- Revenue for 2008 up 7.4% over prior year to $12.8 million; weak
fourth quarter reflects timing of initiation of new and renewed
contracts and backorders HOUSTON, Sept. 29 /PRNewswire-FirstCall/
-- Sharps Compliance Corp. (OTC:SCOM) (BULLETIN BOARD: SCOM)
("Sharps" or the "Company"), a leading provider of cost-effective
disposal solutions for small quantity generators of medical waste,
today reported its financial results for the fourth quarter of
fiscal 2008 which ended June 30, 2008. Revenue was $2.8 million in
the fourth quarter of fiscal 2008 compared with $2.9 million in the
same period the prior fiscal year. For the full year, revenue was
$12.8 million in fiscal 2008, a 7.4% increase compared with revenue
of $12.0 million in fiscal 2007. Fourth quarter fiscal 2008
customer billings were $2.8 million compared with $3.0 million in
the same period the prior fiscal year. Billings increased across
all markets except healthcare, retail and pharmaceutical primarily
due to the timing of implementation of contracts and orders for the
flu shot season combined with a temporary backorder of Pitch-It(TM)
IV Poles for the healthcare industry. Growth in the hospitality,
commercial and professional markets was driven by continued strong
demand for the Company's value-added products. For fiscal 2008
year-end, customer billings increased to $13.2 million, up 7.6%
compared with $12.2 million in fiscal 2007. Growth in
year-over-year billings was led by the pharmaceutical
manufacturing, hospitality, and professional markets.
Pharmaceutical market billings increased 61% year-over-year as a
result of the Company's first Patient Support Program with a
top-ten pharmaceutical manufacturer. The Patient Support Program
combines services to support the pharmaceutical manufacturers'
product delivery system, patient tracking and compliance. Sharps
provides direct patient fulfillment of the Sharps Disposal by Mail
System(R), product timing and consumption tracking with its
proprietary SharpsTracer(TM) system and data feedback to the
manufacturer. The Company recently renewed this program through
June 2009 and expects the total value of this contract to exceed
$1.7 million, with billings of approximately $800 thousand in the
first quarter of fiscal 2009 and $900 thousand in the second half
of fiscal 2009. Dr. Burton J. Kunik, Chairman, Chief Executive
Officer and President of Sharps Compliance, commented, "Revenue and
billings, and consequently earnings, were affected by the timing of
new and renewed contracts which were executed earlier in the year
and began shipping in the first quarter of fiscal 2009 and
backorders that also shipped in fiscal 2009's first quarter. More
importantly, our success in fiscal 2008 should be measured by the
many contracts we were awarded which have already begun to
positively impact our fiscal 2009 performance. We invested heavily
in our growth in fiscal 2008 in order to be able to address both
these opportunities, as well as several large projects that are
quite active in our pipeline. Our expanded operations, strengthened
infrastructure and enhanced sales and marketing team are designed
to address the rapid growth we anticipate in fiscal 2009." Fourth
Quarter Fiscal 2008 Operating Performance Gross margin was 34% in
the fourth quarter of fiscal 2008, down from 39.5% in the fourth
quarter of fiscal 2007. The reduction in gross margin was primarily
a result of incremental air freight costs incurred in the quarter
for Pitch-It(TM) IV Poles in order to promptly fulfill backorders
that grew due to supplier issues. These issues were resolved in
July 2008. In addition, approximately $150,000 in shipments that
would have occurred in the fourth quarter were shipped in the
fiscal 2009 first quarter which ends September 30, 2008. Selling,
general and administrative (SG&A) expenses were $1.3 million in
the fourth quarter of fiscal 2008 compared with $1.1 million in the
same period of the prior year and $1.2 million in the third quarter
of fiscal 2008. Higher SG&A expenses reflect increases in sales
and marketing staff and activities, expanded square footage under
lease and investor relations efforts. The Company also recorded a
special charge of $67 thousand in the quarter ended June 30, 2008
related to severance costs. Net loss was $456 thousand, or $0.04
per diluted share, for the fourth quarter of fiscal 2008 compared
with a net loss of $10 thousand, or $0.0 per diluted share, in the
fourth quarter of fiscal 2007. Fiscal Year 2008 Review Gross margin
for fiscal 2008 decreased to 40% compared with 42% for fiscal 2007
due to increased costs, product and customer mix, and unplanned
inbound shipping expenses. SG&A for fiscal 2008 was $4.8
million compared with $3.9 million in the same period of the prior
fiscal year. The increase reflects higher non-cash stock-based
compensation expense, recruiting fees and similar expenses as noted
for the fourth quarter. Net income was $82 thousand, or $0.01 per
share, for fiscal 2008, compared with net income of $785 thousand,
or $0.06 per diluted share, for fiscal 2007. The weighted average
shares outstanding for fiscal 2008 were 13.5 million, up from 12.3
million for fiscal 2007 reflecting increased stock options
exercised during the year. Liquidity and Balance Sheet Strength
Cash and cash equivalents were $2.0 million at June 30, 2008, down
from $2.2 million at March 31, 2008 and $2.1 million at June 30,
2007. Cash generated from operations of approximately $0.5 million
and proceeds from stock option exercises of about $0.6 million in
fiscal 2008 were offset by capital expenditures of $1.1 million
which included the purchase of a treatment facility in Carthage,
Texas plus associated facility improvements and additions. At June
30, 2008, stockholders' equity and total assets were $2.9 million
and $5.7 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 June 30, 2008. The line of credit is available to
finance working capital, expansion and/or potential acquisition
opportunities. Dr. Kunik added, "During fiscal 2008, we developed
an infrastructure that will handle significantly larger orders
which we are now realizing as a result of our efforts to diversify
the markets we address. We see the pharmaceutical manufacturers,
government and retail markets expanding rapidly as the push to
properly dispose of syringes and other medical waste created by
small quantity generators driven by efforts to maintain a safe,
healthy and clean environment continues to gain greater support.
Fiscal 2008 was a year of major transition and development, and we
are starting fiscal 2009 already boasting record billing levels in
the near-finished first quarter. We expect the rest of fiscal 2009
to continue to reflect our successes in sales." Strong Outlook for
Fiscal 2009 led by Expected Record Billings in the First Quarter
The Company expects billings to increase approximately 30%, to $4.7
million, in the first quarter of fiscal 2009 compared with $3.6
million in the first quarter of fiscal 2008. Increased sales to the
pharmaceutical and retail markets are expected to drive the
increase from the renewal of the Company's first Patient Support
Program as well as contracts won for Patient Support Programs with
two additional pharmaceutical manufacturers. The retail market
growth is from pharmacies and retail medical clinics increasing
their use of the Sharps Disposal By Mail Systems(R) for the flu
shot season. Product Line Innovation to Increase Market Penetration
The Company recently launched a number of new product lines to
further penetrate the existing market of small quantity generators
of medical waste. These products are expected to generate new sales
opportunities in fiscal 2009 and beyond. The RxTakeAway(TM) line of
products was launched in September 2008 and is specifically
designed for individual consumers and community facilities, such as
assisted living, long-term care, hospice and correctional
operations, to safely dispose of unused pharmaceuticals and
medications. The product line is also being marketed to national
pharmacy chains as a part of "take back" programs to provide their
customers with an alternative to disposing of unused medications by
flushing or placing in the trash. The Company launched the Medical
Professional Sharps Disposal by Mail System(R) in June 2008, a
larger version of its flagship products specifically designed to
meet the needs of physicians' and dentist clinics or offices.
Update on California Senate Bill 1305 Effective September 1, 2008,
California Senate Bill 1305 requires the proper disposal of
home-generated sharps waste (syringes, needles, lancets, etc.) to
protect the general public and workers from potential exposure to
contagious diseases as well as health and safety risks when
improperly disposed biohazard waste enters the public waste stream.
The Bill specifically acknowledges mail-back programs, like the
Sharps Disposal by Mail System(R), as one of the most convenient
alternatives for the collection and destruction of home-generated
sharps. Dr. Kunik concluded, "The catalysts that we have needed to
drive the recognition of the value of our products have begun to
ignite. We have unprecedented numbers of inquiries regarding our
products, and our sales force is being readily received by the
government offices of cities and counties that realize they must
offer solutions to the individuals in their jurisdictions for the
disposal of medical waste." About Sharps Compliance Corp.
Headquartered in Houston, Texas, Sharps Compliance is a leading
provider of cost-effective disposal solutions for small quantity
generators of medical waste and unused pharmaceuticals. 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 and products
for the safe disposal of unused pharmaceuticals, RxTakeAway(TM).
Sharps Compliance focuses on targeted growth markets such as the
pharmaceutical, retail, commercial, 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-K, quarterly reports on Form
10-Q 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 Poblete Executive Vice President, Chief Kei
Advisors LLC Financial Officer & Business Development Investor
Relations Phone: (713) 660-3514 Phone: (716) 843-3853 Email:
FINANCIAL TABLES FOLLOW. SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Consolidated Statements of Income (Loss) (unaudited) Three-Months
Ended Twelve-Months Ended June 30, June 30, 2008 2007 % 2008 2007 %
(Unaudited) (Unaudited) Change Change Revenue $2,771,297 $2,889,704
(4.1%) $12,840,911 $11,956,016 7.4% Cost of revenue 1,835,827
1,747,742 5.0% 7,725,921 6,942,567 11.3% Gross profit 935,470
1,141,962 (18.1%) 5,114,990 5,013,449 2.0% Gross margin 33.8% 39.5%
39.8% 41.9% SG&A expense 1,267,656 1,114,489 13.7% 4,782,532
3,945,642 21.2% Special charge 67,541 - 100.0% 67,541 138,000
(51.1%) Depreciation and amortization 72,312 60,500 19.5% 265,613
202,502 31.2% Operating income (loss) (472,039) (33,027) (696)
727,305 Operating margin (17.0%) (1.1%) 0.0% 6.1% Other income
12,254 22,973 85,715 78,575 Net income (loss) before income taxes
(459,785) ($10,054) $85,019 $805,880 Income taxes 3,438 (3,446)
(21,180) Net income (loss) (456,347) ($10,054) $81,573 $784,700 Net
income (loss) per share Basic (0.04) - $0.01 $0.07 Diluted (0.04) -
$0.01 $0.06 Weighted Average Shares Outstanding Basic 12,561,337
11,894,855 12,313,160 11,161,367 Diluted 12,561,337 11,894,855
13,540,381 12,338,047 SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Consolidated Balance Sheet 6/30/2008 6/30/2007 ASSETS: Current
assets: Cash and cash equivalents $2,035,219 $2,134,152 Restricted
cash 10,010 10,010 Accounts receivable, net 1,183,975 1,330,731
Inventory 580,861 364,005 Prepaid and other assets 359,894 186,101
Total current assets 4,169,959 4,024,999 Property and equipment,
net 1,375,657 590,567 Intangible assets, net 130,702 75,002 Total
assets $5,676,318 $4,690,568 LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities: Accounts payable $778,423 $557,302 Accrued
liabilities 432,971 613,851 Current portion of deferred revenue
1,063,016 883,678 Current maturities of capital lease obligations -
1,809 Total current liabilities 2,274,410 2,056,640 Long-term
deferred revenue 516,372 392,803 Other - 72,000 Total liabilities
2,790,782 2,521,443 Stockholders' Equity: Total stockholders'
equity 2,885,536 2,169,125 Total liabilities and stockholders'
equity $5,676,318 $4,690,568 SHARPS COMPLIANCE CORP. AND
SUBSIDIARIES Supplemental Customer Billing and Revenue Information
(unaudited) Three-Months Ended June 30, 2008 % Total 2007 % Change
BILLINGS BY MARKET: Health Care $1,663,849 59.3% $1,959,756 (15.1%)
Hospitality 287,939 10.3% 239,780 20.1% Professional 218,986 7.8%
182,256 20.2% Commercial 204,345 7.3% 111,179 83.8% Agriculture
139,032 5.0% 75,303 84.6% ProTec 109,345 3.9% 104,810 4.3% Retail
79,538 2.8% 186,177 (57.3%) Government 45,493 1.6% 29,466 54.4%
Other 36,983 1.3% 24,923 48.4% Pharmaceutical 20,187 0.7% 46,274
(56.4%) Subtotal 2,805,697 100.0% 2,959,924 (5.2%) GAAP Adjustment
* (34,399) (70,220) (51.0%) Revenue Reported $2,771,298 $2,889,704
(4.1%) Twelve-Months Ended June 30, 2008 % Total 2007 % Change
BILLINGS BY MARKET: Health Care $7,293,267 55.3% $7,327,530 (0.5%)
Hospitality 1,202,330 9.1% 878,100 36.9% Professional 748,919 5.7%
615,014 21.8% Commercial 617,390 4.7% 528,915 16.7% Agriculture
502,878 3.8% 515,281 (2.4%) ProTec 457,788 3.5% 416,307 10.0%
Retail 1,124,040 8.5% 1,107,442 1.5% Government 204,403 1.6%
177,790 15.0% Other 144,120 1.1% 128,810 11.9% Pharmaceutical
889,766 6.7% 553,885 60.6% Subtotal 13,184,901 100.0% 12,249,074
7.6% GAAP Adjustment * (343,990) (293,058) 17.4% Revenue Reported
$12,840,911 $11,956,016 7.4% * 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 Poblete of Kei Advisors LLC Investor Relations,
+1-716-843-3853, , for Sharps Compliance Corp. Web site:
http://www.sharpsinc.com/
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