Dynatronics Corporation

Net sales were $8.2 million in Q2 fiscal 2024, down from $10.9 million in Q2 fiscal 2023. Gross profit was $1.8 million, or 22.3% of net sales, versus $3.1 million, or 28.1% a year ago. SG&A was $2.7 million, down 29% from $3.9 million. Net loss was $1.0 million versus $0.8 million last year. For the first six months, cash used in operating activities was $1.5 million. As of December 31, 2023, net cash was approximately $0.6 million, line of credit balance was approximately $1.9 million, and additional availability was approximately $2.5 million on a borrowing base of approximately $4.4 million. Management lowered full-year revenue expectations to the lower end of its $34 million to $37 million guidance range, did not provide gross margin guidance, and reiterated SG&A at 29% to 33% of net sales.

Brian Baker said the company is making progress toward sales goals and positive EBITDA, with the commercial team working closely with strategic customers and identifying new products customers want Dynatronics to source. He emphasized a limited launch of new products in Q3 and a full launch in Q4, while saying it is too early to estimate revenue contribution. His tone was cautiously optimistic, pointing to improved customer confidence, lower backorders, and better service levels.

Gabe Ellwein walked through the quarter’s financials, highlighting $8.2 million in sales, $1.8 million in gross profit, and a 22.3% gross margin, versus 28.1% last year. SG&A fell $1.1 million to $2.7 million, mainly from a $0.8 million reduction in salaries and benefits, but the company still posted a $1.0 million net loss. He also noted net cash of about $0.6 million, $1.9 million drawn on the line of credit, $2.5 million of remaining availability, and $1.5 million of operating cash use in the first half, with roughly $300,000 of new shares expected to be issued per quarter depending on share price.

Analyst Brooks O'Neil asked whether rehab demand was weaker than expected and management said new facility openings have slowed because customers say there are not enough graduating physical therapists to staff them, though replacement-equipment demand remains solid. He also asked about new products and inventory, and Baker said customers are giving Dynatronics a roadmap of product gaps, early feedback has been very positive, and the company is building stock for a limited launch now and a broader launch later. On inventory, Baker said backorders are low and the company feels appropriately stocked, not over-inventoried.