Dynatronics Corporation Reports Second Quarter Fiscal Year 2023 Financial Results and Business Highlights

Dynatronics Corporation (“Dynatronics” or the “Company”), a manufacturer of athletic training, physical therapy, and rehabilitation products, today reported financial results for its second quarter of fiscal year 2023 ended December 31, 2022, and provided an update on the business.

CEO Commentary

“The year-over-year improvement in gross margin of 8.4% or nearly $1.0 million in gross profit was a solid improvement. We are pleased with our progression, but we have more work to do. New, targeted, and innovative, product releases are the third pillar of our gross margin improvement plan, and we plan to continue to improve our performance in this area,” said John Krier, Chief Executive Officer of Dynatronics.

“Our inventory balance was reduced to $10.7 million with a reduction of approximately $1.4 million from the balance on June 30, 2022. Reducing inventory by this level, allowed us to strengthen our supplier relationships with a reduction in accounts payable of approximately $0.9 million in the second quarter. This is an important development as we work to optimize our inventory with selected reductions while preparing for future new product introductions and historical seasonality-related growth expected in our fiscal fourth quarter,” concluded Krier.

Key Financial Highlights

Q2 Fiscal Year ‘23 Financial Highlights

Note: All financials referenced in this release are in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) and comparisons in this release are to the same period in the prior year unless otherwise noted.

• Total net sales of $10.9 million.
• Gross profit margin of 28.1% up from 19.8% in Q2 fiscal year ‘22.
• Net loss of $0.8 million improved from $1.4 million in Q2 fiscal year ‘22.
• Current liabilities reduced by $1.0 million in Q2 fiscal year ‘22.
• Cash of $0.7 million, flat from $0.7 million at the end of Q4 fiscal year ‘22.
• 10^th consecutive quarter of no debt.

Guidance for Fiscal Year ‘23

Dynatronics reaffirmed net sales guidance for fiscal year ‘23 of $45 million to $48 million. The midpoint of this range is a 5% improvement over the Company’s $44.3 million net sales in fiscal year ‘22. The Company expects the distribution of net sales across the quarters in fiscal year ‘23 to align with historical trends, which are highest in the first quarter, lower in the second and third quarters, with a bounce back in the fourth quarter. The second quarter of fiscal year 2023 continued this historical seasonality trend.

Even as it expects fiscal year ’23 to showcase continued improvement toward its 40% long-term goal, given the persistent inflationary pressure and macro-economic impacts the Company is deferring providing gross margin guidance.

Selling, general, and administrative expenses are anticipated to be 30% to 35% of net sales in fiscal year ‘23.

Dynatronics expects to continue its strategic approach to optimize inventory levels with selected reductions while preparing for future new product introductions and historical seasonality-related growth expected in our fiscal fourth quarter. This approach allowed the company to generate positive cash flow from operations of $0.3 million for the first six months of the fiscal year.

The Company’s financial guidance for fiscal year ’23 is subject to the risks identified in its safe harbor notification below. The Company continues to expect volatility due to the challenges related to the broader economic environment and the COVID-19 global pandemic, including higher raw material, delivery and shipment costs, supply chain disruptions, extended handling times and delays or disruption in procedure volume. Dynatronics also expects some ongoing volatility from the Company’s business optimization.

Growth Priorities

The Company has delivered sales growth that outpaced market growth, and its baseline continued product net sales expectation for the seventh consecutive quarter. Dynatronics employs multiple levers to drive sales growth – by capturing market share, product innovations, and through acquisitions.

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About Dynatronics Corporation

Dynatronics (NASDAQ:DYNT) 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®, Solaris™, Hausmann®, Physician’s Choice®, and PROTEAM™, among others. More information is available at www.dynatronics.com.

Source: Dynatronics Corporation