Dynatronics Corp (NASDAQ:DYNT) Q4 2020 Earnings Conference Call - Final Transcript
Sep 24, 2020 • 08:30 am ET
2020 revenues we have experienced continued positive revenue momentum.
July and August, 2020 net sales are approximately 60% to 70% up when compared to the same period in fiscal year 2020. Given the ongoing uncertainty in our markets due to the COVID-19 pandemic, we will continue to suspend guidance. We continue to take significant actions to improve operating profitability by reducing cost and increasing scalability.
First, in June of this year, we announced the decision to close our Chattanooga, Tennessee facility. We have transferred manufacturing operations from Tennessee to our existing facilities in New Jersey and Minnesota. And we have transferred distribution operations to a third-party logistics provider Millstone Medical Outsourcing for a service agreement we executed on July 8, 2020. Operations with Millstone commenced mid-September 2020 and the final transition of inventory is being completed on schedule.
We continue to pursue the sale of our Chattanooga facility in the coming months to generate additional flexibility through our liquidity goals. Second, we continue to improve operational effectiveness and reduce costs across the Company. The cumulative effect of our cost reductions have enabled us to reduce ongoing operating expenses.
Third, despite significant revenue reductions due to COVID-19 in Q4, the Company generated positive cash flow from operations of $541,000 in the period, as our employees executed a working capital plan. The cumulative effect of operating efficiencies, working capital improvements, the ATM stock sale proceeds and the SBA paycheck protection program loan has enabled Dynatronics to stabilize in this uncertain time and prepare for the future.
Our overall strategy for the Company remains steady, our focus continues to balance the uncertain present business environment with the opportunities we see in our markets and for our products.
Skyler will now provide a financial report.
Thanks, John. I am pleased to review the financial performance during the quarter and briefly cover the year end results. Net sales for the quarter ended June 30, 2020 decreased $7.4 million or 48% to $8.1 million compared to $15.5 million in the same quarter of the prior year. The decrease was primarily due to reduction in sales due to COVID-19 stay at home restrictions and holds on elective procedures.
Gross profit for the quarter decreased $3.1 million or 68.9% to $1.4 million, representing 17.4% of sales compared to $4.5 million or 29.3% of sales in the same quarter of the prior year. Lower sales were the primary cause of the decrease, reducing gross profit by approximately $2.1 million. The decrease in gross margin percentage to 17.4% from 29.3% contributed about $1 million to the reduction in gross profit.
Selling, general and administrative expenses for the quarter decreased approximately $1.2 million or [Phonetic] 25.4% to $3.6 million compared to $4.9 million in the same quarter of the prior year. The decrease included lower selling expenses of $0.9 million as a result of lower fixed sales management salaries and lower commissions and a decrease of $0.3 million in other general and administrative expenses, primarily related to lower personnel costs.