DYNT - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Dynatronics Second Quarter Financial Year 2021 Earnings Call. At this time, all participants have been placed on listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Skyler Black. Sir, the floor is yours.

Skyler Black

Thank you, Operator.

financial me we that regarding will expectations, projections let of the our begin, our plans, call, to this make and we remind during you course current business. Before relating performance forward-looking statements These today. only they forward-looking could actual involve today materially differ that and results uncertainties statements to view and from of our cause reflect as risks those discussed our or today actual uncertainties that to the differ SEC, in projected could are on those pandemic statements forward-looking cause the results of business recent impact other implied factors and and our results. Important from by with to XX-K reports most included materially the COVID-XX risks filed related include and not reliance we We forward-looking caution undue place to you morning. on statements made this to or obligation statements. update forward-looking revise We undertake no

John Krier

you Accounting Officer I'll And of who And lines report. achievements phone the our our it Skyler our open At have Group and Krier, remarks financial provide release in year January November conference XX, we’ll prepared and then to the questions. second turn conclusion, been operator XXXX, Skyler. call. today's a Norm for I quarter an Roegner, press you, was Officer, XXXX. call, results for update Principal John Finance positioning. joined overall Dynatronics. And We issued morning a to the announcing has quarter Executive since the call. our earnings in leader over morning for Good this our some President on the have XXXX; introduced fiscal Officer, our Chief on Thank of ended Chief financial the December on today's company today and for who participating and Black, in Norm Financial last within here me thank with and I'm the

remain and our safety top and our We're COVID-XX. hard our mind. the best our partners, And to team preserve trying like customers to at their through I'd of do thank to pandemic. to global Dynatronics. perseverance for the of Health stakeholders all of work to and committed responsibly partners for protect First, and our the and employees, here business continued responding we time continue people challenges

a is the of you And as Skyler part if Investor included available registered have have can on slide forward-looking on for which have Page webcast find dynatronics.com. presentation, our our We statements. you at if not, you reviewed the it deck it.

collective company to executive So significant get like to excitement introduce provide let's at we resources brought and to have the Slide our the that team go to X. some Dynatronics as I'd and experience as changes the to myself our color and CEO Dynatronics to XXXX. underway. I've of know company started Dynatronics, in nearly Prior I management XX of ago. for team to years. was the I Orthopedics since years several and July involved companies bracing been joining the the to

easy model. successful with experience building to revenues mantra organic compelling We we Breg make sustainable a us. and acquisitions, to and industry-leading commitment customer an helped to for Partners, great Dynatronics Breg success significant with working Street I customer. owned execute a extensive of Breg a is healthcare Water Breg, in firm equity XX growing business it growth, unwavering a our and predecessor had which significantly by remarkably While customers is an record choose building At private companies. companies, track had by Healthcare for

Finance a years financial of for Solutions of Pharma operational and focus industry to our executive team Medical similar are President Dynatronics over Molex us to was Dynatronics. XX ago, the three that very who Norm Roegner, has in Most Our and months Phillips-Medisize, division brings mind fundamentals at Vice leadership same recently, Breg's. joined Company. Norm of

known supply multiple culture work During chain discipline. has the within the that organization, recognizes execution industry Molex financial that company the of It's commercial a Norm well parent led at across Industries, operating Koch operation. companies, Molex extensive and his manufacturing

in hear just minutes. Norm. from We'll welcome a So few Norm

to is a X. business, and Moving markets so opportunity Slide large, Dynatronics are There an base, generate indicates an growth shareholders. we fragmented. The sustainable create the customer continue research cash build scalable to and for grow to here value its profile. that serving flow revenue and that growing that support and markets we industry The our for rehabilitation bracing attractive exhibit are

which been always want in grow per billion demand in see for nationwide towards people X% to the aging a moving there growth can an has this slide, you year, estimated $X both the X. a sales markets market of past billion expected It the strategy to today. annual in going are on slide, these As excess Thus, of our from Drivers to our of to continue to success reflects with top on shortly. and Dynatronics importantly, evident clinics to include lives. longer under style increased levels and At turn you healthier Market and to can to execution in $X live should the of Please rehabilitation move we'll of XXXX, treatment for demand higher therapy conservative population, our to are focus least. support an facilities of see and more expect injuries a of financial model. physicians Slide and towards physical proliferation and of obesity, Snapshot accelerating Also, initiatives wellness, the all that for systems. valuation products important that seems decade, be for at fair get

and some second third the present our to disruption I higher months. chain, supply have in often take the want continues accomplish the to first It's are several our are result We choppiness next in challenges, to the a which for the our Dynatronics. and objectives quarter, investors to quarter which acknowledge financial pandemic including that actions customers sales quarters. fourth to continue to business in lower that for to has the and been there sales will continue and begun these remind business, serious will little historically COVID seasonality to important and a little in

the December Looking forward, planned due increases due cash XXXX, negative negative seasonality, to gross and be fourth operations planning to from in as adjust third third supply margin environment sales quarter the inventory operating targeting the return quarter flow for operations we're COVID to in we cash disruptions in for Similarly, the from COVID, flow to quarter. and our planning We're from the impact for be in. ended in the line to we're quarter we're global chain. the positive with

build moment We margins optimization The to financial of sustainable business experienced the the markets highlights on committed is XX% sheet team competitive staffing, within now before our and with cash sales, business million, our turn and for of like had quarter, cash sales, the Our the the product improving were team to and I'd approximately a on and call the facilities, generating the margins, order activities. which the was what what cash, $XX from we $XX possible the our the grow expense the details line which reduction achieved was higher customer include right a and path an is is to to QX an of side, with a team million, and borrowings in from prior-quarter $X.X rationalization. the financial million, SG&A, Norm the of operating bottom we demand, cash team compared our more described and realized transformation X% and represents line. from net that we into inventory ago, approximately financial to zero sales procurement of and focused to in reported quarterly achieved include confident in growth the over relative to challenges our We our on XXXX. Considering including accounts rundown overall, reviewing base credit $X.X comparisons the of that quarter. benefiting quarter a in the expenses we X% flow traditional to million strongest the matching ended revenues flow. credit. second increase with customer of asset leverage maintaining on perspective, accelerating model a continuing in business. up-level which I'm environment high-level, quarter results go for balance to million to line $X.X And operating a to leadership operating a on fact of prior-quarter, and prior-quarter. significant. the had of transformation base and net portfolio At stabilize the we getting that strategies the borrowing able free we Please Slide the X COVID-XX in gross turn to through

Norm Roegner

them here. net for be or The to XX-Q, the quarter which changes sales and year-over-year for $XX.X elective to procedures, of our XXXX. the XX.X% Please sales ended found financial sales Thanks, for full XXXX. to or $X.X John. the six-months six-months decrease to ended $XX.X the decreased quarterly ended our primarily is X, quarter million, $XX.X XX, December XX, in $XX XX, Analysis net Discussion will million income precautions for million which decreased products. contains sales demand XX.X% I compared December compared summarize ended and XXXX, reduced XX, $X.X million & December to of in Slide can XXXX, highlights. to COVID-XX associated December Net statement, million due and the Management The million Net turn for

of XX% and or and XX.X% no of net sales or administrative salaries. in net $X.X December December headcount to Getting general administrative sales. December major period, the bottom decrease and decrease sales. XX.X% prior-year XXXX. decreased decrease the $X.X the decreased result These December quarter product $X.X of none was the decreased for impacts $X.X and expenses reduced expenses the interest was XX, to the in customers expenses in driven December $X.X period, were or administrative the XX.X% XX, million quarterly six December partially have for for decreased million the expense net XX.X% for to XXXX, six result primarily year-over-year compared The sales for months offset net months six to of XXXX, XXXX, compared expenses $X.X $XX,XXX loss $X.X of XX, million profit just changes XX.X% gross management and or of XXXX. Selling commission sales profit $X.X $X.X quarter for Net million profit General due the in $X.X as decrease prior-year to XX, to ended a or loss or to for a XXXX, about million decreased December $X.X net compared months credit. quarter average quarter primarily quarter. concentration, quarter and of attributable was to of gross to December $X.X or compared and reductions payroll line gross We reductions. than ended in loss decreased sales. $X.X comparison, a six on the December of for same lower in our sales. for sales line, XX, of $X.X million, XXXX, in to our December costs to million ended decreased XX, ended XX.X% to continue Gross quarter XX.X% net to the profit primarily by our borrowings I the XX, six the December million comparison, and significant million XXXX. million by By compared $X.X XXXX, By attributable higher XX, XXXX. for the a the about XX, profit lower months profit ended Gross expense the was to decrease and million million categories. general million The to more million and ended which percentage XX.X% gross Selling, as SG&A, for in or COVID for for gross months lower ended ended ended XX gross million sales customer attributable as profit was factors, benefit $X.X a mix mentioned. XXXX, factors ended XX, a margin in the million ended to on was compared accounted December the XXXX lower ended XX, million $X.X the six Selling, months

position pleased the was $X.X three Also on is our been mentioned, minimum in our and calculation. I'm Based loan a years you'll XX-Q, in John worth as including February compliance regained net the better balance than X, balance That our it of approximately rules, of share. Program, will shape $X as million per million is with Paycheck XXXX. be thus, it's December of Protection or $X.X position. this a review cash forgiven to say see with in we're believe the requirement bid As in amount In on XX, PPP of forgiveness loan the net net we sheet not that full we mentioning cash debt NASDAQ of sheet.

did you we This operating call if and we're X, turn compliance now NASDAQ didn't it, listing file summary an with on see of So concludes the I'll our back in X-K requirements. the to full February John. results.

John Krier

Thank you, Norm.

X, see you’ll to a few highlight you Slide of taken believe track this grow. these into to the activities show we of and then can Turning a on to groups, broke as the actions We actions. that a see I'll we're down list we've slide, few stability right on and

a safety our focus Group base cultural and revenue Tables with support: sale the focusing change, recently being GPO and Two XX-plus through expansion. revenue for consistent our been on year New reflecting is extended employees, overall implementing products a leadership relationship industry area, leadership share facility actions and is Hausmann and leaders and for Tennessee organic now partners Intalere hires, margin This contract additional three purchasing to growth has our organic and outside both broker. our growth years. fully opportunities major Ossur. Intalere three or for profitability. we and The in builds listed this Intalere and of new agreement announced an with bracing DJO, Breg the organization exited, this stabilizing of employee marketed

X, strategy. Turning to M&A Slide

strategy M&A for. here of to looking will detailed give an you be what idea is Our we

explore We have conversations and to continue potential exist. partners may that to with merger product opportunities

positioned sheet, leadership acquisitions strengthened we're opportunistic balance may As we as have be our capabilities, teams' our execution to present. and

a we're Let's grow At pair the revenues have the deliver. attractive an same to Slide to model. to continuing the we experiences starting optimization team Dynatronics business sustainable our I'm turn that and competitive to aggressive meet we cost to the experienced structure build time, and reenergize commitment XX. at is management with confident demands seeking margins. the strategy customer market to gross undergoing

of culturally to time. optimizing disciplined focused brands given resources are respected substantially, a models We're stand of and portfolio Dynatronics and employees time metrics has decisions. all aligned see some serving well improve these test Our applying to on financial relevant developing growth which markets. the culture, product a investment

we other a and commitment, EBITDA talent within our generated outstanding cash we've We us loans on experience. than talent and compensation is XX, here, have incentive business. the see debt have linked flow build to senior coming PPP from to revenue some and management no And as operations, to accumulated and you'll great industry takes growth. many level focus Slide It

and worked from our Brian benefit great Baker, to continue closely C-suite experience before. has whom continuing with I've like association at companies Integra We Brian with Seaspine.

as I nearly heading want being Our to at of up team. kind who in most outstanding knew the with given numerous is and at Breg EBITDA Champion key make award before. R.J.'s Breg, growth other collaborating R.J. worked R.J. XX R.J. and of marketing hire the was we recipient of expansion. of leader recently Dynatronics. Smith, Breg's Year, Cultural he accolades our to achieving the the also excellent focus team, an have his was leader organic of the years including named which members I on an Experience announced was with revenue and Customer him results leadership results and sales contributors

the related accordingly. employees react and of locations to COVID-XX to changing all adapt across assess conditions continue market our to Our will and

past to end-user resulting our in despite business, We ability the of the this disruptions stabilization quarters, a customers. significant our have three demonstrated over

into want remain from chain. the of we managing our to taking there, got supply the to still year XXXX, XXXX, change here, are We're steps throughout outlook. maintain build and calendar committed fiscal cautious While added and I to affecting disruptions that COVID a layer out customers we've and

would we it expect the model. into company forward the choppiness be Given some disruption, growth reasonable ongoing a to drive as

base, we'll for appreciate turn for employees our commitment the operator ongoing As our I'll We to recent and to Dynatronics. and support investor it providing their of not questions. continue thank over guidance. a now practice result, forward-looking and

Operator

the live. for in Thank And is line announce question open floor question. your affiliation first you. Jeffrey your questions. is coming from Ladies Please and Cohen. your pose Jeffrey, [Operator now the gentlemen, Instructions]. is and

Jeffrey Cohen

Well, hi, John, Norm and Skyler, how are you?

John Krier

Great morning, Jeff. voice. to Good hear your

Jeffrey Cohen

on seeing it's speaking there, and So over you've markets three just like? growth bottomed sense you or impact where And on like your And some take Are generally effect two we're to and specifically, occur? signs out. months? on It get sounds what even COVID's feels rehab, or work what's disruptions and done prehab on that this you and occurred which stabilization has of your serve past PT. looks more trying the will any the like out COVID's

John Krier

it Thanks, at at Jeff. this; largely volumes like patient look we're I would looking stabilizing. the

see think to in QX. I in compared you QX revenues our that

the for of of is markets little breadth the different. impact stabilization the bit of interesting serve; a areas One given the that's us we is that

happening forward QX think But what's QX. may volumes be and locations and have ambulatory surgery schools the But we training what's with athletic both certainly of centers. versus private looking than largely, in as would there the therapy happening different stabilized. with we're acute it was those So at to COVID look spike facilities, in I physical in activity, choppiness IDN

Jeffrey Cohen

it. got Okay,

you? lines it Has you unproductive bottomed and products And some continue there. are lines add on that out are margin the do higher? feels and which and commentary more to Have other discontinued driving for that on some front. work like It that productive you

Norm Roegner

today? doing you Thanks for are How call. morning. good Jeffrey, So, the

sequential a margins In obviously saw, that margins terms period. bit the the dropped we from of

that and product in driven saw into bleed QX So QX. was a that by mix that really didn't QX favorable we from

products as we'll we're part the improvement forward, for in in, in always see that, new for at generally, and going QX we point coming So looking looking quarter opportunities our releases with and Tables in QX of think and for to terms with products, some should the the of with results. at there. be second we're But that point. this margins Hausmann the this improve line margins be line And QX to

Jeffrey Cohen

does aspirationally could where Okay, continue as that front, less that slides M&A know And and be or some you there activity for, lastly, looking then but more front? I on talk got you're that like the busy on seem about John going addressed out activity it. there's of the as to and it you have you

John Krier

Jeff. do partners, the merger to the continue past categories complementary actively busy have We Thanks, especially be are having we with as as participate that those conversations in. we in in that

continues do continue we'll balance position landed that. us. available we've being the That for to be with asset sheet credit cash and an to where part the line So to is The of us. opportunity base our nice

So of an we'll ongoing part our be and active have that strategy continuing.

Jeffrey Cohen

on then, the direction? Okay, revenues seems conditions being I for changing that are last good thus like relatively commentary It think give any got your on it. And we how to a that's read-out, know from two quarters, forward-looking anticipate has as about gone. year level nothing either lastly far much not me, you should stable the

John Krier

what with similar what the we markets that around that down up we're the That's activity and and planning business planning choppiness out COVID and is serve, right, come Jeff. but the impacts different is that QX. had building in We're we challenge The around. that's as there for

Jeffrey Cohen

taking that's it Thanks okay, questions. me. for Perfect, for the

John Krier

Jeff. Thanks,

Operator

line Please you. coming pose Henry. your from the is Scott question. and live. announce question affiliation next Scott, your Thank your is And

Scott Henry

morning. Good you. Thank

probably a that question margin, at a on is I'll as point, years of the that noted XX%. was would speed, goal should that longer-term, Just long-term few not with this but one XX% Thank but attainable? we levels you. those couple of year, comes thinking guess, questions. number, questions fiscal just at a expand are was be just it the corporate ago, prior couple looking start gross about I think Or be back target? on you may as lower, new business higher still maybe maybe long-term The do

Norm Roegner

and And don't I general, what this to we're for for would have on history know margin in get been they that to one want jump But back able if aiming we're John, a this point. perspective. Dynatronics you say to in I a to looking mid-XXs at that. achieve at

our do, lot I releases, different a and there, to perspective lot expectations. we're of some doing got on margin margins. just to improve obviously new structure course, at a with think options we of looking get from operations aren't perspective, looking have products rationalizing different there, looking fronts. product in that our we're terms operating it at and some work of do And a on One overall work -- we're commercial we've and to to in obviously, line our of

think of I lot target. don't fair to. long-term a Dynatronics that to set into has mid-XXs, us goal really there's a we get But gotten historically the back know knowing that's So work. a I if for

Scott Henry

Okay. Fair enough.

John Krier

higher build that Norm to than margins said on as been what I'll well have categories industry ours. in Scott, achieve participants able various

so to need And and our be to that reason model that a our do able to well. operations as there's business improve we

Scott Henry

be were of it great, that's just new out top-line, release, should in And it new do impactful year, January, of Okay, is, you was product the bottom the of I there to can newer launches? do able from the magnitude line a expect The those the like to how revenue that to two kind starting sort or what seems on mentioned get throughout there in Not bring products say? product press cycle. question but you're on helpful. be

John Krier

fiscal of to QX. pay-off. two add Those tables Absolutely. nice I nice our in interesting us forward. as Product the starting a that of products Sarah work, sign fronts. two And of us Director two this moving is are Marketing, And are those two this. of year indication our end things Mealman towards would joined I think to

to they're revenue, While they're they're not both to material going not materially, additive.

former features New a from to one with our being Tennessee ability combination it facility, our The Hausmann and and our the Jersey treatment first of facility into of two bring table both. the products was one

margin. second New design table were we released, traditionally was able in-house, to then an it Jersey a provider that So expand the our product sold gross we expand facility, we grow to bring the in revenues could our and with our table and stand-in have sourced opportunity produce we Similarly, margin. it marketplace, from gross the another had that in

So looking that is a the do be product that we sign launches future. work of we're of releases of for an our part and some important and believe will

Scott Henry

guess, final XXXX do that year Okay. that that pending at quarter question, be I time well well. when tailed through you as levels think COVID assuming stay down at kind that coming expect it's point? quarter growth we this uptick? is And these that I the should growth a And we kind to the fiscal I in revenue just obviously should fourth fiscal see SG&A, recognize want to coming going revenue about of not happen and growth of not through, to as -- Would third revenue probably

Norm Roegner

SG&A a start change I at. guess with we've it our part. -- point this that we the the near-term costs the planning see a SG&A level I until think From for to operating in and I'll we're top-line scaled, we're And number. And to maintain the at

there is our hold pretty to I where So near-term. think it we're comfortable we [ph] the plan feel mostly for at,

XXXX. get some year, to at probably more momentum where when in the see we the with this our start starting growth growth see see In in revenue, through well to numbers as we and and terms second, in of land. think top-line? final start But got year we're looking to the this do I aiming should quarter this the point, see but through go we to we've

Scott Henry

final I quick should see to XX-Q Okay, great. that filing, just expect when today? be And should the I a guess question,

John Krier

will Yes, be that morning. Scott, just this later

Scott Henry

the great. you Thank Okay, question. for taking

Operator

And is your next is line your Anthony, announce question Thank from question. Please affiliation and you. Anthony live. coming your Vendetti. the pose

Anthony Vendetti

How Maxim Group. doing? you Thanks.

John Krier

Anthony thanks for in. joining

Anthony Vendetti

Hey, Norm, you hey good. Hey Skyler. How are John, doing? hey

new the an to answered business, is the hear, had and some impact product Just -- obviously And sounds things like most impacted it bit could into questions opportunity. in glad COVID Hausmann tables. the gross Thank are specific, you one way? the you. in Obviously, so which of those similar? of at are can't hear about extent, pipeline has get this on about just the point? too product many then has the we but mix other COVID combining do And initiatives in margin something to a what little talk how the if pipeline great initiatives been provides Can those if stabilizing, to that

John Krier

Absolutely.

we has orthopedic bracing if we a at mix, mix categories Anthony, it our given and certainly the quarter-over-quarter. overall at product think, I serve, the if look to had support equipment, look stronger you rehabilitation compared the

that looked overall So for seeing that at out. -- the you're if you company, play that,

or the individual On product pipeline category opportunities.

You're we right, without categories. being our too specific; have of opportunities each in

opportunities and support in got shows we orthopedic the equipment we've in line in have, our therapeutic modality. treatment in tables our bracing area, Hausmann an the think opportunity I that

release revenues. build area, we forward nice, now to team we've that look lean So into our to the to marketing be as in individuals and we'll and going our build selectively a use can started a product in to pipeline this that cadence added in able

Anthony Vendetti

in Okay. impact the not really? that just on And mix, terms had the has of COVID or much impact, product

John Krier

or It has modalities of that it, any business has in the with equipment. product treatment meaningful not supply side supports other our our of modalities for us, equipment our participated capital supply our mix not traditional the on way consistent. We've that and than stayed the being Hausmann

Operator

this questions were the there in at no you. queue And Thank other time.

John Krier

you, you Thank the and Dynatronics. questions for thank Paul, and all for your interest in

issued on them or Peter and Seltzberg. Skyler Their this may presentation further to the please If Operator, Black questions, you call. is you contact in morning. the this have earlier end direct any press information release

Operator

conclude you. conference Ladies and today's gentlemen, this Thank call. does

Thank for disconnect day. phone this may you your your at wonderful Have You participation. a lines time.

Dynatronics (DYNT) 11 Feb 212021 Q2 Earnings call transcript