Psychemedics Corporation Announces Q2 Earnings
Published: Aug 03, 2017
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.
To read full press release, please click here.