Never before in its many years in business has Psychemedics Corp. (NASDAQ: PMD) generated the kind of revenue and earnings it has reported for 2Q2016. The company also announced its 80th unbroken dividend streak, with distribution to shareholders being planned for mid-August.
2Q2016 earnings at a glance
Psychemedics Corp. (NASDAQ: PMD) generated revenue of $9.7 million in 2Q2016, which increased 39% over the like quarter last year. Net income for the quarter came in at $1.6 million, translating to EPS of $0.30, which implies a whopping 547% increase over the comparable quarter in 2015.
According to Psychemedics’ CEO, Raymond C. Kubacki, they have never seen such lofty quarterly revenue and EPS figures in the entire history of the company. But Kubacki provided a hint that what happened in 2Q could just be the start of could be a long-tailed growth momentum.
The opportunity in Brazil
Psychemedics Corp. (NASDAQ: PMD)’s operations in Brazil played a major role in driving revenue and earnings in the latest quarter. In case you don’t understand why, Brazil early this year passed a law that requires truck drivers in the country to undergo mandatory hair test for drug abuse. The law is said to affect at least 13 million truck drivers in the country and implementation of the legislation has only begun with some states asking for more time before they roll it out.
As you may already be aware, Psychemedics is in the business of providing hair testing and analysis for abuse of drugs. As such, the law in Brazil that forces the country’s truck drivers to undergo hair test for drug abuse means a massive addressable market for the company. To position itself to grab the opportunity that has arisen in Brazil, Psychemedics is working with an exclusive Brazilian distributor.
The government-mandated hair test for abuse of drug for truck drivers will be taken every 5 years. Trucking companies are the ones required to foot the testing bill, which is $100 per driver. If you look at the numbers of drivers requiring tests at the amounts of payments involved, you see a long-tailed growth cycle for Psychemedics in Brazil.
Dividend payout – Psychemedics Corp. (NASDAQ: PMD)
Psychemedics Corp. (NASDAQ: PMD) has declared a quarterly dividend of $0.15 a share, which will be distributed on August 15 to shareholders of record as of August 5. The latest dividend marks the 80th time the company has paid quarterly dividend without a break.