Retractable Technologies, Inc. (NYSE MKT: RVP) reports the following
results of operations for the three and six months ended June 30, 2014
and 2013, respectively.
Comparison of Three Months Ended June 30, 2014 and June 30, 2013
Domestic sales accounted for 75.0% and 69.0% of the revenues for the
three months ended June 30, 2014 and 2013, respectively. Domestic
revenues increased 8.1% principally due to higher sales volume mitigated
by lower average sales prices. Domestic unit sales increased 13.4%.
Domestic unit sales were 66.3% of total unit sales for the three months
ended June 30, 2014. International revenue and unit sales decreased
19.6% and 27.7%, respectively, due to lower sales volume mitigated by
higher average sales prices. Overall unit sales decreased 4.8%.
Gross profit increased 25.2% primarily due to lower cost of
manufacturing. Gross profit as a percentage of net sales was 31.7% in
the three months ended June 30, 2014 as compared to 25.2% in 2013 due to
lower cost of manufacturing per unit.
The average cost of manufactured products sold per unit decreased by
6.4% due to variations in production levels. 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. The cost of manufactured products as a
percentage of net sales was 59.6% in the three months ended June 30,
2014 as compared to 66.6% in 2013 due to lower cost of manufactured
product. Royalty expense increased 5.9% due to higher gross sales.
Operating expenses decreased 14.7% or $607 thousand. The decrease was
due to decreases in legal costs other than litigation, compensation
costs, office expenses, consulting, and taxes other than income taxes.
Our operating loss was $1.3 million compared to an operating loss for
the same period last year of $2.4 million due primarily to improved
gross profit and lower operating expenses.
Our effective tax rate on the net loss before income taxes was (0.1)%
and (0.1)% for the three months ended June 30, 2014 and June 30, 2013,
respectively.
Comparison of Six Months Ended June 30, 2014 and June 30, 2013
Domestic sales accounted for 78.3% and 74.6% of the revenues for the six
months ended June 30, 2014 and 2013, respectively. Domestic revenues
decreased 3.8%. Domestic unit sales increased 0.2%. Domestic unit sales
were 71.8% of total unit sales for the six months ended June 30, 2014.
International revenue and unit sales decreased 21.4% and 33.0%,
respectively, due to lower volumes mitigated by higher average sales
prices. Overall unit sales decreased 12.1%.
Gross profit decreased 13.6% primarily due to lower revenues. Gross
profit as a percentage of net sales was 30.2% in the six months ended
June 30, 2014 as compared to 32.1% in 2013 due to lower sales volume
mitigated by higher unit cost of manufacture.
The average cost of manufactured products sold per unit increased by
6.7% due to variations in the production schedule. 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. The cost of manufactured products as a
percentage of net sales was 61.3% in the six months ended June 30, 2014
as compared to 59.9% in 2013 due to higher cost of manufacturing.
Royalty expense decreased 2.4% due to lower gross sales.
Operating expenses decreased 12.5% or $1.0 million. The decrease was due
to decreases in legal expense other than litigation costs, consulting
fees, Medical Device excise tax, and donations.
Our operating loss was $3.3 million compared to an operating loss for
the same period last year of $3.8 million due primarily to reduced
operating expenses.
Our effective tax rate on the net loss before income taxes was (0.1)%
and (0.1)% for the six months ended June 30, 2014 and June 30, 2013,
respectively.
Discussion of Balance Sheet and Statement of Cash Flow Items
Our balance sheet remains strong with cash making up 50.1% of total
assets. Working capital was $17.5 million at June 30, 2014, a decrease
of $3.8 million from December 31, 2013.
Approximately $3.7 million in cash flow in the six months ended June 30,
2014 was used by operating activities. Changes in working capital
comprised $900 thousand of the cash used by operating activities. Our
cash balance was positively affected in the third quarter of 2013 by the
receipt of litigation proceeds subject to a stipulation.
Further details concerning the results of operations as well as other
matters are available in the Company’s Form 10-Q filed on August 14,
2014 with the U.S. Securities and Exchange Commission.
Retractable manufactures and markets VanishPoint® and Patient
Safe® safety medical products. 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. Retractable's products are distributed by various
specialty and general line distributors.
For more information on Retractable, visit our website at www.vanishpoint.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 our current views with respect to future events.
We believe that the expectations reflected in such forward-looking
statements are accurate. However, we cannot assure you that such
expectations will materialize. Our actual future performance could
differ materially from such statements.
Factors that could cause or contribute to such differences include, but
are not limited to: our ability to maintain liquidity; our maintenance
of patent protection; the impact of current litigation; our ability to
maintain favorable third party manufacturing and supplier arrangements
and relationships; our ability to quickly increase capacity in response
to an increase in demand; our ability to access the market; our ability
to maintain or lower production costs; our ability to continue to
finance research and development as well as operations and expansion of
production; the continuing interest of larger market players,
specifically Becton, Dickinson and Company, 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.
Copyright Business Wire 2014