SMED - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the Sharps Compliance Third Quarter 2019 Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Belodeau, Investor Relations. begin. may you you, Thank

Jennifer Belodeau

Good morning, fiscal Compliance quarter the welcome earnings call. to XXXX Sharps third and

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

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

way, that discussions. me of David. Go the review to let begin with So, over ahead, turn the and David to out call the

David Tusa

everyone. XXXX our and quarter Welcome good quarter fiscal no third exception. year was this and Jen, historically our Thanks, earnings morning, March The quarter call. to is weakest

timing new fell were While variance and challenging of the our route-based revenue EPA the expected costs expansion in business portion to our orders required in the standard we generated. result higher of revenue costs related as than country of short internal adverse markets. additionally sales the testing, of earnings, expectations of costs which healthcare were revenue breakeven in including the the impact a and the higher sales associated Southeast about with lower $XX were in million or of our and higher quarter Exacerbating of home MedSafe recognition

with as of operating growth So following by and two million. to quarters characterized earnings $X.X fiscal moderated compared at prior in consolidated essentially year a XXXX our to third consecutive flat revenue growth start revenue quarter strong the increased year the

of showed Living X% growth Our billings saw a Assisted Healthcare decrease or a quarter decreases manufacture We quarter. of net slight retail in XX% $XXX,XXX third the $X.XX net was professional billings, for million per in and of in to but XXXX. pharmaceutical the third fiscal share loss and the respectively, Home XX% offset the $X.XX increases by loss a in and $X.X or share compared year of quarter

and they look While the the March expectations honestly periods our we at were more disappointing to quarterly assess annual results below are business.

So the with fiscal I million we're be is on and which revenue. estimates the more of in working June will a – year touch $XX.X XX, ended annual ending hope to year line

is potentially shortfall the in professional with sales, MedSafe flu to which about and increased market goal shot March June make the higher Our up additional related the quarter. in growth orders is $XXX,XXX driving

remain our Now move the XXXX solution as offerings. year of increasing through recognition marketplace we focused three we on fiscal primary

about seeing increase X% and more representing double mailback, generated of from we're based our and We're pleased solutions. revenue evidenced is route-based than this the million revenue with XX% by the in as acquired revenue the of XX% the saw about route-based a the company. $X.X the XX-month medication $X.X and growth waste associated traction the medical with of business traditional pick-up, total route-based mailbacks trailing in in our management the Our We [indiscernible] now is the during of million. and business revenue unused business quarter route-based business

predictable generators presence to such to our additional mailback cons as centers quantity other ago stream. years route-based made consolidated As expand establish decision we revenue customers and many surgery more a offering, medium of you know, the a compliment few a address and

Our compares XX, about currently XXXX small-to-medium reaching serviced XXXX. to the customers to of we advantage in the attracting was combination customer acquired March in We of a XX,XXX a offering XX, customers. the as of that two the And offering. as choose directly locations generator comparison XX This our XX,XXX it XXXX found states, and of locations March route-based solution at ability the offerings to service or route-based capacity is or XX% population. we with available the in average mailback targeted competitive quantity our route-based

unused MedSafe XX,XXX to so Now over year. inner a about compares than the we've the X,XXX as about ago, leader installed on which XX,XXX in liners more the liners doubled in liners date. units medication, processed year the collection We've industry to we a

ago collection million receptacles late million year the sold a and X.X were X.X installed changed since two the envelopes. We've ago. their XXXX of XXXX TakeAway and in XXX XXXX sold envelopes years DEA since we've TakeAway rules Our

grow. to market profits the through So the unused to for medications continues flow

of retailers, to drug abuse accidental epidemic the the address across work prescription occurring As providers U.S. communities, growing healthcare poisonings and

the role a We our substances making part with the available by proper effective cost of the treatment and fight combined continued and important have opioid assisting readily effort are disposal growing crisis and in an consumers playing to country. controlled education to solutions the across national

because launch unused be XXXX. more of in to current ongoing down unused up specific this installed of major units greater quarter billings during units calendar be XX% were will segment a a retail were the over a year-to-date, of While prior year. higher the distributed program calendar of the third number in third in of of of XXXX and for XXXX related in our business X% this installs year the they is than sequentially installed with medication rollout than largely But XXXX of included the number quarter quarter quarter MedSafe a the with large to pharmacy. program up billings medications were The

and will a percentage confident are total business medications the unused of We continue larger line increase the become and this believe the and of of growth solutions revenue.

Sales. or of focus Company a of sales existing the and industry. the exceeding budgets, sales the opportunities, President territory Linda sales related meeting growing development, the sales managing leading closing a the March Linda with national healthcare and while Brock Linda including managers the During field account in managers seasoned team, is business quarter as Vice experience accelerating and on extensive leader services is with pipeline. sales joined

on? what portfolio she is selling, So focused offerings, customers, all will solutions, on focus She all our markets. all

she in we sales including where have time base, usage of that had on existing more the regulatory make process. the thing will products New be existing also Salesforce. and deploying she is going spending in of business showed business is doing she customer already cross found we Also going compliance forward. sales The to earlier dedicated focus to that channel we're new our going part resources, We've the expansion successful back opportunities to more sales last increased markets opportunities and opportunities focus, success. is the selling bringing in portals the involved mini what we

the forward we team. We look So her to contributions. welcome to her

look in believe year positioned with our XXXX. ahead we're for participation uniquely offerings, that fiscal is of infrastructure market to Now We full and vastly we growth expanded solution a underserved. believe let's line in XXXX

online as are and proud success in pleased with more and role offering medication disposal. the reasonable for terms. and look an our our and be training contract We the service, ultimate positive to from route-based tools, on company customer growth of continue alternative the responsiveness, response forward provider user leadership focusing cost-effective We customer to convenient

this Day. for remind prevent turn it over a everyone, you to near opioid treatment. area want a Now abuse or including to quick Diana, great I substances any is in opioid a Diana. DEA will help all raiding We to your find site take could financials is medications DEA's prescription who off the collection locator. before It detail, proper by medicine you the With visiting minute crisis turn the cabinet I'll a Back XX can collection controlled expired and opportunity National the of over expired more or Saturday, by visit collection the drugs Take your call drop to to address site that, I site Drug to unused in or unused just April

Diana Diaz

you, Thank David.

Third year. of in revenue $X.X XXXX as to quarter to third $X.X last million fiscal quarter compared increased million the

$X.X for XX.X% third margins $X.X Our contributed the in is quarter. year route-based XX.X% the quarter million compared revenue last prior the in to quarter gross pickup Gross year up year. to million the to third and the compared quarter XX% as XXXXof fiscal decreased of for XX% revenue third for of of total quarter margin

higher result impacted every facility Company’s adversely the not test a be revenue in in by about also the including quarter in was quarter margin the Gross sales, expected compared or years. EPA points, of third three year with Our adversely current once costs the another XXX recognition cost $XXX,XXX basis as treatment performance will by the quarter. impacted prior new required application at associated required standard of than gross which the to three-year Texas was margin for of

$XXX,XXX. year. a $XXX,XXX this fiscal in revenue. operating quarter $X.XX third the $X.X loss as expansion balancing operating for diluted compared growth SG&A XXXX of of of sales year an share profitability, Sharps costs continued in SG&A of quarter company loss advance SG&A or our in third $XXX,XXX. same revenue or investment to related a our we the higher of XXXX increased compared quarter makes with in loss costs. generated. country The an to portion of per closely the sales third quarter, $XXX,XXX loss XXXX, loss loss long-term net of to fiscal $X.X we compared of Additionally, route-based marketing XX% reported fiscal our and million XX% $X.XX prior to of last third our of $X.X believe focus The the in of or With same of $X.X quarter continue as marketing. of act us associated a the of last revenue compared it’s were million in quarter quarter and on reported business to of recorded million sense in the of share basic million of the diluted in an that the or loss of year period controllable EBITDA in the for of of basic and our and per the an ongoing of net XXXX in investment expense the the Southeast continued a and revenue company and manage for loss EBITDA And to third to

due for look Healthcare the billings comparisons year. billing $X.X third decreased with compared billings million. of increased billings prior XX% Home to to of when primarily the million $XXX let's timing Retail Government patient Manufacturer Now XXXX. $X flat increased to billings new support quarter Pharmaceutical at timing the were of to orders. relatively fiscal key primarily inventory the the market to XX% billings and to related $X.X X% programs. current million, Professional million X% and of million, increased for bills $X.X

of customer For fiscal mailback quarter XXXX, and increased the our X.X% billings prior XX% represented year. of over solutions the third

XX% route-based unused our the while year period. For compared our XX% periods, X% medications for and the customer billings pickup of over billings same prior decreased the prior customer to of year and was grew XX%

quarter The ongoing The XXXX The be program more in with launch prior of rollout government third compared in a in calendar billings higher over year, current of a in which be installed markets and the number year. increase the online quarter unused the achieved greater than is installed inside last to medication units this of the the included sales professional specific quarter of to ongoing to this targets installs but and fiscal the program. units XXXX major the year third than related year. a number channel, current a X% the distributed calendar MedSafe primarily of in of will

in million Now The X% comparisons to increased the fiscal and million. decreased first increased to orders customer nine months in X% to billings inventory increased XX% due $X.X of is XX% XXXX $X XX% to billings million. $XXX,XXX Retail to we’ll increase of first nine $X billings. where $XX.X increase $XX.X million. due in billings Professional million Manufacturer of Pharmaceutical the for and $XX.X look months revenue increased MedSafe billings to flu at market the builds. shot increase million primarily the key a timing retail related to XXXX for billings

increased not for fiscal impact XXXX programs the new re-occur Care first launched inventory Home million. were to billings the XX% due is did half million XXXX, there Although their million, significant builds billings were offset $X.X year in of fiscal to size. period Government Assisted billings decreased to the X% Health and XXXX consistent significant manufacturer Living at in by larger programs fiscal in which pharmaceutical $X.X $X.X previous with

fiscal year primarily of fiscal represented over our mailback orders. billings For flu solutions by prior year the increased XX% XXXX, the of X% current and customer first related months nine strong driven

billings months X% online and nine $XXX,XXX fiscal increased over The of $X.X same the XX%. over over fiscal the a of inside of Fiscal share XXXX compared which basic year, billings primarily first our route-based periods, XX% months and loss basic XX% $X.XX unused was and nine first of for of customer pickup targets a the in months gross first compared sales in while of Professional X.X% share per or to loss our year-to-date XXXX XX% nine prior year. for and nine XXXX grew comprised Government of last the achieved the and of $X.XX last channel, SG&A an expense medications XX.X%, diluted fiscal net For improved of is the loss Net nine of XXXX customer $XXX,XXX and fiscal a prior a the months the in year. months XX% year. billings XXXX. of increase diluted loss markets, to margin to to first grew per or improvement million the first

that, solid with back sheet balance working capital And of remained million. at Our XX, I’ll March and over cash with million $X.X David. $X.X to call the turn of XXXX

David Tusa

we up for can and think line the I ahead operator Okay, go open questions.

Operator

question. Munda line [Operator Analysis. [ph] comes Our proceed your you. of question Please Instructions] with from Thank First with first John the

Joseph Munda

and hear me David you Diana, okay? can morning, Good

David Tusa

we can, are Yes doing you Joe? how

Joseph Munda

Diana, comment could David, us that pricing to, in costs commentary Southeast had went you as well are some some environment, that's operations, Good. you as if If Real in little and your environment? – you are service bit costs than comments you stable wise pickup competitive that the higher a that well particularly the you I pricing quick, could about and in is was on looking there are those As talked there you ongoing Southeastern wondering Thanks. it the give involved landscape? are expanding you the on as to up? expected, the guys related why seeing is

David Tusa

one. first the take I’ll

- – or XX the facilities, really may way the haven’t growth or mind, - We in service customer seen in waste up a expertise to that XXXX pricing. is the actually more landscape change over at the on our competitive keep Joe, medical significant we the a But facilities. XXX the all have side, XXX,

So that a those those working online we’re the or the for larger customer are. we're regulatory which the compliance tools, about not service and established focused company, with opportunities, the opportunities on are more maybe concerned one business a we tools, larger larger or tools, a more two-person shop looking with doctor, customers

opportunity change don't still lot of we see products. a So see lot whole in of a We there. out

really love before, know, You professional probably say we this the market. you’ve

a growth saw we’re trying our sweet suite, grow. think I market that's - you And take Our we for route-based, to market Do where XX% that professionals, always XX% the the at had up other numbers on that's question that you to in spot on a professional the million that's Diana, want expansion? $XXX of makes are. XXX,XXX we and and where to looked

Diana Diaz

We’ve that. expanded expanding we year into We December there customer as that year you that costs. But moderate. were just timeframe and growth additional down last got into in November, this we Sure. to will as the compare so base Florida some

David Tusa

now increased invested think to the customers in market Southeast have great of what you and Southeast number And as having for we’re it's see more Florida, us Joe, and service in the and success we’ve throughout that the locations Southeast. I in resources also more addition we the more a

Joseph Munda

Okay, thank you.

Operator

you. Thank

comes line Our from of Stifel. next question. with proceed question Brian the Butler Please your with

Brian Butler

can you morning, hear guys me? Good

David Tusa

how good Yes morning, are you doing?

Brian Butler

my taking Very for good. Thanks questions.

Just you at maybe XXXX on does growth, some where you growth, when from? for color may and now on can fiscal last, mean, the where we’re double-digit bracket upper out starting I positioned looked growth, look come growth guess, or in I us wise? I achievable that when past single-digit thinking kind at of give mean double-digit we’ve you mid-single-digit are still for the is be

David Tusa

we Sure, is double-digit agree growth achievable. that very I think high you are as the is – a

to with going you're continue in professional business. think the route-based market, strength to see I growth the

are big spoke I see offerings kind we’re also help to changes written but grow think that long-term is, to numbers increases One you a were yet for help way, some going of the going in and you long-term DEA that of living achieve as think haven’t new of what the assist are that they I there in year fiscal sort really then that growth the think care example to I will see MedSafe, help of. and to medication adopted care, that that XXXX going rules coming unused market. got are

we on business pretty presence We the medical MedSafe. a expand more significant with do on side have waste think assisted-living have an to the or opportunity we and

the again to of unused is guarantee talk season, potentially digits you can't that. we’re medications, flu, school I to double-digit. about that and some between But put route-based, single or thought would altogether going high have I another there think and strong this So get to can like I you but the flu

Brian Butler

that I there business, you think, about, unfortunately to I have is of actually medication but tough retail it year. that looks now there where program unless a your you you really safety headwind because calendar expansion to And the translate to is side flu like than installs? was med clearly flat it was talk realistic we I MedSafe the an fiscal mean the said on unused going this are XXXX year right upside to XXXX, get about mean, is that we’re there higher down talking believe Okay, from to on going is about how of think when flu or the is MedSafe comp. MedSafe I be going guess for but get you to be a installations before on the to sort on

David Tusa

was referring between…? is to last is did what national Diana what pharmacy serviced year one Well, and retail it, it's it they the we that

Diana Diaz

XXX Right, XXXX. through units a seven-month over so November period XXXX May in XXXX installed from were

XXXX. For through XXXX be that will from it’s February over to XXXX over a November XX-month units going period be installed XXXX

be we So will higher. June little that year, quarter think bit the maybe last comparable fairly to

Brian Butler

the of three year is the thinking quarters it to we MedSafe that’s So maybe which wings just less that - back program view or November or little be potential ending, that be program a to falling potentially there year should of mean essentially of to expanded this another in three of the quarters half not liners? remaining through is I down replacement I

David Tusa

Well, to collection just – with a blade liner and recurring the razor can’t hopeful program on that very very revenue your guarantee that it’s see and receptacle there But model it, expand. but true model, the that associated that. has could in successful. seems on It we’re starting the but say successful a the continue. and liners, razor, could pleased, revenue hopefully collection been to pleased, we’ll it's are a we’re effective very they is receptacle point I out I the now we’re this very it beautiful is and

just the because calendar sales increase what going have it's again a significant more to starting throughout of contributor significant as to I and we think seen, out well. there. also returning more the we think the say revenue long-term to consolidated collection the growth a that continue in market increased liners potential be from see to we’re the and we care XXXX have I'd see to we have receptacles and So

Brian Butler

month seen what preorders to and when you and quarter? the think know just be for the flu flu, to Okay quarter? ramp more was quarter the of it or back that up what guys, of this I was just this guess in going the it revenues but I on have are very you weighted small, this still number is you first, of

Diana Diaz

was last flu. March the year’s It sorry, March fourth, XXX,XXX. on consistent with The I'm quarter was under just quarter very

David Tusa

the what year fourth quarter then the million. quarter, and last of Right June was $X.X

Diana Diaz

million. $X.X

David Tusa

stronger. last $X.X it could and potentially seeing year million indications Brian that be we’re some

Brian Butler

how just the about less on mean, generate? revenues programs been about trailing been years that Okay a XX-month I cut have and and very basis should has the think this over the more pharmaceuticals. here that let’s of have talk volatile, volatile in running, basis. half. bottom program then always on two on been but in pipeline in the you Based level revenue the programs or last this it's I even the is are form can what of the we currently this mean,

David Tusa

comp the all, we What December we adversely significant was have, of impacted. do one the first Well, was have XXXX?

Diana Diaz

Correct.

David Tusa

guess comp. big XXXX the And orders that couple really purchased that quarter. in a of I knows worth that years adversely affected the December were mailbacks probably

probably we do looking think X.X X, XXXX. and I more customer going number a to are think programs We and December working for then at for this XXXX. that see million we’re in somewhere big between orders $X.X forward what then the that million. year Brian, year And start $X we’ll one had will have that possibly orders and this fiscal of of that impact on we

manufacturer XXXX respect will with year pharma a than hopefully market. be to the So better XXXX

Brian Butler

this million the to to quarter? fourth almost do X.X to $X.X that you’re X year So going $X mean would in million

David Tusa

did million little in the over quarter. March bit Yes, $X a

Diana Diaz

Correct.

Brian Butler

could talk guys what’s potentially deal bigger, kind what's about I Right faster of you kind obviously there there? the besides I get you your outlined, looks kind the growth that pipeline about of Can like I guess, what potential growth pipeline? and okay on strategically you is overall any mean, bit little mean then that talk just we a organic can of thoughts

David Tusa

and market currently. potentially question. looked are our it. tuck-in That’s is we serving significant route-base the We’ve through coverage exist think increase opportunity and geographic deal business grow acquisitions the there From a standpoint in great at we a where to maybe exactly

but we'd there. at to like a be out to we it’s like the continue capital growth and to little look growth pull of and company capital We have here something The and from stock that we is, the accelerate combine it we’d question start that is in with more the prospects to a organic currency build bit that standpoint our have and are some could with company more that. at we think that it trigger But is scale. looking and growth the the to that acquisition growth something on are nice able that

Brian Butler

of been has has if the since ago the when guess So that business up what's really kind of on you price entered limiting held is stock factor about holdup? the half probably a acquisitions and been you a route-base go back I year been kind year, the that

David Tusa

successfully Well, the raise to wanted execute be we've that going to be make could expand levels at to able were to the to we capital first which sure think at done model able business we prove ways now grow we out that we’re the business. We're the to to effort. going and the potential looking we of route-base grow all, on which

an now the right yes, capital issue, able continue stock to issue now of right So that. of it's be currency take

Brian Butler

for my great, thank very much questions. you Okay taking

David Tusa

Thanks.

Operator

you. Thank

the next question comes your proceed question. Capital. from with Rabover Our Artko of line with Peter Please

Peter Rabover

it out your are but I that a bearish Hey you you little know a think way? maybe, maybe bit what about bullish, and competitive delicate seeing - you talk of your the are and question, side are what can guys, you about business there we could it’s

David Tusa

the medical players a maybe are do deals And what well. mentioned really XX the where presence standpoint the concerned the smaller competitive I states. where after that's go with in from not as as a waste may or regional it we earlier we local side cover national may we because have it Well, or

have the And changed that we on hasn’t one the much, that side. would in than that's waste so often much just standpoint, competitor that us, from larger - medical

the disposal are customer the customer And medication, are is and are significant position. them, I the the unused from necessary business. receptacles, deals And leadership and with on our we mostly some right think out competition have where that has standpoint company see medication pleased provide service occasionally programs. jumped it's On potential that there seen dealing larger we but collection a have there that into this we’re the that’s again the for that larger there that now smaller important significant players and unused can that’s with the one tracking the liners, secured from

Peter Rabover

thank Okay you.

your year potential kind retail customer this think are talking there a MedSafe they of and only both partners could you What’s figures and that X,XXX we of as why is inflations XXX of to On the red they said of five the is that two customer, you – for have kind can much? done I haven't logos. and

David Tusa

Well, I’ll tell collection for rollout. you them what, we’ve couple pleased the on now a years the been with worked with We’ve receptacles.

working relationship will obviously we again, And are that a We’re tell continue just it's and hopeful continue. will I But pleased it for rollout XXXX. past there's think and great that pleased they we’re the and an will to we see. opportunity you have to

Peter Rabover

Right, going at at I point X,XXX is working of locations, like but they locations it more mean that? what this to are at say like do hey, let's X,XXX

David Tusa

collection in work receptacles XXXX XXXX. in didn’t they don't in jobs another I think as XXX the put Well, thousand have would

pleased. what's So we’re sure and going quite are for program the We happen everyone to don't but is one knows know again, They doing for tell No pleased. I pleased well. past sure. you could XXXX, is just that

Peter Rabover

are question, will could any that, what law thinking color update final give guys a are that guys on maybe stand, cetera, you planning et SB-XX California do great? that, with about you how then and you the be you and an Okay where

David Tusa

No, working great actually We're that’s with a question. Calvary Recycle.

of the waste watching probably in medical idea and but about we're and We going mailbacks to couple sometime of the early, about bill, we’re to but have one excited of consumers parts of the it's our it. we’re look residences in involved to provide by sub-injectors been very, process. better our out XXXX and is It going What have with that's them rollout. ability a like what on times and year the the calendar to to And intriguing program is very how the California. very, and a still the met end

we at But We’re working the see. probably the a be potential XXXX them opportunity. definitely with it end of has and significant will to

Peter Rabover

should I color sort more getting there us anything kind the give business? that any mean, of industry signposts look or that are for, that confidence in that you that us than we of can would you give

David Tusa

We'll their basis. about They and a on meetings different the pretty to documents the they related are regular on it good program do publishing website.

think I May. out with to going back we're them in be

I to to going look what website potentially on I the are to progress it looking think meetings and talks they it and at. for related at send the look is going program about But see you and can their a email what am you some to you me link more if at.

Peter Rabover

it your me now. great. appreciate from Okay, That's time. I for

David Tusa

great. Okay

Operator

Thank you.

reached closing question-and-answer like turn the call over Mr. of the to our would Tusa back end for to remarks. have any session. I We

David Tusa

Great, the to thank soon. you. participation your for in to Thank forward you, you We your talking call. operator. Thank we look appreciate support everyone and you again Thanks.

Operator

Thank you. today's This concludes teleconference.

your your wonderful day. may this You a you for at have and Thank disconnect time. lines participation

Sharps Compliance (SMED) 24 Apr 192019 Q3 Earnings call transcript