- Awarded $40 million, five-year U.S. Government contract; $28.5
million in contract year one HOUSTON, Feb. 10
/PRNewswire-FirstCall/ -- Sharps Compliance Corp. (OTC Bulletin
Board: SCOM) ("Sharps" or the "Company"), a leading provider of
cost-effective disposal solutions for alternative site healthcare
customers and other generators of medical waste, today reported
revenue of $3.4 million in the second quarter of fiscal 2009, which
ended December 31, 2008, a $381 thousand decrease compared with the
second quarter of fiscal 2008. Customer billings, which the Company
believes is an appropriate measure of performance and progress of
the business, decreased 14.4% to $3.2 million for the second
quarter of fiscal 2009, compared with $3.8 million in the same
period the prior fiscal year. The decrease in revenue and customer
billings for the quarter is primarily due to timing associated with
the vendor management inventory programs the Company provides to
pharmaceutical manufacturers. For the six-month period ended
December 31, 2008, revenue increased $497 thousand to $7.6 million,
compared with the first six months of fiscal 2008. Year-to-date
customer billings were $7.9 million in fiscal 2009 and $7.4 million
in fiscal 2008, an increase of 7.2%. The increase in year-to-date
revenue and customer billings was primarily driven by strong growth
in the pharmaceutical, retail and professional markets. Dr. Burton
J. Kunik, Chairman and Chief Executive Officer of Sharps
Compliance, commented, "Our efforts to move from being a provider
of products and services to a comprehensive solutions provider of
medical waste management systems is being realized by our recent
pharmaceutical and government contracts. Although this last quarter
does not demonstrate our earnings power, with the addition of our
government contract and continued growth in the pharmaceutical
manufacturing business, we believe consolidated gross margins could
exceed 50% beginning in the fourth quarter of fiscal year 2009
ending June 30, 2009." $40 million U.S. Government Contract Award
The Company recently announced it had been awarded a contract to
provide its Sharps Medical Waste Management System
("Sharps(R)MWMS(TM)") to an agency of the United States Government.
The total contract is valued at approximately $40 million and is
expected to be executed over a five year period. The Company has
received a purchase order for $28.5 million which represents
product and services to be provided during the first contract year.
The following four option years represent payment for program
maintenance. Sales and Billings Growth Customer billings from
contracts with pharmaceutical manufacturers increased to $1.0
million in the six-months ended December 31, 2008 compared with
$498 thousand in the same period the prior year. The recently
announced renewal of the Company's first vendor managed inventory
program for a top ten pharmaceutical manufacturer's patient support
program contributed approximately $700 thousand in billings in the
first quarter of fiscal 2009 and is expected to generate an
additional $900 thousand in billings during the fourth quarter of
fiscal 2009 ending June 30, 2009. Billings to additional
pharmaceutical manufacturers contributed approximately $300
thousand to the quarter ended December 31, 2008. Sharps' vendor
managed inventory program includes the direct fulfillment of the
Sharps Disposal By Mail System(R) to the pharmaceutical
manufacturers' self-injecting patient support program participants,
who use the product as a convenient means of disposing of used
syringes. Sharp's proprietary SharpsTracer(TM) system tracks the
return of the Sharps Disposal By Mail System(R) by the patient to
the treatment facility, where the package is scanned and weighed
prior to destruction. This data is electronically transmitted to
the pharmaceutical manufacturer which assists them in monitoring
drug usage and provides them with a touch point for individual
patient follow-up. Customer billings to retail market customers
increased 29.5% to $1.3 million in the first half of fiscal 2009 as
a result of strong seasonal demand for the Sharps Disposal By Mail
Systems(R) as pharmacies and clinics in retail settings administer
flu shots to their customers. Higher customer billings to the
professional and commercial markets were offset by decreased
billings to healthcare and hospitality customers. Second Quarter
Fiscal 2009 Operating Performance Gross margin was 38.2% in the
second quarter of fiscal 2009 and 41.1% for the fiscal year-to-date
period ended December 31, 2008. Gross margins for the quarter were
adversely impacted by the effect of lower revenue, increased
operations infrastructure costs as the Company prepared for higher
volume including that related to the recent $40 million U.S.
Government contract and the mix of product sold (i.e., lower
percentage of higher margin mailback business). For the fiscal
year-to-date period, gross margins were down from the prior year as
a result of approximately $200 thousand in excess air freight
shipping costs that were incurred in the first quarter ended
September 30, 2008 to address supply and manufacturing issues
associated with the Company's Pitch-It IV Poles and increased
operations infrastructure costs as the Company prepared for the
higher volume including that related to the recent U.S. Government
contract. Selling, general and administrative (SG&A) expense
was $1.4 million for the second quarter of fiscal year 2009, an
increase of $253 thousand, or 21% over the corresponding period of
the prior year. For the six-months ended December 31, 2008,
SG&A expense was $2.6 million compared with $2.3 million for
the corresponding period of the prior year, an increase of 11%. The
increase in the SG&A for both the second quarter and fiscal
year-to-date periods was a result of increased non-cash 123R
stock-based compensation expense, professional fees, recruiting and
compensation-related expenses. Dr. Kunik continued, "We invested
heavily in our organization as we developed the systems and
processes necessary to address the expected and rapid increase in
top line growth. The operating leverage inherent in our business
model will become even more evident as the Company's top line grows
significantly while our SG&A expense increases at a much lower
pace." Operating loss for the second quarter of fiscal 2009 was
$232 thousand, compared with operating income of $354 thousand in
the second quarter of fiscal 2008. Operating income for the
six-months ended December 31, 2008 was $377 thousand, or 5% of
sales, a decrease of $198 thousand compared with operating income
of $575 thousand, or 8% of sales, in the same period the prior
fiscal year period. The reduction in operating income was primarily
due to the increases in SG&A, as noted above. During the
quarter ended December 31, 2008, the Company evaluated its deferred
tax asset valuation allowance and determined that such valuation
allowance should be reduced to zero. As a result of this decision,
the Company's balance sheet reflects deferred tax assets of $3.1
million at December 31, 2008. Additionally, the Company recorded a
corresponding income tax benefit of $1.8 million, or $0.13 per
diluted share, and an increase to additional paid in capital of
$1.3 million during the quarter ended December 31, 2008. Net income
was $1.6 million, or $0.11 per diluted share, for the second
quarter of fiscal 2009 compared with net income of $380 thousand,
or $0.03 per diluted share, in the second quarter of fiscal 2008.
Net income was $2.2 million, or $0.16 per diluted share, for the
six months ended December 31, 2008 compared with net income of $622
thousand, or $0.05 per diluted share, in the corresponding period
of prior fiscal year. Liquidity and Balance Sheet Strength Cash and
cash equivalents were $2.1 million at December 31, 2008, up from
$2.0 million at June 30, 2008. At December 31, 2008, stockholders'
equity and total assets were $6.8 million and $9.5 million,
respectively, up from $2.9 million and $5.7 million at June 30,
2008, respectively. Although Sharps maintains a $2.5 million line
of credit with JPMorgan Chase (the "Bank"), no amounts were
outstanding at June 30, 2008. The line of credit is available to
finance working capital, expansion and/or potential acquisition
opportunities. The Company has completed negotiations and received
a favorable term sheet from the Bank to increase its line of credit
from $2.5 to $4.5 million. While no assurances can be made, the
Company believes it should have its new line of credit in place by
the end of February 2009. Dr. Kunik concluded, "Over the last two
years we have been able to grow shareholder equity over 520% and
established a solid balance sheet to a level that qualifies us to
move from the bulletin board and apply for listing on a major
exchange. We are confident that we have the experience, expertise,
personnel and infrastructure to transform into a comprehensive
provider of medical waste management services for alternative site
healthcare customers and other generators of medical waste." Second
Quarter 2009 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 and Chief
Executive Officer, 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 (verbal or via e-mail). 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 311150,
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 311150.
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
Tuesday, February 17, 2009. About Sharps Compliance Corp.
Headquartered in Houston, Texas, Sharps Compliance is a leading
provider of cost-effective disposal solutions for alternative site
healthcare facilities and other 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 Sharps(R)MWMS(TM),
a Medical Waste Management System, is a comprehensive medical waste
solution which includes an array of services and products necessary
to effectively collect, store and dispose of medical waste in the
alternate site market (i.e., outside of the hospital or large
healthcare facility setting). The System, which is designed for
rapid deployment, features the Sharps Disposal By Mail System(R)
products combined with warehousing, inventory management, training,
data and other services necessary to provide a comprehensive
solution. The Sharps(R)MWMS(TM) is designed to be an integral part
of governmental and commercial emergency preparedness programs. 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 Deborah Pawlowski Executive Vice President, Chief Kei
Advisors LLC Financial Officer & Business Investor Relations
Development Phone: (716) 843-3908 Phone: (713) 660-3514 Email:
Email: FINANCIAL TABLES FOLLOW. SHARPS COMPLIANCE CORP. AND
SUBSIDIARIES Consolidated Statements of Income (unaudited)
Three-Months Six-Months Ended Ended December 31, December 31,
------------ ------------ % % 2008 2007 Change 2008 2007 Change
---- ---- ---- ---- Revenue $3,369,646 $3,750,802 (10.2%)
$7,639,182 $7,141,914 7.0% Cost of revenue 2,081,422 2,145,468
(3.0%) 4,501,783 4,103,203 9.7% --------- --------- ---------
--------- Gross profit 1,288,224 1,605,334 (19.8%) 3,137,399
3,038,711 3.2% Gross margin 38.2% 42.8% 41.1% 42.5% SG&A
expense 1,438,016 1,185,046 21.3% 2,600,971 2,340,427 11.1%
Depreciation and amortization 82,854 65,920 25.7% 159,234 123,617
28.8% ------ ------ ------- ------- Operating income (loss)
(232,646) 354,368 (165.7%) 377,194 574,667 (34.4%) Operating margin
(6.9%) 9.4% 4.9% 8.0% Other income 17,492 26,094 (33.0%) 32,365
52,396 (38.2%) ------ ------ ------ ------ Net income (loss) before
income taxes (215,154) $380,462 (156.6%) $409,559 $627,063 (34.7%)
Income taxes (benefit) (1,800,026) 558 (1,780,654) 5,555 ----------
--- ---------- ----- Net income $1,584,872 $379,904 317.2%
$2,190,213 $621,508 252.4% ========== ======== ========== ========
Net income per share Basic $0.12 $0.03 $0.17 $0.05 ===== =====
===== ===== Diluted $0.11 $0.03 $0.16 $0.05 ===== ===== ===== =====
Weighted Average Shares Outstanding Basic 12,841,280 12,157,441
12,751,844 12,109,845 Diluted 13,839,779 13,494,251 13,771,731
13,514,774 SHARPS COMPLIANCE CORP. AND SUBSIDIARIES Consolidated
Balance Sheets 12/31/2008 6/30/2008 (Unaudited) ----------
--------- ASSETS: ------- Current assets: Cash and cash equivalents
$2,064,290 $2,035,219 Restricted cash - 10,010 Accounts receivable,
net 1,133,015 1,183,975 Inventory 830,640 580,861 Prepaid and other
assets 343,638 359,894 Deferred income taxes 17,352 - ------ ---
Total current assets 4,388,935 4,169,959 Property and equipment,
net 1,809,641 1,375,657 Deferred income taxes, net 3,106,390 -
Intangible assets, net 152,932 130,702 ------- ------- Total assets
$9,457,898 $5,676,318 ========== ========== LIABILITIES AND
STOCKHOLDERS' EQUITY: ------------------------------------- Current
liabilities: Accounts payable $696,002 $778,423 Accrued liabilities
245,470 432,971 Current portion of deferred revenue 1,134,994
1,063,016 --------- --------- Total current liabilities 2,076,466
2,274,410 Long-term deferred revenue 633,178 516,372 -------
------- Total liabilities 2,709,644 2,790,782 Stockholders' equity:
Total stockholders' equity 6,748,254 2,885,536 --------- ---------
Total liabilities and stockholders' equity $9,457,898 $5,676,318
========== ========== SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
Supplemental Customer Billing and Revenue Information (unaudited)
Three-Months Ended December 31, -------------------------------
2008 % Total 2007 % Change ---- ------- ---- -------- BILLINGS BY
MARKET: ------------------- Health Care $1,709,000 52.7% $1,933,695
(11.6%) Retail 455,077 14.0% 315,115 44.4% Professional 313,157
9.7% 168,317 86.1% Hospitality 221,791 6.8% 306,779 (27.7%)
Pharmaceutical 144,512 4.5% 491,157 (70.6%) Commercial 110,212 3.4%
160,137 (31.2%) Non-Mailable 92,972 2.9% 116,253 (20.0%)
Agriculture 92,617 2.9% 173,694 (46.7%) Other 36,634 1.1% 35,072
4.5% Government 65,647 2.0% 85,090 (22.8%) ------ --- ------ -----
Subtotal 3,241,619 100.0% 3,785,309 (14.4%) GAAP Adjustment *
128,027 (34,507) 471.0% ------- ------- ----- Revenue Reported
3,369,646 3,750,802 (10.2%) ========= ========= ===== Six-Months
Ended December 31, ----------------------------- 2008 % Total 2007
% Change ---- ------- ---- -------- BILLINGS BY MARKET:
------------------- Health Care $3,615,697 45.7% $3,852,959 (6.2%)
Retail 1,295,839 16.4% 1,000,551 29.5% Professional 561,598 7.1%
339,501 65.4% Hospitality 431,244 5.5% 670,014 (35.6%)
Pharmaceutical 1,019,125 12.9% 498,342 104.5% Commercial 294,711
3.7% 276,246 6.7% Non-Mailable 223,325 2.8% 241,523 (7.5%)
Agriculture 266,628 3.4% 266,998 (0.1%) Other 74,789 0.9% 84,276
(11.3%) Government 120,797 1.5% 141,151 (14.4%) ------- --- -------
----- Subtotal 7,903,753 100.0% 7,371,561 7.2% GAAP Adjustment *
(264,571) (229,647) 15.2% -------- -------- ---- Revenue Reported
7,639,182 7,141,914 7.0% ========= ========= === * 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 Deborah Pawlowski, Investor
Relations of Kei Advisors LLC, +1-716-843-3908, , for Sharps
Compliance Corp. Web Site: http://www.sharpsinc.com/
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