Psychemedics Corp (PMD) SEC Filing 10-Q Quarterly report for the period ending Sunday, September 30, 2018

Psychemedics Corp

CIK: 806517 Ticker: PMD


Psychemedics Announces Quarterly Results

Declares 89th Consecutive Quarterly Dividend

ACTON, Mass., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Psychemedics Corporation (NASDAQ:PMD) today announced third quarter financial results for the period ended September 30, 2018.  The Company also announced a quarterly dividend of $0.18 per share payable to shareholders of record as of November 2, 2018, to be paid on November 12, 2018.  This will be the Company’s 89th consecutive quarterly dividend.

The Company’s revenue for the quarter ended September 30, 2018 was $11.0 million versus $10.0 million for the comparable period in 2017, an increase of 10%.  Net income for the quarter ended September 30, 2018 was $1.3 million or $0.23 per diluted share, versus $1.4 million or $0.25 per diluted share, for the comparable period last year, a decrease of 7%.  Revenue for the nine months ended September 30, 2018 was $32.7 million versus $29.9 million for the comparable period in 2017, an increase of 9%.  Net income for the nine months ended September 30, 2018 was $3.7 million or $0.67 per diluted share versus $3.8 million or $0.68 per diluted share, for the comparable period last year, a decrease of 2%.

Raymond C. Kubacki, Chairman and Chief Executive Officer, said,

"Third quarter volumes and revenues continued to show strong growth.  However, these strong results (revenues and earnings) were masked by the unfavorable impact from foreign currency exchange rates. 

“Total revenue growth was 10%.  Excluding the exchange rate impact, total revenue would have been up 15%.  Our domestic revenues continued to show strong growth, which was largely attributable to our Oil & Gas, Transportation and Manufacturing market segments.  Our international business (primarily Brazil) was up 9%. International revenue would have been up 26% for the quarter compared to the same period in 2017, if the exchange rate had remained constant.    

"Earnings were also impacted by the change in exchange rate.   Had the exchange rate for the quarter remained the same as the third quarter of 2017, net income would have been approximately $1.6 million or $0.29 per diluted share which would have reflected an increase of 16%.  In response to these foreign exchange rate fluctuations, we came to an agreement with the company’s Brazilian distributor to now share in the foreign exchange risk.     

"We have stated for several quarters that we were expecting an expansion of the Brazil market in the fourth quarter this year when professional drivers were required to renew their licenses every 2 1/2 years instead of the current 5 years.  This expansion is by law and will virtually double the market size as it unfolds.  However, the implementation of this law can be temporarily delayed, and it now appears this is the case, due to the elections in Brazil.  We expect that this market expansion will take place in 2019.

“The Company’s balance sheet remains strong with $6.0 million in cash and $9.8 million of working capital.  The total equipment financing obligation outstanding was $2.7 million as of September 30, 2018.  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 our quarterly dividend $0.18 per share. This dividend represents our 89th consecutive quarterly dividend.”

Neil Lerner
Vice President of Finance
(978) 206-8220

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

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.  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 development of markets for new products and services offered, costs of capacity expansion, U.S. and foreign government regulation, including but not limited to FDA regulations, Brazilian laws and regulations, proposed laws and regulations, currency risks, 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, general economic conditions and other factors disclosed in the Company's filings with the Securities and Exchange Commission.  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.

Psychemedics Corporation
Consolidated Statements of Income
(in thousands, except per share amounts)
 Three Months Ended Nine Months Ended
 September 30, September 30,
  2018   2017  2018  2017 
Revenue$11,016  $10,049 $32,738 $29,942 
Cost of revenue 5,658   4,928  16,853  14,896 
Gross profit 5,358   5,121  15,885  15,046 
Operating Expenses:       
General & administrative 1,599   1,471  4,907  4,278 
Marketing & selling 1,267   1,065  3,807  3,552 
Research & development 372   353  1,089  1,005 
Total Operating Expenses 3,238   2,889  9,803  8,835 
Operating income 2,120   2,232  6,082  6,211 
Other income (expense) (9)   13  47  (22) 
Net income before provision for income taxes 2,111   2,245  6,129  6,189 
Provision for income taxes 836   881  2,426  2,418 
Net income$1,275  $1,364 $3,703 $3,771 
Diluted net income per share$0.23  $0.25 $0.67 $0.68 
Dividends declared per share$0.18  $0.15 $0.54 $0.45 

Psychemedics Corporation
Consolidated Balance Sheets
(in thousands, except par value)
 September 30, December 31,
  2018   2017 
Current Assets:   
Cash and cash equivalents$6,016  $8,165 
Accounts receivable, net of allowance for doubtful accounts   
of $71 in 2018 and $64 in 2017 8,067   4,488 
Prepaid expenses and other current assets 1,359   1,212 
Total Current Assets 15,442   13,865 
Fixed Assets, net of accumulated amortization and depreciation   
of $13,712 in 2018 and $11,670 in 2017 10,644   11,811 
Other assets 900   832 
Total Assets$26,986  $26,508 
Current Liabilities:   
Accounts payable$813  $398 
Accrued expenses 3,908   2,870 
Current portion of long-term debt 941   957 
Total Current Liabilities 5,662   4,225 
Long-term debt 1,719   2,420 
Deferred tax liabilities, long-term 1,091   1,243 
Total Liabilities 8,472   7,888 
Shareholders' Equity:   
Common stock, $0.005 par value; 50,000 shares authorized   
6,175 shares issued in 2018 and 6,160 shares issued in 2017 31   31 
Accumulated other comprehensive loss (1,584)   (238) 
Additional paid-in capital 31,365   31,022 
Accumulated deficit (1,216)   (2,113) 
Less - Treasury stock, at cost, 668 shares (10,082)   (10,082) 
Total Shareholders' Equity 18,514   18,620 
Total Liabilities and Shareholders' Equity$26,986  $26,508 

The following information was filed by Psychemedics Corp (PMD) on Tuesday, October 23, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Balance Sheets (Current Period Unaudited)
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Income And Comprehensive Income (Unaudited)
Note 1 - Basis Of Presentation
Note 10 - Significant Customers
Note 10 - Significant Customers (Details Textual)
Note 11 - Recently Adopted Accounting Pronouncements
Note 12 - Accounting Pronouncements Issued But Not Yet Effective
Note 13 - Revenue
Note 13 - Revenue (Details Textual)
Note 13 - Revenue (Tables)
Note 13 - Revenue - Revenue By Major Source (Details)
Note 2 - Cash And Cash Equivalents
Note 3 - Share-Based Compensation - Nonvested Award Activity (Details)
Note 3 - Stock-Based Compensation
Note 3 - Stock-Based Compensation (Details Textual)
Note 3 - Stock-Based Compensation (Tables)
Note 3 - Stock-Based Compensation - Stock Option Activity (Details)
Note 4 - Basic And Diluted Net Income Per Share
Note 4 - Basic And Diluted Net Income Per Share (Details Textual)
Note 4 - Basic And Diluted Net Income Per Share (Tables)
Note 4 - Basic And Diluted Net Income Per Share - Basic And Diluted Shares Outstanding (Details)
Note 5 - Business Segment Reporting
Note 5 - Business Segment Reporting (Details Textual)
Note 5 - Business Segment Reporting (Tables)
Note 5 - Business Segment Reporting - Summary Of Revenues By Geographic Region (Details)
Note 6 - Fair Value Measurements
Note 7 - Subsequent Events
Note 7 - Subsequent Events (Details Textual)
Note 8 - Commitments And Contingencies
Note 9 - Debt And Other Financing Arrangements
Note 9 - Debt And Other Financing Arrangements (Details Textual)
Note 9 - Debt And Other Financing Arrangements (Tables)
Note 9 - Debt And Other Financing Arrangements - Schedule Of Debt Repayments (Details)

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Psychemedics Corp provided additional information to their SEC Filing as exhibits

Ticker: PMD
CIK: 806517
Form Type: 10-Q Quarterly Report
Accession Number: 0001171843-18-007223
Submitted to the SEC: Thu Oct 25 2018 12:23:46 PM EST
Accepted by the SEC: Thu Oct 25 2018
Period: Sunday, September 30, 2018
Industry: Medical Laboratories

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