Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the
“Company”) today provided unaudited financial results for the
quarter and six months ended September 30, 2021.
Quarter ended September 30, 2021 Highlights ─ compared to
September 30, 2020
- Net sales of $132.0 million decreased $10.9 million.
- Gross profit of $62.0 million (47.0% of net sales compared to
57.1%) decreased $19.5 million.
- Research and development (“R&D”) expenses of $12.5 million
decreased $4.1 million.
- Selling, marketing, general and administrative expenses
(“SG&A”) of $23.7 million were in line with the prior year
quarter.
- Settlements and loss contingencies of $1.4 million relate to
the global resolution with the U.S. Department of Justice (“DOJ”)
in connection with its investigations into the U.S. generic
pharmaceutical industry.
- Operating income of $24.4 million decreased $16.5 million.
Excluding the settlement and loss contingencies charges, operating
income was $25.9 million compared to $41.0 million, and as a
percentage of net sales was 19.6% compared to 28.7%.
- Interest and other financial income of $2.4 million decreased
$3.3 million, reflecting the lower global interest rate
environment.
- Tax expense of $6.1 million increased $2.5 million; with the
effective tax rate of 20.7%. Excluding the impact from the
settlement and loss contingencies charges, the effective tax rate
was 19.8% compared to 7.4%.
- Net income attributable to Taro was $23.3 million compared to
$45.1 million, resulting in diluted earnings per share of $0.62
compared to $1.18. Excluding the impact from the settlement and
loss contingencies charges, net income was $24.7 million, resulting
in diluted earnings per share of $0.66.
Six Months ended September 30, 2021 Highlights ─ compared to
September 30, 2020
- Net sales of $279.1 million increased $18.6 million.
- Gross profit of $139.7 million (50.1% of net sales compared to
56.3%) decreased $6.8 million.
- R&D expenses of $25.4 million decreased $4.0 million.
- SG&A of $47.7 million increased $1.3 million.
- Settlements and loss contingencies of $61.4 million consist of
the additional legal contingency of $60.0 million (taken in the
first quarter) related to ongoing multi-jurisdiction civil
antitrust matters and $1.4 million related to the aforementioned
global resolution with the DOJ in connection with its
investigations into the U.S. generic pharmaceutical industry. In
the prior year, settlements and loss contingencies of $478.9
million consisted of $418.9 million related to the global
resolution with the DOJ in connection with its investigations into
the U.S. generic pharmaceutical industry and an additional
provision of $60.0 million related to ongoing multi-jurisdiction
civil antitrust matters; however, there can be no assurance as to
the ultimate outcome.
- Operating income of $5.2 million compared to operating (loss)
of $(408.2) million. Excluding the settlement and loss
contingencies charges in both periods, operating income was $66.6
million compared to $70.7 million, a decrease of $4.1 million, and
as a percentage of net sales was 23.9% compared to 27.2%.
- Interest and other financial income of $5.4 million decreased
$7.6 million.
- Tax expense of $8.8 million decreased $3.7 million. Excluding
the impact from the settlement and loss contingencies charges in
both periods, the effective tax rate was 11.8% compared to
14.4%.
- Net income attributable to Taro was $4.5 million compared to
net (loss) of $(389.8) million, resulting in diluted earnings
(loss) per share of $0.12 compared to $(10.19). Excluding the
impact from the settlement and loss contingencies charges in both
periods, net income was $66.0 million compared to $74.2 million, an
$8.2 million decrease, resulting in diluted earnings per share of
$1.75 compared to $1.94.
Cash Flow and Balance Sheet Highlights
- Cash flow (used in) operations for the six months ended
September 30, 2021, was $(8.0) million. Excluding the impact from
the settlement and loss contingencies charges in both periods, cash
flow provided by operations was $94.9 million compared to $54.7
million for the six months ended September 30, 2020.
- As of September 30, 2021, cash and cash equivalents and
marketable securities (both short and long-term), decreased $55.4
million to $1.5 billion from March 31, 2021; reflecting the impact
from a payment to the DOJ as a result of the global resolution with
the DOJ in connection with its investigations into the U.S. generic
pharmaceutical industry, and share repurchases of $24.9
million.
Mr. Uday Baldota, Taro’s CEO stated, “We continue to face an
overall challenging market trend, particularly in the U.S, and
depending on the product(s), price deflation and pressure persist.
While the current quarter reflects a reduction in R&D,
principally due to timing of clinical studies, we maintain a
development pipeline investing only in those products which are
viable. From a business development perspective, we will continue
to evaluate opportunities that make strategic sense and remain
disciplined in our approach. We are pleased to put the government’s
investigations behind us and reaffirm our commitment to a robust
corporate compliance program.”
FDA Approvals and
Filings
The Company recently received an approval from the U.S. Food and
Drug Administration (“FDA”) for the Abbreviated New Drug
Application (“ANDA”): Oxymetazoline Hydrochloride Cream, 1%. The
Company currently has a total of eighteen ANDAs awaiting FDA
approval, including four tentative approvals.
Taro Finalizes Settlement Agreement
with the DOJ
Taro Pharmaceuticals U.S.A., Inc. finalized its settlement
agreement with the DOJ’s Civil Division and corporate integrity
agreement with the U.S. Department of Health and Human Services’
Office of Inspector General, both of which were previously
announced on July 23, 2020.
Share Repurchase Program – Maximizing
Shareholder Value
On November 4, 2019, the Company announced that its Board of
Directors approved a share repurchase of ordinary shares up to $300
million. The repurchase authorization enables the Company to
purchase its ordinary shares from time to time through open market
purchases (including Rule 10b5-1 trading plans), privately
negotiated transactions, tender offer or other means, in accordance
with applicable securities laws and other regulations. No time
period has been set for the repurchase program, and any such
program may be suspended or discontinued at any time.
During the quarter, the Company repurchased 86,696 shares at an
average price of $71.34. Under the $300 million authorization, the
Company has repurchased, in total, 954,165 shares (280,719 at an
average price of $91.00 and 673,446 at an average price of $74.12),
leaving $224.5 million remaining under the current board
authorization.
The Company cautions that the foregoing financial information is
presented on an unaudited basis and is subject to change.
************************
About Taro
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 further information on Taro Pharmaceutical Industries
Ltd., please visit the Company’s website at www.taro.com.
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 SEC.
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 2022. 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 Israel, the United States, or any country
in which Taro operates, regulatory 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 Annual
Reports on Form 20-F. Forward-looking statements are applicable
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.
**Financial Tables Follow**
TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (U.S. dollars
in thousands, except share data)
Quarter Ended
Six Months Ended
September 30,
September 30,
2021
2020
2021
2020
Sales, net
$
131,986
$
142,843
$
279,099
$
260,477
Cost of sales
69,941
61,255
139,356
113,943
Gross profit
62,045
81,588
139,743
146,534
Operating Expenses: Research and development
12,495
16,552
25,448
29,484
Selling, marketing, general and administrative
23,684
24,074
47,660
46,323
Settlements and loss contingencies
1,420
—
61,420
478,924
Operating income (loss) *
24,446
40,962
5,215
(408,197
)
Financial (income) expense, net: Interest and other
financial income
(2,371
)
(5,678
)
(5,413
)
(12,988
)
Foreign exchange (income) expense
(264
)
(632
)
11
(829
)
Other gain, net
2,340
1,380
2,724
1,929
Income (loss) before income taxes
29,421
48,652
13,341
(392,450
)
Tax expense
6,104
3,590
8,792
12,444
Net income (loss)
23,317
45,062
4,549
(404,894
)
Net loss attributable to non-controlling interest
—
(70
)
—
(15,108
)
Net income (loss) attributable to Taro *
$
23,317
$
45,132
$
4,549
$
(389,786
)
Net income (loss) per ordinary share attributable to
Taro: Basic and Diluted *
$
0.62
$
1.18
$
0.12
$
(10.19
)
Weighted-average number of shares used to compute net
income (loss) per share: Basic and Diluted
37,600,580
38,258,337
37,696,975
38,258,337
May not foot due to rounding.
* Excluding the settlement and loss contingencies charges of
$1.4 million for the quarter ended September 30, 2021, Operating
income was $25.9 million and $41.0 million, Net income attributable
to Taro was $24.7 million and $45.1 million, and basic and diluted
earnings per share was $0.66 and $1.18, for the quarters ended
September 30, 2021 and 2020, respectively.
Excluding the settlement and loss contingencies charges of $61.4
million and $478.9 million for the six months ended September 30,
2021 and 2020, Operating income was $66.6 million and $70.7
million, Net income attributable to Taro was $66.0 million and
$74.2 million, and basic and diluted earnings per share was $1.75
and $1.94, respectively.
TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY
CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands)
September 30,
March 31,
2021
2021
ASSETS
(unaudited)
(audited)
CURRENT ASSETS: Cash and cash equivalents
$
523,668
$
605,177
Short-term and current maturities of long-term bank deposits
35,573
—
Marketable securities
413,322
418,480
Accounts receivable and other: Trade, net
196,671
213,539
Other receivables and prepaid expenses
59,785
53,347
Inventories
182,928
180,292
TOTAL CURRENT ASSETS
1,411,947
1,470,835
Marketable securities
552,939
557,209
Property, plant and equipment, net
196,632
205,508
Deferred income taxes
125,449
142,007
Other assets
30,191
31,314
TOTAL ASSETS
$
2,317,158
$
2,406,873
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Trade payables
$
55,228
$
61,166
Other current liabilities
558,730
615,135
TOTAL CURRENT LIABILITIES
613,958
676,301
Deferred taxes and other long-term liabilities
30,092
35,115
TOTAL LIABILITIES
644,050
711,416
Taro shareholders' equity
1,673,108
1,703,649
Non-controlling interest
—
(8,192
)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,317,158
$
2,406,873
TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in
thousands)
Six Months Ended September
30,
2021
2020
Cash flows from operating activities: Net income
(loss)
$
4,549
$
(404,894
)
Adjustments required to reconcile net income (loss) to net cash
used in operating activities: Depreciation and amortization
12,795
11,361
Realized loss on sale of long-lived assets
551
—
Change in derivative instruments, net
(314
)
(942
)
Effect of change in exchange rate on marketable securities and bank
deposits
404
(3,569
)
Deferred income taxes, net
16,927
(39,591
)
Decrease in trade receivables, net
16,868
3,550
Increase in inventories, net
(2,636
)
(14,140
)
Increase in other receivables, income tax receivables, prepaid
expenses and other
(2,472
)
(8,451
)
(Decrease) increase in trade, income tax, accrued expenses and
other payables
(59,982
)
407,522
Expense from amortization of marketable securities bonds, net
5,287
1,007
Net cash used in operating activities
(8,023
)
(48,147
)
Cash flows from investing activities: Purchase of
plant, property & equipment, net
(5,831
)
(8,953
)
Investment in other intangible assets
(107
)
(76
)
Investment in short-term bank deposits, net
(35,573
)
—
(Investment in) proceeds from marketable securities, net
(6,442
)
41,820
Net cash (used in) provided by investing activities
(47,953
)
32,791
Cash flows from financing activities: Purchase of
treasury stock
(24,934
)
—
Net cash used in financing activities
(24,934
)
—
Effect of exchange rate changes on cash and cash
equivalents
(599
)
798
Decrease in cash and cash equivalents
(81,509
)
(14,558
)
Cash and cash equivalents at beginning of period
605,177
513,354
Cash and cash equivalents at end of period
$
523,668
$
498,796
Cash Paid during the year for: Income taxes
$
4,532
$
20,596
Cash Received during the year for: Income taxes
$
2,351
$
4,093
Non-cash investing transactions: Purchase of property, plant
and equipment included in accounts payable
$
702
$
1,410
Non-cash financing transactions: Purchase of marketable
securities, net
$
630
$
2,435
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028006230/en/
William J. Coote Interim CFO – AVP, Treasurer and
Investor Relations (914) 345-9001 William.Coote@taro.com
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