Dynatronics(US:DYNT)2021-09-23 14:29Financial Data and Key Metrics Changes - Net sales for Q4 fiscal year 2021 were $12.2 million, up from $8.1 million in the same quarter last year, primarily due to increased overall procedures and activity compared to the prior year impacted by COVID-19 [40] - For the full fiscal year 2021, net sales were $47.8 million, down from $53.4 million in the prior fiscal year, mainly due to continued COVID-19 impacts including reduced demand and supply chain disruptions [41] - Gross profit for Q4 fiscal year 2021 increased to $2.3 million (19.1% of net sales) from $1.4 million (17.4% of net sales) in the same quarter last year [42] - Full fiscal year gross profit was $12.9 million (27% of net sales), down from $15.1 million (28.3% of net sales) in the prior year [44] Business Line Data and Key Metrics Changes - The company eliminated over 1,600 SKUs of low-margin third-party distributed products, which were expected to improve overall margins over time [23] - The introduction of the Hausmann 3D PROTEAM Builder product has received positive feedback, indicating successful product innovation [24] Market Data and Key Metrics Changes - The rehabilitation and bracing markets are expected to grow in the mid-single digits, providing a favorable environment for the company's growth strategy [35][66] - The company anticipates net sales for fiscal year 2022 to be in the range of $40 million to $45 million, representing a 15% growth from the previous baseline [29] Company Strategy and Development Direction - The company aims to streamline rehabilitation sales exclusively through existing and new dealers, focusing on higher-margin products manufactured by Dynatronics [16] - Goals include expanding margins and cash flow, strengthening the balance sheet, and maintaining a consistent cadence of new product introductions [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges from COVID-19, including supply chain disruptions and potential impacts on procedure volumes, but remains optimistic about growth opportunities [56] - The company expects to achieve higher gross margins over time, contingent on navigating the current economic environment [64][75] Other Important Information - The company ended Q4 with a cash position of approximately $6.1 million and no drawn amounts on its asset-based line of credit, indicating a strong balance sheet [22][52] - Other income for Q4 included $5.1 million, primarily from PPP loan forgiveness and gains from the sale of the Tennessee facility [48] Q&A Session Summary Question: Clarification on employee retention credit - Management confirmed that the employee retention credit is a federal charge [24] Question: Discussion on revenue growth drivers - Management indicated that revenue growth is driven by strong reactions to the clarified strategy and the growth of the markets they operate in [60] Question: Expectations for gross margin in fiscal year 2022 - Management expects gross margins to migrate upwards, with a baseline of 28% for fiscal year 2021 [64] Question: Impact of COVID-19 on customer operations - Management noted that while customers have adapted to provide services during COVID-19, there are still delays and deferrals of procedures [77]