Dynatronics(US:DYNT)2022-05-12 18:05Financial Data and Key Metrics Changes - Net sales for Q3 2022 were $10.3 million, a decrease from $11.5 million in the same quarter of the previous fiscal year, but exceeded the $9.25 million baseline set in April 2021 [34] - Gross profit for Q3 2022 was $2.3 million, representing 22.4% of net sales, compared to $3.3 million or 28.8% in the same quarter of the prior year [35] - The net loss for Q3 2022 was $1.5 million, compared to a net income of $0.1 million in Q3 2021, which benefited from employee retention credits [38] Business Line Data and Key Metrics Changes - The company has seen double-digit sales growth for four consecutive quarters, driven by business transformation and strategic inventory levels [11][12] - Inventory levels increased to $5.1 million, a 78% rise compared to the start of fiscal year 2022, to meet customer demand and offset supply chain disruptions [14][41] Market Data and Key Metrics Changes - The markets served by the company exhibit organic growth rates of 5% to 6% annually, with the company targeting to exceed this through market share gains and new product releases [9][24] - The company expects to maintain a distribution of net sales across quarters that aligns with historical trends, with the highest sales in the first quarter and a bounce back in the fourth quarter [10] Company Strategy and Development Direction - The company is focused on gross margin expansion, targeting a long-term gross margin of 40%, which is comparable to peers in the industry [17][22] - The strategy includes capturing market share, developing product innovations, and pursuing acquisitions to enhance growth [24][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook, raising the midpoint of fiscal year 2022 net sales guidance to a range of $44 million to $45 million, reflecting a 20.3% organic growth rate [9][20] - The company anticipates continued volatility due to COVID-19 and supply chain challenges but expects to improve throughput with elevated inventory levels [15][42] Other Important Information - The company has implemented a culture of accountability and is focused on organic sales growth and consistent profitability [29] - The cash balance was $2.5 million as of March 31, 2022, with no debt, indicating a stable financial position [45] Q&A Session Summary Question: Can you talk about the number of SKUs and any anticipated changes? - The company currently has around 5,000 SKUs, with no material change expected in the short term [49] Question: How are pricing and margins being affected by inflation? - Approximately 97% of sales growth in Q3 was driven by volume, with only 3% from price increases, indicating that price increases have not fully offset inflationary costs yet [50] Question: What are the key metrics to follow in the coming months? - The company is focused on consistent net sales growth, gross margin expansion, and positive operating cash flow as key metrics [63] Question: What new products are being launched? - The company has released seven new products since January 2021, with a strong pipeline of new products expected to contribute to revenue growth [65] Question: Will the growth show up in the revenue stream for 2023? - The company is projecting $44 million to $45 million in revenue for fiscal year 2022, which will serve as the baseline for future growth [79]