Taro Reports Record 2003 Results
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Feb. 17, 2004--
20 Consecutive Years of Record Sales;
6 Consecutive Years of Record Net Income
2003 Highlights
-- Q4 Sales Increase 43% to $88.6 million
-- Q4 Gross Profit Increases 61% to $62.1 million
-- Q4 Net Income Increases 29% to $16.6 million, or $0.56 per
Diluted Share
-- 2003 Sales Increase 49% to $315.5 million
-- 2003 Net Income Increases 37% to $61.2 million, or $2.06 per
Diluted Share
Financial Highlights ($000)*
3 Months Ended 12 Months Ended
December 31, December 31,
-----------------------------------------------------
% %
2003 2002 Change 2003 2002 Change
----------------------------------------------------------------------
Net Sales $88,621 $61,976 +43% $315,458 $211,581 +49%
----------------------------------------------------------------------
Gross Profit $62,060 $38,541 +61% $213,004 $132,113 +61%
----------------------------------------------------------------------
Operating Income
Before R&D $29,963 $23,519 +27% $115,286 $79,632 +45%
----------------------------------------------------------------------
Operating Income $18,901 $15,526 +22% $74,685 $53,259 +40%
----------------------------------------------------------------------
Net Income $16,613 $12,925 +29% $61,155 $44,555 +37%
----------------------------------------------------------------------
EPS (diluted) $0.56 $0.44 $2.06 $1.52
----------------------------------------------------------------------
* Except per share data.
Taro Pharmaceutical Industries Ltd. (NASDAQ: TARO) today reported record fourth quarter and year-end results for 2003, which was Taro's 20th consecutive year of record sales and sixth consecutive year of record net income.
Fourth Quarter 2003 Results
Taro's sales for the fourth quarter increased 43% to $88.6 million, compared with sales of $62.0 million for the fourth quarter of 2002. Gross profit in the fourth quarter of 2003 increased 61% to $62.1 million, or 70% of sales, from $38.5 million, or 62% of sales, in the fourth quarter of 2002. Selling, general and administrative ("SGA") expenses in the fourth quarter of 2003 were $32.1 million, or 36% of sales, compared with $15.0 million, or 24% of sales, in the fourth quarter of 2002. The increase in SGA expenses primarily reflects costs associated with the Company's newly established proprietary products divisions in the U.S., as well as legal costs associated with intellectual property matters.
Operating income before R&D expenses increased to $30.0 million, or 34% of sales, compared with $23.5 million, or 38% of sales, in the fourth quarter of 2002. R&D expenses for the fourth quarter of 2003 were $11.1 million, or 12% of sales, compared with $8.0 million, or 13% of sales, in the fourth quarter of 2002. Operating income for the quarter increased 22% to $18.9 million, or 21% of sales, compared with $15.5 million, or 25% of sales, for the same period in 2002.
Net income for the fourth quarter of 2003 increased 29% to $16.6 million, or $0.56 per diluted share, compared with $12.9 million, or $0.44 per diluted share, for the fourth quarter of 2002.
Full Year 2003 Results
Taro's net sales for the year ended December 31, 2003 increased 49% to $315.5 million, compared with net sales of $211.6 million in 2002.
Gross profit in 2003 increased 61% to $213.0 million, or 68% of sales, compared with $132.1 million, or 62% of sales, in 2002. SGA expenses for the year increased as a percentage of sales to 31%, or $97.7 million, compared with 25%, or $52.5 million, in 2002.
Operating income before R&D expenses in 2003 was $115.3 million, or 37% of sales, compared with $79.6 million, or 38% of sales, in 2002. R&D expenses were $40.6 million, or 13% of sales, compared with $26.4 million, or 12% of sales, in 2002. Operating income in 2003 was $74.7 million, or 24% of sales, compared with $53.3 million, or 25% of sales, in 2002.
Net income for 2003 increased 37% to $61.2 million, or $2.06 per diluted share, compared with net income of $44.6 million, or $1.52 per diluted share, in 2002.
"In 2003, the growth and profitability of Taro's generic business enabled the Company to achieve strong financial performance while establishing and supporting two new proprietary product divisions and continuing to invest in infrastructure and research," said Barrie Levitt, M.D., Chairman of the Company. "Currently, we have 35 filings at the FDA, and we will continue investing in the Company's long-term growth."
Taro Consumer Healthcare Products
During 2003, the ElixSure(R) and Kerasal(R) product lines were launched by Taro Consumer Healthcare Products ("Taro Consumer"), a division of Taro Pharmaceuticals U.S.A., Inc. ("Taro U.S.A."), the Company's U.S. affiliate.
ElixSure Launch
During the second half of 2003, Taro launched its new line of spill-resistant ElixSure products for children. The over-the-counter ElixSure products utilize the patented NonSpil(TM) liquid drug delivery system developed by Taro researchers. ElixSure products for fever/pain, cough and congestion are now available in pharmacies, grocery chains and mass merchandisers across the U.S. ElixSure products pour like liquids but resist spilling. The effective, good-tasting ElixSure formulations are designed to provide rapid relief of symptoms while affording parents increased accuracy and ease of dosing when they administer liquid medicines to children.
The launch is supported by national television and print advertising, as well as by the professional medical representatives of the Company's TaroPharma division.
ElixSure Recognized by Good Housekeeping
Soon after their launch, ElixSure products received the Good Housekeeping Seal. In December 2003, the ElixSure product line received a Good Buy Award from the Good Housekeeping Institute. Of the thousands of new products reviewed by Good Housekeeping, ElixSure is the only healthcare product, and one of only seven products in total, to receive the Good Buy Award at the end of 2003.
"We are satisfied with the progress of Taro's ElixSure products to date," said Dr. Levitt. "The ElixSure line achieved broad nationwide distribution during 2003, and we are adding to the ElixSure product portfolio. We continue to support these products in the marketplace."
ElixSure(R) IB NDA Approved
In January 2004, Taro U.S.A. received approval from the U.S. Food and Drug Administration ("FDA") for its New Drug Application ("NDA") for Children's ElixSure IB (ibuprofen) Oral Suspension, 100mg/5mL. ElixSure IB will be sold over-the-counter ("OTC") for reducing fever and relieving pain in children. Along with its spill resistant characteristics, ElixSure IB is a unique suspension that does not require shaking before administration. This property reduces variability and potential errors in dosing.
Kerasal
Early in 2003, Taro Consumer launched Kerasal ointment, a unique, exfoliating moisturizer for the feet. Kerasal is sold by drug, grocery and mass merchandise chains across the United States and has become a leading product in the footcare category. Taro Consumer is also introducing a cream version of the product, Kerasal(R) AL(TM) cream, which contains an alpha hydroxy acid.
TaroPharma
In January 2003, Taro U.S.A. established its TaroPharma division to promote proprietary products directly to physicians. TaroPharma's professional medical representatives are calling on dermatologists and pediatricians to provide information about prescription products, including Topicort(R) (desoximetasone), a line of high-potency topical corticosteroid products, Ovide(R) (malathion), Taro's topical treatment for head lice, and U-cort(TM), a topical hydrocortisone acetate cream in a urea base. In visits to pediatricians, TaroPharma representatives are also supporting the ElixSure launch.
Balance Sheet
At December 31, 2003, total assets were $616.5 million, compared with $379.8 million at December 31, 2002. Cash and cash equivalents were $159.1 million, compared with $130.7 million at the end of 2002. Total liabilities were $267.4 million, compared with $109.5 million at the end of 2002. Shareholders' equity at December 31, 2003 was $347.4 million, compared with $269.1 million at December 31, 2002.
Total current assets of $383.7 million at year-end 2003 include $120.5 million in accounts receivable - trade, and $84.5 million in inventories, compared with $69.0 million and $42.4 million at December 31, 2002, respectively. The increase in accounts receivable is primarily due to increased sales and the timing of trade payments. The increase in inventories reflects a buildup in anticipation of future sales, preparation for new product launches and fluctuations in foreign exchange rates.
Property, plant and equipment, net, at year-end 2003 increased to $182.3 million, compared with $93.4 million at the end of 2002. The $88.9 million increase primarily reflects the expansion of the Company's facilities.
Total liabilities of $267.4 million at year-end 2003 include long-term liabilities of $156.9 million, compared with $47.1 million at the end of 2002. The increase in long-term liabilities includes proceeds from two debt offerings totaling $110 million that the Company reported in 2003.
Facilities Expansion
During 2003, Taro made significant capital expenditures designed to enable the Company to keep pace with growing demand for its products, enter new markets and broaden its product lines.
In early 2003, Taro acquired a multi-purpose pharmaceutical research and manufacturing facility in Roscrea, Ireland. The facility consists of 124,000 square feet of manufacturing, laboratory, office and warehouse space on a 14-acre campus. Taro is currently renovating the manufacturing areas in preparation for plant qualifications and product certifications.
Through the end of 2002 and early 2003, construction was also completed on two facilities on the Company's campus in Haifa, Israel, a chemical facility for synthesizing active pharmaceutical ingredients and a state-of-the-art pharmaceutical warehouse. A new multi-purpose pharmaceutical manufacturing plant for finished products is under construction and expected to be completed by early 2005. The Company's affiliate in Canada expanded its manufacturing and warehousing operations, including a new production site for ElixSure. In addition, work on the expansion of Taro's research center in Canada continues.
In 2003, the Company opened its first research operations in the U.S. at the headquarters of Taro U.S.A. in Hawthorne, New York. In January 2004, Taro U.S.A. acquired a 315,000-square-foot distribution center in South Brunswick, New Jersey. This facility is expected to begin operations during 2004.
FDA Approvals in 2003
In 2003, Taro U.S.A. received final approvals for several Abbreviated New Drug Applications ("ANDAs") from the FDA. The approvals included ANDAs for ammonium lactate cream, 12%, which is bioequivalent to Bristol-Myers Squibbs' Lac-Hydrin(R) cream; betamethasone dipropionate cream (augmented), 0.05% and betamethasone dipropionate gel (augmented), 0.05%, bioequivalent to Schering-Plough's Diprolene(R) products; etodolac extended-release tablets in 400, 500 and 600 mg strengths, bioequivalent to Wyeth's Lodine(R) XL tablets; and, fluorouracil topical solution in 2% and 5% strengths, bioequivalent to ICN Pharmaceuticals' Efudex(R) topical solutions.
U.S. FDA Filings
Taro currently has 35 filings submitted to the FDA: 34 ANDAs, including tentative approvals for fluconazole tablets and loratadine syrup, plus one NDA for a NonSpil-related product. Twenty of the filings are for topical products and 15 are for oral dosage form products. The ANDAs address markets with annual U.S. sales of more than one billion dollars. In addition, Taro has regulatory filings in Canada, Israel and other countries.
In November 2003, the Company announced that Taro U.S.A. had filed an ANDA with a Hatch-Waxman "Paragraph IV" certification for gabapentin capsules in 100, 300 and 400 mg strengths. These products are intended to be marketed as generic equivalents to Pfizer's Neurontin(R) capsules in the same strengths. In an effort to prevent the FDA from approving this ANDA, Pfizer has filed a patent infringement lawsuit against Taro. Other companies have filed ANDAs for these products and are engaged in similar lawsuits with Pfizer.
Conference Call
The Company will conduct a conference call to discuss fourth quarter and year-end results on Tuesday, February 17, 2004 at 11:00 Eastern Time (8:00 a.m. Pacific Time).
The call will be available live via the Internet by accessing www.taro.com.
Online and telephone replays of the call will be available from approximately 1:00 p.m. on February 17th through February 24, 2004. The online replay can be accessed at www.taro.com. The telephone replay can be heard by dialing 1-800-428-6051 (domestic U.S.) or +973-709-2089 (international) and entering the passcode 332153 when prompted.
Taro 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.
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 are not describing historical facts; events or circumstances the Company "anticipates," "expects," "plans," "intends," or "designs" to happen or exist; consumer, physician or marketplace acceptance of the Company's new or existing products; comments concerning marketing of proprietary products including ElixSure(R) and Kerasal(R) products; the potential benefits of ElixSure products; initiatives undertaken by the Taro Consumer Healthcare Products and TaroPharma divisions; the Company's research and facilities expansion programs; Taro's filings with the FDA; and the Company's growth. Although Taro Pharmaceutical Industries Ltd. believes the expections 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 economic conditions, industry and market conditions, slower than anticipated penetration of new markets, changes in the Company's financial position, regulatory actions and legislative actions in the countries in which Taro operates, future demand and market size for products under development, marketplace acceptance of new or existing products, either generic or proprietary, and other risks detailed from time to time in the Company's SEC reports, including its 2002 Annual Report on Form 20-F. Forward-looking statements speak 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 BALANCE SHEETS
(US dollars in thousands)
DECEMBER 31, DECEMBER 31,
2003 2002
---------------- ----------------
ASSETS
Current Assets:
Cash and Cash Equivalents $159,120 $130,717
Restricted short-term bank deposits 2,518 2,468
Accounts Receivable - Trade 120,522 69,038
Accounts Receivable - Other and
prepaid expenses 17,065 12,453
Inventories 84,486 42,439
----------------------------------- ---------------- ----------------
Total Current Assets 383,711 257,115
Long Term Investments 2,850 1,348
Property, Plant and Equipment, net 182,288 93,358
Deferred Taxes and Other Assets 47,673 28,024
----------------------------------- ---------------- ----------------
TOTAL ASSETS $616,522 $379,845
=================================== ================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-Term Bank Credits $19,122 $2,310
Current Maturities of Long-Term
Liabilities 24,420 7,962
Accounts Payable and Accrued Expenses 60,268 47,972
----------------------------------- ---------------- ----------------
Total Current Liabilities 103,810 58,244
Long-Term Liabilities 156,937 47,127
Deferred Taxes and Other Liabilities 6,667 4,178
----------------------------------- ---------------- ----------------
TOTAL LIABILITIES 267,414 109,549
Minority Interest 1,708 1,159
Shareholders' Equity 347,400 269,137
----------------------------------- ---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $616,522 $379,845
=================================== ================ ================
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
SALES $88,621 $61,976 $315,458 $211,581
Cost of Sales 26,561 23,435 102,454 79,468
------------
Gross Profit 62,060 38,541 213,004 132,113
Operating
Expenses:
Selling and
Administrative 32,097 15,022 97,718 52,481
------------
Operating Income
before Research
and Development 29,963 23,519 115,286 79,632
Research and
Development 11,062 7,993 40,601 26,373
Operating Income 18,901 15,526 74,685 53,259
Financial and
Other (Income)
Expenses-net 561 (264) 1,729 84
------------ ------------
18,340 15,790 72,956 53,175
Taxes on Income 1,730 2,740 11,475 8,406
------------ ------------
16,610 13,050 61,481 44,769
Minority Share in
Profit (Loss) of
Subsidiary (3) 125 326 214
------------ ------------ ------------ ------------
NET INCOME $16,613 $12,925 $61,155 $44,555
============ ============ ============ ============
Earnings per
Ordinary Share $0.57 $0.45 $2.12 $1.55
Diluted Earnings
per Ordinary
Share $0.56 $0.44 $2.06 $1.52
Weighted Average
Number of Shares-
BASIC EPS 28,934,811 28,706,286 28,872,839 28,664,887
DILUTED EPS 29,817,095 29,462,204 29,674,148 29,408,194
CONTACT: Taro Pharmaceutical Industries Ltd.
Vice President, Corporate Affairs
Daniel Saks, 914-345-9000 Ext. 6208
or
Chief Financial Officer
Kevin Connelly, 914-345-9000 Ext. 6338
SOURCE: Taro Pharmaceutical Industries Ltd.