(expense) income, net
|
718
|
(128)
|
618
|
(364)
|
|
Income
tax provision
|
-
|
-
|
(10)
|
-
|
|
Net
income (loss)
|
$118
|
$(1,091)
|
$(933)
|
$(1,130)
|
|
|
|
|
|
|
|
Deemed
dividend on convertible preferred stock and accretion of
discount
|
-
|
(65)
|
(51)
|
(174)
|
|
Convertible
preferred stock dividend, in common stock
|
(182)
|
(168)
|
(558)
|
(538)
|
|
Net
loss attributable to common stockholders
|
$(64)
|
$(1,324)
|
$(1,542)
|
$(1,842)
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders per common share - basic
and diluted
|
$(0.00)
|
$(0.13)
|
$(0.10)
|
$(0.20)
|
|
Weighted-average
common shares outstanding - basic and diluted
|
15,827,808
|
10,168,596
|
14,829,216
|
9,216,027
|
|
Balance Sheet Highlights
|
||
|
In thousands
|
||
|
|
|
|
|
|
March 31,
2021
|
June 30,
2020
|
|
Cash
and cash equivalents
|
$4,651
|
$2,316
|
|
Trade
accounts receivable, net
|
5,803
|
4,894
|
|
Inventories,
net
|
6,852
|
8,372
|
|
Prepaid
& other
|
3,786
|
493
|
|
Total
current assets
|
21,092
|
16,075
|
|
|
|
|
|
Non-current
assets
|
18,824
|
21,522
|
|
Total
assets
|
$39,916
|
$37,597
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
$3,807
|
$3,014
|
|
Accrued
payroll and benefits expense
|
1,676
|
1,205
|
|
Accrued
expenses
|
1,286
|
768
|
|
Other
current liabilities
|
4,649
|
1,679
|
|
Line
of credit
|
-
|
1,013
|
|
Total
current liabilities
|
11,418
|
7,679
|
|
|
|
|
|
Non-current
liabilities
|
5,944
|
10,022
|
|
Total
liabilities
|
17,362
|
17,701
|
|
|
|
|
|
Stockholders'
equity
|
22,554
|
19,896
|
|
Total
liabilities and stockholders' equity
|
$39,916
|
$37,597
|
|
Operating
Cash Flow Highlights
|
||||
|
In thousands
|
||||
|
|
|
|
|
|
|
|
Quarter
Ended
|
Nine
Months Ended
|
||
|
|
March
31,
|
March
31,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
Net
income (loss)
|
$118
|
$(1,091)
|
$(932)
|
$(1,130)
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
384
|
438
|
1,140
|
1,240
|
|
Stock
based compensation
|
30
|
45
|
128
|
233
|
|
Receivables
|
(735)
|
356
|
(910)
|
863
|
|
Inventory
|
(838)
|
61
|
148
|
205
|
|
Prepaid
and other assets
|
(373)
|
(131)
|
(1,054)
|
(250)
|
|
Accounts
payable, accrued expenses, and other liabilities
|
(903)
|
(43)
|
1,794
|
1,388
|
|
Net
cash provided by operating activities
|
(2,317)
|
(365)
|
314
|
2,549
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
(18)
|
(68)
|
(88)
|
(249)
|
|
|
|
|
|
|
|
Payments
on non-current liabilities
|
(86)
|
1,431
|
(1,353)
|
(1,026)
|
|
Proceeds
from issuance of common stock, net
|
3,462
|
-
|
3,462
|
-
|
|
Net
cash provided by (used in) financing activities
|
3,376
|
1,431
|
2,109
|
(1,026)
|
|
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
1,041
|
998
|
2,335
|
1,274
|
|
Cash
and cash equivalents at beginning of the period
|
3,610
|
532
|
2,316
|
256
|
|
Cash
and cash equivalents at end of the period
|
$4,651
|
$1,530
|
$4,651
|
$1,530
|
Contact:
Dynatronics Corporation
Investor Relations
Skyler Black
(801) 676-7201
ir@dynatronics.com
Darrow Associates
Peter Seltzberg, Managing Director
(516) 419-9915
pseltzberg@darrowir.com
For additional information, please visit: www.dynatronics.com
Connect with Dynatronics on LinkedIn
SOURCE: Dynatronics
Corporation
