Dynatronics Corp (DYNT) 2023 Q4 法說會逐字稿

Welcome to the Dynatronics Fourth Quarter Results for Fiscal 2023 Conference Call. (Operator Instructions) The conference is being recorded. (Operator Instructions) I would now like to turn the conference over to John Krier, Chief Executive Officer and Chief Financial Officer of Dynatronics. Please go ahead.

歡迎參加 Dynatronics 2023 財年第四季電話會議表現。 （操作員指示）會議正在錄音。 （操作員指示）我現在想將會議轉交給 Dynatronics 執行長兼財務長 John Krier。請繼續。

Thank you, operator. Good morning, everyone, and thanks for joining Dynatronics call today. I am John Krier, Chief Executive Officer and Chief Financial Officer; and with me is our President and Chief Operating Officer, Brian Baker.

謝謝你，接線生。大家早安，感謝您今天參加 Dynatronics 電話會議。我是執行長兼財務長 John Krier；和我在一起的是我們的總裁兼營運長布萊恩貝克 (Brian Baker)。

Before we begin, I will call your attention to our safe harbor statement. Please note that during this call, we will make forward-looking statements regarding our current expectations, plans, projections and financial performance relating to our business. These forward-looking statements reflect our view as of today only and may involve risks and uncertainties that could cause actual results to differ materially from those discussed today.

在我們開始之前，我將提請您注意我們的安全港聲明。請注意，在本次電話會議中，我們將就與我們業務相關的當前預期、計劃、預測和財務業績做出前瞻性聲明。這些前瞻性陳述僅反映我們截至今天的觀點，可能涉及風險和不確定性，可能導致實際結果與今天討論的結果有重大差異。

Important factors that could cause actual results to differ materially from those projected or implied by our forward-looking statements are included in our most recent 10-K and other reports filed with the SEC and include uncertainties and risks related to the broader economic environment on our business results.

我們最近向SEC 提交的10-K 報告和其他報告中包含了可能導致實際結果與我們的前瞻性陳述中預測或暗示的結果存在重大差異的重要因素，其中包括與我們的更廣泛經濟環境相關的不確定性和風險。業務成果。

We caution you not to place undue reliance on forward-looking statements we make this morning. We undertake no obligation to update or revise forward-looking statements. We issued a press release this morning announcing the financial results of our Fourth Fiscal Quarter and full year ended June 30, 2023, along with additional details of the previously announced CEO succession plan with Brian Baker.

我們提醒您不要過度依賴我們今天早上所做的前瞻性陳述。我們不承擔更新或修改前瞻性陳述的義務。我們今天早上發布了一份新聞稿，宣布了截至2023 年6 月30 日的第四財季和全年的財務業績，以及之前與布萊恩貝克(Brian Baker) 宣布的首席執行官繼任計劃的更多細節。

Today, I will provide a few brief opening remarks, turning the call over to Brian for additional commentary. Then I will provide a detailed financial report and turn it back to Brian for closing remarks. At the conclusion, we will have the operator open the phone line for questions.

今天，我將做一些簡短的開場白，並將電話轉交給布萊恩以獲取更多評論。然後我將提供一份詳細的財務報告並將其傳回給布萊恩以供結束語。最後，我們將讓接線員打開電話線路進行提問。

To begin, it is with great admiration and respect that I welcome Brian Baker back as CEO of Dynatronics effective October 1, 2023, as part of the company's executive transition plan announced in May of this year. I will continue as an Executive Consultant to Brian, the Board of Directors and the Management Team as the Interim Chief Financial and Accounting Officer, while we continue to search for a permanent CFO. The company will provide the final details of the CEO transition via a press release in the next few days.

首先，我懷著極大的欽佩和尊重，歡迎 Brian Baker 重新擔任 Dynatronics 首席執行官，自 2023 年 10 月 1 日起生效，這是該公司今年 5 月宣布的高管過渡計劃的一部分。我將繼續擔任布萊恩、董事會和管理團隊的執行顧問，擔任臨時財務和會計官，同時我們將繼續物色永久財務長。該公司將在未來幾天內透過新聞稿提供執行長過渡的最終細節。

Before I turn the call over to Brian, I want to take a moment and thank all our employees, present and past customers, suppliers, investors, analysts and stakeholders for your continued support and partnership during the last 3-plus years. I am proud of what we have been collectively able to achieve especially during the pandemic extremely challenging operating environment.

在將電話轉給布萊恩之前，我想花一點時間感謝我們所有的員工、現在和過去的客戶、供應商、投資者、分析師和利益相關者在過去三年多的時間裡一直以來的支持和合作。我對我們共同取得的成就感到自豪，尤其是在疫情期間、極具挑戰性的營運環境中。

I've had the pleasure to work with Brian since I joined the company in 2020, and he has the right talent, skill set and energy to lead Dynatronics as we move forward. I will now turn the call over to Brian.

自 2020 年加入公司以來，我很高興與 Brian 合作，他擁有合適的才能、技能和精力來領導 Dynatronics 前進。我現在將把電話轉給布萊恩。

Thank you, John. For the past 3 to 4 months, I've been speaking with our employees, customers and vendor partners to assess our forward-looking plans. As a result of these conversations, I believe we have the opportunity to sharpen our focus on our customers' needs and to offer the products they take at competitive pricing. In order to enable us to do this, we have implemented significant cost reductions in all areas of the business.

謝謝你，約翰。在過去的三到四個月裡，我一直在與我們的員工、客戶和供應商合作夥伴交談，以評估我們的前瞻性計劃。透過這些對話，我相信我們有機會更加關注客戶的需求，並以有競爭力的價格提供他們所需的產品。為了使我們能夠做到這一點，我們在業務的所有領域都實施了顯著的成本削減。

These were largely completed by June 30, 2023, and we believe these cuts will improve our financial performance at the revenue levels in our guidance. Our goal is to demonstrate steady improvement in operating profitability during fiscal year 2024. We also intend to continue to manage our working capital and the line of credit that we executed on August 1, 2023, which will provide us the operating flexibility in this regard. While the business environment in our markets remains uncertain, I believe Dynatronics can be more nimble in navigating both the opportunities and challenges ahead of us. John will now provide a financial report.

這些工作已於 2023 年 6 月 30 日基本完成，我們相信這些削減將改善我們指導中的收入水準的財務表現。我們的目標是在2024 財年實現營運獲利能力的穩定改善。我們還打算繼續管理我們的營運資金和我們於2023 年8 月1 日執行的信貸額度，這將為我們提供這方面的營運彈性。雖然我們市場的商業環境仍然不確定，但我相信 Dynatronics 可以更靈活地應對我們面前的機會和挑戰。約翰現在將提供財務報告。

Thanks, Brian. I will now review the financial performance during the quarter and cover the year-end results. The full income statement and management discussion and analysis can be found in the 10-K, and I will summarize them here.

謝謝，布萊恩。我現在將回顧本季的財務表現並介紹年終業績。完整的損益表和管理層的討論和分析可以在10-K中找到，我將在這裡進行總結。

Net sales were $8.4 million for the quarter ended June 30, 2023 compared to $11.2 million in last year's quarter. For the full fiscal year ended June 30, 2023, net sales were $40.6 million compared to $44.3 million in the prior fiscal year. The year-over-year decrease is primarily due to the acquisition of a competitor by one of our larger rehabilitation product category customers and a reduction in demand in our Orthopedic Soft Bracing.

截至 2023 年 6 月 30 日的季度淨銷售額為 840 萬美元，而去年同期為 1,120 萬美元。截至 2023 年 6 月 30 日的整個財年，淨銷售額為 4,060 萬美元，而上一財年為 4,430 萬美元。年比下降主要是由於我們較大的康復產品類別客戶之一收購了競爭對手以及我們的骨科軟支撐需求減少。

Gross profit for the 3 months ended June 30, 2023, decreased to $1.2 million or 14.7% of net sales compared to $2.6 million or 23.4% of net sales in the same quarter of the prior year. Q4 of fiscal year '23, gross profit reduction of $1.4 million compared to Q4 of fiscal year '22 was driven equally by a reduction in revenue and the result of lower product margin on the reduced revenue levels. Q4 included additional inventory reserves of $0.2 million compared to the prior period.

截至 2023 年 6 月 30 日的三個月毛利潤下降至 120 萬美元，佔淨銷售額的 14.7%，而去年同期為 260 萬美元，佔淨銷售額的 23.4%。與 22 財年第四季相比，23 財年第四季的毛利減少了 140 萬美元，這同樣是由於收入減少以及收入水準下降導致的產品利潤率下降所致。與上一季相比，第四季的庫存儲備增加了 20 萬美元。

Gross profit for the full fiscal year ended June 30, 2023, was $10.2 million or 25% of net sales compared to $10.7 million or 24.1% of net sales in fiscal year 2022. The year-over-year decrease in gross profit was primarily attributable to a reduction in sales related to the revenue disruption previously discussed. The improvement in the gross margin as a percentage of net sales year-over-year was driven by net price realization.

截至2023 年6 月30 日的整個財年，毛利為1,020 萬美元，佔淨銷售額的25%，而2022 財年為1,070 萬美元，佔淨銷售額的24.1%。毛利年減的主要原因是與先前討論的收入中斷相關的銷售額減少。毛利率佔淨銷售額的百分比年增率是由淨價變現推動的。

Selling, general and administrative expenses were $3.6 million for the 3 months ended June 30, 2023, a decrease of $0.5 million from $4.1 million in last year's period. SG&A would have been $0.9 million lower compared to the prior year before, including the effect of severance expenses of $0.2 million and other onetime specific charges of $0.2 million.

截至 2023 年 6 月 30 日的三個月，銷售、一般和管理費用為 360 萬美元，比去年同期的 410 萬美元減少了 50 萬美元。 SG&A 將比前一年減少 90 萬美元，其中包括 20 萬美元的遣散費和 20 萬美元的其他一次性特定費用的影響。

For the full fiscal year, SG&A was down $0.4 million compared to the prior year due primarily to lower salaries and benefits. Other income was $0 for the 3 months ended June 30, 2023, a decrease of $0.1 million from other expense of $0.1 million in last year's period. For the full fiscal year, other income was $0 compared to other income of $0.9 million for the fiscal year 2022. The decrease in other income is due to the absence of the employee retention credit in the current year.

整個財年，SG&A 比前一年減少了 40 萬美元，這主要是由於薪資和福利下降。截至 2023 年 6 月 30 日的三個月，其他收入為 0 美元，比去年同期的其他費用 10 萬美元減少 10 萬美元。整個財年的其他收入為 0 美元，而 2022 財年的其他收入為 90 萬美元。其他收入的減少是由於本年度沒有員工保留信貸。

Net loss was $2.4 million for the 3 months ended June 30, 2023 compared to a loss of $1.6 million in the same quarter of last year. The Q4 net loss included $0.2 million of additional COGS related to inventory reserves and $0.4 million of SG&A related to severance and other onetime costs for total quarterly costs of $0.6 million. Net loss was $5.0 million for the full fiscal year ended June 30, 2023, compared to a net loss of $4.0 million in the prior year.

截至 2023 年 6 月 30 日的三個月淨虧損為 240 萬美元，去年同期淨虧損為 160 萬美元。第四季淨虧損包括與庫存準備金相關的 20 萬美元額外銷售成本以及與遣散費和其他一次性成本相關的 40 萬美元銷售管理費用，季度總成本為 60 萬美元。截至 2023 年 6 月 30 日的整個財年，淨虧損為 500 萬美元，而前一年的淨虧損為 400 萬美元。

We expect our outstanding shares to increase in the range of 240,000 per quarter, depending on our share price. As of September 22, 2023, the number of common shares outstanding was approximately 4.3 million. As of June 30, 2023, net cash was $0.6 million compared to $0.7 million on June 30, 2022. As a reminder, Dynatronics executed a new working capital based line of credit on August 1, 2023. As of September 15, 2023, our line of credit balance was approximately $1.8 million. Additional line of credit availability was approximately $2.6 million on a borrowing base of approximately $4.4 million.

我們預計我們的流通股每季將增加 240,000 股，具體取決於我們的股價。截至2023年9月22日，已發行普通股數約430萬股。截至2023 年6 月30 日，淨現金為60 萬美元，而2022 年6 月30 日為70 萬美元。謹提醒您，Dynatronics 於2023 年8 月1 日執行了新的基於營運資金的信貸額度。截至2023 年9 月15 日，我們的信貸額度餘額約為180萬美元。額外可用信貸額度約 260 萬美元，借款基礎約 440 萬美元。

Proceeds from the line of credit enabled the company to reduce the accounts payable balance by approximately $2.0 million as of September 15, 2023 compared to the period ended June 30, 2023. This concludes our summary of financial results. I will now turn the call back to Brian.

與截至 2023 年 6 月 30 日的期間相比，截至 2023 年 9 月 15 日，來自信貸額度的收益使公司的應付帳款餘額減少了約 200 萬美元。我們的財務業績摘要到此結束。我現在將把電話轉回給布萊恩。

Thank you, John. In terms of guidance for fiscal year 2024, we expect net revenue to be in the range of $34 million to $37 million. The distribution of the revenue is expected to align with historical trends. We are not providing gross margin guidance at this time. Given the recent reductions in revenue and costs, we'd like to have more data before considering reinstituting such guidance.

謝謝你，約翰。就 2024 財年的指導而言，我們預計淨收入將在 3,400 萬美元至 3,700 萬美元之間。收入分配預計將符合歷史趨勢。我們目前不提供毛利率指引。鑑於最近收入和成本的減少，我們希望在考慮重新制定此類指導之前獲得更多數據。

SG&A is anticipated to be in the range of 29% to 33% of net sales for the fiscal year. Outstanding shares, currently $4.3 million as of September 22, 2023, will generally increase approximately 240,000 shares per quarter, depending on our share price.

SG&A 預計佔本財年淨銷售額的 29% 至 33%。截至 2023 年 9 月 22 日，流通股目前為 430 萬美元，通常每季將增加約 24 萬股，具體取決於我們的股價。

In summary, my focus for the current fiscal year is to strengthen our customer relationships as we improve our operating profitability and financial flexibility. We appreciate and thank our investor base and employees for their ongoing support. I will now turn it over to the operator for questions.

總之，我本財年的重點是加強我們的客戶關係，同時提高我們的營運獲利能力和財務靈活性。我們感謝並感謝我們的投資者基礎和員工的持續支持。我現在將其交給接線員詢問。

Thank you. We will now begin the question-and-answer session.

謝謝。我們現在開始問答環節。

(Operator Instructions)

（操作員說明）

Our first question comes from (inaudible) of Lake Street Capital Markets.

我們的第一個問題來自（聽不清楚）Lake Street Capital Markets。

This is [Aaron] on the line for Brooks this morning. So I just want to start off talking about the demand in general. You mentioned a little bit about a reduction in demand in orthopedics, but just in general and overall in terms of product mix now, has there been a significant change from Q3? And how is the macro environment sort of affected your operations?

這是今天早上為布魯克斯接聽的[亞倫]。所以我想先談談整體需求。您提到了骨科需求的減少，但就目前的產品結構而言，總體而言，與第三季相比是否有顯著變化？宏觀環境對您的營運有何影響？

[Aaron], this is John. And I'll start with that. Our overall mix of our product categories is still pretty consistent. When you look at it quarter-over-quarter and where we ended the year, it's roughly 45% in our orthopedic bracing category and 55% of our revenues in the rehabilitation product categories. We talked about this a little bit last quarter about the overall market demand in our categories is in that low single digits, 1%, 2% to 3% year-over-year growth.

[亞倫]，這是約翰。我將從這個開始。我們產品類別的整體組合仍然相當一致。當你查看季度環比以及我們年末的情況時，我們的骨科支撐類別中大約有 45% 的收入，康復產品類別中大約有 55% 的收入。上個季度我們談到了這一點，我們類別的整體市場需求處於較低的個位數，年增 1%、2% 到 3%。

We've certainly seen pricing become more of an issue in the recent term. But the general demand out there is steady. And as we continue to reorganize the business and position ourselves going forward, we think that demand will be consistent.

我們當然看到定價在最近一段時間變得更加重要。但整體需求穩定。隨著我們繼續重組業務並定位自己的未來，我們認為需求將保持一致。

That's helpful. And then as you sort of think about new product activity. You leased 8 or 9 products since early 2021. Are there any specific highlights that you'd offer that might give us some encouragement about the future and the opportunity to grow in this next year? How are these current products being accepted? If you could give some more color there, that would be great.

這很有幫助。然後當你考慮新產品活動時。自 2021 年初以來，您租賃了 8 或 9 個產品。您是否可以提供任何具體的亮點，這些亮點可能會為我們帶來一些關於未來的鼓勵以及明年的成長機會？目前這些產品如何被接受？如果你能給那裡更多的顏色，那就太好了。

Yes. This is Brian. I'll jump in on this [Aaron]. As far as new products go, we're still tracking about 6% of our overall revenue for -- related to new products. And we are getting some feedback from our customers. There are some modifications that we can do to existing products or a few additions that we can add to our product portfolio. And with these changes or new additions, we're seeing some new opportunity come in.

是的。這是布萊恩。我會加入這個[亞倫]。就新產品而言，我們仍在追蹤與新產品相關的總收入的約 6%。我們正在從客戶那裡得到一些回饋。我們可以對現有產品進行一些修改，或添加一些內容到我們的產品組合中。隨著這些變化或新增內容，我們看到了一些新的機會。

Our next question comes from Jeffrey Cohen of Ladenburg.

我們的下一個問題來自拉登堡的傑弗裡·科恩。

John and Brian, just a couple of questions from our end. Firstly, could you give us any further insight on the line of credit and the terms there, please?

約翰和布萊恩，我們最後想問幾個問題。首先，您能為我們提供更多有關信用額度和條款的資訊嗎？

Yes. The terms there, we executed that line of credit on August 1. It's an asset-based line of credit centered around our inventory and accounts receivable. So as I said, it's a $7.5 million facility. Our borrowing base as of September 15th is roughly $4.4 million. That's going to be driven by our AR size and our inventory size.

是的。根據條款，我們於 8 月 1 日執行了該信貸額度。這是一項基於資產的信貸額度，以我們的庫存和應收帳款為中心。正如我所說，這是一項耗資 750 萬美元的設施。截至 9 月 15 日，我們的借款基礎約為 440 萬美元。這將由我們的 AR 規模和庫存規模驅動。

In terms of the terms of the agreement, it's roughly at about 11% today in terms of interest rate and SOFR of 5%, and it has one primary covenant on it. But overall, it's been a great addition for the working capital flexibility for our team going forward.

就協議條款而言，目前的利率大致約為 11%，SOFR 為 5%，並且有一項主要契約。但總的來說，這對我們團隊未來的營運資金彈性來說是一個很大的補充。

Okay. Got it. And big picture for '24. Could you talk about number of customers and current channels and how we may see any potential shift in channels, customers, geographical process, et cetera?

好的。知道了。還有 24 年的大局。您能否談談客戶數量和當前管道，以及我們如何看待管道、客戶、地理流程等方面的潛在轉變？

I think when we look at the overall business, Jeff, it's going to be very consistent to what we're seeing today. Both in the mix of product category revenue, we're seeing very similar results. Brian highlighted that some of the new product discussions we're having and we may continue to see some penetration with our existing customers. But there should be no major shift in our overall customer base going forward as we see now.

傑夫，我認為當我們審視整體業務時，它將與我們今天所看到的非常一致。在產品類別收入組合中，我們看到了非常相似的結果。布萊恩強調說，我們正在討論一些新產品，我們可能會繼續看到現有客戶的一些滲透。但正如我們現在所看到的，我們的整體客戶群未來應該不會發生重大變化。

We took obviously a major shift for last year with the acquisition of one of our competitors by a significant customer, and we're still digesting that throughout this first half of this next fiscal year. But other than that, pretty consistent.

去年，我們顯然做出了重大轉變，一位重要客戶收購了我們的一個競爭對手，我們仍在下一財年的上半年消化這項變化。但除此之外，非常一致。

Got it. And then lastly for us, any color on cadence '24 readout? Should we assume that previous years are a good indication as far as any seasonality quarter-wise?

知道了。最後對我們來說，節奏 '24 讀數有顏色嗎？我們是否應該假設前幾年對於季度季節性而言是一個很好的指標？

We should assume that. We believe, at least the way the quarter is playing out and the way that we expect the season to play out, seasonality should be the same. Revenue higher in the First and Fourth Quarters. Typically, they account for about 26% of our revenue, a little lower in Q2 and Q3. That's about 24% of our revenue. So we do expect that to play out and to follow the guidance that we've given out there for revenue.

我們應該這樣假設。我們相信，至少本季的表現方式和我們預期的本季的表現方式、季節性應該是相同的。第一季和第四季的收入較高。通常，它們約占我們收入的 26%，第二季和第三季略低。這大約占我們收入的 24%。因此，我們確實希望這種情況能夠發揮作用，並遵循我們給予的收入指引。

Got it. Okay. And then lastly, one more on margins. Any outlook expectations, helps aspirations on margin levels for '24?

知道了。好的。最後，還有一個關於邊緣的問題。任何前景預期是否有助於實現 24 年利潤水準的願望？

Yes, I'd say a couple of things. One, let's talk SG&A first. One thing you'll notice in SG&A is this range that we provided this fiscal year is lower than we've provided in the past at 29% to 33% like Brian highlighted. That's a continuation of what we talked about in May that when we recognize that we needed to steer the business to be profitable at lower revenue levels, we made significant changes in the business.

是的，我想說幾件事。一，我們先來談談SG&A。您會在 SG&A 中註意到的一件事是，我們在本財年提供的範圍低於我們過去提供的 29% 至 33%，就像 Brian 強調的那樣。這是我們在五月討論的延續，當我們認識到我們需要引導業務以較低的收入水平實現盈利時，我們對業務做出了重大改變。

So we will be on the lower end of that range in our higher quarters, in a little bit at the higher end of that range in our middle quarters just based on the overall revenue number. We're not ready to give gross margin guidance now, and we know that that's something that all of us want to see in the future. And that's just because of the revenue shifts and the change and as we rightsize operations in our plants.

因此，根據整體收入數據，在較高季度，我們將處於該範圍的下限，在中期季度，我們將處於該範圍的較高端。我們現在還沒有準備好給予毛利率指導，我們知道這是我們所有人未來都希望看到的。這只是因為收入的變化和變化，以及我們工廠運作規模的調整。

Typically, our First Quarter is one of our higher-margin quarters. However, that's not reliable in our current state because we had such disruption in Q3 and Q4. So we'd be looking -- we're looking at Q3 and Q4 and saying, is that more likelihood while we digest getting our plants rightsized and our operations rightsized going into the year. But as soon as we have a little more data, we'll get back to everybody with that and try to provide more clarity.

通常，我們的第一季是利潤率較高的季度之一。然而，這在我們目前的狀態下並不可靠，因為我們在第三季和第四季遇到了這樣的中斷。因此，我們正在研究第三季度和第四季度，並說，在我們消化今年工廠規模和營運規模調整的過程中，這種可能性是否更大。但一旦我們有了更多的數據，我們就會向每個人回饋，並盡力提供更清晰的資訊。

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Krier for any closing remarks.

問答環節到此結束。我想將會議轉回由克里爾先生發表閉幕詞。

Thank you, operator, and thank you all for your interest in Dynatronics. I'm pleased to be supporting Brian in this transition and look forward to watching the success of the organization in the quarters and the years to come. If you have any further questions, please direct them to ir@dynatronics.com. Have a great day. Operator, you may end the call.

謝謝您，操作員，也謝謝大家對 Dynatronics 的興趣。我很高興能夠支持 Brian 完成這一過渡，並期待看到該組織在本季度和未來幾年取得成功。如果您還有任何其他問題，請直接發送電子郵件至 ir@dynatronics.com。祝你有美好的一天。接線員，您可以結束通話了。

Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

謝謝。今天的電話會議到此結束。您可以斷開線路。感謝您的參與並祝您有個愉快的一天。