Dynatronics(US:DYNT)2020-11-12 18:17Financial Data and Key Metrics Changes - Net sales for Q1 2021 decreased by $4.3 million or 26.0% to $12.1 million compared to $16.4 million in the same quarter of the prior year [12][16] - Gross margin decreased by $1.3 million or 24.3% to $3.9 million, representing 32.2% of sales, compared to 31.4% of sales in the same quarter of the prior year [17] - Net loss for the quarter was approximately $0.4 million compared to a net income of $0.1 million in the same quarter of the prior year [19] Business Line Data and Key Metrics Changes - Selling, general and administrative (SG&A) expenses decreased by approximately $0.7 million or 13.8% to $4.2 million compared to $4.9 million in the same quarter of the prior year [18] - The company generated $1.1 million in positive cash flow from operating activities and paid down its line of credit by $1 million, currently having no outstanding balance [13] Market Data and Key Metrics Changes - The decrease in net sales was primarily due to a reduction in sales related to COVID-19 precautions and the deferral of elective procedures [16] - The company reported that Q1 represented sequential improvement, finishing at approximately 74% of the prior year compared to expectations of 60% to 70% [21] Company Strategy and Development Direction - The company is focused on balancing the uncertain business environment with opportunities in the market and for its products [15] - Dynatronics remains committed to executing its recovery plan and pursuing growth strategies as market opportunities arise [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the margins achieved in Q1 and noted that they are matching resources to demand [24] - The company will continue to suspend guidance due to ongoing uncertainty in the markets caused by the COVID-19 pandemic [21] Other Important Information - The company is finalizing the closure of its Tennessee facility and transferring rehabilitation supplies to a third-party logistics provider [15] - As of September 30, 2020, the company held cash balances of approximately $2.3 million and had an $11 million asset-based line of credit with zero borrowings [19][20] Q&A Session Summary Question: Any commentary on margins and sustainability going forward? - Management expressed pride in the gross margins delivered in Q1 and noted that they are pleased with the activity seen in October, indicating a positive outlook [24] Question: Commentary on October ordering patterns and geographical differences? - Management confirmed that ordering patterns are geography-driven and noted that October trended in line with Q1, feeling good about the activity level [25] Question: Specific areas of product line performance? - Management highlighted the diversity in product lines, noting that different brands performed well depending on the type of procedures and physical therapy visits [28] Question: Priorities for driving down SG&A expenses and product innovation? - Management stated that they are focused on matching resources to run a scalable organization and are looking for new product opportunities within their portfolio [31][32]