Form 8-K DYNATRONICS CORP For: Sep 23

September 23, 2021 7:46 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.
 
 
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): September 23, 2021
__________________________________________
 
Dynatronics Corporation
(Exact name of registrant as specified in its charter)
 
__________________________________________
 
 
Utah
 
0-12697
 
87-0398434
(State or other jurisdiction of incorporation)
 
Commission File Number
 
(IRS Employer Identification Number)
 
1200 Trapp Rd, Eagan, Minnesota
 
55121
(Address of principal executive offices)
 
(Zip Code)
(801) 568-7000
 
 
(Registrant's telephone number, including area code)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14(d)-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act: 
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, no par value
 
DYNT
 
The Nasdaq Capital Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
 
 
 
 

   
 
 
 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Report includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions that pertain to future events, or convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
 
The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the uncertainty regarding the impact or duration of the novel coronavirus COVID-19 ("COVID-19") pandemic adversely affecting communities and businesses, including ours, as well as those factors described under the heading "Risk Factors" in our filings with the Securities and Exchange Commission ("SEC"), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under "Risk Factors" may not be exhaustive.
 
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.
 
Item 2.02  Results of Operations and Financial Condition
 
On September 23, 2021, Dynatronics Corporation ("Dynatronics" or "Company") issued a press release reporting, among other things, financial results relating to the quarter and full year ended June 30, 2021. Also, as previously announced by a press release issued on September 9, 2021, on September 23, 2021, the Company held a conference call in which executives of the Company reviewed the fiscal 2021 fourth quarter and full year results. A replay will be available through September 30, 2021, by dialing (877) 481-4010, using passcode 42721. The full text of the press release is furnished herewith as Exhibit 99.1. The slide presentation that accompanied the earnings conference call is furnished as Exhibit 99.2.
 
The information under this Item 2.02 and in Exhibits 99.1 and 99.2, is being “furnished” and is not being “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933, whether made before or after the date hereof, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01          
Financial Statements and Exhibits
 
 
 
Exhibit Number
 
Description
 
 
 
 
Press Release dated September 23, 2021
Slide Presentation accompanying investor conference call held September 23, 2021
 
 
 
 
 
 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  
Date: September 23, 2021
DYNATRONICS CORPORATION
 
 
 
 
 
 
By:  
  /s/John Krier
 
 
Name:
  John Krier
 
 
Title:    
Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
Exhibit 99.1
 
 
 
 
Dynatronics Corporation Reports Fourth Quarter and Fiscal Year 2021 Financial Results and Business Highlights
 
EAGAN, MN / ACCESSWIRE / September 23, 2021 / Dynatronics Corporation (NASDAQ: DYNT), a leading manufacturer of athletic training, physical therapy, and rehabilitation products, today reported financial results for its fourth quarter and fiscal year ended June 30, 2021, and provided an update on recent business highlights.
 
CEO Commentary
 
“Customer and dealer reaction to Dynatronics' optimization strategy confirmed the changes and decisions we made in April 2021, and our transformation remains the top priority,” said John Krier, Chief Executive Officer of Dynatronics. “Customer and dealer demand forecasts have provided us the confidence to initiate revenue guidance. We anticipate good progress in FY ’22, with revenues benefitting from our growing markets as we work to improve margins and build long-term value for our shareholders.”
 
Key Financial Highlights
 
Q4 FY '21 Financial Highlights
Note: All financials referenced in this release are in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) and comparisons in this release are to the same period in the prior year unless otherwise noted.
 
Total net sales of $12.2 million and gross profit margin of 19.1% (GAAP results).
Continued product net sales of $9.8 million (non-GAAP financial measure).
Net income of $2.9 million compared to net loss of $2.3 million in the same quarter last year.
Notable events in Q4 FY ’21:
 
Cost of sales and SG&A collectively impacted by $1.0 million in optimization activity costs.
 
Other Income benefitted from the $3.5 million PPP loan forgiveness, $0.9 million Employee Retention Credit, and $0.8 million gain on sale of former Tennessee manufacturing facility.
No debt, zero balance on the line of credit, and a borrowing base of approximately $5.0 million as of the end of Q4 FY '21.
Cash of $6.1 million at the end of Q4 FY '21, the highest cash position in recent years.
 
Dynatronics defines continued product net sales as sales in Q4 FY ‘21 on products that the company plans to continue offering to customers in FY '22.
 
FY '21 Financial Highlights
 
Total net sales of $47.8 million and gross profit margin of 27.0% (GAAP results). Excluding $0.5 million optimization exit activity costs, fiscal year ’21 gross profit margin on total net sales would have been 28.0% (non-GAAP financial measure).
 
 
 
 
 
Guidance for FY ’22
Customer and dealer demand forecasts have provided the company with the confidence to initiate net sales guidance for FY ‘22.
 
Product sales in FY ’22 will represent products the company plans to offer moving forward since the optimization initiatives announced on April 22, 2021 were substantially completed in FY ’21. Net sales are on pace to achieve approximately $11.5 to $12.0 million for Q1 FY ’22, which exceeds the ˜$9.25 million quarterly continued product net sales baseline set in April 2021 and the $9.8 million continued product net sales in Q4 FY ’21. Dynatronics expects, assuming continued growth in procedure volume despite the recent surge in COVID-19, net sales in FY ’22 to be $40 million to $45 million. The mid-point of this range is a 15% improvement relative to the ˜$37 million annual continued product net sales baseline set in April 2021. The company expects the distribution of net sales across the quarters in FY ’22 to align with historical trends, which have tended to be a little higher in the first and fourth quarters and lower in the second and third quarters. There may be some variability in this pattern, as the company is adjusting to ordering patterns in its rehabilitation market given the transition to an exclusive dealer-based sales model.
 
The company is targeting improvement over time in gross margin, operating income, and cash flow from operations. Absent significant impacts from COVID-19 outbreaks, the company expects those financial metrics will improve in FY ’22 relative to FY ’21, excluding the notable Other Income events experienced in Q4 FY ‘21.
 
Selling, General, and Administrative expenses are anticipated to be 30% to 35% of net sales in Q1 FY ’22. Other income is expected to include an approximately $0.6 million benefit from the Employee Retention Credit in Q1 FY ’22.
 
The company's financial guidance for FY ’22 is subject to the risks identified in our Safe Harbor Notification below. The company and its customers expect to experience continued challenges due to COVID-19, including higher delivery and shipment costs, supply chain disruptions, and extended handling times. Dynatronics also expects some continued volatility from the company's business optimization.
 
Growth Priorities
 
While each of the following strategies is very important to Dynatronics’ growth platform, the first four items are our focus in the first half of FY ’22, as we see near-term opportunities:
 
Deliver commercial success, emphasizing quality for cost and a differentiated customer experience
Improve margins through consolidations and financial discipline
Continue focus on cash flow from operations
Timely commercial launch of new products focused on growth markets
Optimize manufacturing and supply chain
Rationalize product portfolio and pricing for attractive growth trends
Target acquisitions in existing or adjacent markets with customer uptake
 
 
 
 
 
Conference Call and Webcast
 
The company will hold a conference call and live audio webcast to discuss the results, consisting of prepared remarks by management, slide presentation, and a question-and-answer session with analysts, beginning at 8:30 AM ET on Thursday, September 23, 2021.
 
Interested persons may access the live conference call by dialing 844-407-9500 (U.S./Canada callers) or 862-298-0850 (international callers). It is recommended that participants call or login 10 minutes ahead of the scheduled start time to ensure proper connection. An audio replay will be available one hour after the live call until Midnight on September 30, 2021, by dialing 877-481-4010, using passcode 42721.
 
The live webcast and slide presentation can be accessed on the company's Investor webpage under the Events & Presentations tab at https://irdirect.net/DYNT/corporate_document/1982. The webcast will be archived on the website for future viewing.
 
About Dynatronics Corporation
 
Dynatronics is a leading medical device company committed to providing high-quality restorative products designed to accelerate achieving optimal health. The Company designs, manufactures, and sells a broad range of products for clinical use in physical therapy, rehabilitation, pain management, and athletic training. Through its distribution channels, Dynatronics markets and sells to orthopedists, physical therapists, chiropractors, athletic trainers, sports medicine practitioners, clinics, hospitals, and consumers. The Company's products are marketed under a portfolio of high-quality, well-known industry brands including Bird & Cronin®, Solaris™, Hausmann™, Physician's Choice®, and PROTEAM™, among others. More information is available at www.dynatronics.com.
 
Forward-Looking Statements
 
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Those statements include references to the company's expectations and similar statements. Such forward-looking statements reflect the views of management at the time such statements are made. These statements include our statements regarding expected improvement in overall performance, expectations that the company will deliver higher annual gross margins, operating income and cash flow from operations in fiscal year 2022 compared to fiscal year 2021, expectations regarding reduction in leased space in fiscal year 2022, expectations regarding net sales, gross margin, selling general and administrative costs, and other income in fiscal year 2022, and uncertainties involving the impact of the COVID-19 pandemic on the company’s results of operations and financial condition.
 
About Non-GAAP Financial Measures
 
Continued product net sales and gross profit margin excluding exit activity costs as used in this press release are non-GAAP measures as defined under the rules of the Securities and Exchange Commission. The company defines continued product net sales as sales excluding discontinued products and sales of physical therapy and rehabilitation products through our direct sales channel. Management uses these non-GAAP measures to evaluate our operating performance and to forecasting future periods. Management believes these non-GAAP measures provide investors additional information about the company’s ongoing operating performance and is not intended as a substitute for, or superior to, the financial measures prepared in accordance with GAAP. Investors are cautioned against placing undue reliance on these non-GAAP measures.
 
 
 
 
 
Summary Financial Results
 
Following is a summary of operating results for the periods ended June 30, 2021 and 2020, the balance sheet highlights at June 30, 2021 and June 30, 2020 and cash flow for periods ended June 30, 2021 and 2020.
 
 
Summary Selected Financial Data
 
 
Statement of Operation Highlights
 
 
In thousands, except share and per share amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
Year Ended
 
 
 
June 30,
 
 
June 30,
 
 
 
 2021
 
 
 2020
 
 
 2021
 
 
 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 $12,238 
 $8,116 
 $47,799 
 $53,409 
Cost of sales
  9,900 
  6,703 
  34,913 
  38,311 
Gross profit
  2,338 
  1,413 
  12,886 
  15,098 
 
  19.1%
  17.4%
  27.0%
  28.3%
Selling, general, and admin. expenses
  4,558 
  3,641 
  16,646 
  18,091 
Other (expense) income, net
  5,134 
  (78)
  5,752 
  (442)
Income tax provision
  20 
  10 
  10 
  10 
Net income (loss)
 $2,934 
 $(2,296)
 $2,002 
 $(3,425)
 
    
    
    
    
Deemed dividend on convertible preferred stock and accretion of discount
  - 
  - 
  (51)
  (174)
Convertible preferred stock dividend, in common stock
  (182)
  (180)
  (741)
  (718)
Net income (loss) attributable to common stockholders
 $2,752 
 $(2,476)
 $1,210 
 $(4,317)
 
    
    
    
    
Net loss attributable to common stockholders per common share - basic and diluted
 $0.16 
 $(0.18)
 $0.08 
 $(0.42)
Weighted-average common shares outstanding - basic and diluted
  17,557,595 
  13,461,148 
  15,461,339 
  10,262,769 
 
 
 
 
 
Balance Sheet Highlights
In thousands
 
 
 
 June 30, 2021
 
 
 June 30, 2020
 
Cash and cash equivalents
 $6,254 
 $2,316 
Trade accounts receivable, net
  5,643 
  4,894 
Inventories, net
  6,526 
  8,372 
Prepaid & other
  2,483 
  493 
Total current assets
  20,906 
  16,075 
 
    
    
Non-current assets
  18,234 
  21,522 
Total assets
 $39,140 
 $37,597 
 
    
    
 
    
    
Accounts payable
 $3,738 
 $3,014 
Accrued payroll and benefits expense
  1,656 
  1,205 
Accrued expenses
  1,485 
  768 
Other current liabilities
  1,593 
  1,679 
Line of credit
  - 
  1,013 
Total current liabilities
  8,472 
  7,679 
 
    
    
Non-current liabilities
  5,154 
  10,022 
Total liabilities
  13,626 
  17,701 
 
    
    
Stockholders' equity
  25,514 
  19,896 
Total liabilities and stockholders' equity
 $39,140 
 $37,597 
 
 
 
 
 
 
 
 
 
Cash Flow Highlights
 
 
In thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
Year Ended
 
 
 
June 30,
 
 
June 30,
 
 
 
 2021
 
 
 2020
 
 
 2021
 
 
 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 $2,934 
 $(2,295)
 $2,001 
 $(3,425)
 
    
    
    
    
Depreciation and amortization
  368 
  397 
  1,480 
  1,618 
Stock based compensation
  26 
  45 
  154 
  279 
Gain on extinguishment of debt
  (3,518)
  - 
  (3,518)
  - 
(Gain) loss on sale of property and equipment
  (745)
  19 
  (717)
  38 
Receivables
  160 
  1,739 
  (749)
  2,601 
Inventory
  403 
  2,951 
  551 
  3,156 
Prepaid and other assets
  313 
  445 
  (741)
  195 
Accounts payable, accrued expenses, and other liabilities
  128 
  (2,758)
  1,922 
  (1,371)
Net cash provided by operating activities
  69 
  543 
  383 
  3,091 
 
    
    
    
    
Net cash used in investing activities
  1,620 
  (43)
  1,532 
  (291)
 
    
    
    
    
Payments on non-current liabilities
  (86)
  (1,998)
  (1,439)
  (3,024)
Proceeds from issuance of common stock, net
  - 
  2,287 
  3,462 
  2,287 
Net cash provided by (used in) financing activities
  (86)
  289 
  2,023 
  (737)
 
    
    
    
    
Net change in cash and cash equivalents
  1,603 
  789 
  3,938 
  2,063 
Cash and cash equivalents at beginning of the period
  4,651 
  1,530 
  2,316 
  256 
Cash and cash equivalents at end of the period
 $6,254 
 $2,319 
 $6,254 
 $2,319 
 
 
Contact:
 
 
Dynatronics Corporation
Investor Relations
Skyler Black
(801) 676-7201
ir@dynatronics.com
 
Darrow Associates
Jeff Christensen, Managing Director
(703) 297-6917
jchristensen@darrowir.com
 
For additional information, please visit: www.dynatronics.com
 
Connect with Dynatronics on LinkedIn
 
 
SOURCE: Dynatronics Corporation
 
 
 
 Exhibit 99.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings