COTTONWOOD HEIGHTS, Utah, Feb. 13, 2018 — Dynatronics Corporation (NASDAQ:DYNT) today announced financial results for its fiscal 2018 second quarter ended December 31, 2017.
Net sales for the quarter increased $9.4 million, or 107.5 percent, to $18.1 million, compared to $8.7 million in the same period of the prior year. Gross profit for the quarter increased $2.7 million, or 87.7 percent, to $5.8 million. The increase in net sales and gross profit were attributable to our acquisitions of Hausmann and Bird & Cronin in the past year. These acquired operations contributed sales of $4.4 million and $5.7 million, respectively, and gross profit of $1.1 million and $2.1 million, respectively, in the quarter. Revenue from the legacy operation declined approximately $700,000, primarily attributable to a single order in 2017 not repeating in 2018. Gross margin for the quarter was 31.9 percent, compared to 35.3 percent in the same period of the prior year. As with sales and gross profit, the gross margin reflects the consolidation of all operations for the first time.
“With the acquisitions of Hausmann and Bird & Cronin, we more than doubled our sales over the prior year’s quarter,” emphasized Kelvyn H. Cullimore Jr., Dynatronics’ CEO. “The integrations of both Hausmann and Bird & Cronin have gone smoothly as we expected and are generating positive cash flow for the consolidated operations.”
Net income for the quarter ended December 31, 2017 was approximately $14,000, compared to a net loss of $95,000 for the quarter ended December 31, 2016. The improvement in net income is attributable primarily to gross profit contributed from the acquisitions of Hausmann and Bird & Cronin, partially offset by the selling, general and administrative costs from those operations. In the quarter, we recorded $325,000 in expenses related to an abandoned R&D project and we incurred $100,000 in acquisition costs. Depreciation, amortization, and other non-cash expenses were $362,000 in the quarter.
Net loss applicable to common stockholders for the quarter ended December 31, 2017 was approximately $1,315,000 compared to a loss of $560,000 for the quarter ended December 31, 2016. Net loss applicable to common stockholders recognizes a deemed dividend of $1,024,000 related to the issuance and partial conversion of the Series C Preferred Stock issued in October 2017. This deemed dividend is a non-cash accounting charge that does not result in the payment of dividends in cash or stock. We also paid dividends of $105,000 in cash and incurred $200,000 of accrued dividends subsequently paid with shares of our common stock. The increase in dividends in the quarter as compared with the prior year period is attributable to the issuance of additional preferred shares in December 2016, April 2017, and October 2017.
“This quarter is a significant milestone in that it reflects, for the first time, the full impact of both of the acquired operations,” explained Mr. Cullimore. “We are confident in our strategy and will continue to execute on organic growth and strategic acquisitions. With the foundation established by these two recent acquisitions, the investments we are continuing to make in seasoned executive leaders, and our partnership with Prettybrook Partners, we believe we are gaining momentum in all of our divisions.”
Dynatronics has scheduled a conference call for investors on February 13, 2018, at 4:30 PM EST. Those wishing to participate should call (877) 407-8033 or (201) 689-8033 for international callers.
The following is a summary of the financial results for the quarters ended December 31, 2017 and 2015 and as of December 31, 2017 and June 30, 2016:
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Summary Selected Financial Data |
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|
Statement of Operations Highlights |
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|
In thousands, except per share amounts |
|||||||
|
Quarter Ended |
Six Months Ended |
||||||
|
December 31, |
December 31, |
||||||
|
2017 |
2016 |
2017 |
2016 |
||||
|
Net sales |
$18,085 |
$8,713 |
$30,883 |
$16,876 |
|||
|
Cost of sales |
12,315 |
5,640 |
20,773 |
11,008 |
|||
|
Gross profit |
$5,770 |
$3,073 |
$10,109 |
$5,868 |
|||
|
Selling, general, and admin. expenses |
$5,110 |
$2,851 |
$8,933 |
$5,616 |
|||
|
Research and development expenses |
553 |
309 |
805 |
588 |
|||
|
Other expense, net |
92 |
8 |
159 |
45 |
|||
|
Loss before income taxes |
$14 |
($95) |
$213 |
($381) |
|||
|
Income tax (provision) benefit |
0 |
0 |
0 |
0 |
|||
|
Net income (loss) |
$14 |
($95) |
$213 |
($381) |
|||
|
Deemed dividend on 8% convertible preferred stock |
($1,024) |
($376) |
($1,024) |
($376) |
|||
|
Preferred stock dividend, cash |
(105) |
0 |
(105) |
0 |
|||
|
8% convertible preferred stock dividend |
(201) |
(89) |
(388) |
(178) |
|||
|
Net loss attributable to common stockholders |
($1,315) |
($560) |
($1,303) |
($935) |
|||
|
Net loss attributable to common stockholders per share – basic |
(0.23) |
(0.19) |
(0.25) |
(0.33) |
|||
|
Weighted-average common shares outstanding |
5,735,159 |
2,881,111 |
5,241,604 |
2,861,299 |
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Balance Sheet Highlights |
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In thousands, except per share amounts |
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|
Dec. 31, 2017 |
June 30, 2017 |
||||||||||||
|
Cash and cash equivalents |
$3,652 |
$255 |
|||||||||||
|
Trade accounts receivable |
7,222 |
5,281 |
|||||||||||
|
Inventories, net |
11,605 |
7,398 |
|||||||||||
|
Prepaid & other |
1,033 |
537 |
|||||||||||
|
Total current assets |
$23,513 |
$13,471 |
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Accounts payable |
$4,451 |
$2,335 |
|||||||||||
|
Accrued payroll and benefits expense |
1,359 |
1,473 |
|||||||||||
|
Accrued expenses |
714 |
657 |
|||||||||||
|
Other current liabilities |
1,155 |
1,001 |
|||||||||||
|
Line of credit |
6,743 |
2,172 |
|||||||||||
|
Total current liabilities |
$14,422 |
$7,637 |
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About Dynatronics Corporation
Dynatronics Corporation (NASDAQ:DYNT) designs, manufactures, markets, and distributes advanced-technology medical devices, therapeutic and medical treatment tables, rehabilitation equipment, custom athletic training treatment tables and equipment, institutional cabinetry, orthopedic soft goods, as well as other specialty patient, rehabilitation and therapy products and supplies. Through its various distribution channels, the company markets and sells its products to physical therapists, chiropractors, athletic trainers, sports medicine practitioners, orthopedists, hospitals, clinics, and other medical professionals, and institutions. More information including earnings releases and other financial information are available at www.dynatronics.com/investors. Information about the company’s products and services is available at www.dynatronics.com, www.hausmann.com, and www.birdcronin.com.
Safe Harbor Notification
This press release contains forward-looking statements. Those statements include references to the company’s expectations and similar statements. Forward-looking statements in this press release include statements regarding future acquisition activities. Actual results may vary from the views expressed in the forward-looking statements contained in this release. The development and sale of the company’s products are subject to a number of risks and uncertainties, including, but not limited to, changes in the regulatory environment, competitive factors, inventory risks due to shifts in market demand, market demand for the company’s products, availability of financing at cost-effective rates, and the risk factors listed from time to time in the company’s SEC reports.
For additional information, please visit: www.dynatronics.com
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SOURCE Dynatronics Corporation
