Retractable Technologies, Inc. (NYSE American: RVP) reports that
its operating income was $10.3 million in the third quarter of
2020, compared to an operating income for the same period last year
of $978 thousand and that income applicable to common shareholders
was $11.0 million for the third quarter of 2020. During the third
quarter, Retractable had an increase in net sales of approximately
$15.5 million over the prior period, of which $12.9 million is
attributable to sales to the U.S. Department of Health and Human
Services under a previously reported $83.8 million delivery order
(the “HHS Order”).
Retractable also reports the following results of operations for
the three and nine months ended September 30, 2020 and 2019,
respectively.
Comparison of Three Months Ended September 30,
2020 and September 30, 2019
Domestic sales, including sales to the U.S. government,
accounted for 94.2% and 77.7% of the revenues for the three months
ended September 30, 2020 and 2019, respectively. Domestic revenues
increased 182.3% principally due to the increase in units sold.
Domestic unit sales increased 151.7%. Domestic unit sales were
90.6% of total unit sales for the three months ended September 30,
2020. Domestic sales excluding the HHS Order rose approximately
40%. International revenue and unit sales decreased 39.7% and
41.3%, representing a return to normal levels after the unusually
high volumes in 2019. International orders may be subject to
significant fluctuation over time and there is limited
predictability with respect to the timing of international orders.
Overall unit sales increased 92.2%. Other than the Department of
Health and Human Services, the increased sales are predominantly
attributable to existing customers as well as several new smaller
customers who do not operate as distributors. Sales under the HHS
Order in the quarter ended September 30, 2020 were approximately
$12.9 million and the Company expects such sales to increase each
quarter through May 2021.
The Cost of manufactured product increased by 67.0% principally
due to the increase in the volume of units sold. Profit margins can
fluctuate depending upon, among other things, the cost of
manufactured product and the capitalized cost of product recorded
in inventory, as well as product sales mix. Royalty expense
increased 79.6% due to increased gross sales.
Gross profit increased 267.0% primarily due to the increase in
net revenues.
Operating expenses increased 24.8%. The increase was due to
employee expenses such as added payroll and related costs and
consulting fees.
Income from operations was $10.3 million compared to an
operating income of $978 thousand for the same period last year due
primarily to the increase in net revenues and resulting gross
profit.
Interest and other income decreased $179 thousand for the
quarter ended September 30, 2020 compared to the same period last
year principally due to unrealized losses in investments.
The effective tax rate on income before income taxes was 15.6%
and 0.4% for the three months ended September 30, 2020 and
September 30, 2019, respectively.
Comparison of Nine Months Ended September 30,
2020 and September 30, 2019
Domestic sales, including sales to the U.S. government,
accounted for 86.8% and 79.4% of the revenues, excluding product
licensing fees, for the nine months ended September 30, 2020 and
2019, respectively. Domestic revenues increased 87.9% principally
due to the increase in units sold. Domestic unit sales increased
76.4%. Domestic unit sales were 81.6% of total unit sales for the
nine months ended September 30, 2020. International revenue and
unit sales increased 10.1% and 3.7%, respectively, due to increased
orders and the timing of the same. International orders may be
subject to significant fluctuation over time and there is limited
predictability with respect to the timing of international orders.
Overall unit sales increased 56.3%. As discussed above, sales under
the HHS Order contributed $14.3 million to the Company’s results
for the nine months ended September 30, 2020.
The Cost of manufactured product increased by 45.2% principally
due to the increase in the volume of units sold. Profit margins can
fluctuate depending upon, among other things, the cost of
manufactured product and the capitalized cost of product recorded
in inventory, as well as product sales mix. Royalty expense
increased 38.5% due to increased gross sales.
Gross profit increased 128.9% primarily due to the increase in
net revenues.
Operating expenses increased 14.7%. 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 $11.8 million compared to an operating
income for the same period last year of $1.1 million due primarily
to increased net revenues and resulting gross profit.
Interest and other income for the first nine months of 2020
increased $589 thousand compared to the same period last year
principally due to realized and unrealized gains on
investments.
The effective tax rate on income before income taxes was (1.2)%
and 0.6% for the nine months ended September 30, 2020 and September
30, 2019, respectively.
Further details concerning the results of operations as well as
other matters are available in Retractable's Form 10-Q filed on
November 16, 2020 with the U.S. Securities and Exchange
Commission.
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/20201118005939/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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