Dynatronics(US:DYNT)2020-02-11 17:07Financial Data and Key Metrics Changes - For the second quarter ended December 31, 2019, net sales decreased by $243,000 or 1.6% to $15.2 million compared to $15.4 million in the same quarter of the prior year, primarily due to a reduction in sales of physical therapy and rehabilitation products [17] - Gross profit for the quarter decreased by $94,000 or 2% to $4.6 million, representing 30.2% of sales compared to 30.3% in the same quarter of the prior year [18] - Selling, general and administrative expenses decreased by approximately $155,000 or 3.2% to $4.6 million compared to $4.8 million in the same quarter of the prior year [18] - Net loss for the quarter was approximately $137,000 compared to a net loss of $441,000 in the same quarter of the prior year [19] - Operating income improved by $61,000 for the second quarter of fiscal 2020 compared to the second quarter of fiscal 2019 [19] Business Line Data and Key Metrics Changes - The company achieved sales objectives for major brands including Hausmann, Bird & Cronin, and Solaris, with a commitment to meet sales objectives every quarter [8] - The commercial teams are implementing improved sales analytics to gain insights into sales trends and opportunities [9] Market Data and Key Metrics Changes - The company expects consolidated net sales for fiscal year 2020 to be in the range of $59 million to $61 million, aligning with historical trends [21] - The number of common shares outstanding increased by 760,000 in the second quarter due to the conversion of Series C preferred to common shares [23] Company Strategy and Development Direction - The company aims to drive operational changes to reduce costs, improve profitability, and position itself well for the next fiscal year [12] - A new e-commerce store will be launched to enhance customer experience and augment sales channels [15] - The focus for the current fiscal year is to lay the operational foundation for mid-single digit organic revenue growth and to continue the M&A strategy [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the narrowed sales guidance for fiscal year 2020 and indicated that the company is well-positioned for modest single-digit growth beyond the current fiscal year [30] - The company anticipates generating positive cash flow from operating activities for fiscal 2020, despite some volatility in quarters [35] Other Important Information - The company has reduced its line of credit balance to $4.8 million as of December 31, 2019, reflecting decreases in working capital accounts and positive cash flow from operating activities [11] - The company is actively recruiting for key positions to enhance talent in critical areas [13] Q&A Session Summary Question: Can you give us a sense on FTEs over the past quarter? - Management indicated that full-time employees are in the low 300 range, with approximately 280 currently [28][29] Question: Do you think mid-single digit growth will commence in March/June? - Management feels confident about meeting the sales guidance for fiscal year 2020 and is positioning the company for modest single-digit growth beyond this fiscal year [30] Question: Can you talk about the torque table and other innovations? - The torque table is a proprietary product that anchors patients during therapy, and there are plans to refresh the Solaris product for easier use [32][34] Question: What is the status of the outsourcing of the electrotherapy line? - Management reported good progress on outsourcing the electrotherapy line to a contract manufacturer, which is expected to positively impact margins [39] Question: Can you discuss the product line rationalization process? - Management confirmed that the product rationalization project has been completed, with ongoing management of product lifecycle [41]