Taro Reports Record Third Quarter and Nine Month 2003 Results; 31st Consecutive Quarter of Record Sales; 21st Consecutive Quarter of Record Net Income
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Oct. 30, 2003--Taro Pharmaceutical Industries Ltd. (Nasdaq/NMS: TARO)
3rd Quarter 2003 Highlights:
-- Sales Increase 50% to $83.1 Million
-- Net Income Increases 36% to $15.7 Million, or $0.53 Per
Diluted Share
-- Spill-Resistant ElixSure(TM) Children's Medicines Launched
Financial Highlights ($000)*
3 Months Ended 9 Months Ended
September 30, September 30,
--------------------------------------------------
% %
2003 2002 Change 2003 2002 Change
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Net Sales $83,115 $55,482 50% $226,836 $149,605 52%
----------------------------------------------------------------------
Gross Profit $56,556 $33,923 67% $150,943 $93,572 61%
----------------------------------------------------------------------
Operating Income
Before R&D $30,879 $20,856 48% $85,322 $56,113 52%
----------------------------------------------------------------------
Operating Income $19,658 $14,074 40% $55,784 $37,733 48%
----------------------------------------------------------------------
Net Income $15,736 $11,563 36% $44,543 $31,630 41%
----------------------------------------------------------------------
EPS (diluted) $0.53 $0.39 $1.50 $1.08
----------------------------------------------------------------------
*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, 2003.
Third Quarter 2003 Results
The third quarter results represent the Company's 31st consecutive quarter of record sales and its 21st consecutive quarter of record net income.
Third quarter 2003 sales increased 50% to a record $83.1 million, from $55.5 million in the third quarter of 2002. Taro's gross profit in the third quarter of 2003 increased 67% to $56.6 million, or 68% of sales, up from $33.9 million, or 61% of sales, in the third quarter of the prior year. Selling, general and administrative ("SGA") expenses increased 97% to $25.7 million, or 31% of sales, compared with $13.1 million, or 24% of sales, in the third quarter of 2002. The increase in SGA expenses as a percentage of sales primarily reflects costs associated with the Company's newly established proprietary products divisions, TaroPharma and Taro Consumer Healthcare Products ("TCHP").
Operating income before R&D expenses increased to $30.9 million, or 37% of sales, from $20.9 million, or 38% of sales, for the third quarter of 2002. R&D expenses increased 65% to $11.2 million, or 14% of sales, compared with $6.8 million, or 12% of sales, for the third quarter of 2002.
Net income for the quarter increased 36% to a record $15.7 million, or $0.53 per diluted share, compared with $11.6 million, or $0.39 per diluted share, for the third quarter of 2002.
"Growth in our core U.S. generics business and sales of proprietary prescription and over-the-counter products have contributed to a strong quarter," said Barrie Levitt, M.D., Chairman of the Company.
Nine Month Results
For the nine month period ended September 30, 2003, sales increased 52% to a record $226.8 million, compared with $149.6 million for the same period in 2002. Taro's gross profit for the nine month period increased by 61% to $150.9 million, or 67% of sales, from $93.6 million, or 63% of sales, for the same period in 2002. SGA expenses for the nine month period increased as a percentage of sales to 29%, or $65.6 million, compared with 25% of sales, or $37.5 million, for the same period in 2002.
Operating income before R&D expenses was $85.3 million, or 38% of sales, up from $56.1 million, or 38% of sales, for the same period in the prior year. R&D expenses increased 61% to $29.5 million, or 13% of sales, from $18.4 million, or 12% of sales, for the same period in 2002.
Net income for the nine-month period increased 41% to a record $44.5 million, or $1.50 per diluted share, compared with $31.6 million, or $1.08 per diluted share, for the same period in 2002.
Strong Financial Position
At September 30, 2003, total assets were $527.0 million, compared with $379.8 million at the end of 2002. Cash and cash equivalents were $136.9 million, compared with $130.7 million at the end of 2002. Total assets include $105.7 million in accounts receivable - trade, compared with $69.0 million at December 31, 2002. The increase in accounts receivable primarily reflects gains in sales and the timing of certain trade payments that were received subsequent to the close of the quarter. Inventories for the quarter increased to $68.4 million, compared with $42.4 million at the end of 2002.
Total liabilities were $205.2 million, compared with $109.5 million at the end of 2002. The increase in total liabilities includes proceeds from a $60 million debt offering that the Company completed in June 2003.
Shareholder's equity at September 30, 2003 was $320.3 million, compared with $269.1 million at the end of 2002.
ElixSure(TM) Products Launched
During the quarter, Taro launched its new line of spill-resistant ElixSure(TM) products for children. ElixSure(TM) medications for fever/pain, cough or congestion are now available in pharmacy and grocery chains and mass merchandisers across the U.S. The over-the-counter ElixSure(TM) products utilize the patented NonSpil(TM) liquid drug delivery system developed by Taro researchers. ElixSure(TM) products pour like liquids but resist spilling. The ElixSure(TM) formulations are designed to provide parents with increased accuracy and ease of dosing. In addition, ElixSure(TM) products do not require shaking before administration.
"An unpleasant struggle often develops when giving liquid medications to children, which can result in spills, stains and inaccurate dosages of medicine," said Dr. Levitt. "We believe that ElixSure(TM)'s spill-resistant formulations may go a long way towards solving this problem. While we are optimistic about the ElixSure(TM) launch, the consumer, of course, will be the ultimate judge of our ElixSure(TM) product line."
The ElixSure(TM) product line is being launched by TCHP. The launch is being supported by national television and print advertising, as well as by the professional medical representatives of the Company's TaroPharma division. Earlier this year TCHP launched Kerasal(R), a unique, exfoliating moisturizer for the feet.
FDA Filings
The Company has 33 filings submitted to the U.S. Food and Drug Administration: 32 Abbreviated New Drug Applications, including one tentative approval, as well as one New Drug Application related to Taro's patented NonSpil(TM) spill resistant liquid drug delivery system. In addition, Taro has regulatory filings in Canada, Israel and other countries around the world.
Conference Call
The Company will conduct a conference call to discuss third quarter and nine-month results on Thursday, October 30, 2003 at 11:00 a.m. Eastern Time (8:00 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 November 6, 2003 on www.taro.com. A telephone replay will also be available through November 6, 2003 by dialing 800-428-6051 (domestic U.S.) or +973-709-2089 (international) and entering the passcode 308456 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.
For more information on Taro, please visit 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, and comments concerning marketing of proprietary products including Kerasal(R) and ElixSure(TM) products, the potential benefits of ElixSure(TM) products, initiatives undertaken by the Taro Consumer Healthcare Products and TaroPharma divisions, Taro's filings with the FDA, and the Company's growth. 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, 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 obligation to update, change or revise any forward-looking statements, 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)
SEPTEMBER DECEMBER
30, 31,
2003 2002
---- ----
Assets
Current Assets:
Cash and Cash Equivalents $136,856 $130,717
Restricted Short-Term Bank Deposits 2,516 2,468
Accounts Receivable - Trade 105,676 69,038
Accounts Receivable - Other and Prepaid Expenses 14,774 12,453
Inventories 68,403 42,439
------------------------------------------------ -------- --------
Total Current Assets 328,225 257,115
Long Term Investments 2,877 1,348
Property, Plant and Equipment, net 156,112 93,358
Deferred Taxes and Other Assets 39,832 28,024
------------------------------------------------ -------- --------
TOTAL ASSETS $527,046 $379,845
================================================ ======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $22,445 $2,310
Current Maturities of Long-Term Liabilities 21,108 7,962
Accounts Payable and Accrued Expenses 50,450 47,972
------------------------------------------------ -------- --------
Total Current Liabilities 94,003 58,244
Long-Term Liabilities 106,792 47,127
Deferred Taxes and Other Liabilities 4,437 4,178
------------------------------------------------ -------- --------
Total Liabilities 205,232 109,549
Minority Interest 1,487 1,159
Shareholders' Equity 320,327 269,137
------------------------------------------------ -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $527,046 $379,845
================================================ ======== ========
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,
2003 2002 2003 2002
---- ---- ---- ----
SALES $83,115 $55,482 $226,836 $149,605
Cost of Sales 26,559 21,559 75,893 56,033
------- ------- -------- --------
Gross Profit 56,556 33,923 150,943 93,572
Operating Expenses:
Selling, General and
Administrative 25,677 13,067 65,621 37,459
------- ------- -------- --------
Operating Income before
Research and Development 30,879 20,856 85,322 56,113
Research and Development 11,221 6,782 29,538 18,380
------- ------- -------- --------
Operating Income 19,658 14,074 55,784 37,733
Financial Expenses and
Other Income - Net 585 249 1,168 348
------- ------- -------- --------
19,073 13,825 54,616 37,385
Taxes on Income 3,253 2,252 9,745 5,666
------- ------- -------- --------
15,820 11,573 44,871 31,719
Minority Share in Profits
of Subsidiary 84 10 328 89
------- ------- -------- --------
NET INCOME $15,736 $11,563 $44,543 $31,630
======= ======= ======== ========
Earnings per Ordinary
Share $0.54 $0.40 $1.54 $1.10
Diluted Earnings per
Ordinary Share $0.53 $0.39 $1.50 $1.08
Weighted Average Number of
Shares -
BASIC EPS 28,902,137 28,659,401 28,851,955 28,641,209
DILUTED EPS 29,728,763 29,372,390 29,626,273 29,380,312
CONTACT: Taro Pharmaceutical Industries Ltd.
Daniel Saks, 914-345-9000 ext. 6208
OR
Kevin Connelly, 914-345-9000 ext. 6338
SOURCE: Taro Pharmaceutical Industries Ltd.