HAWTHORNE, N.Y.--(BUSINESS WIRE)--Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and fiscal year ended March 31, 2017.
Quarter ended March 31, 2017 Highlights - compared to March 31, 2016
- Net sales of $196.4 million, decreased $68.7 million, or 25.9%, the result of continuing increased competition and the challenging pricing environment. Overall volumes increased 3%.
- Gross profit of $143.8 million decreased $80.4 million, and as a percentage of net sales, was 73.2% compared to 84.6% for the same quarter last year.
- Research and development expenses of $19.9 million, remained in line with the comparable quarter.
- Selling, marketing, general and administrative expenses (SG&A) of $22.2 million slightly decreased.
- Operating income of $101.7 million decreased $80.0 million and as a percentage of net sales was 51.8% as compared to 68.6% in the prior year quarter.
- Foreign Exchange (FX) expense decreased $41.6 million to $5.8 million, principally due to the weakening of the U.S. dollar vs. Canadian dollar at a lower rate than in prior period.
- Tax expense decreased $5.6 million to $17.3 million resulting in an effective tax rate of 17.3% compared to 16.6% for the same quarter last year.
- Net Income attributable to Taro was $83.0 million compared to $115.0 million, resulting in diluted earnings per share of $2.05 compared to $2.68 for the same period last year.
Year ended March 31, 2017 Highlights - compared to March 31, 2016
- Net sales of $879.4 million, decreased $71.4 million, or 7.5%. Overall volumes increased 2% versus the prior year.
- Gross profit of $671.3 million decreased $107.7 million and as a percentage of net sales, was 76.3% compared to 81.9%.
- Research and development expenses of $70.6 million decreased slightly.
- SG&A expenses decreased $6.7 million to $85.7 million, principally as a result of reduced Keveyis spend and certain other savings.
- Operating income of $515.0 million decreased $99.5 million, and as a percentage of net sales was 58.6% vs. 64.6%.
- FX income increased $13.1 million to $20.2 million, principally driven by the strengthening of the U.S. dollar vs. Canadian dollar at a slightly lower rate compared to the prior year. The FX impact is mainly balance sheet driven.
- Other gain, net of $11.2 million increased $8.5 million, primarily driven by the sale of Keveyis in the fiscal 2017 third quarter.
- Tax expense increased $8.5 million, mainly due to certain tax benefits reflected in the prior year, not realized in the current year, resulting in the effective tax rate increasing to 18.5% from 15.0%.
- Net income attributable to Taro was $456.4 million compared to $540.9 million, resulting in diluted earnings per share of $11.05 compared to $12.62 for last year.
Cash Flow and Balance Sheet Highlights - compared to March 31, 2016
- Cash provided by operations for the period ended March 31, 2017 was $437.5 million, compared to $395.1 million.
- As of March 31, 2017, cash, including short-term bank deposits and marketable securities of $1.4 billion, increased $158.1 million from March 31, 2016, despite the $294.9 million impact from the Company’s share repurchases during this fiscal year.
Mr. Abhay Gandhi, Taro’s Interim CEO said, “As is commonly known, and as we have stated for quite some time, the entire generic sector, including Taro, is facing a challenging period. We continue to see a difficult generic pricing environment, particularly in the U.S., driven by intensified competition among manufacturers, new entrants to the market, buying consortium pressures, and higher ANDA approval rate from the FDA.” Mr. Gandhi continued, “Based on our well-balanced portfolio, the continuing focus on R&D investment, our healthy pipeline, and the Company’s strong balance sheet, we believe we are well positioned in our target markets.”
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”): Brompheniramine Maleate, Pseudoephedrine Hydrochloride and Dextromethorphan Hydrobromide Syrup 2 mg/5 mL, 30mg/5 mL, 10 mg/5 mL, Metronidazole Gel USP, 1%, Tazarotene Cream, 0.1% and Felbamate Tablets, 400 mg and 600 mg. The Company currently has a total of thirty-five ANDAs awaiting FDA approval, including 5 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. This authorization follows the successful completion of the previous $250 million share repurchase program on August 19, 2016; under which, the Company bought back 1,801,099 of its ordinary shares, of which, 1,733,760 shares were purchased subsequent to April 1, 2016.
Under the November 2016 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 fourth quarter, the Company repurchased 207,503 shares at an average price of $103.99. During the year, the Company repurchased 2,252,725 shares between the two programs.
Purchase of Thallion Pharmaceuticals Inc.
On March 16, 2017, BELLUS Health Inc.(“BELLUS”) announced that it had entered into a share purchase agreement with Taro for the sale of BELLUS’ wholly-owned subsidiary Thallion Pharmaceuticals Inc. (“Thallion”), including all the rights to the drug candidate Shigamab™. Pursuant to the agreement, Taro is acquiring all issued and outstanding shares of Thallion for a potential total consideration of CAD $2.7 million. In addition, BELLUS will receive a portion of certain post-approval revenues related to the Shigamab™ program.
Development and Commercialization license to sell and distribute Pliaglis®
On April 25, 2017, Crescita Therapeutics Inc. (“Crescita”), announced it had entered into a development and commercialization license agreement with Taro, under which, Crescita has granted Taro an exclusive license to the rights to sell and distribute Pliaglis® in the U.S. market and for a second-generation enhanced version with patent pending.
Earnings Call (8:00 am EDT, May 23, 2017)
As previously announced, the Company will host an earnings call at 8:00 am EDT on Tuesday, May 23, 2017, where senior management will discuss the Company’s performance and answer questions from participants. This call will be accessible through an audio dial-in and a web-cast. Audio conference participants can dial-in on the numbers below:
