Retractable Technologies, Inc. (NYSE American: RVP) reports that
its operating income was $960 thousand in the second quarter of
2020, compared to an operating income for the same period last year
of $329 thousand, and that income applicable to common shareholders
was $3.6 million for the second quarter of 2020. During the second
quarter, Retractable had an increase in net sales of approximately
$2.0 million over the prior period, of which $1.4 million is
attributable to sales to the U.S. Department of Health and Human
Services under a previously reported $83.8 million delivery order.
Other material changes in the Statement of Operations for the three
months ended June 30, 2020 include an unrealized gain of
approximately $900 thousand in an investment account and a
recognition of approximately $1.8 million in deferred tax assets.
Retractable also reports recent activity under the $53.7 million
Technology Investment Agreement with the U.S. government, including
placing orders for approximately $20 million in equipment and
engagement of professionals to expand Retractable’s facilities in
Little Elm, Texas.
Retractable reports the following results of operations for the
three and six months ended June 30, 2020 and 2019,
respectively.
Comparison of Three Months Ended June 30, 2020
and June 30, 2019
Domestic sales accounted for 81.5% and 83.2% of revenues for the
three months ended June 30, 2020 and 2019, respectively. Domestic
revenues increased 20.1% principally due to the increase in units
sold. Domestic unit sales increased 25.4%. Domestic unit sales were
78.7% of total unit sales for the three months ended June 30, 2020.
International revenue and unit sales increased 35.6% and 25.2%,
respectively, due to increased orders. Overall unit sales increased
25.3%. With the exception of the Department of Health and Human
Services, increased sales are predominantly attributable to
existing customers. Despite the global disruption of the pandemic,
none of the markets in which the Company sells its products have
experienced material decline. Sales to the Department of Health and
Human Services in the quarter ended June 20, 2020 were
approximately $1.4 million and the Company expects such sales to
increase each quarter through May 2021.
The Cost of manufactured product increased by 21.1% principally
due to the increase in the volume of units sold. Gross profit
increased 25.3% primarily due to the increase in net revenues.
Operating expenses increased 4.3%. The increase was due to
employee expenses such as added payroll and related costs and
consulting fees.
Operating income was $960 thousand compared to an operating
income of $329 thousand for the same period last year due primarily
to the increase in net revenues and resulting gross profit.
Interest and other income increased $1.0 million for the quarter
ended June 30, 2020 compared to the same period last year
principally due to a $900 thousand unrealized gain from an April
2020 investment in individual energy stocks. In addition to
operating income, the increase in Interest and other income
contributed significantly to the increase in net income for the
second quarter of 2020.
The Company’s effective tax rate on the income before income
taxes was (85.1)% and 0.9% for the three months ended June 30, 2020
and June 30, 2019, respectively. As of June 30, 2020, the Company
released its valuation allowance for deferred tax assets based on
evidence supporting the position that the potential benefit would
be “more-likely-than-not” realized. As a result of the release of
the valuation allowance, the Company recognized approximately $1.8
million in deferred tax assets and recognized the corresponding
amount as a beneficial income tax provision. The recognition of the
benefit and deferred tax asset is reflected in the second quarter
of 2020.
Comparison of Six Months Ended June 30, 2020
and June 30, 2019
Domestic sales accounted for 78.0% and 80.5% of the revenues for
the six months ended June 30, 2020 and 2019, respectively. Domestic
revenues increased 27.0% principally due to the increase in units
sold. Domestic unit sales increased 27.8%. Domestic unit sales were
72.6% of total unit sales for the six months ended June 30, 2020.
International revenue and unit sales increased 48.5% and 41.6%,
respectively, due to increased orders and the timing of the same.
Overall unit sales increased 31.3%. As discussed above, sales to
the Department of Health and Human Services contributed
significantly to second quarter results for 2020.
The Cost of manufactured product increased by 30.8% principally
due to the increase in the volume of units sold. Gross profit
increased 32.9% primarily due to the increase in net revenues.
Operating expenses increased 9.4%. The increase was due to an
increase in employee headcount and related costs as well as
consulting fees and an increase in the allowance for doubtful
accounts.
Operating income was $1.4 million compared to an operating
income for the same period last year of $154 thousand due primarily
to increased net revenues and resulting gross profit.
Interest and other income for the first six months of 2020
increased $767 thousand compared to the same period last year
principally due to unrealized gain on investments. As discussed
above, the Company’s investment in individual stocks in April 2020
contributed significantly to this increase.
The Company’s effective tax rate on the income (loss) before
income taxes was (74.8)% and 1.31% for the six months ended June
30, 2020 and June 30, 2019, respectively. As of June 30, 2020, the
Company released its valuation allowance for deferred tax assets
based on evidence supporting the position that the potential
benefit would be “more-likely-than-not” realized.
ABOUT RETRACTABLE
Retractable manufactures and markets VanishPoint® and Patient
Safe® safety medical products and the EasyPoint® needle. The
VanishPoint® syringe, blood collection, and IV catheter products
are designed to prevent needlestick injuries and product reuse by
retracting the needle directly from the patient, effectively
reducing exposure to the contaminated needle. Patient Safe®
syringes are uniquely designed to reduce the risk of bloodstream
infections resulting from catheter hub contamination. The
EasyPoint® is a retractable needle that can be used with luer lock
syringes, luer slip syringes, and prefilled syringes to give
injections. The EasyPoint® needle also can be used to aspirate
fluids and for blood collection. Retractable's products are
distributed by various specialty and general line distributors.
For more information on Retractable, visit its website at
www.retractable.com.
Forward-looking statements in this press release are made
pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995 and reflect Retractable's current
views with respect to future events. Retractable believes that the
expectations reflected in such forward-looking statements are
accurate. However, Retractable cannot assure you that such
expectations will materialize. Actual future performance could
differ materially from such statements.
Factors that could cause or contribute to such differences
include, but are not limited to: the impact of COVID-19 on all
facets of logistics and operations, as well as costs, Retractable’s
ability to complete capital improvements and ramp up domestic
production in response to government agreements, potential tariffs,
Retractable's ability to maintain liquidity; Retractable's
maintenance of patent protection; Retractable's ability to maintain
favorable third party manufacturing and supplier arrangements and
relationships; foreign trade risk; Retractable's ability to access
the market; production costs; the impact of larger market players
in providing devices to the safety market; and other risks and
uncertainties that are detailed from time to time in Retractable's
periodic reports filed with the U.S. Securities and Exchange
Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20200817005466/en/
Retractable Technologies, Inc. John W. Fort III, 888-806-2626 or
972-294-1010 Vice President, Chief Financial Officer, and Chief
Accounting Officer
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