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Businesswire

Taro Provides Results for December 31, 2019

by businesswireindia.com

Business Wire India

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the three and nine months ended December 31, 2019.

 

Quarter ended December 31, 2019 Highlights ─ compared to December 31, 2018

 
  • Net sales of $147.7 million decreased $28.7 million, primarily the result of competition.
  • Gross profit of $94.1 million (63.7% of net sales compared to 66.6%) decreased $23.4 million.
  • Research and development (R&D) expenses of $15.0 million remained constant.
  • Selling, marketing, general and administrative expenses (SG&A) of $20.9 million decreased $3.0 million.
  • Operating income of $58.2 million (39.4% of net sales compared to 44.8%) decreased $20.7 million.
  • Interest and other financial income of $8.5 million increased slightly.
  • Foreign Exchange (FX) income of $3.3 million decreased $27.4 million principally the result of the commencement of hedging accounting in accordance with ASU No. 2017-12 and the change in our Canadian subsidiary’s functional currency to U.S. dollar.
  • Tax expense of $2.9 million decreased $22.9 million; reflecting the impact from a non-recurring item.
  • Net income attributable to Taro was $67.7 million compared to $93.5 million, a $25.8 million decrease ─ as the decrease in operating income and FX income was partially offset by the decrease in tax expense ─resulting in diluted earnings per share of $1.76 compared to $2.40.
     

Nine Months ended December 31, 2019 Highlights ─ compared to December 31, 2018

 
  • Net sales of $469.8 million decreased $20.1 million.
  • Gross profit of $297.5 million (63.3% of net sales compared to 66.6%) decreased $28.7 million.
  • R&D expenses of $44.0 million increased $1.3 million.
  • SG&A of $64.3 million decreased $2.3 million.
  • Settlements and loss contingencies was a $0.2 million credit, as compared to a $4.0 million credit (the result of a settlement of a patent infringement) in the prior year.
  • Operating income of $189.3 million (40.3% of net sales compared to 45.1%) decreased $31.5 million.
  • Interest and other financial income increased $1.7 million to $27.0 million.
  • FX income of $11.1 million compared to $34.7 million in 2018 ─ an unfavorable impact of $23.6 million – principally the result of the aforementioned commencement of hedging accounting and the change in our Canadian subsidiary’s functional currency to U.S. dollar effective April 1, 2019.
  • Tax expense of $39.6 million decreased $19.5 million; the result of the aforementioned non-recurring item in the quarter.
  • Net income attributable to Taro was $190.0 million compared to $223.3 million, a $33.3 million decrease, resulting in diluted earnings per share of $4.93 compared to $5.71.
     

Cash Flow and Balance Sheet Highlights

 
  • Cash flow provided by operations for the nine months ended December 31, 2019, was $222.0 million compared to $265.1 million for the nine months ended December 31, 2018.
  • As of December 31, 2019, cash and cash equivalents and marketable securities (both short and long-term) increased $176.8 million to $1.5 billion from March 31, 2019. Cash and cash equivalents reflects the impact from the $26.8 million Tender Offer paid in December 2019.
     

Mr. Uday Baldota, Taro’s CEO, stated, “Despite approximately 75% of our products ranking in the top two (2) ─ when measured on market share ─ this quarters’ financial performance reflects, in big measure, the continued challenging market dynamics particularly in the U.S. generic market. Responding to the faith our customers and patients repose in us, we continue to invest in R&D for augmenting our product offering. This, coupled with investments in inorganic strategic opportunities, is aimed toward creating longer term shareholder value.”

 

FDA Approvals and Filings

 

The Company recently received an approval from the U.S. Food and Drug Administration (“FDA”) for one Abbreviated New Drug Application (“ANDA”); Azithromycin for Oral Suspension USP, 200 mg per 5mL. The Company currently has a total of twenty-three ANDAs awaiting FDA approval, including seven tentative approvals.

 

Results of the Tender Offer

 

On December 19, 2019, Taro announced the final results of its modified “Dutch auction” tender offer whereby the Company accepted for payment 280,719 ordinary shares including all “odd lots” properly tendered, at the final purchase price of $91.00 per share, for an aggregate purchase price of approximately $25.5 million (excluding fees and expenses relating to the tender offer).

 

The Company cautions that the foregoing financial information is unaudited and could be 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 2020. 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)

 
  Quarter Ended   Nine Months Ended
  December 31,   December 31,
 

2019

 

2018

 

2019

 

2018

Sales, net

$ 147,683

 

$ 176,381

 

$ 469,829

 

$ 489,972

Cost of sales

53,557

 

58,838

 

172,375

 

163,785

Gross profit

94,126

 

117,543

 

297,454

 

326,187

               
Operating Expenses:              

Research and development

14,996

 

14,726

 

43,978

 

42,726

Selling, marketing, general and administrative

20,932

 

23,883

 

64,302

 

66,650

Settlements and loss contingencies

   

(150)

 

(4,000)

Operating income

58,198

 

78,934

 

189,324

 

220,811

               
Financial income, net:              

Interest and other financial income

(8,531)

 

(8,388)

 

(27,012)

 

(25,302)

Foreign exchange income

(3,287)

 

(30,702)

 

(11,147)

 

(34,706)

Other gain, net

534

 

1,398

 

2,211

 

1,910

Income before income taxes

70,550

 

119,422

 

229,694

 

282,729

Tax expense

2,874

 

25,752

 

39,565

 

59,083

Net income

67,676

 

93,670

 

190,129

 

223,646

Net (loss) income attributable to non-controlling interest

(6)

 

164

 

84

 

303

Net income attributable to Taro

$ 67,682

 

$ 93,506

 

$ 190,045

 

$ 223,343

               
Net income per ordinary share attributable to Taro:              
Basic and Diluted

$ 1.76

 

$ 2.40

 

$ 4.93

 

$ 5.71

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

38,502,440

 

38,938,963

 

38,526,806

 

39,134,563

               
May not foot due to rounding.              

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 
 

December 31,

 

March 31,

 

2019

 

2019

ASSETS (unaudited)   (audited)
CURRENT ASSETS:      
Cash and cash equivalents

$ 509,361

 

$ 567,451

Marketable securities

542,032

 

481,883

Accounts receivable and other:      

Trade, net

227,327

 

237,945

Other receivables and prepaid expenses

21,115

 

47,362

Inventories

157,875

 

148,079

TOTAL CURRENT ASSETS

1,457,710

 

1,482,720

Marketable securities

479,050

 

304,322

Property, plant and equipment, net

206,692

 

206,242

Deferred income taxes

114,193

 

110,974

Other assets

33,318

 

31,068

TOTAL ASSETS

$ 2,290,963

 

$ 2,135,326

       
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Trade payables

$ 37,035

 

$ 35,060

Other current liabilities

177,144

 

181,761

TOTAL CURRENT LIABILITIES

214,179

 

216,821

Deferred taxes and other long-term liabilities

8,180

 

7,383

TOTAL LIABILITIES

222,359

 

224,204

       
Taro shareholders' equity

2,062,934

 

1,905,536

Non-controlling interest

5,670

 

5,586

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 2,290,963

 

$ 2,135,326


TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)
(U.S. dollars in thousands)

 
  Nine Months Ended December 31,
 

2019

 

2018

Cash flows from operating activities:      
Net income

 $            190,129

 

 $            223,646

Adjustments required to reconcile net income to net cash provided by operating activities:      
     Depreciation and amortization

                  16,101

 

                  13,738

     Realized gain on sale of long-lived assets                         —  

                        18

     Change in derivative instruments, net

                  (3,395)

 

                    5,881

     Effect of change in exchange rate on inter-company balances, marketable securities and bank deposits

                 (11,061)

 

                 (49,688)

     Deferred income taxes, net

                  (2,076)

 

                      741

     Decrease (increase) in trade receivables, net

                  10,618

 

                 (18,439)

     Increase in inventories, net

                  (9,796)

 

                  (6,795)

     Decrease in other receivables, income tax receivable, prepaid expenses and other

                  27,407

 

                  86,425

     Increase in trade, income tax, accrued expenses, and other payables

                    5,263

 

                    8,810

     (Income) loss from marketable securities, net

                  (1,182)

 

                      792

Net cash provided by operating activities

               222,008

 

               265,129

       
Cash flows from investing activities:      
     Purchase of plant, property & equipment, net

                 (19,350)

 

                 (19,526)

     Investment in other intangible assets

                  (1,016)

 

                  (2,669)

     Proceeds from short-term bank deposits, net                         —  

                225,503

     Proceeds from long-term deposits and other assets                         —  

                  70,685

    (Investment in) proceeds from marketable securities, net

               (233,393)

 

                  24,742

Net cash (used in) provided by investing activities

             (253,759)

 

               298,735

       
Cash flows from financing activities:      
     Purchase of treasury stock

                 (26,827)

 

                 (72,191)

     Dividends paid                         —  

               (500,000)

Net cash used in financing activities

               (26,827)

 

             (572,191)

       
Effect of exchange rate changes on cash and cash equivalents

                      488

 

                  (1,815)

Decrease in cash and cash equivalents

                 (58,090)

 

                 (10,142)

Cash and cash equivalents at beginning of period

                567,451

 

                576,611

Cash and cash equivalents at end of period

 $            509,361

 

 $            566,469

       
Cash Paid during the year for:       
Income taxes

 $               38,773

 

 $               51,487

Cash Received during the year for:       
Income taxes

 $               24,819

 

 $               78,367

Non-cash investing transactions:      
Purchase of property, plant and equipment included in accounts payable

 $                 1,479

 

 $                 1,544

Non-cash financing transactions:      
Purchase of intangible assets

 $                    750

   $                     —
Purchase of treasury stock  $                     —  

 $                 4,493

Purchase of marketable securities  $                     —  

 $                 1,799

Sale of marketable securities

 $                  (145)

   $                     —

#####

 

 
Source: Businesswire
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