Aceto Corporation Reports Third Quarter Fiscal 2015 Results

PORT WASHINGTON, N.Y., May 7, 2015 (GLOBE NEWSWIRE) -- 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.

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