HAWTHORNE, N.Y.
Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and year ended March 31, 2016.
Quarter ended March 31, 2016 Highlights – compared to March 31, 2015
- Net sales of $265.1 million, increased $20.9 million, or 8.6%, on relatively flat volumes
- Gross profit of $224.2 million increased $24.6 million, as Cost of Goods decreased $3.8 million; and as a percentage of net sales increased to 84.6% as compared to 81.8%
- Research and development expenses decreased 16.4% to $19.9 million
- Selling, marketing, general and administrative expenses remained relatively flat
- Operating income increased $28.2 million to $181.7 million
- Net Income was unfavorably impacted by an $80.0 million fluctuation in foreign exchange (FX) from income of $32.5 million in 2015 to an expense of $47.5 million in 2016, principally the result of the strength of the Canadian dollar vs. U.S. dollar
- Tax expense decreased $13.9 million to $23.0 million resulting in an effective tax rate of 16.6% compared to 19.5%
- Net income attributable to Taro was $115.0 million compared to $152.3 million, resulting in diluted earnings per share of $2.68 compared to $3.56
Year ended March 31, 2016 Highlights – compared to March 31, 2015
- Net sales of $950.8 million, increased $87.8 million, or 10.2%, despite a 5% volume decline
- Gross profit increased $102.4 million to $779.0 million and as a percentage of net sales, was 81.9% compared to 78.4%
- Research and development expenses increased 8.6% to $71.2 million
- Selling, marketing, general and administrative expenses increased $4.7 million to $92.4 million
- Settlements and loss contingencies was a $1.0 million expense compared to a $4.2 million creditin 2015
- Operating income increased $86.8 million to $614.5 million
- FX income decreased $34.6 million to $7.1 million, principally the result of the strength of the Canadian dollar vs. U.S. dollar in the fourth quarter of 2016
- Tax expense remained relatively flat, however the effective tax rate improved to 15.0% from 16.5%
- Net income attributable to Taro was $540.9 million compared to $484.3 million, a $56.7 million increase, resulting in diluted earnings per share of $12.62 compared to $11.31
Cash Flow and Balance Sheet Highlights – compared to March 31, 2015
- Cash, including marketable securities increased to $1.2 billion from $920.2 million
- Cash provided by operations for the period ended March 31, 2016 was $395.1 million, as compared to $406.8 million
- Debt of $5.9 million was paid-off during the year
Mr. Kal Sundaram, Taro’s CEO stated, “Overall, we are pleased with our strong operating performance. Additionally, our 9% year-over-year increase in R&D demonstrates our commitment to growing our pipeline of quality products; further evidenced by ten (10) FDA filings this year. However, we continue to face broader industry challenges in the generic landscape, driven by ever-increasing competition and customer consolidation. Nevertheless, we remain cautiously optimistic about our medium and long-term growth and remain focused on strengthening our R&D pipeline and other initiatives that continue to keep us well positioned in the market.”
FDA Approvals and Filings
The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for four Abbreviated New Drug Application (“ANDA”) Naftifine Hydrochloride Cream USP, 2%, Oxiconazole Nitrate Cream, 1%, Diclofenac Sodium Gel, 2% and Fluocinolone Acetonide Topical Oil, 0.01% (Body Oil and Scalp Oil). For the year ended March 31, 2016, the total number of FDA filings was ten (10). The Company currently has a total of thirty-six ANDAs awaiting FDA approval.
Share Repurchase Program
On March 15, 2016, the Company announced that its Board of Directors approved a $250 million share repurchase of ordinary shares. 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. No time period has been set for the repurchase program, and any such program may be suspended or discontinued at any time. 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. The table below presents the purchase of ordinary shares as of May 24, 2016, which were acquired in accordance with a 10b5-1 program:
| Period |
Total Number of |
Average |
Dollar Value of |
||||||
| March 17, 2016 – March 31, 2016 | 67,339 | $140.30 | |||||||
| April 1, 2016 – May 24, 2016 | 599,504 | $135.76 | |||||||
| TOTAL | 666,843 | $136.22 |
$159,165,488 |
|
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Keveyis
On May 2, 2016, Taro announced it will now make Keveyis™ (dichlorphenamide) available to distributors at no cost for the treatment of primary periodic paralysis. As a result, Taro will cease commercial sales and related promotional activities for Keveyis and bear all costs associated with its manufacture. In the near term, patients will continue to receive the medicine through its specialty pharmacy partner, Diplomat as the Company evaluates the best option for keeping pharmacy dispensing fees to patients as low as possible.
Earnings Call (8:30 am EST, May 27, 2016)
As previously announced, the Company will host an earnings call at 8:30 am EST on Friday, May 27, 2016, 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: 18504447
- Participant International Dial-In Number: +1 (716) 247-5800 ID: 18504447
- 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 fifteen (15) 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 2017. 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.
| TARO PHARMACEUTICAL INDUSTRIES LTD. | ||||||||||||||||
| SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (U.S. dollars in thousands, except share data) | ||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (audited) | |||||||||||||
| Sales, net | $ | 265,073 | $ | 244,180 | $ | 950,751 | $ | 862,944 | ||||||||
| Cost of sales | 40,749 | 44,545 | 169,743 | 186,359 | ||||||||||||
| Impairment | 95 | – | 2,042 | – | ||||||||||||
| Gross profit | 224,229 | 199,635 | 778,966 | 676,585 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | 19,948 | 23,865 | 71,160 | 65,510 | ||||||||||||
| Selling, marketing, general and administrative | 22,561 | 22,229 | 92,365 | 87,644 | ||||||||||||
| Settlements and loss contingencies | – | – | 973 | (4,200 | ) | |||||||||||
| Operating income | 181,720 | 153,541 | 614,468 | 527,631 | ||||||||||||
| Financial (income) expense, net: | ||||||||||||||||
| Interest and other financial income | (2,896 | ) | (3,087 | ) | (12,604 | ) | (9,677 | ) | ||||||||
| Foreign exchange expense (income) | 47,478 | (32,481 | ) | (7,068 | ) | (41,634 | ) | |||||||||
| Other gain, net | 860 | 395 | 2,680 | 2,738 | ||||||||||||
| Income before income taxes | 137,999 | 189,504 | 636,820 | 581,680 | ||||||||||||
| Tax expense | 22,950 | 36,872 | 95,313 | 96,059 | ||||||||||||
| Income from continuing operations | 115,049 | 152,632 | 541,507 | 485,621 | ||||||||||||
| Net loss from discontinued operations attributable to Taro | (34 | ) | (314 | ) | (236 | ) | (787 | ) | ||||||||
| Net income | 115,015 | 152,318 | 541,271 | 484,834 | ||||||||||||
| Net income attributable to non-controlling interest | 65 | 26 | 339 | 577 | ||||||||||||
| Net income attributable to Taro | $ | 114,950 | $ | 152,292 | $ | 540,932 | $ | 484,257 | ||||||||
| Net income per ordinary share from continuing operations attributable to Taro: | ||||||||||||||||
| Basic | $ | 2.68 | $ | 3.56 | $ | 12.63 | $ | 11.32 | ||||||||
| Diluted | $ | 2.68 | $ | 3.56 | $ | 12.63 | $ | 11.32 | ||||||||
| Net loss per ordinary share from discontinued operations attributable to Taro: | ||||||||||||||||
| Basic | $ | (0.00 | ) | * | $ | (0.00 | ) | * | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Diluted | $ | (0.00 | ) | * | $ | (0.00 | ) | * | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Net income per ordinary share attributable to Taro: | ||||||||||||||||
| Basic | $ | 2.68 | $ | 3.56 | $ | 12.62 | $ | 11.31 | ||||||||
| Diluted | $ | 2.68 | $ | 3.56 | $ | 12.62 | $ | 11.31 | ||||||||
| Weighted-average number of shares used to compute net income per share: | ||||||||||||||||
| Basic | 42,828,338 | 42,833,533 | 42,832,241 | 42,833,533 | ||||||||||||
| Diluted | 42,828,338 | 42,833,533 | 42,832,241 | 42,833,750 | ||||||||||||
| * 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) | ||||||||
| March 31, | March 31, | |||||||
|
2016 |
2015 |
|||||||
| ASSETS | (unaudited) | (audited) | ||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 576,757 | $ | 481,641 | ||||
| Short-term and current maturities of long-term bank deposits | 648,297 | 434,899 | ||||||
| Restricted short-term bank deposits | – | 199 | ||||||
| Marketable securities | 3,572 | 3,458 | ||||||
| Accounts receivable and other: | ||||||||
| Trade, net | 238,611 | 222,427 | ||||||
| Other receivables and prepaid expenses | 270,724 | 250,911 | ||||||
| Inventories | 138,553 | 120,272 | ||||||
| Long-term assets held for sale, net | 1,081 | – | ||||||
| TOTAL CURRENT ASSETS | 1,877,595 | 1,513,807 | ||||||
| Long-term bank deposits | 115,173 | 30,175 | ||||||
| Property, plant and equipment, net | 159,459 | 153,045 | ||||||
| Other assets | 35,806 | 40,718 | ||||||
| TOTAL ASSETS | $ | 2,188,033 | $ | 1,737,745 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities of long-term debt | $ | – | $ | 912 | ||||
| Trade payables and other current liabilities | 245,462 | 309,093 | ||||||
