ACTON, Mass., Aug. 2, 2017
/PRNewswire/ -- Psychemedics Corporation (NASDAQ: PMD) today
announced second quarter financial results for the period ended
June 30, 2017. The Company also
announced a quarterly dividend of $0.15 per share payable to shareholders of record
as of August 14, 2017, to be paid on
August 24, 2017. This will be
the Company's 84th consecutive quarterly dividend.
The Company's revenue for the quarter ended June 30, 2017 was $9.7
million versus $9.7 million
for the quarter ended June 30,
2016. Net income for the quarter ended June 30, 2017 was $0.9
million or $0.16 per diluted
share, versus $1.6 million or
$0.30 per diluted share, for the
comparable period last year, a decrease of 44%. The Company's
revenue for the six months ended June 30,
2017 was $19.9 million versus
$16.4 million for the six months
ended June 30, 2016, an increase of
22%. Net income for the six months ended June 30, 2017 was $2.4
million or $0.44 per diluted
share, versus $1.6 million or
$0.30 per diluted share, for the
comparable period last year, an increase of 50%.
Raymond C. Kubacki, Chairman and
Chief Executive Officer, said,
"Our 2Q 2017 results represent the first year-to-year comparison
where Brazil driver revenues were
in last year's results, as 2Q 2016 was the first quarter to include
Brazil driver testing. While
on the surface this quarter's financial results may appear to be
disappointing, we believe our business fundamentals are intact and
the results do not reflect the underlying long-term strength of our
company.
"As in past reports, I would like to again point out the
following regarding the Brazil
driver market:
1) It is a large
and expanding market. The Brazil professional driver market is large by
law (all professional drivers must pass a hair test in securing and
renewing their driver's license), and it is also expanding by law
(the law requires that in September
2018, professional drivers must renew their licenses every
2½ years, instead of the current every 5 years). This virtually
doubles the size of that major portion of the market. At the
same time, the great success of this professional driver program
(highlighted below) has the government discussing and considering
possibly requiring a hair test for some other types of drivers
licenses. These factors and results have given us confidence in the
long-term attractiveness of this market.
2) We have
recognized from the beginning that there are greater uncertainties
and continual challenges that accompany any new, large market as it
develops, and we plan to address them, as they may occur. In the
past quarter, we have made a number of strategic decisions and are
implementing a number of strategic initiatives that we believe are
in the best long-term interests of the company. Our market
share remains strong and we have taken further strategic actions to
solidify and strengthen our long-term position in the market.
In addition, we now have established a wholly-owned subsidiary in
Brazil and have brought on a
Country Manager, a Brazilian national to manage our business in
Brazil and work with our
distributor. We believe in the long-term attractiveness of
this market and are willing to make short-term investments and
sacrifices. As you know, public companies are often criticized for
managing too much for the short term. With these strategic
initiatives, we believe we are managing the company for the long
term.
"The results of this Brazil
driver program have had a major positive impact for the people of
Brazil. Recent published data from
the Brazil Federal Highway Police shows that in the first year of
the program, the numbers of highway deaths and disabilities have
been reduced by 39% --- a reduction of approximately 39,000!
In addition, 31% of professional drivers chose not to renew
their license, showing this test to be a major deterrent as well.
The Brazil Center for Research and Economics of Insurance
(CPGS) also estimated that with the 32% reduction of traffic
accidents in 2016, this represented a savings of billions (BRL
$70 billion or US $22 billion).
"At the same time, our domestic business is gaining strength.
The Oil and Gas market segment continues to improve, and we are
also seeing a meaningful pickup in the transportation market
segment. We remain optimistic about continued improvement in
our domestic business and are putting plans in place to accelerate
our growth.
"The Company's balance sheet remains strong with $3.0 million in cash and $6.5 million of working capital. The total
equipment financing obligation outstanding was $1.6 million as of June
30, 2017. This reflects additional payments of
$1.3 million, on top of our normal
payments, made during the second quarter of 2017. Our directors
share our confidence in the future of Psychemedics and remain
committed to rewarding shareholders and sharing the financial
success of the Company with them as we grow. Therefore, we
are pleased to declare a quarterly dividend of $0.15 per share. This dividend represents our
84th consecutive quarterly
dividend."
Psychemedics Corporation is the world's largest provider of hair
testing for the detection of drugs of abuse. The Company's patented
process is used by thousands of U.S. and international clients,
including over 10% of the Fortune 500 companies, for pre-employment
and random drug testing. Major police departments, Federal Reserve
Banks, schools, and other public entities also rely on our unique
patented drug testing process. We strongly believe our drug testing
method to be superior to any other product currently in use,
including traditional urine testing and other hair testing
methods.
The Psychemedics web site is www.psychemedics.com
Cautionary Statement for purposes of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of
1995: From time to time, information provided by Psychemedics
may contain forward-looking information that involves risks and
uncertainties. In particular, statements contained in this
release that are not historical facts (including but not limited to
statements concerning earnings, earnings per share, revenues, cash
flows, dividends, future business, growth opportunities,
profitability, pricing, new accounts, customer base, market share,
test volume, sales and marketing strategies, U.S. and foreign drug
testing laws and regulations and the enforcement of such laws and
regulations, required investments in plant, equipment and people
and new test development) may be "forward looking"
statements. Actual results may differ from those stated in
any forward-looking statements. Factors that may cause such
differences include but are not limited to risks associated with
the development of markets for new products and services offered,
costs of capacity expansion, U.S. and foreign government
regulation, including but not limited to FDA regulations, Brazilian
laws and regulations, proposed laws and regulations, currency
risks, R&D spending, competition (including, without
limitation, competition from other companies pursuing the same
growth opportunities), the Company's ability to maintain its
reputation and brand image, the ability of the Company to achieve
its business plans, cost controls, leveraging of its global
operating platform, risks of information technology system
failures and data security breaches, the uncertain global economy,
the Company's ability to attract, develop and retain
executives and other qualified employees and independent
contractors, including distributors, the Company's ability to
obtain and protect intellectual property rights, litigation risks,
general economic conditions and other factors disclosed in the
Company's filings with the Securities and Exchange
Commission. The forward-looking statements contained herein
speak only of the Company's expectations as of the date of this
press release. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
such statement to reflect any change in the Company's expectations
or any change in events, conditions, or circumstances on which any
such statement is based.
Psychemedics
Corporation
Consolidated
Statements of Income and Comprehensive Income
(in thousands, except
per share amounts)
(UNAUDITED)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
9,684
|
|
$
9,700
|
|
$
19,893
|
|
$
16,367
|
Cost of
revenues
|
5,075
|
|
4,491
|
|
9,968
|
|
8,420
|
|
|
|
|
|
|
|
|
Gross
profit
|
4,609
|
|
5,209
|
|
9,925
|
|
7,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
General
& administrative
|
1,334
|
|
1,186
|
|
2,809
|
|
2,438
|
Marketing & selling
|
1,244
|
|
1,302
|
|
2,487
|
|
2,430
|
Research
& development
|
321
|
|
350
|
|
651
|
|
710
|
|
|
|
|
|
|
|
|
Total Operating
Expenses
|
2,899
|
|
2,838
|
|
5,947
|
|
5,578
|
|
|
|
|
|
|
|
|
Operating
income
|
1,710
|
|
2,371
|
|
3,978
|
|
2,369
|
Interest expense,
net
|
(12)
|
|
(35)
|
|
(34)
|
|
(70)
|
|
|
|
|
|
|
|
|
Net income before
provision for income taxes
|
1,698
|
|
2,336
|
|
3,944
|
|
2,299
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
791
|
|
702
|
|
1,537
|
|
689
|
|
|
|
|
|
|
|
|
Net income
|
$
907
|
|
$
1,634
|
|
$
2,407
|
|
$
1,610
|
|
|
|
|
|
|
|
|
Earnings per common
share (basic)
|
$0.17
|
|
$0.30
|
|
$0.44
|
|
$0.30
|
Earnings per common
share (diluted)
|
$0.16
|
|
$0.30
|
|
$0.44
|
|
$0.30
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
$0.15
|
|
$0.15
|
|
$0.30
|
|
$0.30
|
|
|
|
|
|
|
|
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
Foreign
currency translation (gross)
|
$
(71)
|
|
$
-
|
|
$
(71)
|
|
$
-
|
Total comprehensive income
|
$
836
|
|
$
1,634
|
|
$
2,336
|
|
$
1,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Psychemedics
Corporation
Consolidated
Balance Sheets
(in thousands, except
par value)
(UNAUDITED)
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and
cash equivalents
|
$
2,961
|
|
$
3,938
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
|
of $56 in 2017
and $50 in 2016
|
5,230
|
|
5,837
|
Prepaid
expenses and other current assets
|
1,293
|
|
1,079
|
Income
tax receivable
|
595
|
|
--
|
|
|
|
|
Total Current
Assets
|
10,079
|
|
10,854
|
|
|
|
|
Fixed Assets, net of
accumulated amortization and depreciation
|
|
|
|
of
$10,263 in 2017 and $8,900 in 2016
|
12,749
|
|
13,358
|
Other
assets
|
800
|
|
820
|
|
|
|
|
Total
Assets
|
$
23,628
|
|
$
25,032
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
397
|
|
$
1,363
|
Accrued
expenses
|
1,993
|
|
1,988
|
Accrued
income taxes
|
432
|
|
--
|
Current
portion of long-term debt
|
542
|
|
1,144
|
|
|
|
|
Total Current
Liabilities
|
3,364
|
|
4,495
|
|
|
|
|
Long-term debt
|
1,063
|
|
2,237
|
Deferred
tax liabilities, long-term
|
2,780
|
|
2,693
|
Total
Liabilities
|
7,207
|
|
9,425
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Preferred stock, $0.005 par value, 873 shares
authorized,
|
|
|
|
no shares
issued or outstanding
|
--
|
|
--
|
Common
stock, $0.005 par value; 50,000 shares authorized
|
|
|
|
6,157 shares
issued in 2017 and 6,128 shares issued in 2016
|
31
|
|
31
|
Accumulated other comprehensive loss
|
(71)
|
|
--
|
Additional paid-in capital
|
30,722
|
|
30,603
|
Accumulated deficit
|
(4,179)
|
|
(4,945)
|
Less -
Treasury stock, at cost, 668 shares in 2017 and 2016
|
(10,082)
|
|
(10,082)
|
|
|
|
|
Total Shareholders'
Equity
|
16,421
|
|
15,607
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
23,628
|
|
$
25,032
|
|
|
|
|
Contact:
Neil Lerner
Vice President of Finance
(978) 206-8220
Neill@psychemedics.com
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SOURCE Psychemedics Corporation