Taro Provides Results for December 31, 2017
Quarter ended
- Net sales of
$155.5 million decreased$64.9 million , the result of continuing increased competition and the challenging pricing environment, particularly in the U.S.; despite an increase in overall volumes. - Gross profit of
$102.9 million decreased$64.4 million , and as a percentage of net sales was 66.2% compared to 75.9%. - Research and development (R&D) expenses of
$17.5 million were down slightly from the comparable quarter. - Selling, marketing, general and administrative expenses (SG&A) increased
$1.5 million to $21.8 million . - Settlements and loss contingencies of
$1.9 million in 2017 related to a payroll tax settlement inIsrael . - Operating income of
$61.8 million decreased$67.3 million and as a percentage of net sales was 39.7% as compared to 58.5%. - Foreign Exchange (FX) income of
$3.7 million decreased$14.8 million from$18.5 million , principally the result of the strength of the Canadian dollar vs. U.S. dollar. - Other income of
$0.6 million decreased$8.4 million , principally due to the sale of Keveyis inDecember 2016 . - Tax expense increased
$33.9 million to $54.4 million resulting in an effective tax rate of 76.6% compared to 12.8%. The tax provision for the current quarter includes a$38.0 million expense for the estimated impact of the re-measurement of the Company's estimated net deferred tax asset atDecember 31, 2017 , as a result of the Tax Cuts and Jobs Act. Excluding the impact from the one-time re-measurement, the Company's tax expense would be approximately$16.4 million and the effective tax rate would be approximately 23.1% for the current quarter. - Net income attributable to Taro was
$18.0 million compared to$139.8 million , resulting in diluted earnings per share of$0.45 compared to$3.42 for the same period last year. Excluding the impact of the aforementioned one-time tax re-measurement, net income attributable to Taro would be$54.8 million , or diluted earnings per share of$1.37 .
Nine Months ended
- Net sales of
$486.7 million decreased$196.3 million , the result of continuing increased competition and the challenging pricing environment; despite an increase in overall volumes. - Gross profit of
$344.6 million decreased$182.8 million and as a percentage of net sales was 70.8% compared to 77.2%. - R&D expenses of
$50.1 million were down slightly from the prior year. - SG&A expenses of
$64.4 million increased$1.0 million . - Operating income of
$228.2 million decreased$185.0 million , and as a percentage of net sales was 46.9% as compared to 60.5%. - Interest and other financial income of
$14.0 million , increased$3.2 million . - FX expense of
$48.5 million in 2017 compared to FX income of$26.0 million in 2016 ─ an unfavorable impact of$74.5 million , principally the result of the strength of the Canadian dollar vs. U.S. dollar. - Other income of
$1.4 million decreased$9.0 million , principally due to the sale of Keveyis inDecember 2016 . - Tax expense decreased
$15.2 million to $71.3 million , however, the effective tax rate increased to 36.5% from 18.8%. Excluding the impact of the one-time tax re-measurement, tax expense would be approximately$33.3 million , a decrease of$53.2 million , and the effective tax rate would be 17.0%. - Net income attributable to Taro was
$124.9 million compared to$373.4 million , resulting in diluted earnings per share of$3.10 compared to$8.99 . Excluding the impact of the one-time tax re-measurement, net income attributable to Taro would be$161.7 million , or diluted earnings per share of$4.01 .
Mr.
Cash Flow and Balance Sheet Highlights
- Cash flow provided by operations for the nine months ended
December 31, 2017 , was$225.8 million compared to$320.5 million for the nine months endedDecember 31, 2016 . - As of
December 31, 2017 , cash, including short-term and long-term bank deposits and marketable securities, increased$148.6 million to $1.6 billion fromMarch 31, 2017 . Cash reflects the$54.9 million impact from the Company’s share repurchases during the current fiscal year.
FDA Approvals and Filings
The Company recently received approval from the
Share Repurchase Program - Returning Capital to Shareholders
On
During the current fiscal year, through
About Taro
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
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 2018. 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
**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, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Sales, net | $ | 155,461 | $ | 220,395 | $ | 486,697 | $ | 682,973 | ||||||||||
Cost of sales | 52,545 | 53,053 | 142,118 | 155,366 | ||||||||||||||
Impairment | — | — | — | 184 | ||||||||||||||
Gross profit | 102,916 | 167,342 | 344,579 | 527,423 | ||||||||||||||
Operating Expenses: | ||||||||||||||||||
Research and development | 17,457 | 18,001 | 50,110 | 50,766 | ||||||||||||||
Selling, marketing, general and administrative | 21,830 | 20,312 | 64,421 | 63,450 | ||||||||||||||
Settlements and loss contingencies | 1,860 | — | 1,860 | — | ||||||||||||||
Operating income | 61,769 | 129,029 | 228,188 | 413,207 | ||||||||||||||
Financial (income) expense, net: | ||||||||||||||||||
Interest and other financial income | (4,962 | ) | (3,961 | ) | (14,040 | ) | (10,814 | ) | ||||||||||
Foreign exchange (income) expense | (3,718 | ) | (18,533 | ) | 48,506 | (25,998 | ) | |||||||||||
Other gain, net | 622 | 9,009 | 1,430 | 10,466 | ||||||||||||||
Income before income taxes | 71,071 | 160,532 | 195,152 | 460,485 | ||||||||||||||
Tax expense | 54,411 | 20,483 | 71,262 | 86,467 | ||||||||||||||
Income from continuing operations | 16,660 | 140,049 | 123,890 | 374,018 | ||||||||||||||
Net loss from discontinued operations attributable to Taro | (47 | ) | (137 | ) | (239 | ) | (314 | ) | ||||||||||
Net income | 16,613 | 139,912 | 123,651 | 373,704 | ||||||||||||||
Net (loss) income attributable to non-controlling interest | (1,359 | ) | 94 | (1,212 | ) | 334 | ||||||||||||
Net income attributable to Taro | $ | 17,972 | $ | 139,818 | $ | 124,863 | $ | 373,370 | ||||||||||
Net income per ordinary share from continuing operations attributable to Taro: | ||||||||||||||||||
Basic and Diluted | $ | 0.45 | $ | 3.42 | $ | 3.10 | $ | 9.00 | ||||||||||
Net loss per ordinary share from discontinued operations attributable to Taro: | ||||||||||||||||||
Basic and Diluted | $ | (0.00 | ) | * | $ | (0.00 | ) | * | $ | (0.00 | ) | * | $ | (0.01 | ) | |||
Net income per ordinary share attributable to Taro: | ||||||||||||||||||
Basic and Diluted | $ | 0.45 | $ | 3.42 | $ | 3.10 | $ | 8.99 | ||||||||||
Weighted-average number of shares used to compute net income per share: | ||||||||||||||||||
Basic and Diluted | 40,079,339 | 40,961,015 | 40,294,226 | 41,541,010 | ||||||||||||||
* 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) | ||||||||
December 31, | March 31, | |||||||
2017 | 2017 | |||||||
ASSETS | (unaudited) | (audited) | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 569,193 | $ | 600,399 | ||||
Short-term and current maturities of long-term bank deposits | 419,324 | 782,813 | ||||||
Marketable securities | 403,261 | 3,548 | ||||||
Accounts receivable and other: | ||||||||
Trade, net | 197,799 | 203,924 | ||||||
Other receivables and prepaid expenses | 168,160 | 266,280 | ||||||
Inventories | 149,186 | 141,045 | ||||||
Long-term assets held for sale, net | — | 1,015 | ||||||
TOTAL CURRENT ASSETS | 1,906,923 | 1,999,024 | ||||||
Long-term deposits and marketable securities | 214,226 | 70,685 | ||||||
Property, plant and equipment, net | 190,468 | 180,085 | ||||||
Deferred income taxes | 79,643 | 10,324 | ||||||
Other assets | 30,629 | 29,635 | ||||||
TOTAL ASSETS | $ | 2,421,889 | $ | 2,289,753 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 23,885 | $ | 16,394 | ||||
Other current liabilities | 189,688 | 193,443 | ||||||
TOTAL CURRENT LIABILITIES | 213,573 | 209,837 | ||||||
Deferred taxes and other long-term liabilities | 4,842 | 6,110 | ||||||
TOTAL LIABILITIES | 218,415 | 215,947 | ||||||
Taro shareholders' equity | 2,198,374 | 2,067,494 | ||||||
Non-controlling interest | 5,100 | 6,312 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,421,889 | $ | 2,289,753 | ||||
TARO PHARMACEUTICAL INDUSTRIES LTD. | ||||||||||
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(Unaudited) | ||||||||||
(U.S. dollars in thousands) | ||||||||||
Nine Months Ended December 31, | ||||||||||
2017 | 2016 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 123,651 | $ | 373,704 | ||||||
Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 12,022 | 11,067 | ||||||||
Impairment for long-lived assets | — | 184 | ||||||||
Realized loss (gain) on sale of marketable securities and long-lived assets | 96 | (8,517 | ) | |||||||
Change in derivative instruments, net | (4,641 | ) | 4,501 | |||||||
Effect of change in exchange rate on inter-company balances and bank deposits | 56,903 | (30,017 | ) | |||||||
Deferred income taxes, net | 61,540 | (13,138 | ) | |||||||
Decrease (increase) in trade receivables, net | 6,704 | (13,411 | ) | |||||||
Increase in inventories, net | (5,261 | ) | (9,120 | ) | ||||||
(Increase) decrease in other receivables, income tax receivable, prepaid expenses and other | (28,957 | ) | 16,744 | |||||||
Increase (decrease) in trade, income tax, accrued expenses, and other payables | 3,513 | (11,542 | ) | |||||||
Loss from marketable securities, net | 225 | — | ||||||||
Net cash provided by operating activities | 225,795 | 320,455 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchase of plant, property & equipment, net | (17,742 | ) | (26,377 | ) | ||||||
(Investment in) proceeds from other intangible assets | (1,608 | ) | 955 | |||||||
Proceeds from short-term bank deposits | 225,895 | 250,854 | ||||||||
Proceeds from (investment in) long-term deposits and other assets | 187,725 | (301,616 | ) | |||||||
(Investment in) proceeds from marketable securities, net | (598,578 | ) | 95 | |||||||
Net cash used in investing activities | (204,308 | ) | (76,089 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Purchase of treasury stock | (54,921 | ) | (269,712 | ) | ||||||
Net cash used in financing activities | (54,921 | ) | (269,712 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 2,228 | (1,765 | ) | |||||||
Decrease in cash and cash equivalents | (31,206 | ) | (27,111 | ) | ||||||
Cash and cash equivalents at beginning of period | 600,399 | 576,757 | ||||||||
Cash and cash equivalents at end of period | $ | 569,193 | $ | 549,646 | ||||||
Cash Paid during the year for: | ||||||||||
Income taxes | $ | 42,592 | $ | 76,772 | ||||||
Non-cash operating transactions: | ||||||||||
Sale of intangible asset | $ | — | $ | 7,500 | ||||||
Non-cash investing transactions: | ||||||||||
Purchase of property, plant and equipment included in accounts payable | $ | 1,390 | $ | 354 | ||||||
Non-cash financing transactions: | ||||||||||
Purchase of treasury stock | $ | 781 | $ | 3,602 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180207006325/en/
Source:
Taro Pharmaceutical Industries Ltd.
Mariano Balaguer, (914) 345-9001
VP, Chief Financial Officer
Mariano.Balaguer@Taro.com
or
William J. Coote, (914) 345-9001
AVP, Business Finance, Treasurer and Investor Relations
William.Coote@Taro.com