Q3 2021 Sharps Compliance Corp Earnings Call
Greetings and welcome from the Sharps compliance three Qs 21 earnings call. At this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
Now turn the conference over to your host Jennifer of volatile must spell it out you may begin.
Thank you.
Good morning, and welcome to the Sharps compliance third quarter of fiscal 2021 earnings call on the call today, we have David P. Tusa, the company's President and Chief Executive Officer, and Diana P. Diaz Executive Vice President and Chief Financial Officer, David will review, the company's business performance operations and outlook, while Diana will review the financials and immediately following their formal remarks, we will take.
Questions from our call participants as Youre aware of we may make some forward looking statements during the formal presentation and in the question and answer portion of this teleconference. These statements apply to future events, which are subject to risks and uncertainties as well as the other factors that could cause actual results to differ materially from where we are today. These factors are outlined in our earnings release as well as in documents filed by the cut.
The with the Securities and Exchange Commission, which can be found at our website or at SEC Gov, well down the other way, let me turn it over to David.
Thanks, Shannon and good morning, everyone.
Thank you for participating in this morning's call.
Looking at the list of the attendees and many of you know me and you know how much I like talking about the business.
And the outlook.
And just the opportunity that we have in front of us. So that's why I'm going to the I'm going to talk about the business instead of hey.
Hey.
Any kind of the script the presentation. So everyone can see the March numbers, they're very very impressive we're very proud of the the.
The numbers and the performance but.
I truly believe that's what's more important than the numbers is the fact that I. Just believe we're just getting started as we grow this company to a much much larger organization.
Of course, we knew.
The immunization revenue for the third quarter was going to be very very strong but.
I want everyone to make sure they understand that I don't think we're anywhere near one and done and again I think we're just getting started with generating cigna.
Significant revenue growth, so it's really quite the contrary and.
And again I believe we've got tremendous opportunity in front of US. Let me tell you of how to look at the at the at the immunization business, whether it's COVID-19 or flow.
It's obviously, we're off to the playing a key part and the.
The rollout of the COVID-19, vaccines, which is fantastic we're proud to do it and of course, we love the revenue associated with that.
But the way I look at it is we're working right now on the rollout of the adult.
Maxine and the.
You've seen the news you see the we only have about 29% of our of Americans that are that are fully immunize. So so we've got a ways to go obviously, but here's how I see it rolling out. So we have the vaccine for adults, which is going on right now I think it will be followed by a vaccine.
As for adolescents thing it could happen in the summer.
Then will be followed with seasonal flu shots.
Think that Theres, an opportunity for vaccine for children.
And then as the <unk>.
Everyone. Here is we are the vaccine or the booster shots of the vaccine to address the efficacy and the and the potential of various so.
That's a lot of activity and Thats a lot of things that are going on the we're playing a key role of it.
Why I mentioned, the children's and the adolescent vaccine.
Yes.
You know what the experts are saying, if we have any chance of achieving herd immunity, it's going to be the children, it's going to be the adolescents, they're going to have to be immunized. The if we have any chance of achieving the seven to eight to eight 5%.
The rate of immunization, So I don't look at the the immunization business really for any particular quarter. When I look at it is like over the next three to four quarters.
I don't know exactly how it's going to hit between those three or four quarters, but we feel confident that we're going to be very very busy again through the end of the calendar year and probably into the <unk>.
The following year.
On that.
It's much more than just 21, I mean, theres going to be a layer of this immunization business.
That will continue into 2022 2023.
And forward and in the way, we think about it is when you consider the devastating impact of COVID-19 from the economy health care of the emotional toll that I think we all believe that there's going to be much more proactive work, it's all of it.
Further vaccine booster development and addressing COVID-19 and any potential additional corona viruses. So I see the next three to four quarters very very strong as we participate in all of the different vaccines I mentioned and then some level of that.
Thereafter that will that will continue.
So that's about vaccine the route based business one of my favorite favorite businesses I really enjoy it I think it's great that we're in to that I love that business and it's growing about 40%, but I got to tell you I'm really not totally happy with it I think we can do much better than the 40% increase where we're addressing.
<unk> of $1 billion market for small to medium quantity generators. It's excellent we have service direct service in 37 states, 80% of the population.
It just seems like yesterday, we jumped into this business line.
We're very proud of our geographic expansion and now we need to turn the footprint of the larger footprint into more sales more revenue more dollars and stronger growth in this business will continue of big be a big part of our growth plans of where we're going and we look for continued strong growth contribution from.
The route based business.
These medications I'm here in the <unk>.
In our boardroom and I'll never forget back in like I think it was 2012 2013, we were designing the med safe here in this room based upon the change in the DEA rules.
We thought we had a real opportunity to grow this business and to our developed this line of business and make it a big part of what we're doing and we did it and we're the leader in this metric business. The the patient dispensed ultimate user medication disposal and it's been slow during the pandemic.
That's OK and understandable Theres a pandemic. So the retail pharmacies are are focused on the vaccines immunizations, but what's important is we see and we're starting to see some of the orders lineup.
We see the growth rebounding beginning in the September quarter and get back on the on the growth track set.
That we've experienced before and again make it a big part of what we're doing and I think long term. It will continue to be a big part of of what we're doing now.
Now the financial person and we can't talk about the.
Of the business without talking about the margins, both gross and operating as I've talked about operating leverage for a while but.
I think if you had any doubts about the operating leverage.
And our model I think the March 2021 quarter numbers should put those doubts to rest.
Finally, and I think this is the most important.
The most important as.
And I've said this many times, let's say it again.
Not that typical Microcap company, we're not the typical small micro caps the struggling with growth.
The dealing with growing pains.
Not us we're very well professional organization. We plan Accordingly, we started in March last year planning for.
What you see the results of on the in the March P&L of whether it would be <unk>.
Capacity, whether it would be email back inventory, whether it be warehousing.
It's played out quite quite well for us, but we've got great operations personnel, we have first class customer service and we're good at we're good at executing and that's it.
Tribute to the company into our into our employees and we did all of this during the pandemic.
Which no interruption of no disruption in service, which I think if something really the proud of so when I look at the business going forward and you look at the outlook because we've got our core businesses. We've got mail back business of route based business and unused medication. We think we're extremely well positioned to take advantage of all of the growth opportunities in the.
Three lines of business, we're excited about the the opportunity and we hope to generate more quarters like you see in the March quarter were.
The significant revenue growth of also coupled with significant operating leverage so without that out of the way, let me turn it over to Diana and she'll address the financials in more detail.
Thank you David.
<unk> achieved record revenue of $27 $5 million and record customer billings of $31 million in the third quarter of fiscal 2021, these are increases of $17 $1 million or 164% and $27 million or 200%, respectively. The <unk>.
Kris and customer billings for the third quarter was driven by an increase and immunization related billings of $19 $5 million reflected in the retail market and an increase in our route based business of about $1 million the.
Increase in third quarter revenue of $17 $1 million was driven by immunization related business of $16 1 million, which is net of deferred revenue of almost $4 million and the $1 million increase in the route based business.
<unk> and the professional in long term care market grew 19% and 28% respectively, primarily due to new customers using our route based pick up services as well as increased volumes from existing customers.
Home health care market billings increased 38% to $2 $3 million in the third quarter of fiscal 2021 compared to $1 $7 million in the third quarter of last year due to the timing of distributor orders.
Gross margin for the third quarter was 49% as compared to gross margin of 21% in the third quarter of last year. Our revenue recognition method for accounting purposes, which is a bit complex.
Noted in a net deferral of about $4 million of customer billings for future periods. When recognize these deferred billings will be recorded at a much lower gross margin. Therefore, the billings not deferred and recorded during this quarter of recognized at a higher margin.
Without that favorable impact of revenue recognition gross margin for the third quarter was really 41%.
SG&A expense increased by about $600000 for the quarter. This increase included management incentive compensation, both equity and cash of $400000 higher sales and marketing cost of about $100000 and higher board of director compensation of $100000.
We reported operating income of $9 million and an operating margin of 33% in the third quarter of 2021 compared to an operating loss of $1 $6 million in the third quarter of last year.
Without that revenue recognition impact on gross margin that I described earlier the operating margin for the third quarter of 2021 would have been 25%.
Sharps recorded net income of $6 $9 million or 41.
Per basic and 40 cents per diluted share this quarter compared to a net loss of $1 $6 million are of loss of 10 cents per basic and diluted share in the third quarter of last year.
We generated EBITDA of $9 $6 million or 35% of revenue in the third quarter of fiscal 2021 compared to an EBITDA loss of $1 $2 million in the third quarter of last year without the revenue recognition impact on gross margin that I described earlier, the EBITDA margin for the third quarter.
<unk> of this year would have been 27%.
Our balance sheet remains solid with $11 2 million of cash as of March 31, 2021, which is up from $5 $4 million at June 32020, and working capital of $20 7 million up from $11 million at the end of June 2020, now with that.
I'll turn the call back over to David Great Day, sorry in the operator, let's go ahead and open it up for the for the Q&A after which I'll make a few closing remarks.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad of confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your.
Handset before pressing the star team. Our first question is from Gerry Sweeney with Roth Capital. Please proceed with your question.
Good morning, David Diana Fortunately.
Well thank you.
David you talked about the COVID-19 vaccines, 30% of adult population thereabout at least with one shot.
We have boosters we of variants.
Adolescence, starting the kicking in I suspect the adult population and I don't want of since they're gonna be sort of different participation rates, but.
What do you think.
The potential value of.
All of this wrapped up and even flew into next year is there of where you could maybe help us bracket or the practices or or.
Right of benchmark and how does the true allowed also not just really over the next 12 18 months of this is gonna be of process right now.
That's actually a very good question I'll tell you look at all of our back into it. So you know for planning purposes, we need to know what the demands are going to be on the business.
And we've done many many calculations between COVID-19 COVID-19.
For adults you know you hear on the on the news that I think as many of the 74% of the adult who will receive the two shots.
Adolescents and children and we make some assumptions they maybe even as much as half of the the of these of.
Of the children and adolescence will get the the vaccine flow right now.
Blue this year and by the way the flu.
<unk> is probably going to be worse this year, but the experts are saying the community levels are down and and the few Nate to lose may not just be the typical seven to 8 million and when we think of potentially could be even $10 million and higher than the boosters and even if you make a.
The assumption on boosters, even net of the 250 million adults, even if maybe the third or of half yet.
Get a booster shot.
That's that's.
A significant number of mail backs. So just with the COVID-19, we think that there could be as much as Amelia Belle box.
For the next say non 12 months, maybe 15 months of million mail backs on the COVID-19, and how it.
Can be another can be 300000, none of the flow could be another 300000 on the boosters. So of that gives you as about as many as of 1 million six.
And and mailbox and.
When you do the math that equates it as much as the.
$60 million in revenue and I'm, not saying, we're going to generate 60 million of revenue, but I think that.
That could be the.
Kind of the addressable market that we would have of the vaccine. So.
We generated so far about 20 million of immunization.
So there's opportunities for over the next 912, maybe 15 months to generate significantly more revenue related to the humanization of business isn't even if its $50 million. That's another 30 million over and above where we where we are right now.
I also wanted to say is those meramec numbers are really important in making sure and we do and we have plans. We will meet the requirements. We will have the millions of <unk> of available over that time period to be able to to service at March of that I hope that was a long way of answering your question.
Yeah.
And maybe the taken a step further I was trying to do a little math.
Net with those numbers.
That's that's COVID-19 beginning.
Beginning to and will say like the first wave of vaccines right.
And then we get into 'twenty, two and 'twenty three there is a tail to this business right you're going to be.
Boosters again.
Variants et cetera, and different participation rates. There have you tried to do any of the math on that all of us to what the tail it could be.
Literally right now than I was looking at something like 15 million of them right.
But that's really brought back of the envelope right the way I look at it is.
So in the future years, let's say you have.
One booster versus the two shots you received this year.
The children's.
Vaccine by the way from the children's ultimately is the vaccine yourself they'll have to just like the the adolescence flow will continue to be strong and I think there'll be boosters for the foreseeable future. So I think you can pretty conservatively say, maybe 30, maybe 30% maybe a third of it.
Could continue in the future maybe because of as much as is half of it just depends upon.
The the vaccines it depends on what other kind of various may come about or what other kind of Corona viruses. We may we may see in the future. So I think we're comfortable with maybe see as much as at least a third of that continuing of 22 and thereafter.
Gotcha, and then shifting gears, obviously, Ralph base, you know great business, great growth driver of longer term.
As you look out for the next year, what do you I mean, there's the opportunity probably for organic and inorganic investments.
The organic side, it's a lot of kind of.
The marketing sales.
You sort of carve out some of the numbers I think on the inside sales and the couple of million dollars a year year over year et cetera.
What's your sort of view on that.
Your investment over the next year from both aspects of that through organic and inorganic.
I'll just tell you that.
Because of what we're experiencing on the the immunization side and because of our desire to significantly grow that Rob based business.
Where we're in the process of of hard roughly another 10 salespeople and we're going to invest heavily in the sales and marketing and out of it go from roughly 20 to as many of his 30 people on the.
The sales side, which is which is really important because we think it's our moment of I'd say something else. It really helps when we move into an area of organically. We did the successfully in the Midwest and we're doing it right now in what we call of the southwest the four states in the southwest that brings a lot of revenue opportunities because those are areas. We wouldn't go after <unk>.
<unk> because we don't provide direct service those are areas, where we had previously sub contracted and we may include in larger opportunities. So we're performing direct service and we are marketing heavily and to all of the areas. All 37 states that we are providing direct service so I think that.
That'll give us above as well in the.
In the revenue growth from our route based business more salespeople more marketing and more direct service in and of greater geographic area.
Got it that's very helpful. I appreciate it I'll jump back in line. Thank you.
Thank you. Our next question comes from Rob Brown with Lake Street Capital Markets. Please proceed with your question.
Good morning, David and congrats on a very nice quarter good morning.
Just wanted to dive a little bit more into the into the the COVID-19 vaccine activity.
I guess what are you seeing in terms of the the planning for the for the fall and in sort of feeling the the channel and I guess, what's your inventory at this point and how are you sort of prepared at this point.
So again as I mentioned before I think the we could.
Sales of as many of the $1 six or more of our mailbox even over this.
This calendar year, we sold roughly about a half a million dollars in the March quarter.
And we are right now I'll tell you.
We're right now.
Our our weekly production of the Sharps containers that are the critical part of the.
Of the mail back of about 50000, a week. So we're manufacturing of about 50000 a week.
That that we have ongoing that will go throughout the year to be able to meet to make does needs of.
Of this upcoming COVID-19 business.
Okay great.
I know you added capacity of significant capacity from processing. The returns where are you at in terms of the capacity utilization in your AR and your facilities.
Well, we still have significant.
Capacity, we did add the additional autoclave.
In Pennsylvania, the larger autoclave that we installed in the Texas facility, we tripled the capacity in and we're doing fine we've.
We have plenty of additional capacity, we are using more of it but not substantially.
More because when you triple of the capacity that that gives you a lot of of.
Of room to grow I think what's also important is the improvement of the efficiency the Pennsylvania way of too. So you use the same crew to run two out of places you were using the run one and it makes for a more efficient operation as well, but I don't see I don't see any problem with the having the capacity to treat all of the the medical waste.
That'd be the mailbag or whether it be the the route based business, but I will tell you that.
Because of the facilities we have.
And the permits that we have it wouldn't be too terribly hard to be able to add additional autoclave. If we needed additional additional capacity, but I think I think we're fine for a while.
Okay, Great and then on the the route based business I think you you talked about a 40% growth of something you thought you could you could do better than but what's sort of your view on the route based growth I guess of organic growth of at this point and are you seeing that that scale benefit as you've got near your footprint in place, where you're seeing the scale benefits.
Accelerating the growth there.
We are and we saw that when we went into the Midwest of about a year ago, we went into the Midwest and we're seeing that as a big part of the contribution of the of the growth that we've seen and we expect to see the significant growth as well from the from the south of us and other regions of we directly directly serve as I'll just say that.
The 40% is great, but we're not happy with it and we think the out of the opportunity to generate a higher much higher revenue organic growth range.
Great. Thank you I'll turn it over.
Thank you. Our next question is from Amit Dayal with H C. Wainwright. Please proceed with your question.
Good morning, guys.
With respect to the strength in the operating margins is this basically coming from better capacity utilization and theirs.
The elevated of these levels.
Should we expect you know these level of margins to continue coming true.
So a couple of things in the dining thats going to show spent some time with you to give you some different.
Gross margin to different revenue levels.
We are of significant.
We are of significant line item of cost of sales of fixed so really it's a variable cost that drive that margin expansion only but the diavik is share with you the different gross margins of different revenue levels. We think we see going forward sure. We if we ignore the impact of the revenue recognition.
Mission that benefited our of our current quarter, we expect gross margins to be at these levels at $20 million revenue level for the quarter. We would expect gross margin of 37% at a 25 million dollar of quarterly revenue level, we would expect gross margin of that 40%.
And out of 30 million dollar of quarterly revenue level, we would expect gross margin of about 42%.
Yeah.
And on the operating margin side.
Your operating costs should remain relatively stable you know given that you have enough capacity right now.
Right right you should see a UCC of flow through of a significant portion of that the additional gross profit to the to the operating income line.
Hum.
In terms of.
The revenue mix longer term David between immunization of drug boost in unused medication is that of target you're shooting for or can you give us a sense of where you might see where the business might be.
In a few years from now.
Relative from relative to contribution from these three segments.
I want it all I want all of them to grow into growth grow significantly and I think the mix will be depending upon which sectors grew.
The most obviously of the mailbox sector is heavily influenced with the immunizations as is going to be strong for.
For quite a while the <unk>.
Route based business should continue to grow at healthy rates and again, we think the unused medication will come back on line.
And the bigger sort of way in the.
In the September quarter so.
I'll take I'll take significant growth from all three of them in a few years down the road, we'll see where we are but there's no. There's no target other than that top line of growing that top line significantly.
And then just looking forward to sort of the June quarter 21.
Should we expect the sequential groups relative to the third quarter given that you know there's still some level of the vaccinations that needs to be completed et cetera.
I don't like talking about quarters, I know you wanted to talk about them.
That's why I was talking about the opportunity more from the nine to 12 months standpoint, we have a huge opportunity in front of us how it all falls in into the quarter I don't know yet I will say that April was strong April was it was a was a busy month.
And it was quite strong so instead of talking about individual quarters, I really look really most of the 912 15 months and.
The significant opportunity how it falls between the two quarters, we'll just have to see.
Stronger than March if you will.
Well you know anything is possible, but we'll just we'll just have to say I am not I am.
Not going to say it is I'm not going to say it.
But I think we're going to see continued strength as a company we consolidated revenue over the next nine to 12 of those.
This last one in terms of sort of your market share gains do you think you are making progress on that front.
You know, especially with either of the growth you see when they're out of this side of it.
Most of the monetization from.
Compared to this time last year do you feel you have.
The stronger market share.
On the amortization side of the business, we have about roughly about 70% of the retail pharmacies and that was the same as what it was last year and that's the same as what it is this year now we do think that we're improving market share in the in the other markets like the route based business and when we grow that's just taking more market share and.
So that's where you'll probably see more market share growth, but with.
But 70% is where we are on the on the retail pharmacy.
That's all the Andres Thank you so much.
Sure.
Thank you. Our next question is from Kevin with Barrington Research. Please proceed with your question.
Hey, good morning, So following up again on the route based business you know obviously around 40% is a healthy growth rate, but we think we can grow it even faster what do you see as the catalyst to potentially growing the business faster.
Just more sales efforts or you.
Geographic expansion or kind of what gets that business growing fast or do you think right well, it's really all of the above its more its more a sales force personnel more marketing and it is it's a geographic expansion of every time, we if we expand geographically and an area that we service directly.
It's an area that we will go after directly.
Versus again sub contracting. So every time, we do that we have the opportunity to.
To grow that business. The other one is just you know closing larger deals as well and as we close larger and larger deals the vast majority of our larger opportunities with prospects and I'll focus on the route based business. So it's really all three of those added out that that we believe will lead to higher growth rates.
Okay got it.
And you've talked about here.
Potentially seeing a growth rebounding in unused medications in the September quarter can you maybe just talk.
Talk a little bit more about what's in the pipeline there.
Giving you some confidence that youre going to start from your rebound.
Sure.
Kevin we talked earlier that one of our large retail pharmacy customers had had adjusted their installation plan to address COVID-19 related response than they expect to get back with their installed them starting in the summer.
We're also seeing increases in line or is processed in the current quarter.
Which those lineup of its process were up 13% over last year and 15% higher than the December quarter. So those are of those are good facts.
We think we installed about 140 net saves during this quarter the third quarter.
And we expect to see the number of installs increased in the September and the December quarters by about 300 units in each quarter and that would that would have an incremental revenue impact of about 400 of $500000 of quarter due to that higher end.
Malaysian activity.
Okay. That's that's some great.
Detail I appreciate that.
And then just the.
Lastly, here you know.
You've talked about your and invest more in.
The sales the sales force and.
How should we think about it kind of of SG&A run rate going forward or is this kind of $4 million plus.
More of what you would expect going forward or what.
How are you thinking about that line.
Yeah.
We talked about there being an increase of.
Of 9% to 12% year.
Year over year, and I think we're still we're still there we may be.
The increases in the head count may bump it up a little bit, but but where we're kind of on target with where we expect it to be but you know Kevin as we see bringing on more sales people. They began working to bring to you and I think we have five and so far of the additional salespeople as we see the that works and sort of accelerating yourselves in the.
The lawnmower.
If we're getting the results from from that but I think this roughly 10% to 12% target is probably probably good for now and if we did anything.
It would be directly related to the fact that we were confident it was going to exponentially increase the revenue growth range exactly.
Okay sure. It makes sense. Thanks, a lot of thanks for taking the questions and congrats on the nice results.
Thanks, Kevin.
Thank you. Our final question is from Brian Butler with Stifel. Please proceed with your question.
Good morning, Thanks for taking my questions.
Good morning.
I'm, sorry, I might have just missed this on the med safe on the liners.
What was the installs for the quarter end.
The yes.
That's great and then the number of met safe installs during the quarter was 141.
And the liners processed in the quarter were 7700.
Some of them.
Can you just kind of remind us just think about what's the size of the med safe market is kind of on a larger go forward basis, I mean, I know what the installs are going to ramp back up but where are we in the site and you know in the progress of this market and kind of what's installed now and how big it could be right.
One of the ways to look at that is.
<unk>.
If you look at just the number of retail pharmacies in the number of say long term care facilities and it's those are two primary too.
The two primary targets, there's at least 100000 facilities between those two and what do we have an metsys deployed right now.
The 6000 of about 6000, so if you think about it from that standpoint your.
Roughly 6% penetrated in the way.
Quite a quite a large market. So we have a lot of runway I will say this about long term care.
The launch of our carriers, where the the DEA rules were originally focused on and long term term care has been a little bit slower to adopt the of course COVID-19 slowed down the the long term care facilities from adopting it as well now we've seen the more opportunities coming our way.
And we're actually getting some help from our new director Pat Malloy, who came on board, who has tremendous contacts and experience of the long term care, we're working with him to help us identify opportunities and to help us to refine our approach to try to drive more minutes safe sales in the long term care of by the way lots of carriers looking.
For cost savings that'd be regulated medical waste or the whole of unused medication side of the house. So we think from the timing standpoint, it could be good as we re approach all of this long term care business. They try to accelerate the growth on the on the med <unk> sales.
Okay. That's helpful and then.
When we think about.
Yeah.
And yet when we think about margins you gave the detail you gave on the gross margin was very helpful and if I were to kind of do the math on that it looks like the incremental gross margin on on new revenue of over 50% comes out is like 52% I think from the math that you gave.
And is that sustainable or is that the right way to look at.
As revenues grow that 50% is is the incremental margin at this point going forward.
I've always said, 45% to 50% of depending upon the mix of the of the business. It was this was a good quarter from a revenue mix standpoint, and it'll be somewhere between that 45 of 50% of maybe closer to 50 than than the 45 of it dependent on the on the mix, but I think the 50% is probably a good.
Measure.
Okay and then when you think it's kind of a side overall just the current infrastructure that you have I know you expand it out obviously the deal with the COVID-19, what what kind of revenue can be supported kind of on the current on the current infrastructure before you have to make more investments.
So you know on the web.
Roughly a third of the capacity on the on.
On the on the on the treatment side on the on the route based business there really isn't any limitations. There because you know you're just add trucks and drivers to the two of the existing infrastructure as far as the mail back business.
We can easily as you saw in this last quarter and with some of the projections that we talked about earlier, we can now easily crank out two plus million of these a year.
Here, we don't really have any restrictions actually I meant to mention earlier, while we have the capacity.
Passed through right now to do about 45 or 50000 of weak here in the June July timeframe will be up to about 60 to 65000 of weak on the on the mailbox side. So yeah, I see us being able to to grow the company much much much larger now if we did have to make investments you know it.
Its adding an additional autoclave, which by the way is about $400000.
Install the trucks and the drivers are in operating expense because of it because we we lease the the.
The trucks and as far as the manufacturing of the mailbox, we have contract manufacturers that use our bolts to make the sharps containers and we have many of them across the country. We could we could add more so we have we have plenty. That's one of the things we assured our customers at the beginning of this COVID-19.
The cause and in some parts of the of the medical waste industry. There was a real shortage in the sharps containers and we reassured and we have as many of you need because we make them ourselves and we're able to delever. So I think it's much much larger before there's really any significant capital expenditure of that that we'd have to make Brian.
Okay. That's helpful and then I am going to switch back to the to the vaccine talk and in the mail backs I guess.
Just want to be clear you talked about $1 6 million, it's kind of the calendar year pace and we did about 500 of little over 500000 in the first quarter.
And when you think about that remaining call it just over a million.
That's the next kind of nine to 12 months is that included that's including the flu the flu.
Demand as well correct right. That's correct because you know the mail back as fungible. It can be used for COVID-19. It can be used for flu that can be used for single shots. It can be used for for for any of them.
Right, there's no way to the.
The kind of pick out which is flu and which is the vaccine Oh no.
No I mean, right now, especially right now with what's going on with the with the with COVID-19. It's just mailbox and that's what we're working on with the.
With the customers and again, we can make a lot more of them and we plan to keep building I won't tell you. This we're not going to stop we're going to keep building and facilitate what we expect to be growth throughout the calendar year, Brian, but we're not going to stop you know we have had additional warehouse of up in Pennsylvania.
And.
My goal is to have par levels of the mailbox, well over 400000, meaning inventory levels that will not go below and at least 400.
400000, and I think this past year was the was.
We would support that.
Without a doubt, but again, if we needed the other warehouse, it's just the warehouse and we leased the warehouses. So it's not a capital expenditure is just some additional operating expenditures that's the beautiful part about this business and expanding it as we are and it's just not of lot of significant capex that we would.
We would have.
Okay, and I know you don't like talking about the quarters, but I'm going to try again, just kind of think about is this I mean, you realize we have to think about the model and how this plays out but the.
I'm guessing from a planning perspective do you have a similar you know the Atlanta and trying to figure out how to be prepared for for delivering the is there any are you or do you think theres any seasonality around the vaccine piece I mean, I guess, what kind of volatility could we see I mean I can just take that one you know the the remaining 1 million or $1 one.
And kind of even it out over whatever period, but is there some volatility that that we should expect or May expect I think you just watch like we do you just watch it and youre going to see when that adolescent vaccines is going to sort of come available I think it's going to be pretty soon and that's the.
The 12 to 16 year old and.
Those kinds of events are very very important as you hear more and more talk about flu and how important it is to get your flu shot and that'll drive it and there's more and more talk about the boosters theres the potential for the boosters in the fall as well. So I think what you have to look at it is you have to look at the the rollout of the of the different vaccines I watch every.
Day, the percentage of the population you know, there's 230 million roughly of.
The of Immunizations AR that we have it's about 90, it's about 93 million people that have received two shots at the $186 million.
Injections and about another 45 is have had one have had one shot so that's 45 million.
That's the 231. So these are the kind of numbers that we watch and I think that everybody should be able to watch as we see these numbers if it slows down the business slows down the picks up.
Then they're not in our business with them will pick up and that millions of sex is an estimate that we made for planning purposes, Brian in the kind of assumptions that we made were again, 74% of the adult maybe 50% of the of the kids, we think the at about 60% to 65% of the easy I mean.
<unk> all of the ones I described will be administered in the retail setting I took that into accounts and then we have about 70% of that market and that I took that into I took that into account as of as well one of the thing about flow.
I got to tell you this retail.
The retail pharmacy has proven to be just a phenomenal spot to be able to get immunization of their efficient and in there.
The run very very very well I think you could get a pick up in the flow in the retail pharmacy market because guess, what they went and got their COVID-19 shot they got it at the retail pharmacy. So I think it's going to bode really well for the.
For the retail pharmacy side, which again is a big part of our a big big part of our business, but it rolls out like it rolls out it falls out like it like it falls out that is why I would like to look at it over the non too.
The 12 month standpoint.
Okay and then one last just quick one from me.
We saw the sale of Curtis day out there have we seen any change in the competitive market for you guys with the kind of that changing of hands or anything else.
No no no change Theres really been no change in the from our Curtis Bay of religion and the.
And the industry standpoint.
Alright, Thank you for taking the questions.
Thanks, Brian.
Thank you ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to David Tusa for closing remarks. Thank you Rob Great day to everyone for participating in our call today, we look forward to follow up we look forward to the the next quarter and it's also a we think of real opportunity too.
So think of all of our employees.
Some of it it has to.
So anyway. Thank you everyone for participating thanks to all of the employees, we look forward to talking to you all soon.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a great day.