Retractable Technologies, Inc. (NYSE American: RVP) reports that
its operating income was $44.1 million for the first nine months of
2021, compared to an operating income for the same period last year
of $11.8 million, and that income applicable to common shareholders
was $35.0 million for the first nine months of 2021 compared to
$14.7 million in the prior year. Net sales were $36.4 million for
the three months ended September 30, 2021 and $128.9 million for
the nine months ended September 30, 2021. The U.S. government
remained a significant customer, constituting 50.7% and 64.8% of
the net sales in the three and nine-month periods ended September
30, 2021. During the quarter ended September 30, 2021, despite the
increase in revenues, Retractable’s gross profit margins were
adversely affected by the widespread and unprecedented rise in
transportation costs and delays affecting nearly all importers as a
consequence of COVID-19’s impact on the global supply chain.
Retractable reports the following results of operations for the
three and nine months ended September 30, 2021 and 2020,
respectively.
Comparison of Three Months Ended September
30, 2021 and September 30, 2020
Domestic sales, including sales to the U.S. government,
accounted for 93.7% and 94.2% of the revenues for the three months
ended September 30, 2021 and 2020, respectively. Domestic revenues
increased 33.5% principally due to increased volumes primarily
attributable to orders from the U.S. government. Domestic unit
sales increased 34.1%. Domestic unit sales were 90.6% of total unit
sales for the three months ended September 30, 2021. Domestic unit
sales excluding the U.S. government rose approximately 32.6%.
International revenues increased approximately 45.5% due to an
increase in products available for international shipment. Our
international orders may be subject to significant fluctuation over
time and may not be reflective of the full year’s sales. Overall
unit sales increased 34.2%. Other than the U.S. government, our
increased sales are predominantly attributable to existing
customers as well as several new smaller customers who do not
operate as distributors. Our gross margins were significantly
impacted during the third quarter of 2021 due to the global demand
for, and rising costs of, cargo freight transportation. Despite the
increase in revenues for the third quarter of 2021, our gross
profit decreased, both on a per unit basis and in the
aggregate.
Cost of manufactured product increased 78.4% principally due to
both an increase in units sold and higher materials and
transportation costs. Royalty expense increased 36.6% due to
increased gross sales.
Operating expenses increased 56.0% from the prior year. This is
substantially due to increased headcount and other employee-related
expenses, as well as consulting expenses. Each of these is
attributable to the larger volume of orders and the expansion
activities required by the Technology Investment Agreement (“TIA”).
Included in the increased employee expenses were $1.2 million of
share-based compensation expense and $338 thousand from general
salary increases and larger headcount. Sales and marketing expenses
decreased due to a reduction in marketing samples and bonus
expense.
Income from operations was $8.0 million compared to income from
operations of $10.3 million for the same period last year. The
decrease was due to lower gross margins as mentioned above and an
increase in general and administrative expenses.
Interest and other income (loss) was ($319) thousand for the
quarter ended September 30, 2021 as compared to ($87) thousand for
the same period last year principally due to a decrease in
investment balances from unrealized losses from the prior quarter.
Interest expense for the third quarter of 2021 increased by
approximately 46.4% from the same period in the prior year. The
increase is primarily attributable to imputed interest associated
with amounts payable for the repurchase of preferred stock from
former shareholders.
Comparison of Nine Months Ended September
30, 2021 and September 30, 2020
Domestic sales, including sales to the U.S. government,
accounted for 95.3% and 86.8% of the revenues for the nine months
ended September 30, 2021 and 2020, respectively. Domestic revenues
increased 184.0% principally due to higher average pricing and
increased volumes primarily attributable to orders from the U.S.
government. Domestic unit sales increased 160.9%. Domestic unit
sales were 92.7% of total unit sales for the nine months ended
September 30, 2021. Domestic unit sales excluding the U.S.
government rose approximately 36.6%. International revenues
decreased approximately 8.6%. Our international orders may be
subject to significant fluctuation over time and may not be
reflective of the full year’s sales. Overall unit sales increased
129.9%. As a result of product mix and customer base for the 2021
nine-month period, our average net revenue per unit sold increased
by 12.5%. Other than the U.S. government, our increased sales are
predominantly attributable to existing customers as well as several
new smaller customers who do not operate as distributors.
Cost of manufactured product increased 137.1% principally due to
an increase in overall units sold as well as higher inventory
carrying costs. Royalty expense increased 123.3% due to increased
gross sales.
An increase in operating expenses of 83.6% over the previous
year is primarily attributable to an increase in headcount,
employee-related expenses, and consulting fees. These increases are
due to the growth in order volume and expansion activities required
by the TIA. Included in the increased employee expenses were
bonuses and retroactive salary increases for the named executive
officers of approximately $650 thousand, $2.2 million in other
employee bonuses, and $2.5 million of share-based compensation
expense. Sales and marketing expenses increased due to employee
bonuses and an increase of GPO fees on the basis of the increase in
sales.
Income from operations was $44.1 million compared to $11.8
million for the same period last year. The increase was due to the
increase in net revenues and resulting gross profit.
Interest and other income (loss) increased 15.1% for the nine
months ended September 30, 2021 compared to the same period last
year principally due to unrealized gains from our investments.
Interest expense for the first nine months of 2021 increased by
approximately 63.0% from the same period in the prior year. The
increase is primarily attributable to imputed interest associated
with amounts payable for the repurchase of preferred stock from
former shareholders.
The 2021 recognition of the gain from the forgiveness PPP Loan
and the 2020 release of the valuation allowance for approximately
$1.8 million in deferred tax assets affect the comparability of the
nine-month periods ended September 30, 2021 and 2020.
Further details concerning the results of operations as well as
other matters are available in Retractable's Form 10-Q filed on
November 15, 2021 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/20211116006221/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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