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PS

Pharma-Bio Serv, Inc. (PBSV)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue modestly grew to $2.471M (+$0.091M YoY), with gross margin expanding to 31.1% (from 22.5% YoY), driving near-breakeven net income of $8.5K vs a $(270.7)K loss a year ago; EPS was ~$0.00 vs $(0.012) YoY .
  • Mix shift and a “high margin yielding project” in Europe were the core drivers of margin improvement, while Puerto Rico and U.S. project revenues declined YoY by ~$0.3M and ~$0.2M, respectively .
  • Liquidity remains strong: working capital ≈$12.1M, cash and equivalents $7.31M, and marketable securities $5.13M at quarter-end; the Board declared a $0.075/share special dividend payable around Mar 20, 2025 (record Feb 28, 2025) .
  • No formal guidance or Wall Street consensus estimates were available; management commentary emphasizes focusing on high-margin opportunities and expansion with projects in Europe, Asia, and Latin America as potential catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin inflected to 31.1% (from 22.5% YoY) tied to a high-margin European project; operating loss narrowed to $(92)K with net income essentially breakeven ($8.5K) .
    • Management executed on margin mix: “The results of this second quarter demonstrate our efforts to concentrate on high margin yielding projects” (forward look corroborates strategy) .
    • Cost discipline: SG&A decreased to $0.86M from $0.97M YoY, supporting the operating improvement despite flat revenue .
    • CEO: “With projects underway in Europe, Asia, and Latin America, we are poised for continued expansion…” highlighting proactive demand capture .
  • What Went Wrong

    • Core markets saw YoY revenue pressure: Puerto Rico (−$0.3M) and U.S. (−$0.2M), offset by Europe (+$0.6M) .
    • Customer concentration elevated: three global groups represented 51.4% of revenue in the quarter and 52.4% of A/R at period-end, increasing concentration risk .
    • PRIDCO tax grant extension pending; while assumed in the tax provision, outcome remains uncertain—an adverse outcome could raise the effective tax burden in Puerto Rico .

Financial Results

Quarterly results versus prior quarters (oldest → newest):

MetricQ2 2024Q3 2024Q1 2025
Revenue ($)$2,377,617 $2,418,163 $2,471,333
Gross Profit Margin %26.0% 26.3% 31.1%
Operating Income (Loss) ($)$(313,375) $(381,782) $(92,191)
Net Income (Loss) ($)$(213,817) $(309,194) $8,536
Diluted EPS ($)$(0.009) $(0.014) $0.000

Q1 YoY comparison by segment and gross margin:

SegmentQ1 2024 Revenue ($)Q1 2024 GP Margin %Q1 2025 Revenue ($)Q1 2025 GP Margin %
Puerto Rico$1,390,609 14.3% $1,103,269 17.9%
United States$882,890 34.3% $646,133 34.4%
Europe$64,805 28.5% $721,258 48.2%
Other$41,883 37.1% $673 100.0%
Total$2,380,187 22.5% $2,471,333 31.1%

KPIs and balance sheet highlights (Q1 2025):

KPIQ1 2025
Cash and Equivalents$7,307,123
Marketable Securities$5,127,525
Working Capital≈$12.1M
Dividend Declared$0.075/share; payable ~Mar 20, 2025; record Feb 28, 2025 (reflected as $1,719,918 dividend payable)
Other Income (Quarter)$101,842; includes FX settlement expense ≈$29K
Top Customer ConcentrationThree global groups: 51.4% of revenue; 52.4% of A/R

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY or QuarterlyNone disclosedNone disclosedMaintained: No formal guidance
MarginsFY or QuarterlyNone disclosedNone disclosedMaintained: No formal guidance
OpEx/SG&AFY or QuarterlyNone disclosedNone disclosedMaintained: No formal guidance
Effective Tax / PRIDCO GrantOngoingPrior grant ended Oct 31, 2024Extension requested; assumed similar terms; outcome uncertain Pending regulatory decision
Dividend1Q25Regular prior-year $0.075 (Feb 2024) Special $0.075/share declared Jan 29, 2025; payable ~Mar 20, 2025 Initiated special dividend

Note: The company did not provide quantitative revenue/EPS guidance in reviewed materials .

Earnings Call Themes & Trends

(Company did not furnish an earnings call transcript in our document set; themes drawn from press releases and MD&A.)

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q1 2025)Trend
Project mix and marginsQ2’24 and Q3’24 emphasized margin pressure due to lapse of prior high-margin Europe projects; strategic focus on higher-value work .High-margin Europe project lifts GM to 31.1% (up 8.6 pts YoY) .Improving mix; margin recovery led by Europe.
Geographic mixEurope revenue sharply down in 2024; PR and U.S. declines persisted .Europe rebounded to $721K; PR and U.S. down YoY by ~$0.3M and ~$0.2M .Europe recovery underway; core markets still soft.
Business development/technology investmentsManagement invested in BD resources and tools in 2024 to minimize revenue volatility .CEO highlights expansion with projects in Europe, Asia, Latin America .Continuing emphasis on growth enablement.
Macro/industry environment“Challenging time” for client investments in 2024 ; macro headwinds noted in MD&A .Similar macro risks cited (inflation, industry consolidation, tax changes) .Headwinds persist.
Regulatory/tax (PRIDCO grant)Grant expiration approaching; renegotiation requested .Grant extension requested; assumed in tax provision; uncertainty remains .Pending; a known overhang.
Customer concentrationConcentration elevated (e.g., 38.4% in Q2’24; 37.8% in Q3’24) .Three global groups: 51.4% of revenue; 52.4% of A/R .Increasing concentration risk.
Capital returnsRegular $0.075 dividend paid Feb 2024 .Special $0.075 dividend declared (payable ~Mar 20, 2025) .Shareholder returns sustained.

Management Commentary

  • Strategic posture: “With projects underway in Europe, Asia, and Latin America, we are poised for continued expansion as we drive growth by anticipating client needs and delivering unmatched solutions.” — Victor Sanchez, CEO (Q1 FY2025 press release) .
  • Margin focus: “The results of this second quarter demonstrate our efforts to concentrate on high margin yielding projects.” — Victor Sanchez, CEO (subsequent Q2 FY2025 press release, supportive of ongoing mix strategy) .
  • Industry backdrop and investments: “The industries we serve are going through a challenging time… we have made key investments in technological tools to identify attractive global business opportunities…” — Victor Sanchez, CEO (Q3 FY2024 press release) .
  • Capital returns and outlook: Special dividend underscores financial strength and confidence following a challenging FY2024 — “We believe this dividend underscores our commitment to deliver value to our shareholders and our confidence in our business plan.” — Victor Sanchez, CEO (FY2024 press release) .

Q&A Highlights

  • No earnings call transcript was available in the reviewed company filings; analysis relies on the Q1 FY2025 8-K press release and 10-Q. Management clarified in MD&A that gross margin expansion was “mainly attributable to a high margin yielding project within the European market,” while Puerto Rico and U.S. revenues declined YoY .
  • Other income drivers and FX: Other income of ~$102K primarily reflects interest income, partially offset by ~$29K FX settlement expense on intercompany balances .
  • Tax grant: PRIDCO tax grant extension remains pending; assumed in the tax provision but outcome not guaranteed .

Estimates Context

  • Wall Street (S&P Global) consensus estimates were unavailable for PBSV for Q1 FY2025 (OTCQB micro-cap with limited coverage). The company did not provide formal quantitative guidance in the quarter’s disclosures .

Key Takeaways for Investors

  • Margin recovery is the core story: mix shift (Europe high-margin project) lifted GM to 31.1% and swung net to breakeven; watch sustainability of European pipeline to maintain margins .
  • Core market softness persists: PR and U.S. revenue declines offsetting; a durable recovery needs broader market traction beyond Europe .
  • Elevated customer concentration increases volatility risk (51.4% of revenue concentrated among three global groups; 52.4% of A/R) .
  • Strong liquidity and capital returns provide a cushion (≈$12.1M working capital; special $0.075 dividend), but reinvestment for growth remains a key capital allocation question .
  • Regulatory/tax overhang: PRIDCO grant extension is important—an unfavorable outcome could raise taxes on Puerto Rico operations .
  • Near-term catalyst tracking: evidence of repeat/high-margin European work and stabilization in PR/U.S. could drive further earnings normalization; management commentary and next quarter’s mix will be critical .
  • With no sell-side coverage, price discovery may be event-driven; execution on high-margin projects and capital return actions could move the stock in the absence of consensus anchors .

Appendix: Additional Data Points (YoY Q1 detail)

MetricQ1 2024Q1 2025
Revenue ($)$2,380,187 $2,471,333
Cost of Services ($)$1,844,578 $1,703,224
Gross Profit ($)$535,609 $768,109
Gross Margin %22.5% 31.1%
SG&A ($)$973,909 $860,300
Operating Income (Loss) ($)$(438,300) $(92,191)
Other Income, net ($)$180,529 $101,842
Income (Loss) Before Tax ($)$(257,771) $9,651
Net Income (Loss) ($)$(270,719) $8,536
Diluted EPS ($)$(0.012) $0.000