UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of February, 2020

 

Commission File Number 001-35463

Taro Pharmaceutical Industries Ltd.

(Translation of registrant’s name into English)

 

14 Hakitor Street, Haifa Bay 2624761, Israel

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F       Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____

 

 



                                                                                                                        

         Taro Pharmaceutical Industries Ltd.

c/o Taro Pharmaceuticals U.S.A., Inc.

Three Skyline Drive

  Hawthorne, New York 10532

  (NYSE: TARO)

 

 

 

 

FOR IMMEDIATE RELEASE  

 

CONTACT:

William J. Coote

AVP, Treasurer and Investor Relations Interim CFO

(914) 345-9001

William.Coote@Taro.com

 

TARO PROVIDES RESULTS FOR DECEMBER 31, 2019

 

Hawthorne, NY, February 3, 2020 - Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the three and nine months ended December 31, 2019.

 

Quarter ended December 31, 2019 Highlights ─ compared to December 31, 2018

 

Net sales of $147.7 million decreased $28.7 million, primarily the result of competition.

 

Gross profit of $94.1 million (63.7% of net sales compared to 66.6%) decreased $23.4 million.

 

Research and development (R&D) expenses of $15.0 million remained constant.

 

Selling, marketing, general and administrative expenses (SG&A) of $20.9 million decreased $3.0 million.

 

Operating income of $58.2 million (39.4% of net sales compared to 44.8%) decreased $20.7 million.

 

Interest and other financial income of $8.5 million increased slightly.

 

Foreign Exchange (FX) income of $3.3 million decreased $27.4 million principally the result of the commencement of hedging accounting in accordance with ASU No. 2017-12 and the change in our Canadian subsidiary’s functional currency to U.S. dollar.

 

Tax expense of $2.9 million decreased $22.9 million; reflecting the impact from a non-recurring item.

 

Net income attributable to Taro was $67.7 million compared to $93.5 million, a $25.8 million decrease as the decrease in operating income and FX income was partially offset by the decrease in tax expense resulting in diluted earnings per share of $1.76 compared to $2.40.

 

Nine Months ended December 31, 2019 Highlights ─ compared to December 31, 2018

 

Net sales of $469.8 million decreased $20.1 million.

 

Gross profit of $297.5 million (63.3% of net sales compared to 66.6%) decreased $28.7 million.

 

R&D expenses of $44.0 million increased $1.3 million.

 

SG&A of $64.3 million decreased $2.3 million.

 

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.

 

Operating income of $189.3 million (40.3% of net sales compared to 45.1%) decreased $31.5 million.

 

Interest and other financial income increased $1.7 million to $27.0 million.

 

FX income of $11.1 million compared to $34.7 million in 2018 ─ an unfavorable impact of $23.6 million – principally the result of the aforementioned commencement of hedging accounting and the change in our Canadian subsidiary’s functional currency to U.S. dollar effective April 1, 2019.

 

Tax expense of $39.6 million decreased $19.5 million; the result of the aforementioned non-recurring item in the quarter.

 

Net income attributable to Taro was $190.0 million compared to $223.3 million, a $33.3 million decrease, resulting in diluted earnings per share of $4.93 compared to $5.71.

 

 

 

 

 

 


 

Cash Flow and Balance Sheet Highlights

 

Cash flow provided by operations for the nine months ended December 31, 2019, was $222.0 million compared to $265.1 million for the nine months ended December 31, 2018.

 

As of December 31, 2019, cash and cash equivalents and marketable securities (both short and long-term) increased $176.8 million to $1.5 billion from March 31, 2019.  Cash and cash equivalents reflects the impact from the $26.8 million Tender Offer paid in December 2019.

 

 

Mr. Uday Baldota, Taro’s CEO, stated, “Despite approximately 75% of our products ranking in the top two (2) when measured on market share this quarters’ financial performance reflects, in big measure, the continued challenging market dynamics particularly in the U.S. generic market.  Responding to the faith our customers and patients repose in us, we continue to invest in R&D for augmenting our product offering.  This, coupled with investments in inorganic strategic opportunities, is aimed toward creating longer term shareholder value.”

 

FDA Approvals and Filings

 

The Company recently received an approval from the U.S. Food and Drug Administration (“FDA”) for one Abbreviated New Drug Application (“ANDA”); Azithromycin for Oral Suspension USP, 200 mg per 5mL.  The Company currently has a total of twenty-three ANDAs awaiting FDA approval, including seven tentative approvals.

 

Results of the Tender Offer

 

On December 19, 2019, Taro announced the final results of its modified “Dutch auction” tender offer whereby the Company accepted for payment 280,719 ordinary shares including all “odd lots” properly tendered, at the final purchase price of $91.00 per share, for an aggregate purchase price of approximately $25.5 million (excluding fees and expenses relating to the tender offer).  

 

 

The Company cautions that the foregoing financial information is unaudited and could be 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 2020.  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

(Unaudited)

(U.S. dollars in thousands, except share data)

 

 

 

Quarter Ended

 

 

Nine Months Ended

 

 

December 31,

 

 

December 31,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Sales, net

$

147,683

 

 

$

176,381

 

 

$

469,829

 

 

$

489,972

 

Cost of sales

 

53,557

 

 

 

58,838

 

 

 

172,375

 

 

 

163,785

 

Gross profit

 

94,126

 

 

 

117,543

 

 

 

297,454

 

 

 

326,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Research and development

 

14,996

 

 

 

14,726

 

 

 

43,978

 

 

 

42,726

 

   Selling, marketing, general and administrative

 

20,932

 

 

 

23,883

 

 

 

64,302

 

 

 

66,650

 

   Settlements and loss contingencies

 

 

 

 

 

 

 

(150

)

 

 

(4,000

)

Operating income

 

58,198

 

 

 

78,934

 

 

 

189,324

 

 

 

220,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest and other financial income

 

(8,531

)

 

 

(8,388

)

 

 

(27,012

)

 

 

(25,302

)

  Foreign exchange income

 

(3,287

)

 

 

(30,702

)

 

 

(11,147

)

 

 

(34,706

)

Other gain, net

 

534

 

 

 

1,398

 

 

 

2,211

 

 

 

1,910

 

Income before income taxes

 

70,550

 

 

 

119,422

 

 

 

229,694

 

 

 

282,729

 

Tax expense

 

2,874

 

 

 

25,752

 

 

 

39,565

 

 

 

59,083

 

Net income

 

67,676

 

 

 

93,670

 

 

 

190,129

 

 

 

223,646

 

Net (loss) income attributable to non-controlling interest

 

(6

)

 

 

164

 

 

 

84

 

 

 

303

 

Net income attributable to Taro

$

67,682

 

 

$

93,506

 

 

$

190,045

 

 

$

223,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per ordinary share attributable to Taro:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

$

1.76

 

 

$

2.40

 

 

$

4.93

 

 

$

5.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

38,502,440

 

 

 

38,938,963

 

 

 

38,526,806

 

 

 

39,134,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

May not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)



 

December 31,

 

 

March 31,

 

 

2019

 

 

2019

 

ASSETS

(unaudited)

 

 

(audited)

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

509,361

 

 

$

567,451

 

Marketable securities

 

542,032

 

 

 

481,883

 

Accounts receivable and other:

 

 

 

 

 

 

 

   Trade, net

 

227,327

 

 

 

237,945

 

   Other receivables and prepaid expenses

 

21,115

 

 

 

47,362

 

Inventories

 

157,875

 

 

 

148,079

 

TOTAL CURRENT ASSETS

 

1,457,710

 

 

 

1,482,720

 

Marketable securities

 

479,050

 

 

 

304,322

 

Property, plant and equipment, net

 

206,692

 

 

 

206,242

 

Deferred income taxes

 

114,193

 

 

 

110,974

 

Other assets

 

33,318

 

 

 

31,068

 

TOTAL ASSETS

$

2,290,963

 

 

$

2,135,326

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Trade payables

$

37,035

 

 

$

35,060

 

Other current liabilities

 

177,144

 

 

 

181,761

 

TOTAL CURRENT LIABILITIES

 

214,179

 

 

 

216,821

 

Deferred taxes and other long-term liabilities

 

8,180

 

 

 

7,383

 

TOTAL LIABILITIES

 

222,359

 

 

 

224,204

 

 

 

 

 

 

 

 

 

Taro shareholders' equity

 

2,062,934

 

 

 

1,905,536

 

Non-controlling interest

 

5,670

 

 

 

5,586

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,290,963

 

 

$

2,135,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)


 

Nine Months Ended December 31,

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

190,129

 

 

$

223,646

 

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

 

 

 

 

 

 

 

     Depreciation and amortization

 

16,101

 

 

 

13,738

 

     Realized gain on sale of long-lived assets

 

 

 

 

18

 

     Change in derivative instruments, net

 

(3,395

)

 

 

5,881

 

     Effect of change in exchange rate on inter-company balances, marketable securities and bank deposits

 

(11,061

)

 

 

(49,688

)

     Deferred income taxes, net

 

(2,076

)

 

 

741

 

     Decrease (increase) in trade receivables, net

 

10,618

 

 

 

(18,439

)

     Increase in inventories, net

 

(9,796

)

 

 

(6,795

)

     Decrease in other receivables, income tax receivable, prepaid expenses and other

 

27,407

 

 

 

86,425

 

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

 

5,263

 

 

 

8,810

 

     (Income) loss from marketable securities, net

 

(1,182

)

 

 

792

 

Net cash provided by operating activities

 

222,008

 

 

 

265,129

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

     Purchase of plant, property & equipment, net

 

(19,350

)

 

 

(19,526

)

     Investment in other intangible assets

 

(1,016

)

 

 

(2,669

)

     Proceeds from short-term bank deposits, net

 

 

 

 

225,503

 

     Proceeds from long-term deposits and other assets

 

 

 

 

70,685

 

    (Investment in) proceeds from marketable securities, net

 

(233,393

)

 

 

24,742

 

Net cash (used in) provided by investing activities

 

(253,759

)

 

 

298,735

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

     Purchase of treasury stock

 

(26,827

)

 

 

(72,191

)

     Dividends paid

 

 

 

 

(500,000

)

Net cash used in financing activities

 

(26,827

)

 

 

(572,191

)

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

488

 

 

 

(1,815

)

Decrease in cash and cash equivalents

 

(58,090

)

 

 

(10,142

)

Cash and cash equivalents at beginning of period

 

567,451

 

 

 

576,611

 

Cash and cash equivalents at end of period

$

509,361

 

 

$

566,469

 

 

 

 

 

 

 

 

 

Cash Paid during the year for:

 

 

 

 

 

 

 

Income taxes

$

38,773

 

 

$

51,487

 

Cash Received during the year for:

 

 

 

 

 

 

 

Income taxes

$

24,819

 

 

$

78,367

 

Non-cash investing transactions:

 

 

 

 

 

 

 

Purchase of property, plant and equipment included in accounts payable

$

1,479

 

 

$

1,544

 

Non-cash financing transactions:

 

 

 

 

 

 

 

Purchase of intangible assets

$

750

 

 

$

 

Purchase of treasury stock

$

 

 

$

4,493

 

Purchase of marketable securities

$

 

 

$

1,799

 

Sale of marketable securities

$

(145

)

 

$

 

 

 

#####

 

 

 

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  February 3, 2020

TARO PHARMACEUTICAL INDUSTRIES LTD.

By:  /s/ Uday Baldota

Name:Uday Baldota

Title:Chief Executive Officer and Director