Good morning, ladies and gentlemen, and welcome to the Sharps Compliance First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jen Belodeau. Ma'am, the floor is yours. Thank you. Good morning, and welcome to the Sharps Compliance First Quarter Fiscal 2022 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 sec.gov. With that out of the way, let me turn the call over to David to begin the review. Please go ahead, David. Right. Thank you, Jen. Good morning, everyone, and thank you for participating in the first quarter earnings call. Let's just jump right into it. We'll review the first quarter, and then we're gonna talk about the business outlook as well. First quarter results were in line with our expectations. They did reflect slower immunization revenue for September, for the September quarter versus the preceding sequential quarters. Just to provide some context, the March and the June quarters for immunization business were about $27.9 million in billings, $24.6 million in revenue. In the September quarter, immunization orders were about $1.8 million and generated about $3.1 million of Mailback revenue. Again, consistent with the slower immunizations that were administered in the country for the September quarter. On the route-based business, we had a bit of a tough comp when you looked at the year-over-year. The prior year included increased volumes from the long-term care markets, which were driven by COVID labs and also labs performing COVID-related testing. Additionally, in our first quarter, our haz waste billings were down. There were delayed pickups resulting from industry-wide limited third-party haz waste incineration. Those added up to about $500,000 of a negative headwind. When you take out those three items, the route-based business increased by about 19%. You know, further supporting that is the increase in our customer locations. They increased from the June quarter to the September quarter, from 14.2 to 16 point. I'm sorry, from 14,200 to 16,600, which was a 17% increase in customer locations. We've talked about unused medications for the last couple of quarters, and we said that we thought that we would see a return to growth for unused medication in the September quarter, and we did. It was up 11% year-over-year and up 31% sequentially. We believe we should continue to see growth in the offering over our fiscal year 2022 as retail pharmacies and long-term care refocus on the proper and cost-effective disposal of ultimate user unused medication. I'm sure you saw the announcement about our first acquisition, tuck-in acquisition of Affordable Medical Waste in Indiana. We were very pleased to have closed this deal. It enhances our presence not only in the Midwest, but it significantly improves the route density in our service area. While it's small or smaller, it's perfect. It's, you know, an overlay to our existing service area. The post-synergy EBITDA margins should be much higher than even our consolidated EBITDA margin. We continue to spend a lot of resources working on the acquisitions. The pipeline is quite full, quite active. You know, we can't make any guarantees, but we're hopeful we'll be able to close more deals that'll densify our existing route-based infrastructure, which again, 37 states, 80% of the population. Let's look forward a bit. Let's talk about COVID. Although the landscape, it's been fluid, continues to be fluid, but it's starting to become a little bit more clear, in my opinion. There's a number of developments. We now have boosters approved for about 100 million adults. The experts say that boosters for the remaining Americans could be approved over the next 3-6 months. This morning they were talking about even a fourth shot for the immunocompromised. With respect to boosters, let's just talk about it from a point of reference. We have 191 million Americans that are fully vaccinated. The polling shows that maybe as much as 80%-90% of the Americans would receive a booster. Well, so far only 7% of those 191 million have received the booster. We're hopeful that with more and more adults getting the booster that we can see revenue opportunities. Yesterday, the FDA recommended approval of the Pfizer vaccine for children aged 5-11. This age group represents about 28 million children. By the way, it's a two-shot regimen for the five to 11s, just as it was for the adult vaccine. Considering all of this, we do believe that we do have opportunity for more COVID-related mail back revenue. If we had to guess that we would probably see that over the next 2-3 quarters, maybe the three quarters as all of this rolls out across the country. Let's sum it up. Where are we and where are we going? We have begun the process of enhancing our route-based business, the growth in our route-based business with complementary and strategic tuck-in acquisitions. As I mentioned, the pipeline is active. The pipeline is quite full. We're looking for the opportunity similar to affordable, where we can bring them in, and because of our existing infrastructure, that we can generate some significant post synergy EBITDA margins, and at the same time, improve the route density. COVID. You know, we don't think it's over. I mean, March and June were significant quarters with respect to COVID. September slowed down, but we still think we have a ways to go for the fiscal year 2022 when you consider boosters, vaccines for children, and so on and so forth. We'll see. Again, we do think there's more opportunity there. On the unused medication, it's great that we're seeing a return of the growth in the unused medication year over year and sequentially. What I get really excited about is the fact that I think fiscal year 2022 could be a really good year for unused medication in the long-term care sector. The long-term care sector, as you all heard me say many times, has been focused on COVID and versus a rollout of the MedSafe. We're seeing some re-engagement, and we're hoping our fiscal year 2022 can show some significant unused medication revenue growth in the long-term care market. That's the big picture. Let me turn it over to Diana, and she's gonna address the financials in a bit more detail. Thank you, David. Sharps reported revenue of $13.9 million, an increase of $764,000 or 6%. Customer billings were $12.7 million in the first quarter of fiscal 2022, a decrease of $700,000 or 5%. As David mentioned, sequential revenue and billings for the first quarter are lower than the March and June 2021 quarters due to the anticipated decrease in immunization-related activity. Professional market billings increased 9% to $4.5 million in the first quarter of fiscal 2022 as compared to $4.1 million in the first quarter of 2021. Professional market billings were negatively impacted in the current quarter by, first, about $100,000 decrease in billings for route-based services to lab customers as COVID-19 related volume decreased compared to last year, and over $100,000 lower billings for route-based services to customers for hazardous waste activity that's been delayed until the December 2021 quarter due to nationwide sporadic and temporary moratoriums on accepting hazardous waste streams destined for third-party incineration. Retail market billings grew 6% to $3.9 million in the first quarter of fiscal 2022 as compared to $3.6 million in the same prior year period. Within this retail market, immunization-related orders grew 9% to $1.8 million in the first quarter of fiscal 2022 compared to $1.6 million in the prior year. Pharmaceutical manufacturer market billings decreased $700,000 to $500,000 in the first quarter of fiscal 2022 as compared to $1.2 million in the same prior year period. The timing of inventory bills for patient support programs drove most of the $900,000 decrease in Mailback solution billings for the company. Long-term care billings decreased $500,000 to $800,000 in the first quarter of fiscal 2022 compared to $1.3 million in the prior year period. This is primarily related to heightened volumes of COVID-19 related waste management and ancillary supplies in the prior year, about half of which impacted our route-based business with the remainder impacting other ancillary solutions. Billings for unused medications grew 11% to $2.6 million in the first quarter of the year as compared to $2.4 million in the same prior year period. Sequentially, billings for unused medications, which includes the MedSafe, grew 31% in the first quarter of fiscal 2022 as compared to $2 million in the fourth quarter of fiscal 2021. Related to our MedSafe business, we installed 398 MedSafes during the first quarter, consistent with our forecast going into the quarter. This compares to MedSafe installs of 172 for the June 2021 quarter and 415 for the September 2020 quarter. MedSafe liners processed in the first quarter of 8,600 was up 56% over the prior year, indicating more traffic in retail pharmacies and increased usage in long-term care. Total liners are 92,470 since program inception, and MedSafe unit installs were at 6,521 at September 30th, 2021. Gross margin for the first quarter was 25%, which is down compared to gross margin of 28% in the first quarter of fiscal 2021. Gross margin was negatively impacted in the current quarter by the effect of revenue recognition, where there was a higher proportion of immunization-related Mailbacks returned for treatment with a lower gross margin upon return, compared to immunization-related Mailbacks sold, which generate a higher upfront gross margin. On a normalized basis, excluding the impact of revenue recognition, gross margin would have been 27%. Think of this as a reversal of sorts of a very high gross margins that we saw in the March 2021 quarter, when the number of immunization Mailbacks shipped out really exceeded the Mailbacks returned for the same quarter. Our SG&A increased by about $400,000 or 11% to $4.2 million in the first quarter of fiscal 2022 compared to the same prior year quarter. The increase in SG&A is related primarily to continued investment in sales and marketing and to a $200,000 increase in the accrual of management incentive compensation. We reported an operating loss of $1 million in the first quarter of 2022 compared to an operating loss of $400,000 in the first quarter of 2021. We recorded a net loss of $800,000 or a loss of $0.04 per basic and diluted share this quarter, compared to a net loss of $300,000 or a loss of $0.02 per basic and diluted share in the first quarter of last year. We recorded an EBITDA loss of $400,000 in the first quarter of 2022 compared to EBITDA of $59,000 in the first quarter of last year. In August 2021, we announced that we closed an underwritten secondary offering which generated net proceeds after expenses of about $16.8 million on shares of 2.1 million. Our balance sheet is very strong with $41.2 million of cash as of September 30th, 2021, which is up from $27.8 million at the end of June 2021. The company had working capital of $44.3 million at September 30th, 2021, as compared to $27.9 million of working capital at the end of June 2021. As David mentioned, a strong balance sheet provides us with the opportunity to execute on our broader acquisition strategy as we continue to work our active pipeline of opportunities. With that, I'll turn the call back over to David. Great. Thanks, Diana. Operator, let's go ahead and open it up for the Q&A session, and then we'll just make a couple of closing remarks afterwards. Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Please hold while we poll for questions. Your first question is coming from Gerry Sweeney. Your line is live. Good morning, David and Diana. Thanks for taking the call. Morning. Morning. Hey. David, can you maybe discuss the route-based revenue? I know it was down a little bit, and I think there's some moving parts, you know, with less testing, you know, some probably PPE coming out of long-term care facilities. But you also saw customer locations up, you know, a very healthy 17%. So Right ... just a little bit more detail on that, but also on that growth in customers. Are those customers essentially the, you know, same scope and manner of your existing customers, so they portend to, you know, very good future growth? Right. Sure. We had in previous periods. You all remember, I'm sure, but with the PPE and just increased volumes out of the long-term care, it was quite significant in the prior year quarter. We also do a lot of lab business, and the lab business was high because of the testing. So those collectively were maybe a few $100,000 of the roughly $500,000 in total negative comp. Then the other thing was, you know, we do a lot of Hazardous Waste business. I've spoken before about, you know, when we're picking up the regulated medical waste, we're there. We pick up Hazardous Waste, which is not medical waste, and we pick it up, we aggregate it, and it's either taken to a Hazardous Waste incinerator, or they come pick it up from us. You know, we do $500,000-$600,000 a quarter in that type of business. It's great business, and it's part of our route-based business. Nationwide, there was a reduction in the capacity in the Hazardous Waste. What it did is we had to delay pickups, and that's what generates revenue is when we pick up the Hazardous Waste. You know, less capacity from the big freeze that we had here, down here in the South. We also had just an overall reduction in the incineration capacity. There were shutdowns of incinerators. So it was a number of things that kind of converged at the same time. Now, we're starting to see that freeing back up in the December quarter. So hopefully we'll be able to catch up on those pickups that we didn't make in the September quarter, make them up in December, and hopefully get that part of the business back on track. Those three items were about $0.5 million that caused a negative comp. When you take the effect of those out, we had about a 19% increase in the route-based. Yes, about a 17% increase in customer locations. Sure, the customer locations we picked up are very consistent with our existing small and medium quantity customer base. Got it. Switching gears to unused medication, this was an area we spoke about a couple years ago, and obviously took the back burner with COVID. A lot of sort of white space on the long-term care side of that. What is the opportunity and to move into long-term care, and is that moving to the forefront? Are you starting some discussions or restarting some discussions? How do we look at that, not just fiscal 2022, but maybe even beyond? It definitely is moving to the forefront. We're having many more discussions with the long-term care customers and, which we're very, very pleased with. You know, the focus is now away from COVID back on unused medication. You know, the rule, the change in the DEA rules were originally designed for long-term care. By the way, in long-term care, it's a cost saver. Long-term care is looking to save money, especially with what all that they went through. It's a way for the long-term care facility to aggregate, you know, the patients' unused medications and in a way that is very, very cost effective versus the ways that they would traditionally dispose of the waste generated by those patients. Yes, discussions have reengaged. We're talking with a number of folks, and we're excited. Now, the way I always look at it, whether it be retail pharmacy or long-term care, which is the two main areas for the MedSafe, you know, that's probably close to 100,000 facilities between retail pharmacy and long-term care where the MedSafe could be utilized. What do we have? Dial in, we have 6,500 of the MedSafes deployed. Which probably more than half of those are retail pharmacy. You know, we see a significant opportunity in the ability to further penetrate that market. Again, we're not typically displacing another provider of a collection receptacle. We're selling them something new. We're selling them something that's very cost-effective and something that, you know, we're the leader in, and we see that is proven in the marketplace. We're working on that, and again, we hope to see that contribute to some revenue growth with the unused medication in our long-term care market. Gotcha. Just one quick follow-up on long-term care, or not long-term care, unused medications, and then I'll jump back in queue. Diana, I think you mentioned on the last call a rollout about 400 additional units of MedSafes in, we'll say the September, December quarter, so fiscal one and Q1 and Q2. Is that still on track specifically for December? We expect to see similar installs and revenue levels to compare to the September 2021 activities. Got it. Thank you. I'll jump back in queue. Thank you. Your next question is coming from Kevin Steinke. Your line is live. Hey, good morning. Good morning. How you doing? Pretty good, thanks. So obviously, you got a deal across the finish line here with Affordable Medical Waste, and you know, obviously you characterize that as a tuck-in, but can you maybe just give us a little more color on how that deal came together, how long you've been talking to them, and maybe anything quantitatively or qualitatively in terms of the size of the acquisition, in terms of revenue, and also you know, what if you're pleased with you know, what you're able to reach in terms of a purchase price? Right. Sure. We're more than happy to talk about that. You know, we've been reaching out heavily to the players in the hauling business, the medical waste management business. You know, we got them at the right time. They were. As I've always said, there's a triggering event to want to get them to sell. The seller was at a point where he thought it made sense to sell the business and to get into a different business. It went pretty quick. We moved quickly into a LOI, and I think we closed the deal 30, about 35 days after the LOI. We moved quickly to get this done. You know, it's like $850,000 in revenue. It's about a 2.5x multiple on the revenue. What we were really impressed with was the profitability. It's a highly profitable business, and it's even much more profitable as a tuck-in because, you know, we don't need the drivers or we don't need much in the way of the cost structure. The post-acquisition synergistic EBITDA margin is even quite much higher than what it would be just on the surface. We're pleased. We just need to do a lot more of them. Again, we're spending a lot of time on the road and talking with folks and trying to get more of them in a stage where we can perform some diligence. This one was, although smaller, it was very much ideal for from a tuck-in standpoint. Okay, great. That's helpful. You know, as you continue to expand the route-based footprint both organically and through acquisitions, do you see the need or are you exploring the possibility of adding more internal waste treatment infrastructure? Sure. You know, right now we have our Texas and we have our Pennsylvania facility. We do use some third-party facilities around the country. You know, it would be fantastic to be able to acquire a company that also has treatment, especially treatment in an area where we don't currently have owned treatment. So those are high on our radar of ones that would come with a medical waste treatment facility. We think that's the best way to do it because, you know, to just go out and get a medical waste treatment facility and go through all the approval process and the permitting process, I mean, that's years and years and years versus being able to buy a business that already has it where you have it on day one. Right. Okay. Yeah, that makes sense. Just lastly for me, for now anyway, is just how should we think about just the SG&A expense levels as we move forward here in fiscal 2022? Or, you know, what are you looking for in terms of SG&A expense growth this year? We had an increase this quarter compared to last year. I don't think all of our investments in SG&A have been fully reflected in the first quarter of last year. We said at the beginning, I guess at the end of last quarter, that we expected SG&A to increase somewhere in the single digits for fiscal year 2022, and I think we still believe that. Okay, great. Thank you very much. Thank you. Your next question is coming from Michael Hoffman. Your line is live. Hey, David and Diana. One, David, can you help us with the dollar amount of potential revenue that you would define as the addressable M&A marketplace? The addressable M&A. If you look at our pipeline, our pipeline of opportunity, you know, probably 35, 40 opportunities. The average revenue on them is probably, I don't know, $4 million, maybe $5 million. The one that we completed was obviously on the smaller end. You know, 40 of them times $4 million is probably at least. That's not all of them. That's ones that we have in our pipeline that we initially think would be a really good fit. Okay. Simply put, somewhere between $150 million and $200 million is your pipeline? Right. What's your capacity as a team to buy and integrate? You know, what do you think your capacity, you know, once you hit some momentum? You know, restarting this corporate development thing, it's got a timeline to it. But once it gets going, what's your capacity to absorb? I'm not talking about the balance sheet, I'm talking about the infrastructure of the company. Can you absorb, you know, $2 million or $3 million or $4 million deals a year, or is it revenue deals or is it bigger? What is that? I look at it from an individual opportunity standpoint. You know, we've got this integration down. We did it in four or five years ago with the other acquisitions. With this one, we just brushed off the integration plan that we have in place, and it's quite smooth. You know, these aren't complicated businesses. I mean, if it came to it and we had the opportunity to be able to close deals, then I don't see why we shouldn't be able to close a few a quarter. They're straightforward business. The diligence is straightforward. The well-run ones are pretty easy to not only perform diligence, but to integrate, especially when they're tuck-ins. You're just loading up their customer information, and then those are going onto your existing routes. It's just think of it as just landing larger customer deals and launching, you know, a 500 or a 1,000 location or more customer opportunity. It's really similar to that. Not to simplify it, but it's pretty straightforward. We have it down, and we'd love to do three or four a quarter. Do you think the sellers are of a mind where you could actually get to that pace? Well, that's the question. There has to be a triggering event. You know, if they see it as an opportunity, and if they're really truly interested in selling, then I think we have a shot at it. You know, we were in discussion with one here not too long ago, and I felt really good about it. You know, sometimes the sellers back off and then maybe it's not the right time or maybe I shouldn't be looking at this. We're very active in the marketplace. We're talking with folks. It helped that we announced one, so they see we're really truly deploying capital. You know, it's tough. It's tough to peg, but if they are really truly interested and they're reasonable about the valuations, then we think we can get deals done. Okay. On the Mailback side, if we go back pre-COVID, you know, if I average sort of where you were settling in, it feels like you were kind of on a $8 million a year number with a little bit of growth to it from flu. Right. Now that we've gotten through the wave, and there's a bit of a start of a recovery, and we've got, you know, an incremental related to boosters and kids and young adults, is it another eight? How should we think about that? You could look at it a couple of different ways. It's a really good question. Just a couple of ways to look at it. One way is, you know, if you had the vast majority of the Americans that received the 191 million that received the COVID vaccine, if the vast majority of those receive a booster, then that's half again as much revenue. What do we generate? Like $27 million-$28 million in billings? Yep. If you do the math, if all of them receive the booster, that's another roughly $14 million in revenue. I'm not saying it's gonna happen. That's what I think would be the potential issue whenever everyone received the booster. As far as flu, as I mentioned last time on the last call, in that we think that some of our larger customers, you know, ordered in advance for flu. The March and the June quarters, I think I mentioned maybe as much as $5 million. I think a significant portion of the flu could already be addressed in their inventory levels. You could throw on top of that from a positive standpoint, you know, the children's vaccine. There's 28 million of them, two shots. That could generate some significant revenue as well. I don't know what the exact number is, but I do know that I think that there's going to be more COVID revenue. I think I mentioned or Diana mentioned, just as a point of reference, the month of October was very strong for COVID, for immunization-related billings. Again, it could be flu, it could be COVID. In the month of October, the billings were higher in the entire month of September. Hopefully we'll start to see that come back with the December quarter. That was a lot. That's the way we look at it. That's what we think. Now, after that, if we look even further, maybe the next year, I think it's pretty certain that, you know, on an ongoing basis, that there will be, you know, at least two shots. Right. We've always talked about flu as being eight. You know, maybe it's two eights or maybe a little bit higher than that because more people would be getting whatever the latest COVID shot would be. We still think we have COVID revenue for the rest of the fiscal year, and we still think that there'll be some incremental level of billings for the years afterwards. Okay. Just so I parse everything you just shared with us, I gotta take your fire hose and try and just a little drink it down. I take the eight, subtract five, and then add in some assumption for boosters, kids, and young adults. Right. I'm not 16, but I'm better than eight. Somewhere in between. You're right. It just depends. Yes, I think that's a reasonable way to look at it. October, just to clarify what you said, October was better than September, but did you mean better than the September quarter or better than this month of September? The September quarter. Yeah. Okay. That's what I thought you meant. Okay. Okie doke. Thanks. All right. Thanks, Michael. Thank you. Your next question is coming from Rob Brown. Your line is live. Morning. Just to follow on Michael's question, I think you've said that the Mailback business is sort of running at about a $20 million annualized base. Is that still the run rate, or how is that trending, and what's the current base there? Are you talking about without COVID? Are you talking about just, the core? Yeah, kind of the core without COVID. Let me just look at September. In the September quarter, in September, we had $1.8 million in billings from immunization. Yep. We generated Mailback revenue for the three months ended almost $6 million. You take a couple of million out, that's- 3.5. 3, 4, 3.5, 4 times 4. Maybe just a bit below that, but I don't think that's too far off. Okay, great. Great. Thank you. Maybe just an update on the inventory situation. How much inventory do you think is sort of still out there or how much impact is there to the December quarter with sort of inventory you've already sold that maybe isn't being redone? Well, well, just like I mentioned, I think that there's maybe as much as about $5 million of inventory that's already out there that I think that they'll utilize as part of. Just like I think with the way Michael laid it out made some sense. You may have $5 million of that $8 million traditional COVID that may be serviced with leftover Mailbacks that were ordered for the COVID season. I think that's probably the best way to look at it. Okay, great. Thank you. I'll turn it over. Okay, great. Thank you. There are no further questions in the queue at this time. Oh. -is coming from Michael Hoffman. Your line is live. Yeah, sorry for the quick follow-up. If I took a $500,000 Hit in route-based in September, what's the hit in December? Is there a like hit in December? 'Cause, how do I think about that? We expect to see an increase in the route-based activity in the upcoming December quarter compared to this current September quarter, as well as compared to last year's December quarter, which was $3.5 million. Despite last year's December quarter had COVID rev-related revenue from long-term care and labs of about $300,000. Excluding those headwinds of $300,000, we expect growth in the December quarter to be somewhere between 15%-20%. Got it. The makeup of hazardous waste would be on top of that? It would be within that. Within. She included some of that. We included in there for that, for the additional Great incremental haz waste. Fair enough. EPA is granting 30-day extensions to big Hazardous Waste centers. You know- Yes The Dows and the DuPonts of the world all the way through the middle of next spring. They don't see this incineration capacity issue relieving before then. We're seeing We're seeing it. We're seeing it open up. We're seeing pickups. For the types of waste streams, it's opening up. You know, we're small quantity generators. Okay. Small quantity generators, they're not talking about massive volumes, but we're already seeing the pickups resume. Okay, cool. Thank you. All right. Thanks, Michael. Yep. Thank you. There are no further questions in the queue. Great. Thank you, everyone. We appreciate your continued support of the company. Great Q&A, and we look forward to talking with you on the next call. Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.