ACETO Corporation (Nasdaq:ACET), a global leader in the marketing,
sale and distribution of products for Human Health, Pharmaceutical
Ingredients and Performance Chemicals, announced today financial
results for the third quarter of fiscal 2015 ended March 31, 2015.
Third Quarter Fiscal 2015 versus Third Quarter Fiscal
2014
- Net sales of $145.8 million versus $124.8 million, a 16.8%
increase
- Gross profit of $36.6 million versus $25.0 million, a 46.6%
increase
- Net income of $8.4 million versus $5.4 million, a 57.0%
increase
- Diluted EPS of $0.29 versus $0.19, a 52.6% increase
- Non-GAAP Adjusted Net Income of $10.0 million versus $6.9
million, a 45.8% increase
- Non-GAAP Adjusted EPS of $0.34 versus $0.24, a 41.7%
increase
Management Commentary
"Overall, we are pleased with our third quarter results.
Quarterly growth in net sales, gross profit and gross margin was
once again led by strong results in our Human Health segment. As a
result, net income, earnings per share and profit margins grew
nicely year-over-year despite continued softness in our Nutritional
products business, lower than expected new product launches this
year and a $0.03 per share adverse impact related to the weakening
Euro," said Sal Guccione, Chief Executive Officer of ACETO. "For
the first nine months of fiscal 2015, our Human Health and
Pharmaceutical Ingredients segments together accounted for more
than two-thirds of net sales and 75% of gross profit, showing
ACETO's continued progress towards becoming a human-health focused
company."
"Human Health sales increased by nearly 66% in the quarter,
driven primarily by the acquisition of PACK Pharmaceuticals.
Pharmaceutical Ingredients saw lower sales and profits due to
decreased sales of active pharmaceutical ingredients, particularly
in Europe, where a strong dollar versus the euro created a
significant headwind for us. Performance Chemicals revenue and
profitability posted double-digit gains versus a year ago largely
reflecting a more favorable mix of higher margin products," Mr.
Guccione added.
"Looking at the quarterly pattern to date for fiscal 2015, net
income and earnings per share results for the third quarter were,
as expected, higher than either the first or second quarter of this
year. Further, we continue to expect the fourth quarter to be the
highest quarterly contributor to net income and earnings per share
for fiscal 2015. On a constant currency basis, we continue to
expect sales and earnings per share growth for fiscal 2015 to be in
the mid-to-upper single digit range, despite the slowness in new
product approvals and nutritionals. However, on a reported basis,
we now expect sales and earnings per share growth to be in the
mid-single digit range for fiscal 2015," concluded Mr.
Guccione.
Third Quarter Financial Review
Net sales for the third quarter of fiscal 2015 were $145.8
million, an increase of 16.8% from $124.8 million reported in the
third quarter of fiscal 2014. Total company gross profit was $36.6
million, an increase of 46.6%, compared to $25.0 million in the
third quarter of fiscal 2014. Gross margin for the third quarter
was 25.1% compared to 20.0% in the prior year period.
Human Health segment sales were $56.3 million, an increase of
65.9%, compared to $33.9 million for the third quarter of fiscal
2014. The sales increase was primarily due to an increase in sales
at Rising resulting from the acquisition of PACK Pharmaceuticals on
April 30, 2014. Nutritional product sales both in the U.S. and
abroad were lower due to soft reorders resulting from high customer
inventory levels, as well as from increased competition. Gross
profit for the Human Health segment was $20.0 million, an increase
of 98.1%, compared to $10.1 million for the third quarter of fiscal
2014. Gross margin for the third quarter was 35.4%, compared to
29.7% in the prior year period. The increase in gross margin was
primarily due to the acquisition of PACK, as well as price
increases on certain Rising products.
Pharmaceutical Ingredients segment sales were $40.5 million, a
decrease of 15.2%, compared to $47.8 million for the third quarter
of fiscal 2014. Gross profit was $6.7 million, a decrease of 9.9%,
compared to $7.4 million for the third quarter of fiscal 2014.
Gross margin for the third quarter was 16.5%, compared to 15.5% in
the prior year period. The segment's sales and gross profits were
adversely affected by the weakening of the Euro as well as slower
sales of certain active pharmaceutical ingredients, offset by
improved mix. The impact of the Euro rate variance for the quarter
compared to last year's quarter was $4.3 million in sales and $0.7
million in gross profit.
Performance Chemicals segment sales were $48.9 million, an
increase of 13.7%, compared to $43.0 million for the third quarter
of fiscal 2014, primarily due to higher sales of agricultural, dye
and pigment intermediates and agricultural protection products
versus 2014. Gross profit was $10.0 million, an increase of 33.3%,
compared to $7.5 million for the third quarter of fiscal 2014, due
to the higher agricultural sales. Gross margin was 20.4% for the
third quarter compared to 17.4% in the prior year period.
Total selling, general and administrative expenses were $19.1
million compared to $16.4 million in the same period last year, a
16.4% increase. Selling, general and administrative expenses
included $2.4 million of SG&A expenses from PACK
Pharmaceuticals, of which $1.2 million was amortization expense
related to acquired intangible assets. Research and Development
expenses in the third quarter totaled $2.1 million compared to $1.5
million in the prior year period. The majority of R&D expenses
are milestone based, and will fluctuate quarterly.
Operating income totaled $15.4 million, an increase of 118%
versus the third quarter of fiscal 2014. An expense of $1.4
million, or approximately $0.03 per diluted share, was recorded in
the quarter for unrealized foreign exchange losses related to the
strengthening of the US dollar compared to the Euro. Interest
expense was $1.0 million compared to $0.3 million in the prior year
period reflecting higher average balances outstanding under the
credit agreement entered into in connection with the purchase of
PACK Pharmaceuticals. Net income was $8.4 million, or $0.29 per
diluted share, compared to net income of $5.4 million, or $0.19 per
diluted share, for the comparable quarter of fiscal 2014. Non-GAAP
Adjusted Net Income was $10.0 million in the third quarter,
compared to $6.9 million in the prior period, a 45.8% increase.
Non-GAAP Adjusted Earnings per Share were $0.34, compared to $0.24
in the year ago third quarter, a 41.7% increase.
Conference Call
Management will host a conference call to discuss the operating
and financial results at 9:00 a.m. ET on Friday, May 8, 2015. To
participate in the conference call, please dial (866) 297-6395 or
(847) 944-7317 approximately 10 minutes prior to the call. Please
reference conference ID # 39551293.
A live webcast of the conference call will be available in the
Investor Relations section of the Company's website, www.aceto.com.
Please access the website 15 minutes prior to the start of the call
to download and install any necessary audio software.
A telephone replay of the conference call will be available from
11:30 a.m. ET on May 08, 2015 until 11:59 p.m. ET on May 15, 2015
and may be accessed by calling (888) 843-7419 and reference
conference ID # 39551293. An archived replay of the conference call
will also be available in the investor relations section of the
Company's website.
Use of Non-GAAP Financial Information
In addition to U.S. GAAP results, this press release also
includes certain non-GAAP financial measures as defined by the SEC.
This measure, Adjusted Net Income, represents net income excluding
amortization of intangibles, debt extinguishment and transaction
costs related to acquisitions. These items should not be reviewed
in isolation or considered substitutes of the Company's financial
results as reported in accordance with GAAP. Due to the nature of
these items, it is important to identify these items and to review
them in conjunction with the Company's financial results reported
in accordance with GAAP. The exclusion of these items also allows
investors to compare results of operations in the current period to
prior periods' results based on the Company's fundamental business
performance and analyze the operating trends of the business. The
exclusion of these items also allows management to evaluate the
performance of its business units.
Pursuant to the requirements of Regulation G, reconciliations of
Adjusted Net Income to U.S. GAAP net income are presented in the
table Non-GAAP Reconciliation of this press release.
About ACETO
ACETO Corporation, incorporated in 1947, is a global leader in
the marketing, sale and distribution of products for Human Health
(finished dosage form generics and nutraceutical products),
Pharmaceutical Ingredients (pharmaceutical intermediates and active
pharmaceutical ingredients) and Performance Chemicals (specialty
chemicals and agricultural protection products). With business
operations in nine countries, ACETO distributes over 1,100 chemical
compounds used principally as finished products or raw materials in
the pharmaceutical, nutraceutical, agricultural, coatings and
industrial chemical industries. ACETO's global operations,
including a staff of 25 in China and 12 in India, are distinctive
in the industry and enable its worldwide sourcing and regulatory
capabilities.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements as that
term is defined in the federal securities laws. The events
described in forward-looking statements contained in this news
release may not occur. Generally, these statements relate to our
business plans or strategies, projected or anticipated benefits or
other consequences of ACETO's plans or strategies, financing plans,
projected or anticipated benefits from acquisitions that ACETO may
make, or a projection involving anticipated revenues, earnings or
other aspects of ACETO's operating results or financial position,
and the outcome of any contingencies. Any such forward-looking
statements are based on current expectations, estimates and
projections of management. ACETO intends for these forward-looking
statements to be covered by the safe-harbor provisions for
forward-looking statements. Words such as "may," "will," "expect,"
"believe," "anticipate," "project," "plan," "intend," "estimate,"
and "continue," and their opposites and similar expressions are
intended to identify forward-looking statements. The
forward-looking statements contained in this press release include,
but are not limited to, statements regarding the Company's
strategic initiatives including selling finished dosage form
generic drugs, and statements regarding the prospects for long-term
growth. ACETO cautions you that these statements are not guarantees
of future performance or events and are subject to a number of
uncertainties, risks and other influences, many of which are beyond
ACETO's control, which may influence the accuracy of the statements
and the projections upon which the statements are based. Factors
that could cause actual results to differ materially from those set
forth or implied by any forward-looking statement include, but are
not limited to, risks and uncertainties discussed in ACETO's
reports filed with the Securities and Exchange Commission,
including, but not limited to, ACETO's Annual Report or Form 10-K
for the fiscal year ended June 30, 2014 and other filings. Copies
of these filings are available at www.sec.gov.
Any one or more of these uncertainties, risks and other
influences could materially affect ACETO's results of operations
and whether forward-looking statements made by ACETO ultimately
prove to be accurate. In addition, periodic high-margin product
sales may have a positive material financial impact in a given
quarter that may be non-recurring in future quarters, thereby
rendering one quarter's performance not useful as a predictor of
future quarters' results. ACETO's actual results, performance and
achievements could differ materially from those expressed or
implied in these forward-looking statements. ACETO undertakes no
obligation to publicly update or revise any forward-looking
statements, whether from new information, future events or
otherwise.
(Financial Tables Follow)
|
Aceto Corporation and
Subsidiaries |
Consolidated Statements
of Income |
(in thousands, except
per share amounts) |
|
|
|
|
|
|
(unaudited) |
(unaudited) |
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, |
March 31, |
|
2015 |
2014 |
2015 |
2014 |
Net sales |
$ 145,796 |
$ 124,830 |
$ 400,364 |
$ 370,599 |
Cost of sales |
109,198 |
99,867 |
306,096 |
284,918 |
Gross profit |
36,598 |
24,963 |
94,268 |
85,681 |
Gross profit % |
25.10% |
20.00% |
23.55% |
23.12% |
|
|
|
|
|
Selling, general and administrative
expenses |
19,067 |
16,381 |
56,320 |
47,212 |
Research and development expenses |
2,101 |
1,504 |
3,223 |
3,232 |
Operating income |
15,430 |
7,078 |
34,725 |
35,237 |
|
|
|
|
|
Other (expense) income, net of interest
expense |
(1,804) |
826 |
(2,969) |
971 |
|
|
|
|
|
Income before income taxes |
13,626 |
7,904 |
31,756 |
36,208 |
Income tax provision |
5,215 |
2,548 |
11,909 |
12,762 |
Net income |
$ 8,411 |
$ 5,356 |
$ 19,847 |
$ 23,446 |
|
|
|
|
|
Net income per common share |
$ 0.29 |
$ 0.19 |
$ 0.69 |
$ 0.84 |
|
|
|
|
|
Diluted net income per common share |
$ 0.29 |
$ 0.19 |
$ 0.68 |
$ 0.82 |
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
Basic |
28,773 |
28,087 |
28,710 |
27,888 |
Diluted |
29,267 |
28,606 |
29,216 |
28,470 |
|
|
|
Aceto Corporation and
Subsidiaries |
Consolidated Balance
Sheets |
(in thousands, except
per-share amounts) |
|
|
|
|
(unaudited) |
|
|
March 31, 2015 |
June 30, 2014 |
|
|
|
Assets |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ 33,709 |
$ 42,897 |
Investments |
1,834 |
746 |
Trade receivables: less allowances for
doubtful accounts: March 31, 2015 $764; and June 30, 2014 $517 |
149,766 |
122,694 |
Other receivables |
8,904 |
5,288 |
Inventory |
97,216 |
100,683 |
Prepaid expenses and other current
assets |
2,757 |
3,556 |
Deferred income tax asset, net |
1,361 |
490 |
|
|
|
Total current assets |
295,547 |
276,354 |
|
|
|
|
|
|
Property and equipment, net |
10,775 |
11,573 |
Property held for sale |
5,848 |
5,848 |
Goodwill |
67,848 |
66,516 |
Intangible assets, net |
81,463 |
87,955 |
Deferred income tax asset, net |
11,518 |
11,605 |
Other assets |
8,622 |
8,133 |
|
|
|
Total Assets |
$ 481,621 |
$ 467,984 |
|
|
|
Liabilities and Shareholders'
Equity |
|
|
|
|
|
Current liabilities: |
|
|
Current portion of long-term debt |
$ 9,697 |
$ 8,343 |
Accounts payable |
55,836 |
48,716 |
Accrued expenses |
62,610 |
61,464 |
Total current liabilities |
128,143 |
118,523 |
|
|
|
Long-term debt |
97,510 |
97,158 |
Long-term liabilities |
10,405 |
11,634 |
Environmental remediation liability |
5,210 |
7,079 |
Deferred income tax liability |
6 |
6 |
Total liabilities |
241,274 |
234,400 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Shareholders' equity: |
|
|
Preferred stock, 2,000 shares authorized;
no shares issued and outstanding |
-- |
-- |
Common stock, $.01 par value: |
|
|
(40,000 shares authorized; 29,117 and
28,772 shares issued and outstanding at March 31, 2015 and June 30,
2014, respectively) |
291 |
288 |
Capital in excess of par value |
92,329 |
87,156 |
Retained earnings |
155,325 |
140,768 |
Accumulated other comprehensive (loss)
income |
(7,598) |
5,372 |
Total shareholders' equity |
240,347 |
233,584 |
|
|
|
Total liabilities and shareholders'
equity |
$ 481,621 |
$ 467,984 |
|
|
Aceto Corporation and
Subsidiaries |
Diluted Net Income Per
Common Share Excluding Charges (Non-GAAP
Reconciliation) |
(in thousands, except
per share amounts) |
|
|
|
|
|
|
|
|
|
|
(unaudited) Three Months
Ended March 31, 2015 |
(unaudited) Diluted Net
Income Per Common Share Three Months Ended March 31,
2015 |
(unaudited) Three Months
Ended March 31, 2014 |
(unaudited) Diluted Net
Income Per Common Share Three Months Ended March 31,
2014 |
(unaudited) Nine Months Ended
March 31, 2015 |
(unaudited) Diluted Net
Income Per Common Share Nine Months Ended March 31,
2015 |
(unaudited) Nine Months Ended
March 31, 2014 |
(unaudited) Diluted Net
Income Per Common Share Nine Months Ended March 31,
2014 |
|
|
|
|
|
|
|
|
|
Net income, as reported |
$8,411 |
$ 0.29 |
$5,356 |
$ 0.19 |
$19,847 |
$ 0.68 |
$23,446 |
$ 0.82 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
2,564 |
0.08 |
1,482 |
0.05 |
7,726 |
0.26 |
4,383 |
0.15 |
Transaction costs related to
acquisitions |
-- |
-- |
988 |
0.03 |
-- |
-- |
1,588 |
0.06 |
Separation and relocation costs |
-- |
-- |
-- |
-- |
99 |
0.00 |
-- |
-- |
Step-up of inventory |
-- |
-- |
-- |
-- |
209 |
0.01 |
-- |
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income excluding charges |
10,975 |
0.37 |
7,826 |
0.27 |
27,881 |
0.95 |
29,417 |
1.03 |
Adjustments to provision for income
taxes |
934 |
0.03 |
939 |
0.03 |
3,013 |
0.10 |
2,269 |
0.08 |
|
|
|
|
|
|
|
|
|
Adjusted net income (Non-GAAP) |
$ 10,041 |
$ 0.34 |
$ 6,887 |
$ 0.24 |
$ 24,868 |
$ 0.85 |
$ 27,148 |
$ 0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding |
29,267 |
29,267 |
28,606 |
28,606 |
29,216 |
29,216 |
28,470 |
28,470 |
|
|
|
|
|
|
|
|
|
NOTE: Items identified in
the above table are not in accordance with, or an alternative
method for, generally accepted accounting principles (GAAP) in the
United States. These items should not be reviewed in isolation or
considered substitutes of the Company's financial results as
reported in accordance with GAAP. Due to the nature of these items,
it is important to identify these items and to review them in
conjunction with the Company's financial results reported in
accordance with GAAP. The exclusion of these items also allows
investors to compare results of operations in the current period to
prior period's results based on the Company's fundamental business
performance and analyze the operating trends of the business. The
exclusion of these items also allows management to evaluate
performance of its business units. |
CONTACT: Investor Relations Contact:
LHA
Jody Burfening
jburfening@lhai.com
(212) 838-3777