COTTONWOOD HEIGHTS, Utah, May 15, 2017 /PRNewswire/ -- Dynatronics Corporation (NASDAQ: DYNT) today announced financial results for its fiscal 2017 third quarter ended March 31, 2017.
For the quarter, net sales increased 4.1% to $7.7 million, compared to $7.4 million in the same period of the prior year. The increase was driven by a 14% improvement in sales of therapeutic modalities, up $243,000, and a 13% increase in sales of distributed capital, up $269,000 over the prior year period. Sales within other product categories decreased by $205,000 compared to the third quarter of 2016.
Gross profit for the quarter increased by 8.7% to $2.7 million, or 35.0% of net sales, compared to 33.6% of sales for the quarter ended March 31, 2016. Gross profit and gross margin during the quarter were positively impacted by a greater proportion of sales derived from therapeutic modalities, which generate a higher gross margin than the company’s combined average gross margin.
“The $215,000 increase in gross profit for the quarter reflects our strategy to focus on our core competency, proprietary capital equipment, with an emphasis on therapeutic modalities,” explained Jeff Gephart, Senior Vice President of Sales. “We continue to refine our sales strategies to achieve the best results for our customers and our shareholders. We will continue to focus on sales growth, margin growth, and expanded coverage in the markets we serve.”
Selling, general and administrative expense for the quarter were up $533,000. Selling expenses accounted for $118,000 of the increase and were related primarily to the hiring of additional sales management and marketing personnel to implement the company’s strategic growth plans. General and administrative expenses for the quarter included acquisition related costs of $486,000, including legal, accounting, and other professional fees incurred in connection with the company’s acquisition of Hausmann Industries, Inc. which closed on April 3, 2017.
Net loss for the quarter ended March 31, 2017, was approximately $755,000, compared to a net loss of $451,000 for the quarter ended March 31, 2016, attributable primarily to the acquisition expenses incurred in the quarter. Net loss applicable to common stockholders for the quarter was approximately $849,000, compared to $531,000 for the prior year period, primarily due to the acquisition expenses in the current period. Net loss applicable to common stockholders also includes $94,000 of dividends accrued on preferred stock during the quarter. These dividends were paid partially in common stock ($78,000) and partially in cash ($16,000).
As reported previously, on March 21, 2017, the company entered into a definitive agreement to acquire the assets of Hausmann Industries, Inc., a New Jersey corporation. Financing for the acquisition was provided by the sale of equity securities in a private offering and borrowings under an asset-based credit facility with Bank of the West. The acquisition transaction and private offering closed on April 3, 2017. The credit facility funded on March 31, 2017, adding cash of $2.5 million to increase cash at the end of the period to approximately $3.4 million. The line of credit provides for revolving credit borrowings by the company in an amount up to the lesser of $8.0 million and a borrowing base computed as provided in the terms of the loan agreement with the bank. Amounts outstanding bear interest at LIBOR plus 2.25%.
“Hausmann is an excellent strategic fit for Dynatronics, as it further solidifies our commitment to and presence in the physical therapy and athletic training space,” said Kelvyn Cullimore, Jr., Dynatronics’ Chairman and CEO. “Our fiscal 2017 third quarter has been one of the most transformative quarters in the company’s history. With the Hausmann acquisition, we have successfully executed on a key part of our growth strategy and we expect the acquired business combined with Dynatronics will result in the company being cash flow positive,” said Cullimore. “During the quarter, we also hired a new vice president of operations, Cyndi McHenry, who will keep us focused on improving manufacturing and enhancing gross margins.”
Dynatronics has scheduled a conference call for investors on May 15, 2017, at 4:30 PM ET. Those wishing to participate should call (800) 263-0877 and use the passcode 3450199.
The following is a summary of the financial results as of March 31, 2017 and 2016, and for the quarter and nine months then ended:
Summary Selected Financial Data | |||||||||||
Statement of Operations Highlights | |||||||||||
In thousands, except per share amounts | |||||||||||
Quarter Ended | Nine Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Net sales | $ | 7,716 | $ | 7,409 | $ | 24,592 | $ | 22,281 | |||
Cost of sales | 5,014 | 4,923 | 16,022 | 14,607 | |||||||
Gross profit | 2,702 | 2,486 | 8,570 | 7,674 | |||||||
Selling, general, and admin. expenses | 3,153 | 2,620 | 8,769 | 7,445 | |||||||
Research and development expenses | 231 | 250 | 819 | 769 | |||||||
Other expense, net | 73 | 67 | 118 | 217 | |||||||
Loss before income taxes | (755) | (451) | (1,136) | (757) | |||||||
Income tax (provision) benefit | 0 | 0 | 0 | 0 | |||||||
Net loss | $ | (755) | $ | (451) | $ | (1,136) | $ | (757) | |||
Deemed dividend on 8% convertible preferred stock | $ | 0 | $ | 0 | $ | (376) | $ | 0 | |||
8% convertible preferred stock dividend | $ | (94) | $ | (80) | $ | (271) | $ | (241) | |||
Net loss attributable to common stockholders | $ | (849) | $ | (531) | $ | (1,783) | $ | (998) | |||
Net loss attributable to common stockholders per share basic | $ | (0.28) | $ | (0.19) | $ | (0.61) | $ | (0.37) | |||
Weighted-average common shares outstanding | 3,022,443 | 2,731,282 | 2,914,229 | 2,681,493 | |||||||
Balance Sheet Highlights | ||||
In thousands, except per share amounts | ||||
March 31, 2017 | June 30, 2016 | |||
Cash and cash equivalents | $ 3,353 | $ 966 | ||
Trade accounts receivable | 2,925 | 3,524 | ||
Inventories, net | 5,783 | 4,997 | ||
Prepaid and other | 252 | 268 | ||
Total current assets | 12,313 | 9,755 | ||
Accounts payable | 2,490 | 1,914 | ||
Accrued payroll and benefits expense | 537 | 1,035 | ||
Accrued expenses | 322 | 359 | ||
Other current liabilities | 646 | 626 | ||
Line of credit | 2,540 | 0 | ||
Total current liabilities | $ 6,535 | $ 3,934 | ||
About Dynatronics Corporation
Dynatronics manufactures, markets and distributes advanced-technology medical devices, treatment tables, rehabilitation equipment, orthopedic soft goods and supplies for the physical therapy, athletic training, sports medicine, chiropractic and related physical medicine markets. More information is available at www.dynatronics.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains “forward-looking statements” that involve risks, uncertainties and assumptions. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. These forward-looking statements include the quotations from management in this press release, as well as any statements regarding Dynatronics’ strategic plans and future growth opportunities, as well as its expectation that its post-acquisition operations will be cash flow positive. Forward-looking statements are based on the company’s current expectations and assumptions regarding its business, the economy and other future conditions. Since forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the company’s ability to maintain its existing relationships and establish new relationships with customers, its ability to integrate the business operations of Hausmann Industries, Inc., its ability to maintain revenue growth and achieve profitability, its ability to execute on its strategic and business plans, its ability to successfully compete with new technologies and adapt to changes in its industry, changes in the regulatory environment, competitive factors, inventory risks due to shifts in market demand, market demand for the company’s products, availability of financing at cost-effective rates, as well as other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (SEC), including the company’s Form 10-K for the year ended June 30, 2016. Any forward-looking statement made by Dynatronics in this press release speaks only as of the date on which it is made. Factors or events that could cause the company’s actual results to differ may emerge from time to time, and it is not possible for Dynatronics to predict all of them. Dynatronics undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
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SOURCE Dynatronics Corporation
