HAWTHORNE, N.Y.--(BUSINESS WIRE)--May 17, 2018--
Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the
“Company”) today provided unaudited financial results for the quarter
and year ended March 31, 2018.
Quarter ended March 31, 2018 Highlights ─ compared to March
31, 2017
-
Net sales of $175.2 million decreased $21.2 million, the result of
continuing increased competition and the challenging pricing
environment, particularly in the U.S.; despite an increase in overall
volumes.
-
Gross profit of $118.9 million decreased $24.9 million, and as a
percentage of net sales was 67.9% compared to 73.2%.
-
Research and development (R&D) expenses of $20.3 million increased
slightly from the comparable quarter.
-
Selling, marketing, general and administrative expenses (SG&A)
increased $1.6 million to $23.8 million.
-
Operating income of $74.8 million decreased $26.9 million and as a
percentage of net sales was 42.7% as compared to 51.8%.
-
Interest and other financial income increased $2.2 million to $5.9
million.
-
Foreign Exchange (FX) income of $16.0 million compared to FX expense
of $5.8 million ─ a favorable impact of $21.9 million, principally the
result of the weakening of the Canadian dollar vs. the U.S. dollar.
-
Tax expense decreased $6.6 million to $10.7 million resulting in an
effective tax rate of 11.0% compared to 17.3%.
-
Net income attributable to Taro was $86.3 million compared to $83.0
million, resulting in diluted earnings per share of $2.17 compared to
$2.05 for the same period last year.
Year ended March 31, 2018 Highlights ─ compared to March 31,
2017
-
Net sales of $661.9 million decreased $217.5 million, the result of
continuing increased competition and the challenging pricing
environment; despite an increase in overall volumes.
-
Gross profit of $463.5 million decreased $207.7 million and as a
percentage of net sales was 70.0% compared to 76.3%.
-
R&D expenses of $70.4 million were relatively in line with the prior
year.
-
SG&A expenses of $88.2 million increased $2.5 million.
-
Operating income of $303.0 million decreased $211.9 million, and as a
percentage of net sales was 45.8% as compared to 58.6%.
-
Interest and other financial income increased $5.5 million to $19.9
million.
-
FX expense of $32.5 million compared to FX income of $20.2 million in
2017 ─ an unfavorable impact of $52.6 million, principally the result
of the strength of the Canadian dollar vs. U.S. dollar.
-
Other income of $1.9 million decreased $9.3 million, principally due
to the sale of Keveyis in December 2016.
-
Tax expense decreased $21.8 million to $82.0 million, however, the
effective tax rate increased to 28.0% from 18.5%. During the third
quarter, the Company recorded a $38.0 million expense for the impact
of the re-measurement of the Company's estimated net deferred tax
asset, as a result of the Tax Cuts and Jobs Act. Excluding the impact
from the one-time re-measurement, tax expense would have been $44.0
million with an effective tax rate of 15.0%.
-
Net income attributable to Taro was $211.2 million compared to $456.4
million, resulting in diluted earnings per share of $5.26 compared to
$11.05. Excluding the impact of the one-time tax re-measurement, net
income attributable to Taro would have been $248.0 million, or diluted
earnings per share of $6.18.
Mr. Uday Baldota, Taro’s CEO stated, “Our results reflect the challenges
that the entire U.S. generic industry has faced, and continues to
encounter. While we continue to invest prudently in developing products,
we have a reasonably good pipeline; some of which will come to market
over the next 24 months. We also continue to look at initiatives and
opportunities in areas of our core strengths and potentially some
adjacent areas as well.”
Cash Flow and Balance Sheet Highlights
-
Cash flow provided by operations for the year ended March 31, 2018,
was $323.7 million compared to $437.5 million for the year ended March
31, 2017.
-
As of March 31, 2018, cash, including short-term and long-term bank
deposits and marketable securities, increased $190.8 million to $1.6
billion from March 31, 2017. Cash reflects the $107.0 million impact
from the Company’s share repurchases during the current fiscal year.
FDA Approvals and Filings
The Company recently received approval from the U.S. Food and Drug
Administration (“FDA”) for an Abbreviated New Drug Applications
(“ANDA”): Clobetasol Propionate Spray, 0.05%. The Company currently has
a total of thirty-two ANDAs awaiting FDA approval, including four
tentative approvals. Taro's onychomycosis drug, Novexatin, did not meet
the main goal of the Phase IIb study. The study data is being analyzed
and we are evaluating the next course of action in the program.
Share Repurchase Program - Returning Capital to
Shareholders
On November 23, 2016, the Company announced that its Board of Directors
approved a $250 million share repurchase of ordinary shares. Under this
authorization, repurchases may be made from time to time at the
Company’s discretion, based on ongoing assessments of the capital needs
of the business, the market price of its stock, and general market
conditions. The repurchase authorization enables the Company to purchase
its ordinary shares from time to time through open market purchases,
negotiated transactions or other means, including 10b5-1 trading plans
in accordance with applicable securities laws or other restrictions. On
November 7, 2017, the Board extended the share repurchase program for
one year.
During the year, the Company repurchased 1,085,694 shares at an average
price of $102.52. Through May 1, 2018, in total under the authorization,
the Company has repurchased 1,774,064 shares at an average price of
$102.83; with $67.6 million remaining.
Earnings Call (8:00 am EDT, May 18,
2018)
As previously announced, the Company will host an earnings call at 8:00
am EDT on Friday, May 18, 2018, where senior management will discuss the
Company’s performance and answer questions from participants. This call
will be accessible through an audio dial-in and a web-cast. Audio
conference participants can dial-in on the numbers below:
-
Participant Toll-Free Dial-In Number: +1 (844) 421-0601 ID: 3249428
-
Participant International Dial-In Number: +1 (716) 247-5800 ID: 3249428
-
Web-cast: More details are provided on our website, www.taro.com
To participate in the audio call, please dial the numbers provided above
five to ten minutes ahead of the scheduled start time. The operator will
provide instructions on asking questions before the call. The transcript
of the event will be available on the Company’s website at www.taro.com.
An audio playback will be available for thirteen (13) days following the
call.
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 or 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 information for
fiscal year 2019. 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 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.
**Financial Tables Follow**
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TARO PHARMACEUTICAL INDUSTRIES LTD.
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SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
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(U.S. dollars in thousands, except share data)
|
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Quarter Ended
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Year Ended
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March 31,
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March 31,
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2018
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2017
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2018
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2017
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(unaudited)
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(unaudited)
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(unaudited)
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(audited)
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Sales, net
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$
|
175,216
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|
|
$
|
196,414
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|
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$
|
661,913
|
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|
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$
|
879,387
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|
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Cost of sales
|
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56,287
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|
|
|
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52,494
|
|
|
|
|
198,405
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|
|
|
|
207,860
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|
Impairment
|
|
|
|
—
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|
|
|
92
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|
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—
|
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|
|
276
|
|
|
Gross profit
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118,929
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|
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143,828
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463,508
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|
671,251
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Operating Expenses:
|
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|
|
|
|
|
|
|
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Research and development
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20,308
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|
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19,878
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|
|
|
|
70,418
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|
|
|
|
70,644
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Selling, marketing, general and administrative
|
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|
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23,775
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|
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|
|
22,206
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|
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|
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88,196
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|
|
|
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85,656
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Settlements and loss contingencies
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24
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|
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|
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—
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|
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1,884
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|
|
|
|
—
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|
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Operating income
|
|
|
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74,822
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|
|
|
|
101,744
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|
|
|
|
303,010
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|
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514,951
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|
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Financial (income) expense, net:
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|
|
|
|
|
|
|
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Interest and other financial income
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(5,894
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)
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(3,654
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)
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(19,934
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)
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(14,468
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)
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Foreign exchange (income) expense
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(16,041
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)
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5,830
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|
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32,465
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(20,168
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)
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Other gain, net
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|
458
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|
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|
|
745
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|
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|
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1,889
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|
|
|
|
11,211
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Income before income taxes
|
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|
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97,215
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|
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|
|
100,313
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|
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|
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292,368
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|
|
|
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560,798
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Tax expense
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|
10,691
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|
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17,313
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|
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81,954
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|
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103,780
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Income from continuing operations
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86,524
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|
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83,000
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|
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|
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210,414
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457,018
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|
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Net loss from discontinued operations attributable to Taro
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(96
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)
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(38
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)
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|
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(335
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)
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|
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(352
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)
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Net income
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86,428
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82,962
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|
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210,079
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456,666
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Net income (loss) attributable to non-controlling interest
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|
141
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|
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(23
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)
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|
|
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(1,071
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)
|
|
|
|
310
|
|
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Net income attributable to Taro
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|
$
|
86,287
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|
|
|
$
|
82,985
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|
|
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$
|
211,150
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|
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$
|
456,356
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Net income per ordinary share from continuing
operations
attributable to Taro:
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Basic and Diluted
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$
|
2.17
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$
|
2.05
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|
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$
|
5.27
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$
|
11.06
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|
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Net loss per ordinary share from discontinued operations
attributable
to Taro:
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Basic and Diluted
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$
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(0.00
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)
|
*
|
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$
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(0.00
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)
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*
|
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$
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(0.01
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)
|
|
|
$
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(0.01
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)
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Net income per ordinary share attributable to Taro:
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Basic and Diluted
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$
|
2.17
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$
|
2.05
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|
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$
|
5.26
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$
|
11.05
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Weighted-average number of shares used to compute net
income
per share:
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Basic and Diluted
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39,729,942
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|
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40,566,815
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|
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40,155,087
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41,300,797
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* Amount is less than $0.01
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May not foot due to rounding.
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|
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|
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|
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TARO PHARMACEUTICAL INDUSTRIES LTD.
|
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SUMMARY CONSOLIDATED BALANCE SHEETS
|
|
(U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
ASSETS
|
|
|
(unaudited)
|
|
|
(audited)
|
|
CURRENT ASSETS:
|
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|
|
|
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|
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Cash and cash equivalents
|
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|
$
|
576,611
|
|
|
$
|
600,399
|
|
Short-term and current maturities of long-term bank deposits
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|
296,188
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|
782,813
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|
Marketable securities
|
|
|
|
549,821
|
|
|
|
3,548
|
|
Accounts receivable and other:
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Trade, net
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|
|
206,455
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|
|
|
203,924
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Other receivables and prepaid expenses
|
|
|
|
122,965
|
|
|
|
266,280
|
|
Inventories
|
|
|
|
144,595
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|
|
|
141,045
|
|
Long-term assets held for sale, net
|
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|
|
—
|
|
|
|
1,015
|
|
TOTAL CURRENT ASSETS
|
|
|
|
1,896,635
|
|
|
|
1,999,024
|
|
Long-term deposits and marketable securities
|
|
|
|
225,639
|
|
|
|
70,685
|
|
Property, plant and equipment, net
|
|
|
|
193,727
|
|
|
|
180,085
|
|
Deferred income taxes
|
|
|
|
87,257
|
|
|
|
10,324
|
|
Other assets
|
|
|
|
29,952
|
|
|
|
29,635
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TOTAL ASSETS
|
|
|
$
|
2,433,210
|
|
|
$
|
2,289,753
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
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CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Trade payables
|
|
|
$
|
25,697
|
|
|
$
|
16,394
|
|
Other current liabilities
|
|
|
|
190,059
|
|
|
|
193,443
|
|
TOTAL CURRENT LIABILITIES
|
|
|
|
215,756
|
|
|
|
209,837
|
|
Deferred taxes and other long-term liabilities
|
|
|
|
7,055
|
|
|
|
6,110
|
|
TOTAL LIABILITIES
|
|
|
|
222,811
|
|
|
|
215,947
|
|
|
|
|
|
|
|
|
|
Taro shareholders' equity
|
|
|
|
2,205,158
|
|
|
|
2,067,494
|
|
Non-controlling interest
|
|
|
|
5,241
|
|
|
|
6,312
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
$
|
2,433,210
|
|
|
$
|
2,289,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TARO PHARMACEUTICAL INDUSTRIES LTD.
|
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SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
210,079
|
|
|
|
$
|
456,666
|
|
|
Adjustments required to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
16,496
|
|
|
|
|
14,829
|
|
|
Impairment of long-lived assets
|
|
|
|
—
|
|
|
|
|
276
|
|
|
Realized loss (gain) on sale of marketable securities and long-lived
assets
|
|
|
|
275
|
|
|
|
|
(8,389
|
)
|
|
Change in derivative instruments, net
|
|
|
|
(893
|
)
|
|
|
|
1,434
|
|
|
Effect of change in exchange rate on inter-company balances,
marketable securities and bank deposits
|
|
|
|
34,970
|
|
|
|
|
(21,174
|
)
|
|
Deferred income taxes, net
|
|
|
|
56,007
|
|
|
|
|
73,706
|
|
|
(Increase) decrease in trade receivables, net
|
|
|
|
(2,297
|
)
|
|
|
|
34,413
|
|
|
Increase in inventories, net
|
|
|
|
(1,978
|
)
|
|
|
|
(3,770
|
)
|
|
Decrease (increase) in other receivables, income tax receivable,
prepaid expenses and other
|
|
|
|
12,644
|
|
|
|
|
(75,219
|
)
|
|
Decrease in trade, income tax, accrued expenses, and other payables
|
|
|
|
(936
|
)
|
|
|
|
(35,237
|
)
|
|
Income from marketable securities, net
|
|
|
|
(678
|
)
|
|
|
|
—
|
|
|
Net cash provided by operating activities
|
|
|
|
323,689
|
|
|
|
|
437,535
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of plant, property & equipment
|
|
|
|
(26,886
|
)
|
|
|
|
(35,755
|
)
|
|
Investment in other intangible assets
|
|
|
|
(2,650
|
)
|
|
|
|
(68
|
)
|
|
Proceeds from short-term bank deposits, net
|
|
|
|
161,032
|
|
|
|
|
196,170
|
|
|
Proceeds from (investment in) long-term deposits and other assets
|
|
|
|
396,281
|
|
|
|
|
(286,607
|
)
|
|
Investment in marketable securities, net
|
|
|
|
(770,490
|
)
|
|
|
|
(26
|
)
|
|
Proceeds from the sale of long-lived assets
|
|
|
|
1,075
|
|
|
|
|
8,508
|
|
|
Net cash used in investing activities
|
|
|
|
(241,638
|
)
|
|
|
|
(117,778
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
|
(106,986
|
)
|
|
|
|
(294,897
|
)
|
|
Net cash used in financing activities
|
|
|
|
(106,986
|
)
|
|
|
|
(294,897
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
1,147
|
|
|
|
|
(1,218
|
)
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
|
(23,788
|
)
|
|
|
|
23,642
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
600,399
|
|
|
|
|
576,757
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
576,611
|
|
|
|
$
|
600,399
|
|
|
|
|
|
|
|
|
|
|
Cash Paid during the year for:
|
|
|
|
|
|
|
|
Income taxes
|
|
|
$
|
55,051
|
|
|
|
$
|
99,720
|
|
|
Cash Received during the year for:
|
|
|
|
|
|
|
|
Income taxes
|
|
|
$
|
36,668
|
|
|
|
$
|
1,938
|
|
|
Non-cash investing transactions:
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment included in accounts
payable
|
|
|
$
|
2,281
|
|
|
|
$
|
692
|
|
|
Non-cash financing transactions:
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
$
|
4,348
|
|
|
|
$
|
—
|
|
|
Purchase of marketable securities
|
|
|
$
|
3,491
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180517006437/en/
Source: Taro Pharmaceutical Industries Ltd.
Taro Pharmaceutical Industries Ltd.
Mariano Balaguer, 914-345-9001
VP,
Chief Financial Officer
Mariano.Balaguer@Taro.com
or
William
J. Coote, 914-345-9001
AVP, Business Finance, Treasurer and
Investor Relations
William.Coote@Taro.com
|