Dynatronics Corp. (DYNT, Financial) filed Quarterly Report for the period ended 2009-12-31.
Dynatronics Corp. has a market cap of $16.39 million; its shares were traded at around $1.2 with a P/E ratio of 60 and P/S ratio of 0.51.
compared to $8,718,893 for the quarter ended December 31, 2008. Net sales were
$16,783,900 for the six months ended December 31, 2009, compared to $16,715,042
for the same period in 2008. Despite the difficult economic conditions in the
United States, we were able to maintain sales within 2% of last year's results
for the quarter and we generated a small increase in sales compared to last
year's six months results. Recessionary pressures have resulted in reduced
demand for capital equipment over the past 12 months. However, sales of
manufactured capital equipment for the rehabilitation market experienced a
$287,739 increase in the quarter ended December 31, 2009, compared to the
quarter ended December 31, 2008. That 10% increase in sales of higher margin
manufactured equipment marks the first quarter in the last six quarters that
this category experienced an increase. This is a positive indicator that the
recessionary pressures are starting to abate. This increase was offset by a
$505,195 decrease in sales of medical supplies, treatment tables and aesthetic
products during the quarter ended December 31, 2009. This was an 8% overall
decline in this product category reflecting a sluggish start to the quarter.
Selling, general, and administrative ("SG&A") expenses decreased $128,070,
or 4.5%, to $2,699,357, or 31.8% of net sales, for the quarter ended December
31, 2009, from $2,827,427, or 32.4% of net sales, for the fiscal second quarter
ended December 31, 2008. SG&A expenses decreased $392,348, or 6.8%, to
$5,411,726, or 32.2% of net sales, for the six months ended December 31, 2009,
from $5,804,074, or 34.7% of net sales, for the six months ended December 31,
2008. The decrease in SG&A expenses for the quarter and six months ended
December 31, 2009 is primarily the result of our internal cost reduction
campaign to improve efficiencies. We targeted lowering transaction costs,
obtaining better pricing and terms from service providers, streamlining customer
service and production processes, and improving our sales support functions. The
impact of these changes in SG&A expenses for the quarter ended December 31,
2009, included:
Research and development ("R&D") expenses decreased $58,836, or 22.1%, to
$206,882 for the quarter ended December 31, 2009, from $265,718 for the quarter
ended December 31, 2008. R&D expenses also decreased as a percentage of net
sales for the quarter ended December 31, 2009, to 2.4 % from 3.0% of net sales
for the quarter ended December 31, 2008. R&D expenses decreased $104,897, or
19.9%, to $422,850 for the six months ended December 31, 2009, from $527,747 for
the six months ended December 31, 2008. R&D costs are expensed as incurred. We
expect to continue our commitment to developing innovative products for the
physical medicine market in fiscal year 2010 and in future periods in order to
position us for growth. We anticipate that R&D expenses as a percentage of net
sales and in absolute terms will increase modestly over the coming quarters
based on the schedule of new products currently under development. Current year
decreases reflect a strategy shift to outsourcing some R&D functions, thus
eliminating some personnel costs.
Net income increased to $188,299, or $.01 per share, for the quarter ended
December 31, 2009, compared to $54,598, or $.00 per share, for the quarter ended
December 31, 2008. Net income increased to $256,923, or $.02 per share, for the
six months ended December 31, 2009, compared to a net loss of $84,353, or ($.01
per share), for the six months ended December 31, 2008. The main factors
contributing to the improvement in net income for the quarter and six months
ended December 31, 2009 were the reduction in SG&A expenses and lower R&D and
interest expenses.
The outstanding balance on our line of credit with a bank decreased
$263,899, to $4,338,752 as of December 31, 2009, compared to $4,602,651 as of
June 30, 2009, and $6,208,338 as of December 31, 2008. Interest on the line of
credit is based on the 90-day LIBOR rate (0.25% as of December 31, 2009) plus 4%
with a minimum interest rate of 4.5% per annum. The line of credit is
collateralized by accounts receivable and inventories, as well as a security
interest in our headquarters facility in Cottonwood Heights, Utah. Borrowing
limitations are based on approximately 45% of eligible inventory and up to 80%
of eligible accounts receivable, up to a maximum credit facility of $7,000,000.
Interest payments on the line are due monthly. As of December 31, 2009, the
borrowing base was approximately $6,177,000, resulting in approximately
$1,800,000 available on the line. The line of credit is renewable in December
2010 and includes covenants requiring us to maintain certain financial ratios.
As of December 31, 2009, we were in compliance with the loan covenants.
Any modifications to estimates of inventory valuation reserves are
reflected in cost of goods sold within the statements of operations during the
period in which such modifications are determined necessary by management. As of
December 31, 2009 and June 30, 2009, our inventory valuation reserve balance,
which established a new cost basis, was $425,539 and $338,788, respectively, and
our inventory balance was $5,971,500 and $6,199,251, net of reserves,
respectively.
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Dynatronics Corp. has a market cap of $16.39 million; its shares were traded at around $1.2 with a P/E ratio of 60 and P/S ratio of 0.51.
Highlight of Business Operations:
Net sales were $8,501,437 for the quarter ended December 31, 2009,compared to $8,718,893 for the quarter ended December 31, 2008. Net sales were
$16,783,900 for the six months ended December 31, 2009, compared to $16,715,042
for the same period in 2008. Despite the difficult economic conditions in the
United States, we were able to maintain sales within 2% of last year's results
for the quarter and we generated a small increase in sales compared to last
year's six months results. Recessionary pressures have resulted in reduced
demand for capital equipment over the past 12 months. However, sales of
manufactured capital equipment for the rehabilitation market experienced a
$287,739 increase in the quarter ended December 31, 2009, compared to the
quarter ended December 31, 2008. That 10% increase in sales of higher margin
manufactured equipment marks the first quarter in the last six quarters that
this category experienced an increase. This is a positive indicator that the
recessionary pressures are starting to abate. This increase was offset by a
$505,195 decrease in sales of medical supplies, treatment tables and aesthetic
products during the quarter ended December 31, 2009. This was an 8% overall
decline in this product category reflecting a sluggish start to the quarter.
Selling, general, and administrative ("SG&A") expenses decreased $128,070,
or 4.5%, to $2,699,357, or 31.8% of net sales, for the quarter ended December
31, 2009, from $2,827,427, or 32.4% of net sales, for the fiscal second quarter
ended December 31, 2008. SG&A expenses decreased $392,348, or 6.8%, to
$5,411,726, or 32.2% of net sales, for the six months ended December 31, 2009,
from $5,804,074, or 34.7% of net sales, for the six months ended December 31,
2008. The decrease in SG&A expenses for the quarter and six months ended
December 31, 2009 is primarily the result of our internal cost reduction
campaign to improve efficiencies. We targeted lowering transaction costs,
obtaining better pricing and terms from service providers, streamlining customer
service and production processes, and improving our sales support functions. The
impact of these changes in SG&A expenses for the quarter ended December 31,
2009, included:
Research and development ("R&D") expenses decreased $58,836, or 22.1%, to
$206,882 for the quarter ended December 31, 2009, from $265,718 for the quarter
ended December 31, 2008. R&D expenses also decreased as a percentage of net
sales for the quarter ended December 31, 2009, to 2.4 % from 3.0% of net sales
for the quarter ended December 31, 2008. R&D expenses decreased $104,897, or
19.9%, to $422,850 for the six months ended December 31, 2009, from $527,747 for
the six months ended December 31, 2008. R&D costs are expensed as incurred. We
expect to continue our commitment to developing innovative products for the
physical medicine market in fiscal year 2010 and in future periods in order to
position us for growth. We anticipate that R&D expenses as a percentage of net
sales and in absolute terms will increase modestly over the coming quarters
based on the schedule of new products currently under development. Current year
decreases reflect a strategy shift to outsourcing some R&D functions, thus
eliminating some personnel costs.
Net income increased to $188,299, or $.01 per share, for the quarter ended
December 31, 2009, compared to $54,598, or $.00 per share, for the quarter ended
December 31, 2008. Net income increased to $256,923, or $.02 per share, for the
six months ended December 31, 2009, compared to a net loss of $84,353, or ($.01
per share), for the six months ended December 31, 2008. The main factors
contributing to the improvement in net income for the quarter and six months
ended December 31, 2009 were the reduction in SG&A expenses and lower R&D and
interest expenses.
The outstanding balance on our line of credit with a bank decreased
$263,899, to $4,338,752 as of December 31, 2009, compared to $4,602,651 as of
June 30, 2009, and $6,208,338 as of December 31, 2008. Interest on the line of
credit is based on the 90-day LIBOR rate (0.25% as of December 31, 2009) plus 4%
with a minimum interest rate of 4.5% per annum. The line of credit is
collateralized by accounts receivable and inventories, as well as a security
interest in our headquarters facility in Cottonwood Heights, Utah. Borrowing
limitations are based on approximately 45% of eligible inventory and up to 80%
of eligible accounts receivable, up to a maximum credit facility of $7,000,000.
Interest payments on the line are due monthly. As of December 31, 2009, the
borrowing base was approximately $6,177,000, resulting in approximately
$1,800,000 available on the line. The line of credit is renewable in December
2010 and includes covenants requiring us to maintain certain financial ratios.
As of December 31, 2009, we were in compliance with the loan covenants.
Any modifications to estimates of inventory valuation reserves are
reflected in cost of goods sold within the statements of operations during the
period in which such modifications are determined necessary by management. As of
December 31, 2009 and June 30, 2009, our inventory valuation reserve balance,
which established a new cost basis, was $425,539 and $338,788, respectively, and
our inventory balance was $5,971,500 and $6,199,251, net of reserves,
respectively.
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