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Taro Provides Results for September 30, 2015


November 4, 2015 - Hawthorne, N.y., United States

Business Wire India

Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) provided unaudited financial results for the three and six months ended September 30, 2015.

 

Quarter ended September 30, 2015 Highlights - compared to September 30, 2014

 
  • Net sales of $212.1 million, decreased $38.8 million, or 15.5%. This net sales decline is principally due to the impact of net charges taken to meet contractual obligations associated with price adjustments and the changing U.S. market dynamics on certain products. On a pro-forma basis, adjusted for the price protection provision, net sales would have decreased 7.7%
  • Gross profit of $168.8 million decreased $29.3 million; however, as a percentage of net sales, was 79.6% compared to 79.0%. Excluding the impact of the price adjustment and the impact of the $2.0 million impairment charge, the gross profit decrease would have been $8.0 million, or 4.1%
  • Research and development expenses increased $4.9 million to $18.7 million
  • Selling, marketing, general and administrative expenses increased $2.4 million to $24.0 million
  • Operating income decreased $35.3 million to $125.0 million
  • Net Income was favorably impacted by a $28.7 million increase in foreign exchange (FX) income to $34.9 million, principally the result of the strength of the U.S. vs. Canadian dollar
  • Net income attributable to Taro was $133.3 million compared to $143.4 million, resulting in diluted earnings per share of $3.11 compared to $3.35
 

Six Months ended September 30, 2015 Highlights - compared to September 30, 2014

 
  • Net sales of $427.3 million, increased $46.3 million, or 12.1%, despite an 8% volume decline as a result of changing U.S. market dynamics on certain products. On a pro-forma basis, adjusted for the previously mentioned price protection provision, the net sales increase would have been 18.5%
  • Gross profit increased $57.1 million to $340.6 million and as a percentage of net sales, was 79.7% compared to 74.4%. Excluding the impact of the aforementioned price adjustment, and the impact of the $2.0 million impairment charge, the gross profit increase would have been $81.4 million, or 28.7%
  • Research and development expenses increased 15.4% to $33.3 million
  • Selling, marketing, general and administrative expenses increased $2.9 million to $46.9 million
  • Operating income increased $44.6 million to $259.4 million
  • FX income increased $29.8 million to $30.7 million
  • Net income attributable to Taro was $237.0 million compared to $189.5 million, a $47.5 million increase, resulting in diluted earnings per share of $5.54 compared to $4.42
 

Mr. Kal Sundaram, Taro’s CEO stated, “We continue to experience pressure on our business from strong competition and the industry and customer consolidations as evidenced by the decrease in our net sales. However, our margins remain strong as the result of the cost efficiencies and benefits realized as we actively manage and remain disciplined with our spending.” Mr. Sundaram, continued, “The recent approval and launch of Keveyis, the first medicine approved by the FDA for the treatment of primary hyperkalemic and hypokalemic periodic paralysis, demonstrates our continuing commitment to R&D.”

 

Cash Flow and Balance Sheet Highlights

 
  • Cash provided by operations for the period ended September 30, 2015 was $129.3 million, as compared to $96.2 million at September 30, 2014
  • Cash, including marketable securities of $1.1 billion, increased $142.1 million from March 31, 2015
 

FDA Approvals and Filings

 

The Company currently has a thirty-four ANDAs awaiting FDA approval.

 

The Company recently received approval from the U.S. Food and Drug Administration (“FDA”) for a New Drug Application (“NDA”) Keveyis™ (dichlorphenamide) 50 mg Tablets, the first medicine approved by the FDA for the treatment of primary hyperkalemic and hypokalemic periodic paralysis and related variants. Periodic paralysis, which is a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis, is estimated to affect approximately 5,000 people in the United States.

 

Taro Purchases Shares of Zalicus Pharmaceuticals Ltd.

 

On October 1, 2015, Taro entered into a Share Purchase Agreement with EPIRUS Biopharmaceuticals, Inc. (“EPIRUS”) for all of the shares of Zalicus Pharmaceuticals Ltd., and its product candidate Z944 and certain related assets, a novel, oral, T-type calcium channel modulator in development for the treatment of pain. As a result of the sale, Taro paid CAD $5.0 million in cash and a non-interest bearing, limited recourse promissory note in the amount of CAD $5.0 million with a maturity date of July 1, 2017. If Taro elects to repay the Promissory Note in cash and continue development of the Z944 Assets, EPIRUS will also be entitled to additional payments.

 

Earnings Call (8:00 am EST, November 4, 2015)

 

As previously announced, the Company will host an earnings call at 8:00 am EST on Wednesday, November 4, 2015, 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: 63935727
  • Participant International Dial-In Number: +1 (716) 247-5800 ID: 63935727
  • 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 twelve (12) 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 2016.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 risks related to commercializing Keveyis, 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 INCOME
(Unaudited)
(U.S. dollars in thousands, except share data)
         
        Quarter Ended   Six Months Ended
        September 30,   September 30,
       

2015

   

2014

   

2015

   

2014

 
Sales, net       $ 212,058     $ 250,834     $ 427,336     $ 381,064  
Cost of sales         41,354       52,745       84,828       97,608  
Impairment         1,947       -       1,947       -  
Gross profit         168,757       198,089       340,561       283,456  
                     
Operating Expenses:                    
Research and development         18,728       13,828       33,268       28,816  
Selling, marketing, general and administrative         24,046       21,684       46,938       44,070  
Settlements and loss contingencies         1,000       2,300       1,000       (4,200 )
Operating income         124,983       160,277       259,355       214,770  
                     
Financial Expenses, net:                    
Interest and other financial income         (3,401 )     (2,054 )     (6,670 )     (3,622 )
Foreign exchange income         (34,858 )     (6,131 )     (30,658 )     (889 )
Other income, net         758       1,575       1,110       1,981  
Income before income taxes         164,000       170,037       297,793       221,262  
Tax expense         30,443       26,110       60,532       31,013  
Income from continuing operations         133,557       143,927       237,261       190,249  
Net loss from discontinued operations         (70 )     (223 )     (101 )     (347 )
Net income         133,487       143,704       237,160       189,902  
Net income attributable to non-controlling interest         139       319       176       419  
Net income attributable to Taro       $ 133,348     $ 143,385     $ 236,984     $ 189,483  
                     
Net income per ordinary share from continuing operations attributable to Taro:                
Basic       $ 3.11     $ 3.35     $ 5.54     $ 4.43  
Diluted       $ 3.11     $ 3.35     $ 5.54     $ 4.43  
                     
Net loss per ordinary share from discontinued operations attributable to Taro:                
Basic       $ (0.00 ) * $ (0.00 ) * $ (0.00 ) * $ (0.01 )
Diluted       $ (0.00 ) * $ (0.00 ) * $ (0.00 ) * $ (0.01 )
                     
Net income per ordinary share attributable to Taro:                    
Basic       $ 3.11     $ 3.35     $ 5.54     $ 4.42  
Diluted       $ 3.11     $ 3.35     $ 5.54     $ 4.42  
                     

Weighted-average number of shares used to compute net income per share:

               
Basic         42,833,533       42,833,299       42,833,533       42,832,976  
Diluted         42,833,533       42,833,493       42,833,533       42,833,411  
                     
* Amount is less than $0.01                    
May not foot due to rounding.                    
                     
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
             
        September 30,   March 31,
        2015   2015
ASSETS       (unaudited)   (audited)
CURRENT ASSETS:            
Cash and cash equivalents       $ 487,695   $ 481,641
Short-term bank deposits         571,147     434,899
Restricted short-term bank deposits         -     199
Marketable securities         3,482     3,458
Accounts receivable and other:            
Trade, net         247,278     222,427
Other receivables and prepaid expenses         271,900     250,911
Inventories         125,856     120,272
Long-term assets held for sale, net         1,066     -
TOTAL CURRENT ASSETS         1,708,424     1,513,807
Long-term receivables and other assets         21,296     46,330
Property, plant and equipment, net         151,053     153,045
Other assets         20,718     24,563
TOTAL ASSETS       $ 1,901,491   $ 1,737,745
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
CURRENT LIABILITIES:            
Current maturities of long-term debt       $ 940   $ 912
Trade payables and other current liabilities         275,030     309,093
TOTAL CURRENT LIABILITIES         275,970     310,005
Long-term debt, net of current maturities         4,499     4,976
Deferred taxes and other long-term liabilities         5,150     5,381
TOTAL LIABILITIES         285,619     320,362
             
Taro shareholders' equity         1,610,032     1,411,720
Non-controlling interest         5,840     5,663
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 1,901,491   $ 1,737,745
                 
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
             
        Six Months Ended September 30,
        2015   2014
        (unaudited)   (unaudited)
Operating Activities:            
Net income       $ 237,160     $ 189,902  
Adjustments required to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization         7,783       7,986  
Loss (gain) on sale of long-lived assets and marketable securities, net         68       (118 )
Impairment for long-lived assets         1,947       -  
Increase in long-term debt due to currency fluctuations         -       (523 )
Increase in trade receivables, net         (25,414 )     (40,092 )
Change in derivative instruments, net         (5,673 )     2,057  
Increase in other receivables, prepaid expenses and other assets         (20,951 )     (31,641 )
Increase in inventories, net         (7,472 )     (8,613 )
Effect of change in exchange rate on bank and inter-company balances         (29,579 )     (1,524 )
Decrease in trade and other payables and liabilities         (28,545 )     (21,278 )
Net cash provided by operating activities         129,324       96,156  
             
Investing Activities:            
Purchase of plant, property & equipment         (6,730 )     (10,520 )
(Investment in) proceeds from other intangible assets         (123 )     57  
Investment in other assets         -       (31,050 )
Investment in long-term security deposits and other assets         (5,000 )     -  
Investment in short-term bank deposits         (108,551 )     (3,479 )
Proceeds from restricted bank deposits         199       13  
(Investment in) proceeds from the sale of marketable securities         (66 )     41  
Net cash used in investing activities         (120,271 )     (44,938 )
             
Financing Activities:            
Proceeds from issuance of shares, net         -       26  
Repayment of long-term debt         (449 )     (422 )
Net cash used in financing activities         (449 )     (396 )
             
Effect of exchange rate changes         (2,550 )     (2,174 )
Net decrease in cash         6,054       48,648  
Cash at beginning of period         481,641       209,967  
Cash at end of period       $ 487,695     $

Source: Business Wire India

BusinessWireIndia

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