Sharps Compliance Corp.

compliance 3Q21 earnings call. At this time, all participants are in a listen-only mode. A 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. I will now turn the conference over to your host, Jennifer Belladeau. Miss Belladeau, you may begin.

Thank you. Good morning, and welcome to the SHARPS Compliance Third Quarter 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. Immediately following their formal remarks, we will take questions from our call participants. As you're aware, 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 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 company with the Securities and Exchange Commission. These can be found at our website or at scc.gov. With that out of the way, let me turn it over to David.

Thanks, Shannon. Good morning, everyone, and thank you for participating in this morning's call. I'm 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 what I'm going to do. I'm going to talk about the business instead of any kind of a scripted presentation. So everyone's seen the March numbers. They're very, very impressive. We're very proud of the numbers and the performance. 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. Again, I think we're just getting started with generating significant revenue growth. It's really quite the contrary. Again, I believe we've got tremendous opportunity in front of us. Let me tell you how I look at the immunization business, whether it's COVID-19 or flu. We're often playing a key part in the rollouts of the COVID-19 vaccines, which is fantastic. We're proud to do it. Of course, we love the revenue associated with that. The way I look at it is we're working right now on the rollout of the adult vaccine. And you've seen the news. You see that we only have about 29% of Americans that are fully immunized. 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 vaccines for adolescents. I think it could happen in the summer. Then we'll be followed with seasonal flu shots. Then I think that there's an opportunity for vaccine for children. Then, as everyone hears, the booster shots for the vaccine to address efficacy and the potential variants. That's a lot of activity, and that's a lot of things that are going on, and we're playing a key role of it. Why I mention the children's and the adolescent vaccine is, 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 if we have any chance of achieving this 70% to 85% rate of immunization. I don't look at the immunization business really for any particular quarter. What I look at it is like over the next three to four quarters. And 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 following year. And on that, you know, it's – It's much more than just 21. I mean, there's going to be a layer of this immunization business that will continue into 2022, 2023, and forward. And the way we think about it is when you consider the devastating impact of COVID-19 on the economy, health care, the emotional toll that, you know, I think we all believe that there's going to be much more proactive work on further vaccine booster development, and addressing COVID and potential additional coronaviruses. So I see the next three to four quarters very, very strong as we participate in all the different vaccines I mentioned, and then some level of that thereafter that will continue. So enough about vaccine. The route-based business, one of my favorite businesses. I really enjoy it. I think it's great that we're into that. I love that business. And it's growing about 40%. But I got to tell you, I'm really not totally happy with that. I think we can do much better than a 40% increase. We're addressing a $1 billion market for small and medium quantity generators. You know, it's excellent. We have direct service in 37 states, 80% of the population. It just seems like yesterday we jumped into this business. And we're very proud of our geographic expansion And now we need to turn the footprint, the larger footprint, into more sales, more revenue, more dollars, and stronger growth. And this business will continue to be a big part of our growth plans and where we're going, and we look for continued strong growth contribution from the route-based business. Unused medication. I'm here in our boardroom, and I'll never forget back in, like, I think it was 2012, 2013, we were designing the MedSafe. here in this room based upon the change in the DEA rules. And, you know, we thought we had a real opportunity to grow this business or develop 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 MedSafe business, the patient dispensed or ultimate user medication disposal. And, you know, it's been slow during the pandemic, but, you know, that's okay. They're understandable. There's a pandemic. So the retail pharmacies are are focused on the vaccines, the immunizations. But what's important is we see, and we're starting to see some of the orders line up, we see the growth rebounding beginning in the September quarter. And get back on the growth tracks 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 what we're doing. Now the financial person in me can't talk about the business without talking about the margins, both gross and operating, and I've talked about operating leverage for a while, but I think if you had any doubts about the operating leverage in 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 is, and I've said this many times, I'm gonna say it again, We're not that typical micro-cap company. We're not the typical small micro-cap struggling with growth, dealing with growing pains. It's just not us. We're a very well professional organization. We plan accordingly. We started in March last year planning for what you see the results of in the March P&L, whether it be whether it be millback inventory, whether it be warehousing, and it's played out quite well for us. But we've got great operations personnel. We have first-class customer service, and we're good at it. We're good at executing, and, you know, it's a tribute to the company and to our employees. And we did all this during a pandemic, which no interruption, no disruption in service, which I think is something we'll really be proud of. So when I look at the business going forward and you look at the outlook, we've got our core businesses. We've got mail-back business, our route-based business, and unused medication. We think we're extremely well-positioned to take advantage of all the growth opportunities in these three lines of business. We're excited about the opportunity, and we hope to generate more quarters like you see in the March quarter where significant revenue growth also coupled with significant operating leverage. With that out of the way, let me turn it over to Diana, and she'll address the financials in more detail.