Taro Provides Results For Quarter Ended June 2017
Published: Aug 09, 2017
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter ended June 30, 2017.
Quarter ended June 30, 2017 Highlights - compared to June 30, 2016
- Net sales of $161.3 million, decreased $72.5 million, or 31.0%, the result of continuing increased competition and the challenging pricing environment; despite an overall increase in volumes.
- Gross profit of $116.5 million, decreased $66.2 million and as a percentage of net sales, was 72.2% compared to 78.2%.
- Research and development (R&D) expenses of $14.7 million decreased $3.3 million; as our R&D spending is not evenly distributed across quarters. R&D as a percentage of net sales increased to 9.1% from 7.7% in the previous year quarter.
- Selling, marketing, general and administrative expenses of $24.2 million increased $2.0 million.
- Operating income of $77.6 million decreased $65.0 million and as a percentage of net sales was 48.1% as compared to 61.0%.
- Foreign exchange expense of $19.6 million increased $13.7 million from $5.9 million, principally due to the weakening of the U.S. dollar vs. Canadian dollar at a higher degree than the prior year quarter.
- Tax expense of $10.0 million decreased $20.4 million with the effective tax rate improving to 15.5% from 21.7%.
- Net income attributable to Taro was $54.5 million compared to $109.9 million, a $55.4 million decrease, resulting in diluted earnings per share of $1.35 compared to $2.59.
Cash Flow and Balance Sheet Highlights
- Cash flow provided by operations was $72.7 million compared to $56.0 million for the three months ended June 30, 2016.
- Cash, including short-term bank deposits and marketable securities, increased $58.2 million to $1.4 billion.
Mr. Abhay Gandhi, Taro’s interim CEO stated, “Our results reflect the difficult generic pricing environment, particularly in the U.S., driven by more intense competition among manufacturers, new entrants to the market, buying consortium pressures, and a higher ANDA approval rate from the FDA. We expect this product-specific pricing pressure to continue into the future.” Mr. Gandhi continued, “We believe our long-term strategy is well balanced, with a leadership position in many of our key molecules, our pipeline, our commitment to providing quality products, and strong manufacturing and customer service capabilities.”
FDA Approvals and Filings
The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for four Abbreviated New Drug Applications (“ANDAs”): Children’s Ibuprofen Oral Suspension USP (OTC) 100mg/5mL, Ibuprofen Oral Suspension 100mg/5mL, Betamethasone Valerate Topical Foam 0.12%, and Felbamate Oral Suspension USP 600mg/5mL. The Company currently has a total of thirty-three ANDAs awaiting FDA approval, including six tentative approvals.
Share Repurchase Program - Returning Capital to Shareholders
On November 23, 2016, the Company announced that its Board of Directors approved a new $250 million share repurchase of ordinary shares. Under this authorization, repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its stock, and general market conditions. No time period has been set for the repurchase program, and any such program may be suspended or discontinued at any time. The repurchase authorization enables the Company to purchase its ordinary shares from time to time through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws or other restrictions. During the quarter, the Company repurchased 80,007 shares at an average price of $106.07. Under this program, in total, the Company has repurchased 598,972 shares, with $187.2 million remaining under the authorization.