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NEWS RELEASE
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Contact: Bob Cardon, Dynatronics Corp.
800-874-6251 or 801-568-7000
Dynatronics' Third Quarter Profits Increase 22%
Salt Lake City, Utah (May 16, 2011) - Dynatronics Corporation (NASDAQ:
DYNT) today announced results for its fiscal third quarter ended March 31, 2011.
Net income for the quarter ended March 31, 2011, increased 22 percent to
$117,260 ($.01 per common share), compared to $96,099 ($.01 per common share)
for the same quarter in the prior fiscal year. Sales for the quarter ended March
31, 2011, increased 1.8 percent to $8,383,842, compared to $8,235,060 for the
quarter ended March 31, 2010.
Net income for the nine months ended March 31, 2011, was $202,112 ($.02
per common share), compared to $353,022 ($.03 per common share) for the same
period in the prior fiscal year. Approximately $400,000 in increased R&D
expenses primarily accounts for the lower profitability through nine months.
Sales for the nine months ended March 31, 2011, were $24,502,477, compared to
$25,018,960 for the similar period of the prior year. General weakness in the
economy contributed to lower demand for capital equipment during the first half
of the current fiscal year.
"Profits increased 22 percent for the quarter despite heavy R&D expenses,"
stated Kelvyn H. Cullimore Jr., chairman and president of Dynatronics. "Other
than higher R&D expenses, we improved every other category including higher
sales, better gross profit margins, slightly lower SG&A expense and lower
interest expense. With several new products currently under development, our R&D
expenses represent an investment in the future - an investment we believe will
strengthen future profitability."
During the quarter, the company announced the signing of contracts with
three group purchasing organizations (GPOs): Premier, Amerinet and First Choice.
"These contracts began on March 1, 2011, so they did not contribute materially
to sales this quarter," Cullimore explained. "However, we did begin the process
of introducing GPO member facilities to Dynatronics' brand of products. The
contracts with the GPOs represent a license to solicit business directly from
the members of the respective GPOs. While the process of converting business to
our brand will take time, management is optimistic about the potential of this
new market segment."
Together, the three GPOs represent tens of thousands of clinics and
hospitals around the nation, spending an estimated $50 million on physical
medicine products annually.
"We are making good progress with the GPO members," stated Larry K.
Beardall, executive vice-president of sales and marketing. "Several of them are
opening accounts and starting to place orders for our products and services. We
expect to announce specific progress soon regarding a large GPO member.
Cultivating business through these GPO contracts and seeking additional
contracts with other GPOs will be a major focal point for us over the coming
years."
"We believe we are well positioned to benefit from our expansion into the
GPO market," added Cullimore. "That expansion will have the most significant
impact on delivering strong revenue growth and increasing operating margins over
the next 12 months and beyond," he concluded.
Dynatronics has scheduled a conference call for investors on Monday, May
16, 2011, at 1:00 p.m. ET. Those wishing to participate should call (800)
926-7510 and use access code: 5687000.
Following is a summary of the financial results as of March 31, 2011, and
June 30, 2010, and for the three and nine-month periods ended March 31, 2011 and
2010:
Summary Selected Financial Data
Statement of Income Highlights (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2010 2011 2010 2011
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Net sales $ 8,383,842 $ 8,235,060 $ 24,502,477 $ 25,018,960
Cost of sales 5,159,450 5,119,797 15,156,811 15,396,978
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Gross profit 3,224,392 3,115,263 9,345,666 9,621,982
SG&A expenses 2,640,053 2,647,417 7,774,848 8,059,143
R&D expenses 339,258 222,062 1,045,573 644,912
Other expenses, net 50,244 84,879 187,630 305,046
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Net income before
income taxes 194,837 160,905 337,615 612,881
Income tax provision (77,577) (64,806) (135,503) (259,859
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Net income $ 117,260 $ 96,099 $ 202,112 $ 353,022
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Diluted income per
common share $ 0.0 $ 0.01 $ 0.02 $ 0.03
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Balance Sheet Highlights
March 31, June 30,
2011 2010
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(Unaudited)
Cash $ 248,202 $ 383,756
Accounts receivable 3,882,665 3,735,251
Inventories 5,549,503 5,766,800
Total current assets 10,484,756 10,609,813
Total assets $ 14,732,447 $ 15,090,329
Accounts payable 1,563,154 $ 1,404,022
Accrued expenses 508,613 462,641
Line of credit 2,664,663 2,768,492
Total current liabilities 5,651,734 5,686,280
Total liabilities 8,094,848 8,291,052
Total liabilities and equity $ 14,732,447 $ 15,090,329
Dynatronics manufactures, markets and distributes advanced-technology
medical devices, orthopedic soft goods and supplies, treatment tables and
rehabilitation equipment for the physical therapy, sports medicine,
chiropractic, podiatry, plastic surgery, dermatology and other related medical,
cosmetic and aesthetic markets. More information regarding Dynatronics is
available at www.dynatronics.com.
This press release contains forward-looking statements. Those statements
include references to the company's expectations and similar statements such as
the statement regarding expectations for future new product line introductions
and growth from GPO contracts. 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 including, but not limited to, the report on Form 10-K for
the year ended June 30, 2010.
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