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Taro Pharmaceutical Industries Ltd.
c/o Taro Pharmaceuticals U.S.A., Inc.
Three Skyline Drive
Hawthorne, New York 10532
(NYSE: TARO)
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|
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Mariano Balaguer
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William J. Coote
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VP, Chief Financial Officer
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AVP, Business Finance and Treasurer
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(914) 345-9000
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(914) 345-9000
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Mariano.Balaguer@Taro.com
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William.Coote@Taro.com
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•
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Net sales of $160.9 million increased $1.9 million, principally driven by an increase in overall volumes.
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•
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Gross profit of $101.6 million (63.2% of net sales compared to 68.3%) decreased $7.0 million.
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•
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Research and development (R&D) expenses of $15.5 million increased slightly.
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•
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Selling, marketing, general and administrative expenses (SG&A) of $23.7 million increased $4.5 million.
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•
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Settlements and loss contingencies was a $0.2 million credit, as compared to a $4.0 million credit (the result of a settlement of a patent infringement) in the prior year.
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•
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Operating income of $62.6 million (38.9% of net sales compared to 49.5%) decreased $16.1 million.
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•
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Interest and other financial income of $8.9 million remained in line with the prior year.
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•
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Foreign Exchange (FX) impact in the current quarter was immaterial as compared to FX expense of $6.0 million in the prior year, principally the result of the commencement of hedging accounting in accordance with ASU No. 2017-12 and our Canadian subsidiary change to the U.S. dollar as its functional currency.
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•
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Tax expense of $16.2 million decreased $3.0 million; with the effective tax rate of 22.4% compared to 23.5%.
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•
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Net income attributable to Taro was $56.2 million compared to $62.6 million, a $6.4 million decrease, resulting in diluted earnings per share of $1.46 compared to $1.60.
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•
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Net sales of $322.1 million increased $8.6 million, principally the result of a single digit increase in overall volumes.
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•
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Gross profit of $203.3 million (63.1% of net sales compared to 66.5%) decreased $5.3 million.
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•
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R&D expenses of $29.0 million increased $1.0 million.
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•
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SG&A of $43.4 million increased slightly.
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•
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Operating income of $131.1 million (40.7% of net sales compared to 45.2%) decreased $10.8 million.
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•
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Interest and other financial income of $18.5 million increased $1.6 million.
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•
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FX income of $7.9 million compared to $4.0 million in 2018 ─ a favorable impact of $3.9 million.
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•
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Tax expense of $36.7 million increased $3.4 million; with the effective tax rate of 23.1% compared to 20.4%.
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•
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Net income attributable to Taro was $122.4 million compared to $129.8 million, a $7.5 million decrease, resulting in diluted earnings per share of $3.17 compared to $3.31.
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•
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Cash flow provided by operations for the six months ended September 30, 2019, was $123.4 million compared to $157.7 million for the six months ended September 30, 2018.
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•
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As of September 30, 2019, cash and cash equivalents and marketable securities (both short and long-term), increased $121.7 million to $1.5 billion from March 31, 2019.
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Quarter Ended
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Six Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2019
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2018
|
2019
|
2018
|
|||||||||||||
Sales, net
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$
|
160,850
|
$
|
158,973
|
$
|
322,146
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$
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313,591
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||||||||
Cost of sales
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59,247
|
50,411
|
118,819
|
104,947
|
||||||||||||
Gross profit
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101,603
|
108,562
|
203,327
|
208,644
|
||||||||||||
Operating Expenses:
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||||||||||||||||
Research and development
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15,539
|
14,655
|
28,982
|
28,000
|
||||||||||||
Selling, marketing, general and administrative
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23,652
|
19,185
|
43,370
|
42,767
|
||||||||||||
Settlements and loss contingencies
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(150
|
)
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(4,000
|
)
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(150
|
)
|
(4,000
|
)
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||||||||
Operating income
|
62,562
|
78,722
|
131,125
|
141,877
|
||||||||||||
Financial (income) expense, net:
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||||||||||||||||
Interest and other financial income
|
(8,857
|
)
|
(9,109
|
)
|
(18,481
|
)
|
(16,914
|
)
|
||||||||
Foreign exchange expense (income)
|
45
|
5,958
|
(7,860
|
)
|
(4,004
|
)
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||||||||||
Other gain (loss), net
|
1,082
|
(90
|
)
|
1,676
|
512
|
|||||||||||
Income before income taxes
|
72,456
|
81,783
|
159,142
|
163,307
|
||||||||||||
Tax expense
|
16,246
|
19,235
|
36,691
|
33,331
|
||||||||||||
Net income
|
56,210
|
62,548
|
122,451
|
129,976
|
||||||||||||
Net income (loss) attributable to non-controlling interest
|
32
|
(12
|
)
|
90
|
139
|
|||||||||||
Net income attributable to Taro
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$
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56,178
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$
|
62,560
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$
|
122,361
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$
|
129,837
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||||||||
Net income per ordinary share attributable to Taro:
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||||||||||||||||
Basic and Diluted
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$
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1.46
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$
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1.60
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$
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3.17
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$
|
3.31
|
||||||||
Weighted-average number of shares used to compute net
income per share:
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||||||||||||||||
Basic and Diluted
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38,539,056
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39,205,874
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38,539,056
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39,232,897
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||||||||||||
May not foot due to rounding.
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September 30,
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March 31,
|
|||||||
2019
|
2019
|
|||||||
ASSETS
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(unaudited)
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(audited)
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||||||
CURRENT ASSETS:
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||||||||
Cash and cash equivalents
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$
|
560,667
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$
|
567,451
|
||||
Marketable securities
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496,948
|
481,883
|
||||||
Accounts receivable and other:
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||||||||
Trade, net
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247,500
|
237,945
|
||||||
Other receivables and prepaid expenses
|
26,312
|
47,362
|
||||||
Inventories
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148,439
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148,079
|
||||||
TOTAL CURRENT ASSETS
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1,479,866
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1,482,720
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||||||
Long-term deposits and marketable securities
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417,778
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304,322
|
||||||
Property, plant and equipment, net
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206,727
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206,242
|
||||||
Deferred income taxes
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111,809
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110,974
|
||||||
Other assets
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33,526
|
31,068
|
||||||
TOTAL ASSETS
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$
|
2,249,706
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$
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2,135,326
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
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$
|
38,409
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$
|
35,060
|
||||
Other current liabilities
|
171,092
|
181,761
|
||||||
TOTAL CURRENT LIABILITIES
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209,501
|
216,821
|
||||||
Deferred taxes and other long-term liabilities
|
8,899
|
7,383
|
||||||
TOTAL LIABILITIES
|
218,400
|
224,204
|
||||||
Taro shareholders' equity
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2,025,630
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1,905,536
|
||||||
Non-controlling interest
|
5,676
|
5,586
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
2,249,706
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$
|
2,135,326
|
||||
Six Months Ended September 30,
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||||||||
2019
|
2018
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
122,451
|
$
|
129,976
|
||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
10,654
|
8,815
|
||||||
Realized gain on sale of marketable securities
|
—
|
18
|
||||||
Change in derivative instruments, net
|
(2,758
|
)
|
2,526
|
|||||
Effect of change in exchange rate on inter-company balances, marketable securities and bank deposits
|
(6,210
|
)
|
(11,771
|
)
|
||||
Deferred income taxes, net
|
302
|
(1,705
|
)
|
|||||
Increase in trade receivables, net
|
(9,556
|
)
|
(17,524
|
)
|
||||
Increase in inventories, net
|
(360
|
)
|
(8,475
|
)
|
||||
Decrease in other receivables, income tax receivable, prepaid expenses and other
|
22,184
|
61,951
|
||||||
Decrease in trade, income tax, accrued expenses, and other payables
|
(12,139
|
)
|
(6,306
|
)
|
||||
(Income) loss from marketable securities, net
|
(1,210
|
)
|
145
|
|||||
Net cash provided by operating activities
|
123,358
|
157,650
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of plant, property & equipment, net
|
(13,603
|
)
|
(12,135
|
)
|
||||
Investment in other intangible assets
|
(45
|
)
|
(1,094
|
)
|
||||
Proceeds from short-term bank deposits, net
|
—
|
225,503
|
||||||
Proceeds from long-term deposits and other assets
|
—
|
70,685
|
||||||
Investment in marketable securities, net
|
(116,494
|
)
|
(159,035
|
)
|
||||
Investment in the sale of plant, property & equipment
|
—
|
(26
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(130,142
|
)
|
123,898
|
|||||
Cash flows from financing activities:
|
||||||||
Purchase of treasury stock
|
—
|
(32,404
|
)
|
|||||
Net cash used in financing activities
|
—
|
(32,404
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
(155
|
)
|
|||||
(Decrease) increase in cash and cash equivalents
|
(6,784
|
)
|
248,989
|
|||||
Cash and cash equivalents at beginning of period
|
567,451
|
576,611
|
||||||
Cash and cash equivalents at end of period
|
$
|
560,667
|
$
|
825,600
|
||||
Cash Paid during the year for:
|
||||||||
Income taxes
|
$
|
21,841
|
$
|
41,981
|
||||
Cash Received during the year for:
|
||||||||
Income taxes
|
$
|
6,964
|
$
|
69,243
|
||||
Non-cash investing transactions:
|
||||||||
Purchase of property, plant and equipment included in accounts payable
|
$
|
2,000
|
$
|
2,258
|
||||
Non-cash financing transactions:
|
||||||||
Purchase of intangible assets
|
$
|
1,000
|
$
|
—
|
||||
Purchase of treasury stock
|
$
|
—
|
$
|
848
|
||||
Purchase of marketable securities
|
$
|
10,589
|
$
|
6,090
|
||||
Sale of marketable securities
|
$
|
(164
|
)
|
$
|
(4,928
|
)
|