Taro Provides Results for the Year Ended March 31, 2021

May 19, 2021 21:30 UTC

HAWTHORNE, N.Y.--(BUSINESS WIRE)-- Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and year ended March 31, 2021.

Quarter ended March 31, 2021 Highlights ─ compared to March 31, 2020

  • Net sales of $148.3 million decreased $26.6 million. The prior year quarter was higher than normal partly due to stocking up by customers as the outbreak of COVID-19 was beginning.
  • Gross profit of $76.9 million (51.9% of net sales compared to 58.5%) decreased $25.3 million.
  • Research and development (R&D) expenses of $16.6 million marginally increased.
  • Selling, marketing, general and administrative expenses (SG&A) of $22.2 million decreased $6.9 million.
  • Settlements and loss contingencies of $80.0 million reflect an additional legal contingency provision related to ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.
  • Operating (loss) of $(41.9) million compared to operating income of $57.2 million. Excluding the settlement and loss contingencies charges, operating income was $38.1 million, a decrease of $19.1 million, and as a percentage of net sales was 25.7% compared to 32.7%.
  • Interest and other financial income of $3.2 million decreased $3.4 million, reflecting the continuing low global interest rate environment.
  • Foreign Exchange (FX) income of $0.8 million compared to $3.7 million ─ an unfavorable impact of $2.8 million.
  • Tax (benefit) of $(8.9) million compared to tax expense of $13.9 million. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate was 18.5% compared to 20.4%.
  • Net (loss) attributable to Taro was $(29.8) million compared to net income of $54.2 million, resulting in diluted (loss) per share of $(0.78) compared to diluted earnings per share of $1.42. Excluding the impact from the settlement and loss contingencies charges, net income was $31.0 million, resulting in diluted earnings per share of $0.81.

Year ended March 31, 2021 Highlights ─ compared to March 31, 2020

  • Net sales of $549.0 million decreased $95.8 million.
  • Gross profit of $296.7 million (54.0% of net sales compared to 62.0%) decreased $103.1 million.
  • R&D expenses of $60.2 million remained in line with the prior year.
  • SG&A of $91.4 million decreased $2.1 million.
  • Settlements and loss contingencies of $558.9 million reflect the one-time settlement charge which consists of $418.9 million related to the global resolution of the Department of Justice (“DOJ”) investigations into the U.S. generic pharmaceutical industry and a $140.0 million provision related to ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.
  • Operating (loss) of $(413.8) million compared to operating income of $246.5 million. Excluding the settlement and loss contingencies charges, operating income was $145.1 million, a decrease of $101.4 million, and as a percentage of net sales was 26.4% compared to 38.2%.
  • Interest and other financial income decreased $13.5 million to $20.2 million.
  • FX expense of $0.4 million compared to FX income of $14.8 million ─ an unfavorable impact of $15.2 million.
  • Tax expense of $9.7 million decreased $43.8 million from $53.5 million in the prior year. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate was 15.7% compared to 17.9%.
  • Net (loss) attributable to Taro was $(386.7) million compared to net income of $244.2 million, resulting in diluted (loss) per share of $(10.12) compared to diluted earnings per share of $6.35. Excluding the impact from the settlement and loss contingencies charges, net income was $141.4 million, resulting in diluted earnings per share of $3.70.

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations for the year ended March 31, 2021, was $45.8 million. Excluding the impact from the settlement and loss contingencies charges, cash flow provided by operations was $130.3 million compared to $271.6 million for the year ended March 31, 2020.
  • As of March 31, 2021, cash and cash equivalents and marketable securities (both short and long-term) increased $12.5 million to $1.58 billion from March 31, 2020. Cash and cash equivalents reflects the impact from a $102.8 million payment under the DOJ settlement agreement and share repurchases of $24.2 million.

Mr. Uday Baldota, Taro’s CEO, stated, “While we are encouraged by the sequential quarter-over-quarter revenue growth and the general trend of revenue this year, we continue to be negatively impacted by the COVID-19 pandemic and the effects it is having on the overall marketplace. Despite the difficult operating environment, we continue to maintain our leading market share, with 70% of our products ranking in the top two in the U.S. generic market. We continue to concentrate on creating shareholder value by continuing our R&D investment, maintaining a healthy pipeline, a robust, consistent flow of ANDA submissions and approvals from the FDA, and timely and successful launches of our products.”

FDA Approvals and Filings

The Company recently received three approvals from the U.S. Food and Drug Administration (“FDA”) for an Abbreviated New Drug Applications (“ANDAs”); Imiquimod Cream USP, 3.75%, Clobetasol Propionate Shampoo, 0.05% and Tavaborole Topical Solution, 5%. In total, the Company reported eight FDA approvals in the year. The Company currently has a total of twenty ANDAs awaiting FDA approval, including five tentative approvals.

Share Repurchase Program - Returning Capital to Shareholders

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 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 278,705 shares at an average price of $75.98. In total, through March 31, 2021, the Company has repurchased 332,033 shares at an average price of $75.23.

Taro Announces the Launch of New Skincare Brand, Bee Rx™

On May 1, 2021, Taro Pharmaceuticals U.S.A., Inc. launched its newest brand in a growing family: Bee Rx™, a new kind of wellness. Bee Rx™ products are manufactured in New Zealand, using a clinically proven, unique combination of medical grade kanuka honey and bee venom. Bee Rx™ launch product line includes anti-aging serums, lip plumpers, and acne blemish repair.

The Company cautions that the foregoing 2021 financial information is unaudited 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 2021. 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
(U.S. dollars in thousands, except share data)
                 
   

Quarter Ended

 

Year Ended

   

March 31,

 

March 31,

   

2021

 

2020

 

2021

 

2020

   

(unaudited)

 

(unaudited)

 

(unaudited)

 

(audited)

Sales, net  

$

148,348

   

$

174,940

   

$

548,970

   

$

644,769

 
Cost of sales    

71,414

     

72,668

     

252,314

     

245,044

 
Gross profit    

76,934

     

102,272

     

296,656

     

399,725

 
                 
Operating Expenses:                
Research and development    

16,587

     

15,799

     

60,152

     

59,777

 
Selling, marketing, general and administrative    

22,234

     

29,111

     

91,355

     

93,413

 
Settlements and loss contingencies    

80,000

     

150

     

558,924

     

 
Operating (loss) income    

(41,887

)

   

57,212

     

(413,775

)

   

246,535

 
                 
Financial (income) expense, net:                
Interest and other financial income    

(3,185

)

   

(6,633

)

   

(20,174

)

   

(33,645

)

Foreign exchange (income) expense    

(842

)

   

(3,690

)

   

365

     

(14,837

)

Other gain, net    

100

     

808

     

2,892

     

3,018

 
(Loss) income before income taxes    

(37,760

)

   

68,343

     

(391,073

)

   

298,035

 
Tax (benefit) expense    

(8,878

)

   

13,920

     

9,667

     

53,485

 
Net (loss) income    

(28,882

)

   

54,423

     

(400,740

)

   

244,550

 
Net income (loss) attributable to non-controlling interest    

904

     

225

     

(14,087

)

   

309

 
Net (loss) income attributable to Taro  

$

(29,786

)

 

$

54,198

   

$

(386,653

)

 

$

244,241

 
                 
Net (loss) income per ordinary share attributable to Taro:                
Basic and Diluted  

$

(0.78

)

 

$

1.42

   

$

(10.12

)

 

$

6.35

 
                 
Weighted-average number of shares used to compute net income per share:                
Basic and Diluted    

38,065,388

     

38,258,337

     

38,209,726

     

38,460,056

 
                 
May not foot due to rounding.                
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
         
   

March 31,

 

March 31,

   

2021

 

2020

ASSETS  

(unaudited)

 

(audited)

CURRENT ASSETS:        
Cash and cash equivalents  

$

605,177

   

$

513,354

Marketable securities    

418,480

     

595,383

Accounts receivable and other:        
Trade, net    

213,539

     

235,221

Other receivables and prepaid expenses    

53,347

     

35,567

Inventories    

180,292

     

153,073

TOTAL CURRENT ASSETS    

1,470,835

     

1,532,598

Marketable securities    

557,209

     

459,639

Property, plant and equipment, net    

205,508

     

209,961

Deferred income taxes    

142,007

     

106,693

Other assets    

31,314

     

32,361

TOTAL ASSETS  

$

2,406,873

   

$

2,341,252

         
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Trade payables  

$

61,166

   

$

28,858

Other current liabilities    

615,135

     

193,873

TOTAL CURRENT LIABILITIES    

676,301

     

222,731

Deferred taxes and other long-term liabilities    

35,115

     

8,762

TOTAL LIABILITIES    

711,416

     

231,493

         
Taro shareholders' equity    

1,703,649

     

2,103,864

Non-controlling interest    

(8,192

)

   

5,895

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  

$

2,406,873

   

$

2,341,252

         
         
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
         
   

Year Ended March 31,

   

2021

 

2020

   

(unaudited)

 

(audited)

Cash flows from operating activities:        
Net (loss) income  

$

(400,740

)

 

$

244,550

 
Adjustments required to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization    

23,680

     

21,383

 
Realized loss on sale of long-lived assets    

92

     

28

 
Change in derivative instruments, net    

(236

)

   

(2,649

)

Effect of change in exchange rate on marketable securities and bank deposits    

(4,588

)

   

(11,600

)

Deferred income taxes, net    

(38,413

)

   

7,584

 
Decrease in trade receivables, net    

21,683

     

2,724

 
Increase in inventories, net    

(27,219

)

   

(4,994

)

(Increase) decrease in other receivables, income tax receivables, prepaid expenses and other    

(16,325

)

   

12,137

 
Increase in trade, income tax, accrued expenses and other payables    

482,520

     

782

 
Loss from marketable securities, net    

5,316

     

1,660

 
Net cash provided by operating activities    

45,770

     

271,605

 
         
Cash flows from investing activities:        
Purchase of plant, property & equipment, net    

(16,983

)

   

(26,610

)

Investment in other intangible assets    

(161

)

   

(1,783

)

Proceeds from (investment in) marketable securities, net    

84,885

     

(269,769

)

Net cash provided by (used in) investing activities    

67,741

     

(298,162

)

         
Cash flows from financing activities:        
Purchase of treasury stock    

(24,196

)

   

(26,984

)

Net cash used in financing activities    

(24,196

)

   

(26,984

)

         
Effect of exchange rate changes on cash and cash equivalents    

2,508

     

(556

)

Increase (decrease) in cash and cash equivalents    

91,823

     

(54,097

)

Cash and cash equivalents at beginning of period    

513,354

     

567,451

 
Cash and cash equivalents at end of period  

$

605,177

   

$

513,354

 
         
Cash Paid during the year for:        
Income taxes  

$

29,377

   

$

54,536

 
Cash Received during the year for:        
Income taxes  

$

4,093

   

$

24,331

 
Non-cash investing transactions:        
Purchase of property, plant and equipment included in accounts payable  

$

2,997

   

$

1,477

 
Non-cash financing transactions:        
Purchase of intangible assets  

$

15

   

$

 
Purchase of treasury stock  

$

782

   

$

 
Purchase of marketable securities  

$

9,417

   

$

9,159

 
         

View source version on businesswire.com: https://www.businesswire.com/news/home/20210519005955/en/

Contacts

Daphne Huang
VP, CFO
(914) 345-9001
Daphne.Huang@taro.com

William J. Coote
AVP, Treasurer and Investor Relations
(914) 345-9001
William.Coote@taro.com

Source: Taro Pharmaceutical Industries Ltd.

Back to news