Retractable Technologies Gets it Together

In May, I reported stagnation at Retractable Technologies, a Texas-based safety needle manufacturer. Pointing to a robust balance sheet, I recommended the company makes some moves.

I’d like to think my call to action were responsible for this quarter’s promising results:

  • Retractable reported revenue of $6.5 million in the three months ended June 30, 2008.
  • Unit sales increased 29.9% year-over-year.
  • Domestic revenue increased 12.7% due to increased volumes and higher sales prices.
  • International revenues increased 95.8% due to higher volumes.
  • Domestic sales now make up 80.7% revenues, compared to the 87.9% reported in the same quarter last year.
  • Gross profit increased primarily due to higher sales and lower cost per unit sold. The average cost of manufactured product on a per unit basis decreased by 14.4%.

Historically, there’s been a good amount of fluctuation in Retractable’s earnings. While I wouldn’t put too much faith in any one quarter’s results, this may signal a move towards profitability. Retractable increased revenues while decreasing sales and marketing expenses. According to the company, the decrease was primarily due to lower trade show, travel and “entertainment expense”.

It’s good to see entertainment taking the sidelines at a company that, to date, has excelled at bleeding money garnered in a 2004 lawsuit (Retractable received approximately $65.1 million on a pre-tax basis from the $100 million cash settlement of its federal antitrust lawsuit against Becton Dickinson).

The company’s balance sheet remains strong with cash making up 60.5% of total assets. Working capital was $39.2 million at June 30th, exceeding the company’s current market capitalization of $31.4 million.

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