Net Sales Increases 43%, EPS Increases to $1.41 from $0.80
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Aug. 6, 2012--
Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the
“Company”) today provided unaudited financial results for the three
month period ended June 30, 2012.
As previously announced, the Company changed its fiscal year end from
December 31 to March 31 to align Taro's fiscal reporting and annual
budgeting periods with that of its major shareholder, Sun Pharmaceutical
Industries Ltd. (Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA,
BSE: 524715) (together with its subsidiaries and affiliates, “Sun
Pharma”). As a result, the financial results contained in this release
represent the first quarter of the Company’s new fiscal year ending
March 31, 2013.
Quarter ended June 30, 2012 Highlights - compared to June 30, 2011
-
Net sales of $159.2 million, increased $47.6 million, or 42.6%
-
Gross profit, as a percentage of net sales was 71.7%, compared to 60.1%
-
Research and development expenses increased 47.6% to $11.5 million
-
Selling, marketing, general and administrative expenses decreased $1.5
million, and as a percentage of net sales decreased to 14.8%, compared
to 22.5%
-
Operating income increased to $79.0 million, or 49.6% of net sales,
compared to $34.2 million, or 30.6% of net sales; a $44.8 million or
131.2% increase
-
Income tax increased $21.2 million from a $4.7 million benefit to an
expense of $16.5 million
-
Net income attributable to Taro was $62.9 million compared to $35.7
million, a $27.2 million increase, resulting in diluted earnings per
share of $1.41 compared to $0.80.
Cash Flow and Balance Sheet Highlights
-
Cash flow provided by operations was $19.2 million compared to $33.3
million, primarily due to the payment of income taxes as reflected in
the significant decrease in trade and other payables
-
Cash, including marketable securities, increased $18.3 million to
$352.6 million from March 31, 2012.
Mr. Kal Sundaram, Taro’s Chairman stated, “We are pleased to present
this quarter’s results to Taro’s shareholders, reflecting a good
performance despite the prevailing economic uncertainties in our major
markets. We are also pleased to note the increased R&D spend which is
essential to keep us competitive in the long-term. However, we remain
cautious of the increasing competition and consequential erosion of
volume on some of our major products and the challenge in maintaining
current performance.”
FDA Approvals and Filings
The Company recently received two approvals from the U.S. Food and Drug
Administration (“FDA”) for its Abbreviated New Drug Applications
(“ANDAs”) for Clobetasol Propionate Lotion, 0.05% and Escitalopram
Oxalate Oral Solution, 5mg (base)/5mL. During the quarter, the Company
filed one ANDA and one New Drug Application (“NDA”) with the FDA. With
this, ANDAs representing fifteen products as well as two NDAs await FDA
approval.
Taro Special Committee Rejects Proposal from
Sun Pharma
On July 19, 2012, the Company announced that the Special Committee of
its Board of Directors unanimously rejected the October 18, 2011
unsolicited, non-binding offer from Sun Pharma to purchase all of the
issued and outstanding shares of Taro not currently held by Sun Pharma
for $24.50 per share as inadequate and not in the best interests of
Taro’s minority shareholders.
Form 20-F Filings with the SEC
During the quarter, the Company filed a Transition Report on Form 20-F,
with unaudited results, with the U.S. Securities and Exchange Commission
(“SEC”) to cover the transition period from January 1, 2012 to March 31,
2012, that resulted from the change in the Company’s fiscal year.
The Company cautions that the foregoing financial information is
presented on an unaudited basis and is subject to change.
About Taro
Taro Pharmaceutical Industries Ltd. is a multinational, science-based
pharmaceutical company, dedicated to meeting the needs of its customers
through the discovery, development, manufacturing and marketing of the
highest quality healthcare products. For further information on Taro
Pharmaceutical Industries Ltd., please visit the Company’s website at www.taro.com.
SAFE HARBOR STATEMENT
The unaudited consolidated financial statements have been prepared on
the same basis as the annual consolidated financial statements and, in
the opinion of management, reflect all adjustments necessary to present
fairly the financial condition and results of operations of the Company.
The unaudited consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial statements
included in the Company’s Annual Report on Form 20-F, as filed with the
SEC.
Certain statements in this release are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to,
statements that do not describe historical facts and statements that
refer or relate to events or circumstances the Company “estimates,”
“believes,” or “expects” to happen or similar language, and statements
with respect to the Company’s financial performance, availability of
financial information, and estimates of financial results and financial
information for 2012. Although the Company believes the
expectations reflected in such forward-looking statements to be based on
reasonable assumptions, it can give no assurances that its expectations
will be attained. Factors that could cause actual results to
differ include actions of the Company's lenders and creditors, general
domestic and international economic conditions, industry and market
conditions, changes in the Company's financial position, litigation
brought by any party in any court in Israel, the United States, or any
country in which Taro operates, regulatory and legislative actions in
the countries in which Taro operates, and other risks detailed from time
to time in the Company's SEC reports, including its Annual Reports on
Form 20-F. Forward-looking statements are applicable only as of the date
on which they are made. The Company undertakes no obligations to
update, change or revise any forward-looking statement, whether as a
result of new information, additional or subsequent developments or
otherwise.
|
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. dollars in thousands, except share data)
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Sales, net
|
|
$159,152
|
|
$111,584
|
|
|
Cost of sales
|
|
45,056
|
|
44,524
|
|
|
Gross Profit
|
|
114,096
|
|
67,060
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
Research and development, net
|
|
11,525
|
|
7,807
|
|
|
Selling, marketing, general and administrative
|
|
23,584
|
|
25,092
|
|
|
Operating Income
|
|
78,987
|
|
34,161
|
|
|
|
|
|
|
|
|
|
Financial Expenses, net:
|
|
|
|
|
|
|
Interest and other financial expense
|
|
390
|
|
624
|
|
|
Foreign exchange (income) expense
|
|
(708)
|
|
2,431
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
365
|
|
752
|
|
|
Income before income taxes
|
|
79,670
|
|
31,858
|
|
|
Tax expense (benefit)
|
|
16,510
|
|
(4,719)
|
|
|
Income from continuing operations
|
|
63,160
|
|
36,577
|
|
|
Net income (loss) from discontinued operations(1)
|
|
10
|
|
(249)
|
|
|
Net income
|
|
63,170
|
|
36,328
|
|
|
Net income attributable to non-controlling interest(2)
|
|
259
|
|
639
|
|
|
Net income attributable to Taro
|
|
$ 62,911
|
|
$ 35,689
|
|
|
|
|
|
|
|
|
|
Net income per ordinary share
from continuing operations attributable to Taro:
|
|
|
|
|
|
|
Basic
|
|
$1.41
|
|
$0.81
|
|
|
Diluted
|
|
$1.41
|
|
$0.81
|
|
|
|
|
|
|
|
|
|
Net income (loss) per ordinary share
from discontinued operations attributable to Taro:
|
|
|
|
|
|
|
Basic
|
|
$0.00*
|
|
($0.01)
|
|
|
Diluted
|
|
$0.00*
|
|
($0.01)
|
|
|
|
|
|
|
|
|
|
Net income per ordinary share
attributable to Taro:
|
|
|
|
|
|
|
Basic
|
|
$1.41
|
|
$0.80
|
|
|
Diluted
|
|
$1.41
|
|
$0.80
|
|
|
|
|
|
|
|
|
|
Weighted-average number of ordinary shares used
to compute net income per ordinary share:
|
|
|
|
|
|
|
Basic
|
|
44,542,808
|
|
44,511,229
|
|
|
Diluted
|
|
44,643,181
|
|
44,568,588
|
|
(1) In 2010, the Company closed its Ireland manufacturing facility and
decided to sell the facility and has therefore classified the losses
attributable to its Irish subsidiary as losses from discontinued
operations.
(2) The impact of the Company adopting FASB ASC Section 810-10-65, which
requires the Company to allocate income or loss attributable to a
non-controlling interest based on the respective ownership percentages.
* Amount is less than $0.01.
|
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)
(U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
March 31,
|
|
|
|
2012
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$191,247
|
|
$238,266
|
|
Short-term bank deposits
|
|
151,317
|
|
72,440
|
|
Restricted short-term bank deposits
|
|
6,980
|
|
15,780
|
|
Marketable securities
|
|
3,043
|
|
7,835
|
|
Accounts receivable and other:
|
|
|
|
|
|
Trade, net
|
|
120,239
|
|
111,130
|
|
Other receivables and prepaid expenses
|
|
101,775
|
|
98,501
|
|
Inventories
|
|
104,049
|
|
109,638
|
|
Long-term assets held for sale, net(1)
|
|
66
|
|
71
|
|
TOTAL CURRENT ASSETS
|
|
678,716
|
|
653,661
|
|
|
|
|
|
|
|
Long-term receivables and other assets
|
|
18,672
|
|
19,972
|
|
Property, plant and equipment, net
|
|
147,779
|
|
150,750
|
|
Other assets
|
|
31,018
|
|
32,041
|
|
TOTAL ASSETS
|
|
$876,185
|
|
$856,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$ 10,566
|
|
$ 10,957
|
|
Trade payables and other current liabilities
|
|
147,545
|
|
187,942
|
|
TOTAL CURRENT LIABILITIES
|
|
158,111
|
|
198,899
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
26,947
|
|
27,949
|
|
Deferred taxes and other long-term liabilities
|
|
6,240
|
|
6,618
|
|
TOTAL LIABILITIES
|
|
191,298
|
|
233,466
|
|
|
|
|
|
|
|
Taro shareholders’ equity
|
|
680,678
|
|
619,008
|
|
Non-controlling interest(2)
|
|
4,209
|
|
3,950
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$876,185
|
|
$856,424
|
(1) In 2010, the Company closed its Ireland manufacturing facility and
decided to sell the facility and therefore has classified the related
assets as held for sale.
(2) The impact of the Company adopting FASB ASC Section 810-10-65, which
requires the Company to allocate income or loss attributable to a
non-controlling interest based on the respective ownership percentages.
|
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
2012
|
|
2011
|
|
|
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
$ 63,170
|
|
|
$ 36,328
|
|
|
|
Adjustments required to reconcile net income to net cash
|
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
4,542
|
|
|
4,754
|
|
|
|
Stock-based compensation
|
|
8
|
|
|
38
|
|
|
|
Loss on sale of marketable securities and long-lived assets
|
|
32
|
|
|
-
|
|
|
|
(Decrease) increase in long-term debt due to currency fluctuations
|
|
(1,208
|
)
|
|
1,325
|
|
|
|
Increase in trade receivables
|
|
(9,312
|
)
|
|
(1,199
|
)
|
|
|
Change in derivative instruments, net
|
|
4,921
|
|
|
(332
|
)
|
|
|
Increase in other receivables, prepaid expenses and other assets
|
|
(5,493
|
)
|
|
(6,833
|
)
|
|
|
Decrease (increase) in inventories
|
|
4,898
|
|
|
(4,744
|
)
|
|
|
Foreign exchange effect on intercompany balances
|
|
(1,602
|
)
|
|
1,762
|
|
|
|
(Decrease) increase in trade and other payables and accruals
|
|
(40,748
|
)
|
|
2,250
|
|
|
|
Net cash provided by operating activities
|
|
19,208
|
|
|
33,349
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
Purchase of property plant & equipment, net of related grants
|
|
(1,783
|
)
|
|
(1,353
|
)
|
|
|
Investment in other intangible assets
|
|
(20
|
)
|
|
-
|
|
|
|
Proceeds from long-term deposits and other assets
|
|
18
|
|
|
-
|
|
|
|
Investment in short-term and restricted bank deposits
|
|
(71,129
|
)
|
|
(536
|
)
|
|
|
Proceeds from marketable securities
|
|
4,792
|
|
|
923
|
|
|
|
Net cash used in investing activities
|
|
(68,122
|
)
|
|
(966
|
)
|
|
|
Financing Activities:
|
|
|
|
|
|
|
Proceeds from the issuance of shares, net
|
|
3,804
|
|
|
227
|
|
|
|
Repayments of long-term debt
|
|
(185
|
)
|
|
(12
|
)
|
|
|
Repayments of short-term bank debt, net
|
|
-
|
|
|
(3,874
|
)
|
|
|
Net cash provided by (used in) financing activities
|
|
3,619
|
|
|
(3,659
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
|
|
(1,724
|
)
|
|
107
|
|
|
|
Net (decrease) increase in cash
|
|
(47,019
|
)
|
|
28,831
|
|
|
|
Cash at beginning of period
|
|
238,266
|
|
|
78,872
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$191,247
|
|
|
$107,703
|
|
|
Source: Taro Pharmaceutical Industries Ltd.
Taro Pharmaceutical Industries Ltd.
Michael Kalb
GVP, CFO
914-345-9001
Michael.Kalb@taro.com
William
J. Coote
VP, Treasurer
914-345-9001
William.Coote@taro.com
|