Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the
“Company”) today provided unaudited financial results for the
quarter and nine months ended December 31, 2021.
Quarter ended December 31, 2021 Highlights ─ compared to
December 31, 2020
- Net sales of $139.0 million decreased $1.2 million.
- Gross profit of $76.0 million increased $2.8 million, and as a
percentage of net sales was 54.7% compared to 52.2%.
- Research and development (“R&D”) expenses of $14.2 million
were in line with the prior year quarter.
- Selling, marketing, general and administrative expenses
(“SG&A”) of $24.8 million increased $2.0 million.
- Operating income of $37.0 million was in line with the prior
year quarter, and as a percentage of net sales was 26.6% compared
to 25.9%.
- Interest and other financial income of $2.1 million decreased
$1.9 million, reflecting the lower global interest rate
environment.
- Tax expense of $13.2 million increased $7.1 million. Excluding
the tax impact from certain items related to the settlement and
loss contingencies charges taken in prior periods, tax expense
increased $0.2 million with a resulting effective tax rate of 15.8%
compared to 15.6%.
- Net income attributable to Taro was $26.3 million compared to
$32.9 million, resulting in diluted earnings per share of $0.70
compared to $0.86.
Nine Months ended December 31, 2021 Highlights ─ compared to
December 31, 2020
- Net sales of $418.1 million increased $17.5 million.
- Gross profit of $215.8 million decreased $3.9 million, and as a
percentage of net sales was 51.6% compared to 54.8%.
- R&D expenses of $39.6 million decreased $3.9 million.
- SG&A of $72.5 million increased $3.4 million.
- Settlements and loss contingencies of $61.4 million consist of
the additional legal contingency of $60.0 million (taken in the
first quarter) related to ongoing multi-jurisdiction civil
antitrust matters and $1.4 million related to the aforementioned
global resolution with the Department of Justice (“DOJ”) in
connection with its investigations into the U.S. generic
pharmaceutical industry. In the prior year, settlements and loss
contingencies of $478.9 million consisted of $418.9 million related
to the global resolution with the DOJ in connection with its
investigations into the U.S. generic pharmaceutical industry and an
additional provision of $60.0 million related to ongoing
multi-jurisdiction civil antitrust matters; however, there can be
no assurance as to the ultimate outcome.
- Operating income of $42.2 million compared to operating loss of
$371.9 million. Excluding the settlement and loss contingencies
charges in both periods, operating income was $103.6 million
compared to $107.0 million and as a percentage of net sales was
24.8% compared to 26.7%.
- Interest and other financial income of $7.5 million decreased
$9.5 million.
- Tax expense of $22.0 million increased $3.4 million. Excluding
the impact from the settlement and loss contingencies charges in
both periods, tax expense decreased $3.4 million with a resulting
effective tax rate of 13.2% compared to 14.8%.
- Net income attributable to Taro was $30.9 million compared to
net loss of $356.9 million, resulting in diluted earnings (loss)
per share of $0.82 compared to $(9.33). Excluding the impact from
the settlement and loss contingencies charges in both periods, net
income was $99.2 million compared to $107.1 million, resulting in
diluted earnings per share of $2.64 compared to $2.80.
Cash Flow and Balance Sheet Highlights
- Cash flow used in operations was $200.0 million for the nine
months ended December 31, 2021. Excluding the impact from the
settlement and loss contingencies charges in both periods, cash
flow provided by operations was $124.6 million compared to $97.5
million for the nine months ended December 31, 2020.
- As of December 31, 2021, cash and cash equivalents and
marketable securities (both short and long-term), decreased $257.4
million to $1.3 billion from March 31, 2021; reflecting the impact
from payments to the DOJ of $317.6 million ─ as a result of the
global resolution with the DOJ in connection with its
investigations into the U.S. generic pharmaceutical industry, and
share repurchases of $24.9 million.
Mr. Uday Baldota, Taro’s CEO, stated, “Despite the challenging
market conditions, particularly in the U.S. generic market, we
successfully defended our market share across each business. Our
current quarter and nine month performance reflects this. With the
intent of ever strengthening the future, we remain focused on high
return R&D investments as well as the exploration of new
business development opportunities.”
FDA Approvals and
Filings
The Company recently received approvals from the U.S. Food and
Drug Administration (“FDA”) for the Abbreviated New Drug
Applications (“ANDAs”): Sildenafil Powder for Oral Suspension, 10
mg/mL and Adapalene Gel, USP 0.1%. The Company currently has a
total of seventeen ANDAs awaiting FDA approval, including four
tentative approvals.
Taro Pharmaceuticals U.S.A., Inc.
(“Taro USA”) Signs Settlement Agreement with the Direct Purchaser
Plaintiffs
Taro USA entered into a settlement agreement with the direct
purchaser class on November 4, 2021, which, if approved by the
court, will resolve all claims brought by the direct purchaser
class against Taro USA and its parents, affiliates, officers and
directors in the In re: Generic Pharmaceuticals Pricing Antitrust
Litigation. Under the terms of the settlement agreement, Taro USA
will pay a maximum of $67.6 million, subject to a reduction of up
to $8.0 million depending on the decisions of certain class members
to opt out of the settlement. The settlement is subject to approval
by the court.
The Company cautions that the foregoing financial information is
presented on an unaudited basis 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 2022. 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,
2021
2020
2021
2020
Sales, net
$
138,984
$
140,145
$
418,083
$
400,622
Cost of sales
62,937
66,957
202,293
180,900
Impairment
13
—
13
—
Gross profit
76,034
73,188
215,777
219,722
Operating Expenses: Research and development
14,201
14,081
39,648
43,565
Selling, marketing, general and administrative
24,841
22,798
72,501
69,121
Settlements and loss contingencies
26
—
61,446
478,924
Operating income (loss) *
36,966
36,309
42,182
(371,888
)
Financial income, net: Interest and other financial income
(2,090
)
(4,001
)
(7,501
)
(16,989
)
Foreign exchange expense
544
2,036
555
1,207
Other gain, net
990
863
3,714
2,792
Income (loss) before income taxes
39,501
39,137
52,842
(353,313
)
Tax expense
13,188
6,101
21,980
18,545
Net income (loss)
26,313
33,036
30,862
(371,858
)
Net income (loss) attributable to non-controlling interest
—
117
—
(14,991
)
Net income (loss) attributable to Taro *
$
26,313
$
32,919
$
30,862
$
(356,867
)
Net income (loss) per ordinary share attributable to
Taro: Basic and Diluted *
$
0.70
$
0.86
$
0.82
$
(9.33
)
Weighted-average number of shares used to compute net
income (loss) per share: Basic and Diluted
37,584,891
38,254,231
37,659,478
38,256,963
May not foot due to rounding.
* Excluding the settlement and loss contingencies charges of
$61.4 million and $478.9 million for the nine months ended December
31, 2021 and 2020, Operating income was $103.6 million and $107.0
million, Net income attributable to Taro was $99.2 million and
$107.1 million, and basic and diluted earnings per share was $2.64
and $2.80, respectively.
TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED
BALANCE SHEETS (U.S. dollars in thousands)
December 31,
December 31,
2021
2020
ASSETS
(unaudited)
(audited)
CURRENT ASSETS: Cash and cash equivalents
$
318,103
$
605,177
Short-term and current maturities of long-term bank deposits
35,573
—
Marketable securities
433,403
418,480
Accounts receivable and other: Trade, net
224,666
213,539
Other receivables and prepaid expenses
43,047
53,347
Inventories
182,446
180,292
TOTAL CURRENT ASSETS
1,237,238
1,470,835
Marketable securities
536,348
557,209
Property, plant and equipment, net
193,995
205,508
Deferred income taxes
125,659
142,007
Other assets
29,779
31,314
TOTAL ASSETS
$
2,123,019
$
2,406,873
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Trade payables
$
43,685
$
61,166
Other current liabilities
351,108
615,135
TOTAL CURRENT LIABILITIES
394,793
676,301
Deferred taxes and other long-term liabilities
31,672
35,115
TOTAL LIABILITIES
426,465
711,416
Taro shareholders' equity
1,696,554
1,703,649
Non-controlling interest
—
(8,192
)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,123,019
$
2,406,873
TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in
thousands)
Nine Months Ended December
31,
2021
2020
Cash flows from operating activities: Net income
(loss)
$
30,862
$
(371,858
)
Adjustments required to reconcile net income (loss) to net cash
used in operating activities: Depreciation and amortization
19,248
17,337
Impairment of long-lived assets
13
—
Realized loss on sale of long-lived assets
551
—
Change in derivative instruments, net
(536
)
(390
)
Effect of change in exchange rate on marketable securities and bank
deposits
(39
)
(4,288
)
Deferred income taxes, net
15,003
(31,877
)
(Increase) decrease in trade receivables, net
(11,129
)
6,395
Increase in inventories, net
(2,154
)
(16,454
)
Decrease (increase) in other receivables, income tax receivables,
prepaid expenses and other
10,973
(11,962
)
(Decrease) increase in trade, income tax, accrued expenses and
other payables
(270,482
)
405,233
Expense from amortization of marketable securities bonds, net
7,734
2,579
Net cash used in operating activities
(199,956
)
(5,285
)
Cash flows from investing activities: Purchase of
plant, property & equipment, net
(9,121
)
(14,210
)
Investment in other intangible assets
(120
)
(117
)
Investment in short-term bank deposits, net
(35,573
)
—
(Investment in) proceeds from marketable securities, net
(17,161
)
60,122
Net cash (used in) provided by investing activities
(61,975
)
45,795
Cash flows from financing activities: Purchase of
treasury stock
(24,934
)
(3,243
)
Net cash used in financing activities
(24,934
)
(3,243
)
Effect of exchange rate changes on cash and cash
equivalents
(209
)
2,297
(Decrease) increase in cash and cash equivalents
(287,074
)
39,564
Cash and cash equivalents at beginning of period
605,177
513,354
Cash and cash equivalents at end of period
$
318,103
$
552,918
Cash Paid during the year for: Income taxes
$
5,667
$
24,169
Cash Received during the year for: Income taxes
$
2,351
$
4,093
Non-cash investing transactions: Purchase of property, plant
and equipment included in accounts payable
$
763
$
453
Non-cash financing transactions: Purchase of treasury stock
$
—
$
559
Purchase of marketable securities, net
$
—
$
580
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220127005955/en/
William J. Coote VP, Chief Financial Officer (914)
345-9001 William.Coote@taro.com
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