Taro Provides Results for Quarter Ended June 2015

By: | Published: August 8, 2015 6:00 AM

Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) provided unaudited financial results for the quarter ended June 30, 2015.

Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) provided unaudited financial results for the quarter ended June 30, 2015.

 

Quarter ended June 30, 2015 Highlights – compared to June 30, 2014

 

  • Net sales of $215 million, reflects an increase of $85 million. Last year’s quarter net sales were negatively impacted by a $79 million provision for price protection (current quarter’s price protection provision was $14 million). On a pro-forma basis, adjusted for the price protection provisions, the net sales increase would have been 10%. Sales volumes declined 10% as the result of an increase in competitor activity in the U.S. market.
  • Gross profit was $172 million as compared to $85 million. Excluding the impact of the aforementioned price adjustments in both periods, the gross profit increase would have been 13% over the same period last year.
  • Research and development (R&D) and Selling, marketing, general and administrative expenses remained relatively flat.
  • Operating income increased $80 million to $134 million, primarily due to the benefits realized from the price adjustments in the prior year. Excluding the non-recurring items, operating income on a comparable basis, would have increased approximately 17%.
  • Net income attributable to Taro was $104 million compared to $46 million, a $58 million increase, resulting in diluted earnings per share of $2.42 compared to $1.08.

Cash Flow and Balance Sheet Highlights

 

  • Cash flow provided by operations was $68 million compared to $36 million for the three months ended June 30, 2014.
  • Cash, including short-term bank deposits and marketable securities, increased $77 million to $998 million from March 31, 2015.

Mr. Kal Sundaram, Taro’s CEO stated, “As we have stated in the past, we remain cautious of the ever-increasing pressure on our business from strong competition and the continuing industry and customer consolidations. We continue our commitment to building a strong, quality pipeline of products through our investment in our R&D efforts which, along with our business development efforts, will help to fuel our medium and long-term growth”.

 

FDA Approvals and Filings

 

The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for the Abbreviated New Drug Applications (“ANDAs”) Desloratadine Oral Solution, 0.5 mg/mL and Loratadine Oral Solution USP, 1 mg/mL (Sugar Free, Bubble Gum Flavor, OTC). The Company has a total of thirty-two ANDAs and one NDA for Orphan indication, awaiting FDA approval.

 

Form 20-F Filings with the SEC

 

On July 1, 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, 2015.

 

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 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 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

 

(Unaudited)

 

(U.S. dollars in thousands, except share data)

Three Months Ended June 30,
20152014
Sales, net$215,278$130,230
Cost of sales43,47444,863
Gross profit171,80485,367
Operating Expenses:
Research and development14,54014,988
Selling, marketing, general and administrative22,89222,386
Settlements and loss contingencies(6,500)
Operating income134,37254,493
Financial Expenses, net:
Interest and other financial income(3,269)(1,568)
Foreign exchange expense4,2005,242
Other income, net352406
Income before income taxes133,79351,225
Tax expense30,0894,903
Income from continuing operations103,70446,322
Net loss from discontinued operations(31)(124)
Net income103,67346,198
Net income attributable to non-controlling interest37100
Net income attributable to Taro$103,636$46,098
Net income per ordinary share from continuing operations attributable to Taro:
Basic$2.42$1.08
Diluted$2.42$1.08
Net loss per ordinary share from discontinued operations attributable to Taro:
Basic$ (0.00)*$ (0.00)*
Diluted$ (0.00)*$ (0.00)*
Net income per ordinary share attributable to Taro:
Basic$2.42$1.08
Diluted$2.42$1.08
Weighted-average number of ordinary shares used to compute net income per ordinary share:
Basic42,833,53342,832,648
Diluted42,833,53342,833,325
*Amount is less than $0.01
TARO PHARMACEUTICAL INDUSTRIES LTD.

 

SUMMARY CONSOLIDATED BALANCE SHEETS

 

(U.S. dollars in thousands)

June 30,

2015

March 31,

2015

(unaudited) (audited)ASSETS              CURRENT ASSETS:      Cash and cash equivalents   $438,998 $481,641Short-term bank deposits    555,122  434,899Restricted short-term bank deposits    –  199Marketable securities    3,425  3,458Accounts Receivable and other:       Trade, net    196,795  222,427 Other receivables and prepaid expenses    257,228  250,911Inventories    119,382  120,272TOTAL CURRENT ASSETS    1,570,950  1,513,807        Long-term receivables    41,419  46,330Property, plant and equipment, net    152,902  153,045Other assets    23,746  24,563TOTAL ASSETS   $1,789,017 $1,737,745                        LIABILITIES AND SHAREHOLDERS’ EQUITY              CURRENT LIABILITIES:      Current maturities of long-term debt   $925 $912Trade payable and other current liabilities    248,079  309,093TOTAL CURRENT LIABILITIES    249,004  310,005        Long -term debt, net of current maturities    4,740  4,976Deferred income taxes and other long-term liabilities    5,260  5,381TOTAL LIABILITIES    259,004  320,362        Taro shareholders’ equity    1,524,312  1,411,720Non-controlling interest    5,701  5,663        TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $1,789,017 $1,737,745

TARO PHARMACEUTICAL INDUSTRIES LTD.

 

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

 

(Unaudited)

 

(U.S. dollars in thousands)

Three Months Ended June 30,
20152014
Operating Activities
Net Income$103,673$46,198
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization3,9133,964
Gain (loss) on sale of marketable securities and long-lived assets48(39)
Increase in long-term debt due to currency fluctuations206
Decrease in trade receivables25,80935,636
Change in derivative instruments, net(5,198)(3,989)
Increase in other receivables, prepaid expenses and other assets(5,785)(42,651)
Decrease (increase) in inventories1,317(8,656)
Foreign exchange effect on intercompany balances1,7165,209
Decrease in trade and other payables and accruals(57,226)(144)
Net cash provided by operating activities68,26735,734
Investing Activities:
Purchase of property plant & equipment(2,393)(6,058)
(Investment in) proceeds from sale of property plant & equipment and other intangible assets(15)78
Investment in long-term deposits and other assets(20,000)(14,708)
(Investment in) proceeds from short-term and bank deposits(92,124)90,078
Investment in marketable securities, net(16)
Net cash (used in) provided by investing activities(114,548)69,390
Financing Activities:
Proceeds from the issuance of shares, net13
Repayments of long-term debt(223)(209)
Net cash used in financing activities(223)(196)
Effect of exchange rate changes3,8612,978
Net (decrease) increase in cash(42,643)107,906
Cash at beginning of period481,641209,967
Cash at end of period$438,998$317,873

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