SMED - Earnings call transcript Q1 2019

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Operator

Greetings and welcome to Sharps Compliance First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Belodeau. you. Thank

begin. may You

Jennifer Belodeau

welcome Call. Sharps and Fiscal First XXXX Earnings to morning, Compliance the Quarter Good

call our we Diana following financials. the will growth and will President On strategies, today, we Chief their review Chief call company's Tusa, and questions will performance take Executive formal President the the while company's remarks, Officer; operation Officer. Diana Immediately and Financial P. participants. business Vice have Diaz, from David David and P. the review

in found forward-looking release, apply some as and are or our in subject make from during well begin. events, may company the of are as could and in we aware, by to David and well be you're are presentation factors Securities statements at the that materially Go factors with With the documents where let the this to cause ahead, today. formal As can at These we our uncertainties, David. which other These press me filed risks turn the to that, call website teleconference. to actual portion over as differ question-and-answer sec.gov. results Commission. These statements outlined Exchange future to as

David Tusa

over the management increases manufacturer to to in Thanks, $XX.X million. year partially The flu a increase the This Gross billings in XXXX increased as to Jenny. company quarter. $XXX,XXX market quarter. increased marketing. lower unused start same quarter, companies to revenue from to for sales of timing we continue The invest the $X.X the builds. net morning, XXXX driven $XXX,XXX quarter of and pharmaceutical share solutions. from the orders first the the year quarter. including basic $XXX,XXX were X.X% our prior first of year everyone shot year of the with in income to quarter recorded and with the related call. $XXX,XXX represents We're of These was flat million, of XX.X% the first year. about about welcome SG&A income consistent is due first increase for and the by prior Good a which over We inventory quarter medication for fiscal XX.X% prior our first year increase reported offset in million by operating operating orders increase of in first margins on fiscal first conference fiscal and earnings $X pleased a XXXX, or of breakeven strong diluted per quarter an income

first the customer solutions fiscal our XXXX of back year For quarter mail represented billing. of XX%

customer Our route-based unused XX%. pick-up was XX% medication and of billings

and in flu seasonality While benefited shot that is quarter, there business. immunization from we variability part orders this the the of and related

focused including the our which contributed our streams, on revenue base we while is medication newer more to pick important revenue business, route recurring retail very both and of typically stream. predictable unused So market growing solutions

route states we During quarter footprint. of to service the XX Florida this up we with And XX% population. the our based now or first pick added directly

returned states and which accidental of as solutions, unused epidemic carrier. XX and states, mail all address with solutions Of prescription unused health communities, serve course, poisoning. we our and care retailers medication our growing work medication drug via seeing already we're management have for demand directly providers and the to back intensified Furthermore, common others abuse

on announced Last week and morning October take of creating the we scheduled a signed federal President aspects expanding including to drug prevention, addressing treatment support reauthorizing and bill fact, DEA's Trump to day, different recovery. opioid this our national epidemic, In the programs place XX. takeback

Recovery XXXX of milestone TakeAway controlled We System currently units care, enforcement, federally opioid law We're opioid half with statewide our treatment with work these processed System environment federal Montana. well our of envelopes. are unused through properly of And interact deployed MedSafe September in XXX,XXX million the dispose residences unused the of for new and and as first TakeAway the with XXXX efforts company quarter noted pharmacy fight assisting XXXX of Through rules, contract well medications used long-term will is the August Recovery the it in that a drug announcement, And retail and user treated in such we the our including that ultimate states. medication of management, to DEA our as support use sold as for funded the its say expected out state has of other and in the opioid providing Medication In MedSafe for liner's envelopes. and really look of MedSafe crisis. convenient more areas to since forward pharmacies, contract to committing £X.X million than of MedSafe medications, As X.X changed XX,XXX statewide company MedSafe epidemic The we have position for retail We over Medication federal over and announced purchase in the our role liners. quarter revenues the facilities, the under that and about the efforts properly and as government. having unused to deployed industries, substances. increasing we're we MedSafe and has the method rolling crisis of national fight to part and assisting a State we to the in working by the as began contributed as hospital licensed XXXX. way leadership pleased processed

this we've company a pharmaceutical to over include devices. masks, broadened tubes, facilitate of forceps, and waste the a recycling solutions. scopes, medical Recycle a designed the to health of true care is airway grown management past strategically primarily back position interest TakeAway portfolio like. and aware, setting most medical our services, provider which a single of We've seen mail years you from recently to management reprocessing We've and use are endoscopes, recycling, few comprehensive the our or continued the devices and many As devices use not now our leading would in for System, single

devices provides TakeAway keeping complying - devices that a with regulations, were for to of become for use System in keeps also while ultimately looking revenue health solution fines, who with single Our manufacturers actively we and and support The the disposal for in the single-use their sustainability, surgery light We're believe for to use recycled us. that still them returning say infections to material developing, help help market potential device working Recycle of from stream a used setting. solution, increased but single a improved has hospitals customers recycling customers avoid is care it of centers the number efficacy. a device

The is Diana in and use excited detail. As fiscal we're single fiscal device our This mail medical company for management and includes our believe year up, growth. to the through the traditional prospects unused to XXXX, I'll financials bit the we with positioned it cover recycling leverage focused system. about more four over very back, team route-based well drive move to primary waste streams turn that, medication to new our XXXX we beyond. pick the management for a and revenue And solutions year

Diana Diaz

you, Thank David.

in of increase a in year, quarter orders primarily with $X.X increased million, the increase fiscal of first XXXX pre-sales $XXX,XXX the revenue quarter X.X% $XX.X related to to as First last million [ph] inventory orders compared a of manufacture were during to billings and timing our the unused build. the due $XXX,XXX increase in lower quarter. pharma medication increases offset to related business in These by to solutions partially our

$X.X of prior based Our generated the acquired the their year route-based XX% on rate. is quarter, businesses first than only more revenue pick revenue up of run XXXX pre-acquisition higher million also than for double from fiscal not it's quarterly revenue our quarter average the

with believe With million first our SG&A of marketing profitability, and recorded share for continued again act and XX% fiscal growth, in as sense investments first to of manage diluted first to about balance compared focus of or of of income or and expense gross first quarter SG&A for fiscal $X.X XXXX XX% XX% consistent consistent year. the first of quarter fiscal period per this continue recorded same EBITDA on a quarter, in sales of and increased first the quarter we the that breakeven quarter prior our or 'XX, operating marketing. SG&A in on revenue ongoing of for to quarter an year. the reported last It's margin revenue of increased We in we in XX% gross last investment - With We due XXXX to in the to cost. makes last of controllable $XXX,XXX of the million we same closely in $XXX,XXX XXXX EBITDA operating basic balancing to with the the quarter of the sales margin quarter, $X revenue first compared $XXX.XX earnings revenue. income long-term that net income quarter. with growth the of consistent year's improved

to quarter, a $XXX,XXX, month XX, about $X.X of XXXX XXXX XX% few the XX% XXX,XXX for of and year million. which included were about manufacturer Professional which basis and million. both the received $X.X due revenue the billings than in immunization retail is immunization orders $XX.X the from and and and orders of of already December company of more quarter were $XXX,XXX fiscal orders quarter, X billings billings related to $$XXX.XXX. the at On pharmaceutical flu flu the comparisons, inventory Looking our Government medication $X.X totaled build. the decreased increased customer right billings billings the up higher million, increased million. key related related year we ending business. coming December comments upcoming more XX of $X.X orders $X than amounts of for half $XXX,XXX million to of million at XX% billings half for about to for achieved and unused to trailing XXXX million, timing X% billings first prior have last September A increased the to of market and Flu XXXX, flu MedSafe orders received retail related solutions. immunization with $X.X of Also, buildings primarily last

And streams. days. a capital about sheet million. or excited on XXXX sales as XX and prospects as we customer is David are of for September month XXXX, four Our remained major of million outstanding are September million XXXX on balance solid those Based with of the day cash $X.X we working for focus mentioned, $XX.X fiscal at the DSL $X.X billing XXth, revenue

turn these have the with We in that, back challenges And in and markets ready ahead. David. the call the all I'll growth we're people place to over infrastructure drive the to and meet to

David Tusa

Diana. Thanks, Great.

for Q&A. think ready the we're I

up. it open let's So

Operator

question you. Please Craig-Hallum. Our Great. is go Instructions] from Thank ahead. Hewitt [Operator Matt first from

Charlie Eidson

QX the on Hi. This on Congrats is execution for Eidson Charlie and questions. thanks my on Matt. for taking

David Tusa

You are doing? bet. you How

Charlie Eidson

and Good. increase been increase on medication with some can offering, pipeline. having - provide Related you the the able unused Are have penetration the of existing you offerings to customers you traction? are you deal additional color the you the gains know, seeing as size sales

David Tusa

a That's question. great

what's in really is changing how we in in with - - is As this changing earlier the really the interact I with country this mentioned customers market crisis, addressed. opening, how opioid going really being it's on it's the and

yes, So are proposed pleased. to on we're that larger to grow. The continues pipeline were the go opportunities and

that we're in leader Customers unused I us. respect see we the this is excited as market. think what medication really ourselves

unused a have substances. managing properly in the controlled history significant of medications, We amount including

continue opportunity and to market So that think that will show growth. we're they about excited

Charlie Eidson

$XXX,XXX in Certainly, you're as ask little it third 'XX on of XXX% line sense. expected party revenue and revenue revenue in that about to FY isn't came - treatment wanted lower It the area? a we that up something item. about talked in Is be have much, makes revenue like How $XXX,XXX. for a bucket that was 'XX? about I around over the looks a finishing line growth then around thinking QX would should this than rest I focused

David Tusa

prior to but that's it you're Well, Hurricane year episodic. is the was had. the majority that talking you business, And know, consistent, there's I of we really level what related some party then the think treatment third Harvey about

sum a that in had lump we So of particular quarter. business

our So profitable. we needs tell time and allocate I effort sizable to, to will it this and do be for be opportunities. and something us you to look capital for quite to able

across run here. and opportunities we So do here

Charlie Eidson

to and up That's Okay. was year? to as And were model of SG&A the would helpful? know, that this mentioned a guess something know, you of we how you run over sales should the then you mentioned be kind rate expect rest any Or the in out you figure bit, help little helpful. I trying is this you more Is one investing marketing. -

Diana Diaz

range. the going we that know is This top of I in million of is million, think range, the about $X.X at that somewhere it's forward. SG&A end expect to $X you but probably before $X.X going million, be said what would we've

Charlie Eidson

Okay. my taking Great. Thanks questions. for

Operator

Our John Sturges Oppenheimer next Company. question is from ahead. go from and Please

John Sturges

my you question. taking for Thank

just that purely or the the - at did much about of that this line? of question things, been How I'm - other in curious interesting was the curious about, is organic My carrier drop enter a is Some looks be with up organic so there just curious bottom to is some M&A. parts. and know discussions I most growth how drops Florida, revenues you was to that route pick it like to would did the this and you can as early increases one, point,

David Tusa

questions. Okay. good Two very

is First not company. of acquire We not we Florida into We've organically. growth organic. reflected all, a moved that's did all did the

that is So going this gross on I way look think we margin best modeling to the clean. quarter did The the organic. at is because pretty forward

think is then - would that of to gross a that out course, as would best to XX% profit revenue SG&A.\ that item do probably about the I Diana line about incremental million mentioned level in and quarter model X the drop way

John Sturges

have had next anticipate do continuing growth, can fast you've would But that. to as quite you grow organic Got you imagine as nice you that that the say years. in of there. couple I I tell

was of there service the your right area? is the your through - part The other of question middle impact, Hurricane one

David Tusa

the we We disruption follow were we in any the well sure We week were And all we then very, what on on have for side. Hurricane. Hurricane prior first Florida. the within very back did this, our customers to so that in is planned related Hurricane Hurricane we - a the make well rise, the to hit, after serviced didn't advance

of growth we penetrated we in and low the as a know, key still we far As opportunity, significantly. still have grow you to number rate very we're think markets think

look grown, continues to we've If the strong. and and in pipeline very, market we're you that how - well continues at still it unused to is low penetrated medication develop, it very

there's - growing that the level consistently percent, some real a route-based XX this based plus about opportunity even been is On but marketing. additional the sales to that grow we've maybe it business, at and think the with to on to XX% route XX for and here XX quarter, that plus higher we continue at

on So on unused be medications could mail our - should continue to traditional business. strong our traditional mail back, back

in were chase. only known cautiously business. all to we continue rides see the with related increase for that We opportunities were We flu were backs the don't we to see the business. flu as markets we company that But pleased We the be want pleased the but to to grow. mail that optimistic,

significant organic think we And opportunities excited. for have we're continue So growth. that we to

John Sturges

are maybe up the possibly your other within It curious what based on. even that going just seems you for a to space? coverage opportunities know businesses M&A me route you little accelerated, could I'm say picking

David Tusa

look not that be pipeline it Plus stay We at the opportunities will do and a look continued We're to and look stock - a have certain at little look for be the in tuck-in currency do deal a market. at opportunities did. a and have performance opportunities. we to to deal. selectively. with we'll We in has We more with meet well look just solid currency little able have more pretty in to we go hopefully go nice additional for at stock and and and We going We're us. selective the expansion to a of to continue do contact requirements opportunities.

John Sturges

nice congratulations. Well, execution. Very

David Tusa

Thank you.

Operator

from question Please Our is Steinke Kevin ahead. Barrington from Research. go next

Kevin Steinke

morning. Good

Just Florida. wanted up discussion on to follow about the

you you perspective? So the know, get a to of to go forward could going to you Maybe terms to how trying then sense a sales space, sales the in a just you to know, more and office Florida. just attack of Florida give you're or us and of investments investment you from the bit little into that of sense expand make team, market a decision know, of type in why going needed trucks

David Tusa

Sure.

or that with is business First you of to just back in medications based we've a Florida mail route Florida, all, pick up. always respect this know, been unused

lot the across that and Given the in is portion we a in we a significant business Florida. You have majority why locations is, that they're reason be have could the actually know, business XXX customer our may of did have it Florida, where than that we of country of a

for - able and we It's a $XXXX and a service out based been month. you we years hard small know, higher where service direct a we're thousand very to office using when route in could this heavy do we've and that then at It's trucks important And our that we three, service. looked drivers, it a the it So like customer see ourselves its there, and business able more our we that more very, doing where it at that's pick to we're a point a and which and got put the dollars is with recognize of three we're to trucks customers out profitability maybe subcontracting office. in month what lease up subcontractor. small instead are we directly few a of a to -

Kevin Steinke

makes sense. a Okay. That of That very lot helpful.

wanted a minute. So the pharmaceutical on to for channel just touch manufacturer

quarter. timing You impacting mentioned the of the inventory builds

existing from customer quarter you that just kind the talked out and was quarter September roll of potentially by more the last Did new impacted customers? as quarter. builds planned know had about a in You ramping up

Diana Diaz

of build a in the reflected to just the of last did quarter this inventory year you in and were at the compared there. lower revenue sort And that know that's We Different started that programs have level. quarter first thing. program a

Kevin Steinke

Sure.

will kind issue. Okay. a just mean, a know timing you presumably quarters, in I we of built - it be those was future

flow And some you we any or timing should benefited just sense change from also business flu that was think good. that is of maybe you again you know terms that? we or increase know, about about shot should there a Okay. to the relative of forward future mean, if I get - quarters think in just this how trying to or flu something is pulled the history, is in order

David Tusa

increased orders. just was it No,

I think media shots out to And their and million what of what's a which in that's that flu I people last that really get think quarter there's was get her shots. we budget we been helped much was generated same as the our actually have mentioned opening, the December more and encouraging coverage it really and in flu Diana year in seven.

are already quarter. have we month into the in the in first a XX what of expectation $X days within of We orders X.X. hand So

So as that's strong well.

there's people is getting that media everyone appears out going to job shots it that. doing a So do and just more I the good think encourage flu of

Kevin Steinke

care Okay. what's timing by can effort you that that particular in on of you give to be know level healthcare quarter-to-quarter. impacted health update That's us in going from your Can know, I meaningful or sales pipeline an sales of home there hear. market? there that good what's on market? home a Is

David Tusa

and very, distributors. very Healthcare it's interesting healthcare is an through And market. fragmented we address home a primarily market

think not health them. And items Kevin, what's we lowest sense, initiatives. market in us directly year, care ourselves the allocate in growth from with where opportunities like said initiative, what when more that consistent allocating X% those look the of them, front healthcare it a our when maybe to do more have kind through, markets that just it with do always markets. and higher growth of and growth expectations, you to marketing look in that go And you in ordering key X%, we're increase that's efficient we markets sell the you We've can look to of probably makes just growth more lot other more other there. markets lot that our over-year-year that that and more was retail a much, have shows in couple resources that a quarter. some through of the We professional we drive is at grow the which is numbers the of at at home we of distributors happened But our and resources much agencies we and last we what

Kevin Steinke

Okay. sense. Yeah, makes

you mentioned mean, is Just as about think I mean, takeaway you that a about December lastly the had that had something ramping last should previously? out that had I ask to - I recycle talked with wanted you up. how or that quarter system rolling one I that is quarter is to landed program benefit customer.

David Tusa

in working Right, that to with. see one we're in XXX,XXX as others about quarter working the couple the right. revenue We'll with the well. customers December We're a in of related of also

back processed basically could be recycle sending that looking into four sustainability initiatives. looking setting a is recycled device back great solutions solution them is use to example. into be and So the they're healthcare, excited, customers then the what the market a industry what in for listen is this the we to is we're said times a accomplish is what when we otherwise use us and healthcare we and three that the us way always or and I supports them that their recycle I've industry we listen accordingly. take do to what devices to design know came single you away for they're system think and but a recycle we or for go cleaning to points care. pain is would itself trying is we of solutions listen and doesn't true The and the asked They or the And reprocessed more health in the

Kevin Steinke

Okay. Thank you for taking the questions.

David Tusa

bet. You

Operator

Butler Stifel. is next ahead. question Please Our Brian Instructions] go from [Operator from

Brian Butler

question. Thank my you for morning. taking Good

kind some of period? quarter year on give can us MedSafe put incremental versus business, and Just ago out last quarter that the you more color a retail were maybe on this the

David Tusa

there about the was now. and way XXXX all and that at I'm before year talk about a XXXX year the right to going MedSafe out markets. We've XXX. A best it the about Here's ago look got was to it

doing doubling out are market, there they're the in deployment in and roughly MedSafe's MedSafe's half every So is pharmacy what the line. year we of of have they're region retail the the

Brian Butler

think about medication Okay. in said unused $XXX period? the the was that I what And I million third heard for you you ago guys revenues quarter and year correctly, was

Diana Diaz

It was $XXXmXXX ago it was was and, ago. it I'm a year sorry, a year - $XXX,XXX about.

Brian Butler

Okay. XXX. And…

Diana Diaz

the In market. retail

Brian Butler

- you when kind think $X.X I flu And XXXX, $X.X I sustainable guess on forward you right somewhere $X in is anniversary this about of you retail know you is know I kind that about Okay. unused retail and non- pace. gains thinking or know million medication mean some from the of a a larger that million the of million, mean annually? related flu you am away I is you know that that running saw

David Tusa

I'm sorry, time one Brian. more

Brian Butler

of facing so kind right - now I on from medication Is $X is you're the to some it trying pace there on of in or especially half of to unused be like understand I'm kind trying going know, the where use? comps on much just we just right remainder more the from revenues. growth to of upside an the non-flu that about mean. that annual. related million mean, understand, tougher running you to baseline you're I second how to 'XX, in I'm X.X, call medication. or unused are

David Tusa

medication. market selling that all in And we're look was MedSafe the opportunity had unused have think than a that the opportunity going right.. to think there revenue was from XXXX, liners. the Montana to We for and replacement to that we the the the it way I hopefully add solid medication quarter generating we're is, at have recurring much more fiscal It retail unused increase time, year think in that - the you XXX,XXX at higher that the we're are we 'XX drive med about retail that. from the we best safes there, out will in know, then same that

So that's given growth we that's what's and think driving the that what opportunity.

the So previously to significant we from sold going as the expect say sale see to saw that that revenue. sell, liners going you're from upfront to we're we hope MedSafe, of the continue recurring as well we to get increases

Brian Butler

Okay. so just mean mean, a month mean, trailing down. you looking the on a segment around and million that the programs this XX. but And a maybe segment of I lot out ,you your on variability, a still at that the have a wise, is there's pharmaceuticals, on $X trailing bit. based XX one annually under touched on I there little Obviously I basis then And understand but of kind you low support quarter-to-quarter you're even new on current in pace. of mean, this that is I'll revenue? a back is volatility, started now I fact you're mean, accept the if and think base two annual to trying our the what kind we kind lot years annualized of million I X, of $X baseline. that does just to the around I'm ago, I you guys level you were revenues there's know, of closer really the went

David Tusa

we for as to and base pharmaceutical I it's revenue think I billion billion the about more will increase as manufacturers market you're that close think $X right, the $X.X deals.

Brian Butler

pharmaceuticals 'XX? this point pipeline like at remainder What is and the look the of for the

David Tusa

We've a new as got pipeline with have strong with we we're as well that customers deals are a customers. few new drugs, existing chasing launching

we and or new think what margin June the quarter either for good will those and look in margin existing hopefully does new pipeline deals with see customers also deals quarter that with just deals the customers. and of So in new June some

Brian Butler

because drivers? where just margin we out about is that that also more about having were margin, on spending revenue And slightly some through, incremental the costs gross Okay. of then the I the just being down to XX% the newer less it you some you're kind on higher before, with rolling that think is end of talked I than and at heard flow line,

David Tusa

while said XX% the XX% XX% to incremental the higher. based is it's always is the the And business We've like XX%, can incremental route XX% and maybe MedSafe unused side business XX%, I know, XX% you be to to when margin. using even gross closer as the or medication type margin

I'm different So with product, the conservative to of as the trying just solution be offerings. the mix

of I say incremental could revenue think line conservatively profit the XX% gross of you item.

Brian Butler

Okay. And from CapEx a and housekeeping Do then in the two just quarter operations? cash for number have you ones.

Diana Diaz

from And around about we be XXX, Cash to XXX,XXX CapEx. is operations XXX,XXX. of going had

Brian Butler

is kind there in kind just unusual regular Anything maintenance? that the or of of

Diana Diaz

regular maintenance, Just yeah. capital

Brian Butler

Okay, you taking questions. much great. the very Thank for

David Tusa

right. All Brian. Thanks,

Operator

for the you. back turn Thank management floor question-and-answer like This the would I any to session. over concludes closing to comments.

David Tusa

next We Great, thank participating. you. everyone talking to forward quarter. for look Thank you

Operator

This concludes today's teleconference.

time. You lines you at this may Thank your participation. disconnect your for

Sharps Compliance (SMED) 24 Oct 182019 Q1 Earnings call transcript