Taro Reports Record Third Quarter and Nine-Month 2002 Results; 27th Consecutive Quarter of Record Sales 17th Consecutive Quarter of Record Net Income
3rd Quarter 2002 Highlights:
- Sales Increase 35% to $55.5 Million
- Net Income Increases 58% to $11.6 Million, or $0.39 Per
Diluted Share
- Facility Acquired for New U.S. Research Center
Financial Highlights ($000)(1)
3 Months Ended 9 Months Ended
September 30, September 30,
---------------------- ---------------------------
% %
2002 2001 Change 2002 2001 Change
------- ------- ------ -------- -------- ------
Net Sales $55,482 $41,043 35% $149,605 $105,771 41%
Gross Profit $33,923 $25,788 32% $93,572 $66,589 41%
Operating Income
Before R&D $20,856 $14,850 40% $56,113 $35,401 59%
Operating Income $14,074 $9,940 42% $37,733 $21,579 75%
Net Income $11,563 $7,338 58% $31,630 $16,169 96%
EPS (diluted) $0.39 $0.29 $1.08 $0.64
(1) Except per share data.
Taro Pharmaceutical Industries Ltd. (Nasdaq/NMS: TARO) today reported record
results for the Company's third quarter and the nine-month period ended
September 30, 2002.
Third Quarter ResultsThe third quarter results represent the Company's 27th consecutive quarter of record sales and its 17th consecutive quarter of record net income.
Third quarter 2002 sales increased 35% to $55.5 million from $41.0 million in the third quarter of 2001. Taro's gross profit in the third quarter of 2002 increased 32% to $33.9 million, or 61% of sales, up from $25.8 million, or 63% of sales, in the third quarter of the prior year. Selling, general and administrative expenses decreased as a percentage of sales to 24%, or $13.1 million, compared with 27% of sales, or $10.9 million, in the third quarter of 2001.
Operating income before R&D expenses increased to $20.9 million, or 38% of sales, from $14.9 million, or 36% of sales, for the third quarter of 2001. R&D expenses increased to $6.8 million, or 12% of sales, compared with $4.9 million, also 12% of sales, for the third quarter of 2001.
Net income for the quarter increased 58% to $11.6 million, or $0.39 per diluted share, compared with $7.3 million, or $0.29 per diluted share, for the third quarter of 2001.
"Growth in our business continued in the third quarter, even when compared to the third quarter of 2001, which was an outstanding quarter for Taro," stated Barrie Levitt, M.D., Chairman of the Company.
Nine-Month ResultsFor the nine-month period ended September 30, 2002, sales increased 41% to a record $149.6 million, compared with $105.8 million for the same period in 2001. Taro's gross profit for the nine-month period increased by 41% to $93.6 million, or 63% of sales, from $66.6 million, also 63% of sales, for the same period in 2001. Selling, general and administrative expenses for the nine-month period decreased as a percentage of sales to 25%, or $37.5 million, compared with 29% of sales, or $31.2 million, for the same period in 2001.
Operating income before R&D expenses was $56.1 million, or 38% of sales, up from $35.4 million, or 33% of sales, for the same period in the prior year. R&D expenses increased to $18.4 million, or 12% of sales, from $13.8 million, or 13% of sales, for the same period in 2001.
Net income for the nine-month period increased 96% to a record $31.6 million, or $1.08 per diluted share, compared with $16.2 million, or $0.64 per diluted share, for the same period in 2001.
Balance SheetAt September 30, 2002, total assets were $346.7 million, compared with $307.8 million at the end of 2001. Cash and cash equivalents were $135.1 million, compared with $150.7 million at the end of 2001.
For the nine-month period, property, plant and equipment increased $24.8 million to $78.9 million. Deferred taxes and other assets, including those related to the acquisition of certain assets of Thames Pharmacal, Inc., increased $8.0 million to $27.4 million.
Shareholder's equity at September 30, 2002 was $249.9 million, compared with $218.4 million at the end of 2001.
Facility Purchased to Establish New Research OperationsIn August, the Company's U.S. subsidiary, Taro Pharmaceuticals U.S.A., Inc., ("Taro USA"), purchased a one-third interest in a building to house its U.S. research and development operations. After renovations, Taro USA will occupy 37,000 square feet of the newly purchased space, which is located in Hawthorne, New York.
"Taro is expanding its commitment to research and development," said Dr. Levitt. "This new center will enable us to augment our R&D operations in Israel and Canada by tapping into the large pool of pharmaceutical research talent in the New York tri-state area."
FDA FilingsThe Company has 15 Abbreviated New Drug Applications on file with the U.S. Food and Drug Administration, including one tentative approval. In addition, Taro has multiple regulatory filings in Canada, Israel and other countries around the world.
Outlook"Over the near term, Taro will focus on prudent investments in research, acquisitions, and increasing manufacturing capacity," said Dr. Levitt. "Our commitment is to ensure that we provide our customers with a continuous supply of the highest quality healthcare products."
Conference CallThe Company will conduct a conference call to discuss third quarter and nine-month results on Thursday, October 24, 2002 at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time). The call will be available live via the Internet by accessing www.taro.com. For those who cannot listen to the live broadcast, an online replay will be available through October 31, 2002 on www.taro.com. A telephone replay will also be available through October 31, 2002 by dialing 800-428-6051 (domestic U.S.) or +973-709-2089 (international) and entering the passcode 264620 when prompted.
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.
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, and comments concerning new research operations in the U.S., investments in research and acquisitions, increasing manufacturing capacity, and distribution. Although Taro Pharmaceutical Industries Ltd. 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 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, and other risks detailed from time to time in the Company's SEC reports, including its 2001 Annual Report on Form 20-F.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
SEPT. 30, DEC. 31,
2002 2001
--------- --------
Assets
Current Assets:
Cash and Cash Equivalents $135,132 $150,732
Restricted Short-Term Bank Deposits 2,446 2,416
Accounts Receivable - Trade 56,277 41,131
Accounts Receivable - Other and Prepaid Expenses 9,691 8,134
Inventories 35,840 29,081
-------- --------
Total Current Assets 239,386 231,494
Long Term Investments 1,040 2,838
Property, Plant and Equipment, net 78,858 54,024
Deferred Taxes and Other Assets 27,428 19,406
-------- --------
TOTAL ASSETS $346,712 $307,762
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $2,503 $2,221
Current Maturities of Long-Term Liabilities 7,239 6,010
Accounts Payable and Accrued Expenses 32,061 26,552
-------- --------
Total Current Liabilities 41,803 34,783
Long -Term Liabilities 49,406 49,285
Deferred Taxes and Other Liabilities 4,732 4,554
--------- --------
Total Liabilities 95,941 88,622
Minority Interest 865 776
Shareholders' Equity 249,906 218,364
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $346,712 $307,762
========= =========
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- -------- ---------
SALES $55,482 $41,043(1)$149,605 $105,771(1)
Cost of Sales 21,559 15,255 56,033 39,182
--------- --------- -------- ---------
Gross Profit 33,923 25,788 93,572 66,589
Operating Expenses:
elling, General
and Administrative 13,067 10,938(1) 37,459 31,188(1)
--------- --------- --------- ---------
Operating Income before
Research and Development 20,856 14,850 56,113 35,401
Research and Development 6,782 4,910 18,380 13,822
--------- --------- --------- ---------
Operating Income 14,074 9,940 37,733 21,579
Financial Expenses - Net 283 860 379 2,692
--------- --------- --------- ---------
13,791 9,080 37,354 18,887
Other Income - Net 34 (9) 31 152
--------- --------- --------- ---------
13,825 9,071 37,385 19,039
Taxes on Income 2,252 1,712 5,666 2,846
--------- --------- --------- ---------
11,573 7,359 31,719 16,193
Minority Share in
Profits of Subsidiary 10 21 89 24
--------- --------- --------- ---------
NET INCOME $11,563 $7,338 $31,630 $16,169
========= ========= ========= =========
Earnings per
Ordinary Share $0.40 $0.34 $1.10 $0.74
Diluted Earnings
per Ordinary Share $0.39 $0.29 $1.08 $0.64
Weighted Average
Number of Shares-
BASIC EPS 28,659,401 21,877,833 28,641,209 21,724,762
DILUTED EPS 29,372,390 25,517,223 29,380,312 25,298,287
(1) Reclassifed.
CONTACT: Taro Pharmaceutical Industries Ltd., Hawthorne
Daniel Saks, 914/345-9000 ext. 208
Kevin Connelly, 914/345-9000 ext. 338
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