- Record customer billings of $3.6 million; revenue of $3.4 million
HOUSTON, Oct. 23 /PRNewswire-FirstCall/ -- Sharps Compliance Corp.
(OTC:SCOM) (BULLETIN BOARD: SCOM) ("Sharps" or the "Company"), a
leading provider of cost-effective medical waste disposal solutions
for industry and consumers, today reported that first quarter
fiscal 2008 revenue grew to a record $3.4 million, an increase of
13% from revenue of $3.0 million in the same period the prior
fiscal year, and up 17% sequentially compared with revenue of $2.9
million in the fourth quarter of fiscal 2007. Customer billings,
which the Company believes is an appropriate measure of performance
and progress of the business, also increased to a record level of
$3.6 million for the fiscal 2008 first quarter, up 14% compared
with the prior fiscal year's first quarter billings of $3.1
million. On a sequential basis, customer billings increased 21%,
from $ 3.0 million, in the fourth quarter of fiscal 2007. Sales and
Billings Growth Customer billings of $3.6 million were driven by
strong growth in the hospitality and healthcare sectors as well as
the start of the flu shot season around the country. Growth to
support the flu shot sector was reflected in customer billings to
the retail market, which increased to $685 thousand in the first
quarter of fiscal 2008 compared with $633 thousand in the same
period the prior year and up 268% from billings of $186 thousand in
the fourth quarter of fiscal 2007. Dr. Burton J. Kunik, Chairman,
President and Chief Executive Officer of the Company, commented,
"Although, we do expect substantial year-over-year growth in the
flu shot business the ordering patterns of our large drug and
grocery store customers administering flu shots have changed to
better match the influenza season, which begins in October and
continues through January. Therefore, and as opposed to experience
in prior years, customer billings to the retail segment are
expected to span the first and second quarters of fiscal 2008 as
opposed to being concentrated in the quarter ended in September. As
a result, we expect to see continued strength in this sector
through the second quarter ended December 31, 2007." Sales and
marketing efforts in the hospitality sector, which includes hotels,
restaurants and assisted living facilities, resulted in higher
billings to new and existing customers. Sales to the hospitality
sector were $363 thousand for the first quarter of fiscal 2008, an
increase of 212%, or $247 thousand, compared with the first quarter
of fiscal 2007, reflecting higher demand of the Sharps Disposal by
Mail System(R) and Biohazard Spill Clean-Up Kit products. Dr. Kunik
continued, "We have delivered approximately $500 thousand in
products and services on our contract with a top ten pharmaceutical
manufacturer over the past three quarters and expect to ship
approximately $400 thousand in both December 2007 and January 2008
achieving virtually the entire contract value of $1.4 million. The
pharmaceutical manufacturing industry is becoming aware of the
success of our program with a top ten pharmaceutical manufacturer
customer facilitating the disposal of syringes used to administer
an injectable drug. We believe the use of our product to protect
its patients and the community is a watershed event in the
pharmaceutical manufacturing industry." Sharps Compliance fulfills,
directly to each patient, a specially designed one gallon Sharps
Disposal by Mail System(R). Sharps' proprietary SharpsTracer(TM)
system is used to track the return of the package by the patient to
the Company's treatment facility, where it is scanned and weighed
prior to destruction. This data is then transmitted to Abbot
Laboratories which assists in monitoring drug usage and provides a
touch point for individual patient follow-up. Customer billings
include all invoiced amounts associated with products shipped
during the period reported. A significant portion of customer
billings are deferred to future reporting periods and recognized as
GAAP revenue when the Sharps Disposal By Mail Systems(R) products
are returned to the Company's treatment facility for processing and
destruction. Revenue represents customer billings adjusted to
reflect the deferral of a portion of current period billings and
recognition of certain revenue associated with product returned for
treatment and destruction. The difference between customer billings
and revenue is reflected in the Company's balance sheet as deferred
revenue. Operating Performance For the three months ended September
30, 2007, gross margin was 42.3%, down from 43.4% in the same
period of the prior fiscal year, but up sequentially from 39.5% in
the previous quarter. The reduction in the gross margin
year-over-year was a result of product mix which reflects a lower
percentage of higher margin products sold during the quarter versus
the prior year period. The sequential gross margin increase
reflected price increases implemented in the third and fourth
quarters of fiscal year 2007 to address higher outbound and return
transportation costs. Gross margin is expected to remain in the low
to mid-40% range for the remainder of fiscal 2008. Selling, general
and administrative (SG&A) expense increased 21% to $1.15
million for the first quarter of fiscal 2008 compared with $0.95
million in the same period of the prior fiscal year but essentially
flat from the fourth quarter of fiscal 2007. For the quarter ended
September 30, 2007, SG&A was 34% of revenue versus 32% for the
corresponding period of the prior fiscal year. The increase in
SG&A expense over the prior year period is a result of
increased sales and marketing related expenses, non-cash
stock-based compensation expense, recruiting fees and facilities
rent expense. SG&A is expected to increase approximately 12%
overall for the full fiscal year 2008 compared with fiscal 2007,
exclusive of any non-cash stock-based compensation expense (SFAS
123R). Operating margin was 6.5% for the three-months ended
September 30, 2007, compared with 10.0% for the corresponding
period of the prior fiscal year. The reduction in the operating
margin was due to the 110 basis point reduction in gross margin and
increase in SG&A, as noted above. The reduction in gross margin
is a result of product mix (lower percentage of billings from
higher margin products). Other income included in the Company's
statement of operations reflects increased interest income
resulting from the corresponding higher cash balances and lower
interest expense associated with reduced capital leases. For the
three months ended September 30, 2007, the Company generated net
income of $242 thousand, or $0.02 per diluted share, a decrease
compared with net income of $292 thousand, or $0.03 per diluted
share, for the same period the prior fiscal year, but an increase
from a net loss of $10 thousand in the fourth quarter of fiscal
2007. The reduction in diluted earnings per share year-over-year is
a result of a 2.5 million, or 23%, increase in the diluted shares
outstanding due to stock options exercised and a higher stock
price. Liquidity and Balance Sheet Strength The Company's cash
position at September 30, 2007 remains strong at $2.2 million. At
September 30, 2007, stockholders' equity and total assets were $2.6
and $5.2 million, respectively, up from $2.2 million and $4.7
million at June 30, 2007, respectively. Although Sharps maintains a
$2.5 million line of credit with JPMorgan Chase, no amounts were
outstanding at September 30, 2007. The line of credit is available
to finance working capital and/or potential acquisition
opportunities. Outlook Dr. Kunik continued, "Our customer billings
target for fiscal year 2008 remains $15 to $16 million, a 23% to
31% increase over fiscal 2007 billings. Strategically, we continue
to see the pharmaceutical manufacturing market as a significant
opportunity to fill the need for the proper disposal of used
syringes administered by the self-injector. There are hundreds of
injectable drugs in the marketplace and pipeline today, translating
into large order opportunities for us. As the leader in the mail
back industry, we believe we are ideally positioned to capture a
significant portion of this emerging market. Our sales and
marketing team has also been aggressively pursuing additional
prospects in a variety of sectors. We currently supply our products
to three of the four largest non-emergency healthcare clinic
operators nationwide. It is expected the number of clinics could
rise from approximately 700 today to over 10,000 in the next three
plus years. As non-emergency healthcare clinic operators continue
to expand and add locations, we expect sales to this market to
continue showing strong growth over the long-term." He concluded,
"We also anticipate the pace of municipal programs to increase as
legislation for the proper disposal of used syringes becomes
effective for California and Massachusetts in calendar year 2008.
Several additional states, such as Pennsylvania, have proposed
similar legislation. As public perceptions and attitudes shift,
demanding more corporate and governmental accountability and
responsibility for the environment, small-quantity generator
customers in our pipeline are more willing to implement the use of
our safe and cost-effective medical waste disposal system." First
Quarter 2008 Webcast and Conference Call The Company will host a
teleconference today beginning at 1:00 p.m. Eastern Time. During
the teleconference, Dr. Burton J. Kunik, Chairman, Chief Executive
Officer and President, and David P. Tusa, Executive Vice President
and Chief Financial Officer, will review the financial and
operating results for the period and discuss Sharps' corporate
strategy and outlook. A question-and-answer session will follow.
The Sharps conference call may be accessed the following ways: --
The live webcast may be found at http://www.sharpsinc.com/.
Participants should go to the website 10 - 15 minutes prior to the
scheduled conference in order to register and download any
necessary audio software. Webcast listeners will have the
opportunity to submit questions to the speakers. Select questions
will be summarized and addressed during the question-and-answer
portion of the call. -- The teleconference may also be accessed by
dialing (201) 689-8560 and requesting conference ID number 258291,
approximately 5 - 10 minutes prior to the call. To listen to the
archived call: -- The archived webcast will be at
http://www.sharpsinc.com/. A transcript will also be posted once
available. -- A replay may also be heard by calling (201) 612-7415,
and entering account number 3055 and conference ID number 258291.
The telephonic replay will be available from 4:00 p.m. Eastern Time
the day of the teleconference until 11:59 p.m. Eastern Time on
October 30, 2007. About Sharps Compliance Corp. Headquartered in
Houston, Texas, Sharps Compliance is a leading provider of
cost-effective medical waste disposal solutions for industry and
consumers. The Company's flagship product, the Sharps Disposal by
Mail System(R), is a cost-effective and easy-to-use solution to
dispose of medical waste such as hypodermic needles, lancets and
any other medical device or objects used to puncture or lacerate
the skin (referred to as "sharps"). The Company also offers a
number of products specifically designed for the home healthcare
market. Sharps Compliance focuses on targeted growth markets such
as the pharmaceutical, retail, healthcare, commercial, professional
and hospitality markets, as well as serving a variety of additional
markets. Sharps is a leading proponent and participant in the
development of public awareness and solutions for the safe disposal
of needles, syringes and other sharps in the community setting. As
a fully integrated manufacturer providing customer solutions and
services, Sharps Compliance's solid business model, with strong
margins and significant operating leverage, and early penetration
into emerging markets, uniquely positions the company for strong
future growth. More information on Sharps Compliance can be found
on its website at: http://www.sharpsinc.com/. Safe Harbor Statement
The information made available in this press release contains
certain forward-looking statements which reflect Sharps Compliance
Corp.'s current view of future events and financial performance.
Wherever used, the words "estimate", "expect", "plan",
"anticipate", "believe", "may" and similar expressions identify
forward-looking statements. Any such forward-looking statements are
subject to risks and uncertainties and the company's future results
of operations could differ materially from historical results or
current expectations. Some of these risks include, without
limitation, the company's ability to educate its customers,
development of public awareness programs to educate the identified
consumer, customer preferences, the Company's ability to scale the
business and manage its growth, the degree of success the Company
has at gaining more large customer contracts, managing regulatory
compliance and/or other factors that may be described in the
company's annual report on Form 10-KSB, quarterly reports on Form
10-QSB and/or other filings with the Securities and Exchange
Commission. Future economic and industry trends that could
potentially impact revenues and profitability are difficult to
predict. The company assumes no obligation to publicly update or
revise its forward-looking statements even if experience or future
changes make it clear that any projected results express or implied
therein will not be realized. For more information contact: - OR -
David P. Tusa Tammy Swiatek Executive Vice President, Kei Advisors
LLC Chief Financial Officer & Investor Relations Business
Development Phone: (713) 660-3514 Phone: (716) 843-3853 Email:
FINANCIAL TABLES FOLLOW. SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
Three-Months Ended September 30, 2007 2006 % Change (Unaudited)
(Unaudited) Revenue $3,391,112 $2,990,884 13.4% Cost of revenue
1,957,735 1,693,588 15.6% Gross profit 1,433,377 1,297,296 Gross
margin 42.3% 43.4% S, G & A expense 1,155,381 954,422 21.1%
Depreciation and amortization 57,697 44,212 30.5% Operating income
220,299 298,662 Operating margin 6.5% 10.0% Other income 26,302
1,640 Net income before income taxes $246,601 $300,302 Income taxes
(4,997) (8,714) Net income $241,604 $291,588 Net income per share
Basic $0.02 $0.03 Diluted $0.02 $0.03 Weighted Average Shares
Outstanding Basic 12,061,734 10,562,723 Diluted 13,535,520
10,991,339 SHARPS COMPLIANCE CORP. AND SUBSIDIARIES Condensed
Consolidated Balance Sheet September 30, 2007 June 30, 2007
(Unaudited) ASSETS: Current assets: Cash and cash equivalents
$2,238,197 $2,134,152 Restricted cash 10,010 10,010 Accounts
receivable, net 1,509,320 1,330,731 Inventory 544,016 364,005
Prepaid and other assets 171,861 186,101 Total current assets
4,473,404 4,024,999 Property and equipment, net 612,250 590,567
Intangible assets, net 80,496 75,002 Total assets $5,166,150
$4,690,568 LIABILITIES AND STOCKHOLDERS' EQUITY: Current
liabilities: Accounts payable $813,346 $557,302 Accrued liabilities
321,290 613,851 Current portion of deferred revenue 1,005,063
883,678 Current maturities of capital lease obligations 465 1,809
Total current liabilities 2,140,164 2,056,640 Long-term deferred
revenue 392,307 392,803 Other 71,250 72,000 Total liabilities
2,603,721 2,521,443 Stockholders' equity: Total stockholders'
equity 2,562,429 2,169,125 Total liabilities and stockholders'
equity $5,166,150 $4,690,568 SHARPS COMPLIANCE CORP. AND
SUBSIDIARIES Supplemental Customer Billing and Revenue Information
(unaudited) Three Months Ended September 30, 2007 %Total 2006
%Total $Change %Change BILLINGS BY MARKET: Health Care $1,919,264
53.5% $1,817,585 57.8% $101,679 5.6% Hospitality 363,235 10.1%
116,333 3.7% 246,902 212.2% Retail 685,436 19.1% 633,003 20.1%
52,433 8.3% Professional 171,184 4.8% 136,339 4.3% 34,845 25.6%
Commercial 116,108 3.2% 110,634 3.5% 5,474 4.9% ProTec 125,270 3.5%
117,129 3.7% 8,141 7.0% Agriculture 93,304 2.6% 120,691 3.8%
(27,387) (22.7%) Pharmaceutical 7,185 0.2% 15,163 0.5% (7,978)
(52.6%) Government 56,060 1.6% 53,858 1.7% 2,202 4.1% Other 49,204
1.4% 21,594 0.7% 27,610 127.9% Subtotal 3,586,250 100.0% 3,142,329
100.0% 443,921 14.1% GAAP Adjustment * (195,138) (151,445) (43,693)
Revenue Reported $3,391,112 $2,990,884 $400,228 13.4% * Represents
the net impact of the revenue recognition adjustments to arrive at
reported GAAP revenue. Customer billings include all invoiced
amounts for products shipped during the period reported. GAAP
revenue includes customer billings as well as numerous adjustments
necessary to reflect, (i) the deferral of a portion of current
period sales and (ii) recognition of certain revenue associated
with product returned for treatment and destruction. The difference
between customer billings and GAAP revenue is reflected in the
Company's balance sheet as deferred revenue. DATASOURCE: Sharps
Compliance Corp. CONTACT: David P. Tusa, Executive Vice President,
Chief Financial Officer & Business Development of Sharps
Compliance Corp., +1-713-660-3514, ; or Tammy Swiatek, Investor
Relations of Kei Advisors LLC, +1-716-843-3853, , for Sharps
Compliance Corp. Web site: http://www.sharpsinc.com/
Copyright