Good morning, ladies and gentlemen, and welcome to Dynatronics' first quarter fiscal year 2024 earnings call. It is now my pleasure to turn the floor over to your host, Brian Baker, the company's Chief Executive Officer. Brian, the floor is yours. Thank you, operator. Good morning, everyone, and welcome to Dynatronics' first quarter earnings call. With me today is Gabe Ellwein, our new Chief Financial Officer, and John Krier, our former CEO and CFO. Before we begin, I'll turn the call over to Gabe to introduce himself and to review our safe harbor statement. Thank you, Brian. This is Gabe Ellwein, Chief Financial Officer of Dynatronics. Let me start by thanking Brian and the Board of Directors for the opportunity to join Dynatronics and to participate with them in leading the company. I believe Dynatronics has established strong vendor and customer relationships, a reputation for quality products and dedicated employees, which positions us well for success. I look forward to building trusted relationships with our shareholders, analysts, and the investment community. Turning to our safe harbor statement. During the course of 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 involve risks and uncertainties that could cause our actual results to differ materially from those discussed today. Important factors that could cause actual results to differ materially from these projected or implied by our forward-looking statements are included in our most recent 10-K and other reports filed with the SEC. We caution you to not place undue reliance on forward-looking statements we make this morning. We undertake no obligation to update or revise forward-looking statements. Thank you, Gabe. This is Brian Baker, President and Chief Executive Officer of Dynatronics. This morning, we issued a press release announcing the financial results of our first quarter ended September 30, 2023. On today's call, I'll provide some initial commentary, then I'll turn it over to John for a financial report. Following John, I will confirm our guidance for the 2024 fiscal year and provide closing remarks. The operator will then open the phone lines for questions. For the quarter ended September 30, 2023, we are pleased to report that we achieved our sales expectations and delivered EBITDA profitability for the business. Our teams continue to be committed to meeting our stated sales objectives and profit goals. Our commercial teams have been and will continue to work hard to strengthen customer relationships with the goal of improving customer loyalty to the Dynatronics brands. Our operations teams continue to find cost reductions in material, freight, and efficient use of labor. These early financials represent one quarter only. However, the results reflect continued discipline in our fiscal year 2024 operating plan and progress on our strategic priorities. Our team's daily commitment to the business has been key to achieving our goals, and I wanna thank every employee for their ongoing dedication in the business. Before I turn it over to John to deliver our financial report, I wanna take a moment and recognize that today's call represents the fifteenth and final earnings call for John as he transitioned out of the CEO role on October 1st. However, he has continued to support myself, the board of directors, and the management team while we welcome Gabe to the team as the new CFO. Thank you, John, and I'll turn it over to you for the financial report. Thank you, Brian. I'm proud of the work you, the management team, and all the employees at Dynatronics have led to deliver these first quarter results, and I look forward to watching the success moving forward. As a reminder, the full income statement and management discussion and analysis can be found in the 10-Q. I will summarize some of the key financials here. Net sales were $9.4 million for the first quarter of fiscal year 2024. That compares to net sales of $12.1 million in fiscal year 2023. 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 category. Gross profit for the quarter was $2.3 million, or 24.7% of net sales, compared to $3.6 million, or 30.2% of net sales in the same period the prior year. The decrease in gross profit as a percentage of net sales, was driven two-thirds by the reduction in net sales we previously discussed, and one-third by lower product margin as we continue to seek efficiencies at the lower revenue levels. Selling, general and administrative expenses decreased $1.6 million, or 38.2% to $2.5 million for the quarter ended September 30, 2023, compared to $4.1 million for the quarter ended September 30, 2022. The overall reduction in selling, general and administrative expenses was led by a reduction of $1.3 million in salaries and benefits, with the remainder of $0.3 million spread across other professional expenses. Net loss for Q1 fiscal year 2024 was $0.3 million. That compares to a net loss of $0.5 million in the same period of fiscal year 2023. We anticipate that outstanding shares will increase approximately 275,000 per quarter, depending on our share price. As of September 30, 2023, the number of common shares outstanding was approximately 4.3 million. The net cash balance was approximately $0.6 million on September 30, 2023, no change to the $0.6 million reported on June 30, 2023. As of September 30, 2023, our line of credit balance was approximately $1.8 million, and additional line of credit availability was approximately $2.8 million on a borrowing base of approximately $4.6 million. Cash used by operating activities was $1.7 million for the first quarter of fiscal year 2024. The company used the proceeds from the line of credit to reduce accounts payable and accrued expenses by $0.9 million and fund prepaid expenses of $0.8 million. The overall net change in cash position for the quarter compared to June 30, 2023, was a + $34,000. This concludes our summary of the financial and operating results. Thank you, John. In terms of guidance for fiscal year 2024, we are reaffirming our net sales to be in the range of $34 million-$37 million. The distribution of revenue is expected to align with historical trends. We're not providing gross margin guidance at this time. Given our reductions in revenue expectations and costs, we'd like to have more data before considering reinstituting such guidance. SG&A is anticipated to be in the range of 29%-33% of net sales for the fiscal year. In summary, our 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 investors and employees for their ongoing support. I'll now turn it over to the operator for questions. Thank you. We'll now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. The first question is from Brooks O'Neil from Lake Street Capital Markets. Please go ahead. Good morning, Brian and John. Thanks for the overview. John, I'm going to miss you, but I wish you well in the future. And Brian, I'm looking forward to working with you as we move forward. So I just have a couple quick questions. The first one is, I know that over the last, let's say, year or maybe a little bit more, inventory has been relatively high, built up in anticipation of supply chain issues, and be sure you could service accounts during the pandemic. Do you feel you're making good progress, bringing that down to a level at which it's acceptable? And do you still feel that the items you have in inventory are saleable in the current market environment? Yeah, Brooks, I'll start with responding to your question by indicating I think we're probably at the right inventory levels with where the current revenue is in the business and what we need to support the demand. John can probably go back and give you kind of a history of where we were with the inventory and where we're at with current balances. I think that would be helpful to just provide a reminder of how historically we've had higher levels, and we believe we've got it down to a more reasonable level to support the business. And then to your question on the inventories, is all saleable inventory? We've got the right reserves on the books for the inventory that we view as in an excess and obsolete position, but we think that we're in a pretty good place with the inventory we do have on our shelves, that they are inventories that will sell through. Great. Yeah, thanks, Brooks. We appreciate the support on that. But just to add a little bit of color for Brian, you know, if we go back about a year, now, a year ago, we were at roughly $12 million of inventory. You see on this balance sheet this morning that we released at about $7 million of inventory. Give you a sense of what, you know, all the work that Brian and the team led over the last year to get those inventories at the right level. And, you know, that is a similar level that we expect with this revenue performance. Great. That's very helpful. And then I'm just curious, I know, John, while we were chatting over the last year or more, one of your focuses has been trying to introduce high-quality new products. I don't know if, Brian, you're in a position to comment about what the outlook might be with regard to new items over the next year or whatever, but is that gonna remain a priority? And do you see any exciting new things in the pipeline? It does remain a priority for us, Brooks, to make sure that we're providing the right products to our customers. As I've started to get reengaged with customers, coming back into this role, we've had a lot of good conversations on the products that we need to enhance our current product portfolio, and we're focusing on the largest opportunities first. But we've got probably a good half dozen products that we believe we need to be adding to our product portfolio over, you know, say, the next six to 12 months. And again, we're just focusing on the ones we'll launch first, based off of the highest opportunity that we're having with our customers. So yes, in short, that is a focus of ours, to continue to innovate and find new products to support our customers. Great. Super. Thanks for taking my questions. Yeah, thank you, Brooks. Thank you, Brooks. Thank you. The next question from Jeff Cohen from Ladenburg Thalmann, please go ahead. Oh, hi, Brian, Gabe, and John. How are you? Good morning, Jeff. So two questions from our end. Could you talk about how you're thinking about the cash utilization over the coming few quarters? I know that there was some usage in the Q1 of $1.7. Sure. Jeff, this is Brian. What I'd like to do is just let John provide some details about that cash utilization. Yeah, absolutely. Good to hear your voice again this morning, Jeff. So if you look at the cash utilization, we actually did increase cash by $34,000 in the quarter, but on operating activities, we used $1.7 million. So the way to really understand that is, the primary driver of that was reducing accounts payable and other accrued expenses to the tune of just under $1 million, and the remainder was funding prepaid expenses with the almost exclusive amount of that being to fund prepaid inventory, you know, advances to our suppliers as we prepare demand in the future. So we're still continued to getting this business to profitability. Good results here in the first quarter. It is just one quarter, and that's gonna also be important for us to manage cash at similar performance. Okay, got it. Could you talk about margins a little bit for the balance of 2024, how you're thinking about them? Does Q1 represent a floor for you? And where could we get to by the balance of the year? Jeff, yeah, I'll come back to earlier comments. We're trying to stay away from providing guidance on that right now because there's just still some unknowns as it relates to revenue volume and how that can affect margin. And we're looking still at where our costs are settling in. We believe we have some opportunities to reduce costs, but till we have some additional data, we don't want to get into any great detail. But, yeah, I think that, you know, I don't know if John have anything else you'd want to provide in terms of that? Yeah, I think, Jeff, you make a good point. You know, what, where is some of our recent data points, and how do we think about the quarter in terms of our margin performance? So our margin at, you know, just under 25% for the quarter was actually similar to where we finished last fiscal year. Now, Q1 is typically one of our highest quarters, along with Q4, and what we saw in the quarter, our decline from prior year, was two-thirds driven by just less revenue and one-third driven by less utilization or efficiency in our plants. So if we looked at history and we're drawing inferences from history, knowing that Q2 and Q3 tend to be less revenue, it will be. This would be likely, you know, somewhere in the higher range, and this would be the data point to then say, "Okay, if revenue's down a little bit in the next couple quarters, maybe margin might be down a little bit." But we simply don't know yet, which is why we're not giving guidance. We need to see some more data. But if I were looking at history, that's what I would draw upon. Okay, got it. And one more, if I may. I commend you on the discipline on the SG&A line for Q1. Could you talk about that a little bit, and then talk about that, how that's being leveraged into your your channels and your customers out there in the marketplace? Yeah. Thanks, Jeff, for recognizing the work that we've done with SG&A. I think that the way we've got that, the cost structure in OpEx, we can leverage that as we start to see revenue growth come through. We don't think that there's a lot of additional expenses that we need to put in SG&A as we start to see the growth happen in the business. So I think that's the leverage that we're gonna get. John, I don't know if you want to add anything to that. Yeah, the only thing I would say, you know, adding to Brian's point, I mean, if you look at the overall, you know, SG&A being sub 28% as a percentage of net sales in Q1 was lower than our guidance. So it is expected to, you know, likely come up a little bit in a couple of quarters just with some seasonality and on lower revenue typically in Q2 and Q3. But I think the way Brian described it is accurate, which is we've tried to be very flexible with our labor pool and only adjust labor as revenue will support it, because of our very clear goal for operating discipline and profitability at this revenue level. Okay, perfect. That does it for us. Thanks for taking the questions. Thank you, Jeff. Thank you, Jeff. Thank you. Thank you. As a reminder, you may press star one if you have a question. The next question is from Scott Henry, from Roth Capital. Please go ahead. Thank you. Good morning. Just a couple questions. First, is the 10-Q available? I didn't see it on your website yet. Hi, Scott, this is John. It is not out there yet. It'll be out by Monday, with the holiday being observed tomorrow for Veterans Day, so you can expect the 10-Q on Monday. Okay. Thank you. And good luck as well, John. Always enjoyed working with you. Shifting gears, when we think about, and I know you don't want to give any guidance, so I'm not gonna ask you about 2024, but when we think about 2025, I mean, do we think that's a year that maybe you start to get back to more traditional organic growth for the category? And what kind of. Where do you see the category as a whole growing, orthopedics and/or physical therapy? And then, I guess, you know, by then, would you be hoping to take share, or do you think you'd still be losing share? Yeah, I think, Scott, you pointed out the two business units that we view what we have in the business with physical therapy or rehab and in our orthopedic bracing space. And so I'll break those out into two answers, starting with the orthopedic bracing, the Bird & Cronin product line. We believe that our core competency is how we source from overseas with large items, large demand items, and how we manage that through an efficient operational process, and are able to support our customers with the way we manage their inventory requirements. And then we believe we got a core competency with our cut-and-sew operation and our manufacturing facility here in Eagan, Minnesota, to support those lower volume items. We continue to leverage those core competencies as we start to talk to our customers about how we can expand the relationship. That's where I think the organic growth is gonna come with orthopedic bracing. Going into the rehab side of the business, I think we have really good relationships with distributors and dealers that have access to the end users, where our capital is coming from and from a demand perspective. I think that the way we see some more organic growth there is what I mentioned earlier, some of these very targeted new product launches. I think as we launch these new products, we're gonna get some additional pull-through sales, because we're now going to be able to support their full products portfolio requirements. Not only will we get demand on these new products, but the existing products that we produce out of our New Jersey site will start to get that additional demand as they switch over from a competitor to our product line. That's what I see in terms of opportunity for growth going into this fiscal year and into fiscal year 2025. When you think about. I appreciate all the color on those segments, but when you think about how fast they are growing, I mean, do you think they're growing 5% a year or maybe a little lower, maybe 3% or 4%? You know, what is kind of the category growth? Yeah, I think it's too soon if you're asking specific growth in, you know, this year into the next year. You know, talking in terms of where I see the opportunity, I can't relate that back into percentage of growth for you right now, Scott. Okay. Well, I think it's growing around 3% or 4%, but, you know, I don't know either. What about, Brian, now that you're taking the CEO role again, how do you think of the acquisition opportunities? You know, would you like to get more aggressive there? You know, a lot of times there's a disconnect among the private players and to what the market thinks their value, their company's worth, and what they do. Is that gap closing? You know, just trying to get a sense of the environment and, how aggressive or not aggressive Dynatronics may be. Right. I believe that acquisitions are still gonna be part of our growth strategy. I think it's more the timing of when we start looking at potential deals. I think right now our focus is, let's stabilize the business, let's get the company profitable, and then once we're, we're stabilized and we're profitable, and there's a different dynamic in the business, that will allow us to be more opportunistic on acquisitions. So I think it's just a matter of timing right now, Scott. Now, just to pose a question, because, yeah, I look at a lot of companies all the time, and there's always good days and bad days. And, you know, businesses get better, and then something happens, and then they get worse, and you end up, you rise above and sink below the water level continuously. Sometimes you just got to do an acquisition to get scale, to stay above the water level all the time. How do you think of that, about that statement relative to Dynatronics? Meaning, you know, maybe, yeah, there'll be good quarters and bad quarters, but maybe you just need to get a little bigger to get to scale. Yeah, I see where you're coming from in those comments, Scott, and there is good quarters and bad quarters, and you've kind of got to look at where the opportunities are coming from and how they fit into your business and how that may help with scale. So we're keeping our eyes open on what the opportunities are. I don't want to get too far ahead of myself and say if there was a really good opportunity, we're gonna be positioned well to be able to execute against something. So I don't want to get into that kind of detail, but we're—I'll say we're keeping our eyes open. Right now, what our focus is, is running the business that we currently have and making sure that we're doing the right things to stabilize it, find those opportunities to grow revenue, get profitable, work on how we service our debt, and that's what the immediate focus is of the team. Like, we don't want to lose sight if there's a strategic opportunity, that we're not taking, that opportunity seriously and assessing for what it is. Okay, great. I appreciate that color. That should do it for me. Good luck, Brian, and as well to John. Thank you, Scott. Yep, thanks, Scott. Thank you. No further questions in the queue. I would now like to turn the floor back over to John for any closing comments. Thank you, operator, and thank you all for your interest in Dynatronics. I am pleased to be supporting Brian and Gabe in this transition, and look forward to watching the success of the organization in the quarters and years to come. If you have any further questions, please direct them to ir@dynatronics.com. Have a great day. Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.