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Taro Provides Results for Quarter Ended June 2014


August 8, 2014 - Hawthorne, N.y., United States

Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) today provided unaudited financial results for the three month period ended June 30, 2014.

 

Quarter ended June 30, 2014 Highlights - compared to June 30, 2013

 
  • Net sales of $130 million, decreased $23 million, on a slight increase in volumes.
    • The net sales decline is due to the impact of net charges taken to meet contractual obligations associated with price adjustments. The charges in the quarter ended June 30, 2014, are more significant than the charges in the quarter ended June 30, 2013; the incremental net impact of such adjustments in the quarter ended June 30, 2014 as compared to the quarter ended June 30, 2013 was approximately $55 million ($79 million in the current quarter vs. $24 million in the same period last year). Excluding the impact of these price adjustments in both periods, net sales growth would have been approximately 18%.
    • The benefits from these price adjustments are expected to commence in the second fiscal quarter.
    • Gross profit of $85 million compared to $107 million in the same period last year. The incremental net impact of the aforementioned adjustments taken in the quarter ended June 30, 2014 as compared to the quarter ended June 30, 2013 was approximately $55 million. Excluding the impact of these price adjustments in both periods, the gross profit increase would have been approximately 25% over the same period last year.
  • Research and development (R&D) expenses increased 23% to $15 million from $12 million. We anticipate the increase in R&D spend to continue throughout the year.
  • Selling, marketing, general and administrative expenses increased $1 million to $22 million,
  • Settlements and loss contingencies was a $7 million credit, the result of a settlement and the reversal of a portion of the associated reserve, related to a certain price reporting litigation,
  • Operating income of $55 million compared to $74 million, a $19 million decrease, principally due to the net charges taken against sales. Excluding the incremental charges taken over the same period last year, operating income, on a comparable basis, would have increased approximately 30%,
  • Net income attributable to Taro was $46 million compared to $59 million, a $13 million decrease, resulting in diluted earnings per share of $1.08 compared to $1.32, due to the impact of the above referenced net charges taken.

Cash Flow and Balance Sheet Highlights

 
  • Cash flow provided by operations was $36 million compared to $64 million for the three months ended June 30, 2013,
  • Cash, including marketable securities, increased $25 million to $657 million from March 31, 2014.

Mr. Kal Sundaram, Taro’s CEO stated, “Our underlying business is stable, with volumes relatively flat from the comparative 2013 quarter. We continue to increase our investment in our research and development, having filed five ANDAs this quarter, with thirty-one total ANDAs awaiting approval with the FDA. Excluding the impact on net sales from the net charges associated with price adjustments, net sales would have increased 18% versus the comparable prior year quarter.”

 

FDA Approvals and Filings

 

The Company recently received approval from the U.S. Food and Drug Administration (“FDA”) for an Abbreviated New Drug Application (“ANDA”) for Fluocinonide Cream USP, 0.1%. During the quarter, the Company filed five ANDAs with the FDA. With this, ANDAs representing thirty-one products await FDA approval.

 

Form 20-F Filings with the SEC

 

On July 3, the Company filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2014.

 

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 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 2015.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**

 
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. dollars in thousands, except share data)
       
     

Three Months Ended

 

   

June 30,

      2014   2013
           
Sales, net     $ 130,230     $ 153,195  
Cost of sales       44,863       46,480  
Gross profit       85,367       106,715  
           
Operating Expenses:          
Research and development       14,988       12,212  
Selling, marketing, general and administrative       22,386       20,953  
Settlement and loss contingencies      

(6,500

)     -  
Operating income       54,493       73,550  
           
Financial Expenses, net:          
Interest and other financial (income) expense      

(1,568

)    

(1,165

)
Foreign exchange expense (income)       5,242      

(993

)
           
Other income, net       406       396  
Income before income taxes       51,225       76,104  
Tax expense       4,903       17,035  
Income from continuing operations       46,322       59,069  
Net loss from discontinued operations      

(124

)    

(123

)
Net income       46,198       58,946  
Net income attributable to non-controlling interest       100       150  
Net income attributable to Taro     $ 46,098     $ 58,796  
           
Net income per ordinary share          
from continuing operations attributable to Taro:          
Basic     $ 1.08     $ 1.32  
Diluted     $ 1.08     $ 1.32  
           
Net loss per ordinary share          
from discontinued operations attributable to Taro:          
Basic    

$(0.00)*

  $(0.00)*
Diluted     $(0.00)*   $(0.00)*
           
Net income per ordinary share          
attributable to Taro:          
Basic     $ 1.08     $ 1.32  
Diluted     $ 1.08     $ 1.32  
           
Weighted-average number of ordinary shares used      
to compute net income per ordinary share:      
Basic       42,832,648       44,770,433  
Diluted       42,833,325       44,774,048  
           

* Amount is less than $0.01.

         
           

TARO PHARMACEUTICAL INDUSTRIES LTD.

 

SUMMARY CONSOLIDATED BALANCE SHEETS

 

(U.S. dollars in thousands)

 
     

June 30,

 

March 31,

      2014   2014
ASSETS     (unaudited)   (audited)
           
CURRENT ASSETS:          
Cash and cash equivalents     $ 317,873   $ 209,967
Short-term bank deposits       335,999     418,946
Restricted short-term bank deposits       231     227
Marketable securities       3,305     3,255
Accounts receivable and other:          
Trade, net       103,526     138,772
Other receivables and prepaid expenses       206,265     162,392
Inventories       127,441     117,639
Long-term assets held for sale, net       72     73
TOTAL CURRENT ASSETS       1,094,712     1,051,271
           
Long-term receivables and other assets       69,207     52,894
Property, plant and equipment, net       154,939     151,416
Other assets       27,914     28,795
TOTAL ASSETS     $ 1,346,772   $ 1,284,376
           
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Current maturities of long-term debt     $ 12,193   $ 11,974
Trade payables and other current liabilities       238,302     241,330
TOTAL CURRENT LIABILITIES       250,495     253,304
           
Long-term debt, net of current maturities       5,665     5,888
Deferred income taxes and other long-term liabilities       4,667     4,591
TOTAL LIABILITIES       260,827     263,783
           
Taro shareholders’ equity       1,080,759     1,015,507
Non-controlling interest       5,186     5,086

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

    $ 1,346,772   $ 1,284,376
           

TARO PHARMACEUTICAL INDUSTRIES LTD.

 

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

 

(Unaudited)

 

(U.S. dollars in thousands)

       
     

Three Months Ended June 30,

 

   

2014

 

2013

Operating Activities

         
Net income     $ 46,198     $ 58,946  
Adjustments required to reconcile net income to net cash          
provided by operating activities:          
Depreciation and amortization       3,964       4,234  
Gain on sale of marketable securities and long-lived assets       (39 )     (112 )
Increase in long-term debt due to currency fluctuations       206       310  
Decrease in trade receivables       35,636       2,881  
Change in derivative instruments, net       (3,989 )     2,969  
Increase in other receivables, prepaid expenses and other assets       (42,651 )     (14,415 )
Increase in inventories       (8,656 )     (4,058 )
Foreign exchange effect on intercompany balances       5,209       (3,856 )
(Decrease) increase in trade and other payables and accruals       (144 )     17,512  
Net cash provided by operating activities       35,734       64,411  
                   
Investing Activities:          
Purchase of property plant & equipment       (6,058 )     (3,898 )
Proceeds from sale of property plant & equipment and intangible assets       78       -  
Investment in long-term deposits and other assets       (14,708 )     -  
Proceeds from (investment in) short-term and restricted bank deposits       90,078       (20,694 )
Proceeds from sale of marketable securities       -       365  
Net cash provided by (used in) investing activities       69,390       (24,227 )
                   
Financing Activities:          
Excess tax benefits from share-based payment arrangements       -       21  
Proceeds from the issuance of shares, net       13       298  
Repayments of long-term debt       (209 )     (197 )
Net cash (used in) provided by financing activities       (196 )     122  
                   
Effect of exchange rate changes       2,978       (4,032 )
Net increase in cash       107,906       36,274  
Cash at beginning of period       209,967       237,284  
                   
Cash at end of period     $ 317,873     $ 273,558  
                   

#####

 

CONTACTS : Taro Pharmaceutical Industries Ltd. Michael Kalb, 914-345-9001 GVP, CFO Michael.Kalb@taro.com or William J. Coote, 914-345-9001 William.Coote@taro.com

Source: Business Wire India

BusinessWireIndia

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