Psychemedics Corporation (NASDAQ: PMD), the world’s largest
provider of hair testing for drugs of abuse, announced today fourth
quarter and full year financial results for the period ended
December 31, 2022. The Company also announced a quarterly cash
dividend of $0.07 per share payable to shareholders of record as of
March 31,2023, to be paid on April 10,2023.
The Company's revenue for the year ended December 31, 2022, was
$25.2 million versus $24.9 million for the year ended December 31,
2021, an increase of 1%. Net loss for the year ended December 31,
2022, was $1.1 million or ($0.19) per diluted share, versus net
loss of $0.7 million or ($0.12) per diluted share, for the
comparable period last year. The Company’s revenue for the quarter
ended December 31, 2022, was $5.7 million versus $6.4 million for
the quarter ended December 31, 2021, a decrease of 11%. Net loss
for the quarter ended December 31, 2022, was $0.7 million or
($0.12) per diluted share, versus net loss of $1.6 million or
($0.29) per diluted share, for the comparable period last year. The
Company most recently declared a dividend on November 9, 2022,
which was paid on December 16, 2022.
Raymond C. Kubacki, Chairman and Chief Executive
Officer, stated:
“2022 proved to be another challenging year due
to the negative impact of major economic forces. The labor shortage
continued and remains unprecedented in its severity and duration,
having an adverse impact on our clients. In addition, inflationary
pressures also continued throughout the year. Despite these
challenges, total revenue showed a 1% increase compared to 2021
with domestic revenues up 4%. The increase is primarily due to the
ongoing strength from our Oil & Gas, Transportation and School
market segments. These labor shortage and inflation challenges
became progressively worse throughout the year. To combat these
challenges, we implemented a price increase and cost reduction
programs in September.
“Our earnings performance compared to 2021 was
significantly better than reported results would indicate. In 2021,
we had the benefit from the Employee Retention Credit (ERC) during
the first three quarters, which amounted to $2.6 million in total.
This made year-over-year comparisons in 2022 more difficult. While
2022 gross profit of $9.3 million showed a decline from $10.3
million reported in 2021, gross profit from last year had the
benefit of the ERC which amounted to $1.8 million. Excluding the
ERC last year, gross profit increased by $0.8 million or 9%.
Operating expenses for 2022 increased from 2021 by $0.3 million;
however, excluding the ERC of $0.8 million, operating expenses in
2022 actually decreased by $0.5 million or 4%. The operating loss
in 2022 was, therefore, reduced by more than 50% to $1.1 million
vs. $2.4 million in 2021, excluding ERC.
“We believe that in 2023 we must still contend
with the two major challenges of severe labor shortage and high
inflation. Nonetheless, we believe that continued resilience of our
domestic business, as well as the revenue and cost initiatives
recently undertaken, position us well to meet the challenges ahead
in a positive manner.
“Our balance sheet remains strong with $4.8 million of cash on
hand ($4.3 million of working capital) at year end. The total
equipment financing outstanding was $0.6 million as of December 31,
2022, compared to a total amount borrowed of $12.2 million
reflecting repayments of $11.6 million since May 2014.
“The Board has declared a cash dividend of $0.07 per share. Our
disciplined approach and strong cash flow are essential to our
priorities in delivering value to our shareholders. This dividend,
our fourth consecutive quarterly cash dividend, is a reflection of
the Board’s confidence in our Company and its commitment to reward
shareholders for their ownership. We will continue to evaluate the
dividend as we move forward.”
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.
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, receivables collection dates, dividends,
future business, growth opportunities, profitability, pricing, new
accounts, customer base, market share, test volume, customer
anticipated testing volume following the COVID-19 pandemic, and
strategic alternatives, 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 severity of the COVID-19 pandemic, and its impact on the
Company’s markets, including its impact on the Company’s customers,
suppliers and employees, as well as its risk on the United States
and worldwide economies, the timing, scope and effectiveness of
further governmental, regulatory, fiscal monetary and public health
responses to the COVID-19 pandemic, audit risk in connection with
compliance by the Company with repayment forgiveness requirements
under the PPP, changes in U.S. and foreign government regulations,
including but not limited to FDA regulations, 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,
including acceptance by the court of our wage/break settlement
arrangement, general economic conditions and other factors
disclosed in the Company's filings with the Securities and Exchange
Commission. With respect to the continued payment of cash
dividends, factors include, but are not limited to, all of the
factors listed above, plus current and anticipated cash flows,
available surplus, capital expenditure reserves required, debt
service obligations, regulatory requirements, requirements under
our bank loan agreements and other factors that the Board of
Directors of the Company may take into account. 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.
The Psychemedics Corporation web site is
www.psychemedics.com
William
NorrisController (978)
206-8220WilliamN@psychemedics.com
Psychemedics
CorporationConsolidated Statements of
Operations(in thousands, except per share
amounts)(UNAUDITED)
|
Three Months
Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
Revenues |
$ |
5,703 |
|
|
$ |
6,436 |
|
|
$ |
25,240 |
|
|
$ |
24,909 |
|
Cost of
revenues |
|
3,458 |
|
|
|
4,251 |
|
|
|
15,949 |
|
|
|
14,645 |
|
Gross
profit |
|
2,245 |
|
|
|
2,185 |
|
|
|
9,291 |
|
|
|
10,264 |
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
General & administrative |
|
1,497 |
|
|
|
1,988 |
|
|
|
5,857 |
|
|
|
6,126 |
|
Marketing & selling |
|
781 |
|
|
|
849 |
|
|
|
3,191 |
|
|
|
2,799 |
|
Research & development |
|
323 |
|
|
|
313 |
|
|
|
1,326 |
|
|
|
1,130 |
|
Total
Operating Expenses |
|
2,601 |
|
|
|
3,150 |
|
|
|
10,374 |
|
|
|
10,055 |
|
|
|
|
|
|
|
|
|
Operating
(loss) income |
|
(356 |
) |
|
|
(965 |
) |
|
|
(1,083 |
) |
|
|
209 |
|
Other
(expense) income |
|
(6 |
) |
|
|
(1,092 |
) |
|
|
43 |
|
|
|
(1,030 |
) |
Net loss
before provision for (benefit from) income taxes |
|
(362 |
) |
|
|
(2,057 |
) |
|
|
(1,040 |
) |
|
|
(821 |
) |
|
|
|
|
|
|
|
|
Provision
for (benefit from) income taxes |
|
326 |
|
|
|
(436 |
) |
|
|
44 |
|
|
|
(156 |
) |
|
|
|
|
|
|
|
|
Net
loss |
$ |
(688 |
) |
|
$ |
(1,621 |
) |
|
$ |
(1,084 |
) |
|
$ |
(665 |
) |
|
|
|
|
|
|
|
|
Diluted net
loss per share |
$ |
(0.12 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
Dividends
declared per share |
$ |
0.07 |
|
|
$ |
0.05 |
|
|
$ |
0.21 |
|
|
$ |
0.05 |
|
Psychemedics
CorporationConsolidated Balance Sheets(in
thousands, except par value)(UNAUDITED)
|
December 31, |
|
December 31, |
|
2022 |
|
2021 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash |
$ |
4,750 |
|
|
$ |
1,992 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
3,739 |
|
|
|
4,116 |
|
Prepaid expenses and other current assets |
|
1,136 |
|
|
|
1,499 |
|
Income tax receivable |
|
339 |
|
|
|
2,678 |
|
Total
Current Assets |
|
9,964 |
|
|
|
10,285 |
|
|
|
|
|
Fixed
assets, net of accumulated amortization and depreciation |
|
4,573 |
|
|
|
6,691 |
|
Other
assets |
|
823 |
|
|
|
864 |
|
Net deferred
tax assets |
|
691 |
|
|
|
160 |
|
Operating
lease right-of-use assets |
|
2,681 |
|
|
|
3,552 |
|
Total
Assets |
$ |
18,732 |
|
|
$ |
21,552 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable |
$ |
448 |
|
|
$ |
994 |
|
Accrued expenses |
|
3,939 |
|
|
|
3,188 |
|
Current portion of long-term debt |
|
294 |
|
|
|
664 |
|
Current portion of operating lease liabilities |
|
1,037 |
|
|
|
984 |
|
Total
Current Liabilities |
|
5,718 |
|
|
|
5,830 |
|
|
|
|
|
Long-term
debt |
|
305 |
|
|
|
599 |
|
Long-term
portion of operating lease liabilities |
|
1,938 |
|
|
|
2,880 |
|
Total
Liabilities |
|
7,961 |
|
|
|
9,309 |
|
|
|
|
|
Shareholders' Equity: |
|
|
|
Common stock, $0.005 par value; 50,000 shares authorized 6,349
shares and 6,257 shares issued at December 31, 2022 and 2021,
respectively, 5,681 shares outstanding and 5,589 shares outstanding
at December 31, 2022 and 2021, respectively |
|
32 |
|
|
|
31 |
|
Additional paid-in capital |
|
34,275 |
|
|
|
33,478 |
|
Less - Treasury stock, at cost, 668 shares |
|
(10,082 |
) |
|
|
(10,082 |
) |
Accumulated deficit |
|
(11,820 |
) |
|
|
(9,550 |
) |
Accumulated other comprehensive loss |
|
(1,634 |
) |
|
|
(1,634 |
) |
Total
Shareholders' Equity |
|
10,771 |
|
|
|
12,243 |
|
|
|
|
|
Total
Liabilities and Shareholders' Equity |
$ |
18,732 |
|
|
$ |
21,552 |
|
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