Dynatronics(US:DYNT)2024-02-08 18:04Financial Data and Key Metrics Changes - Net sales for Q2 fiscal year 2024 were $8.2 million, down from $10.9 million in the same period of fiscal year 2023, primarily due to a competitor acquisition by a major customer and reduced demand in the orthopedic soft bracing category [11] - Gross profit for the quarter was $1.8 million, representing 22.3% of net sales, compared to $3.1 million or 28.1% of net sales in the prior year, driven by lower sales and product margins [12] - Net loss for Q2 fiscal year 2024 was $1.0 million, compared to a net loss of $0.8 million in the same period of fiscal year 2023 [14] Business Line Data and Key Metrics Changes - The company is focusing on new product development based on customer feedback, with plans for a limited launch in Q3 and a full launch in Q4 of fiscal year 2024 [7] - The operations team has improved stock manufacturing and reduced lead times, leading to a decrease in backorders and faster revenue recognition [8] Market Data and Key Metrics Changes - There has been a slowdown in new facility openings among larger groups, impacting demand for physical therapy services [21] - Ongoing demand for replacement equipment in the rehabilitation space continues to be observed [27] Company Strategy and Development Direction - The company aims to strengthen customer relationships while improving operating profitability and financial flexibility [19] - The focus for fiscal year 2024 includes managing inventory effectively to maintain high service levels [26] Management Comments on Operating Environment and Future Outlook - Management has adjusted revenue guidance for fiscal year 2024 to the lower end of the range, estimating net revenue between $34 million and $37 million due to slower demand in the rehabilitation space [17] - There is no current guidance on gross margins as the company seeks stabilization before providing new forecasts [18] Other Important Information - Selling, general and administrative expenses decreased by $1.1 million or 29% to $2.7 million for the quarter, primarily due to reduced salaries and benefits [13] - The net cash balance remained unchanged at approximately $0.6 million as of December 31, 2023 [14] Q&A Session Summary Question: Market Demand for Physical Therapy Services - Management noted a slowdown in new facility openings among larger groups, which is affecting demand for physical therapy services [21][23] Question: Inventory Position - Management expressed satisfaction with the current inventory levels, indicating they are optimized to meet customer demand [26] Question: New Product Opportunities - Management highlighted that customers are identifying gaps in the product portfolio, which will lead to incremental revenue as new products are developed [28]