Taro Provides Results for the Quarter Ended June 30, 2023

HAWTHORNE, N.Y., July 27, 2023--(BUSINESS WIRE)--Taro Pharmaceutical Industries Ltd. (NYSE: TARO) ("Taro" or the "Company") today provided unaudited financial results for the quarter ended June 30, 2023.

Quarter ended June 30, 2023 Highlights ─ compared to June 30, 2022

• Net sales increased $2.2 million, or 1.4%, to $158.9 million.

• Gross profit of $64.1 million (40.3% of net sales) compared to $81.6 million (52.1% of net sales).

• Research and development (R&D) expenses of $16.1 million increased $4.6 million.

• Selling, marketing, general and administrative expenses ("SMGA") of $55.9 million includes certain one-time items of $6.2 million related to transitional expenses for the planned relocation of our Alchemee operations from California to New York. Excluding this charge, SMGA was $49.7 million, or $6.4 million below the prior year quarter.

• Operating income/(loss) of $(7.9) million compared to an operating income of $14.0 million. Excluding the impact from the aforementioned certain one-time items, operating income/(loss) was $(1.7) million in the current year quarter.

• Interest and other financial income of $10.9 million increased $9.0 million.

• Foreign Exchange (FX) income of $2.1 compared to FX expense of $0.3 million in the prior year quarter; a favorable impact of $2.4 million.

• Tax/(benefit) of $(4.6) million compared to tax expense of $2.0 million in the prior year quarter.

• Net income was $10.0 million compared to net income of $14.1 million, resulting in earnings per share of $0.27 compared to net earnings per share of $0.37. Excluding the impact from the certain one-time items in the current year quarter, net income was $14.9 million resulting in earnings per share of $0.40.

Cash Flow and Balance Sheet Highlights

• Cash flow provided by operations for the quarter ended June 30, 2023, was $7.8 million; compared to cash flow used in operations for the quarter ended June 30, 2022, of $58.0 million (excluding the impact from the settlement and loss contingencies charges in the prior year quarter, cash flow provided by operations was $9.6 million).

• As of June 30, 2023, cash and cash equivalents, short-term bank deposits and marketable securities (both short- and long-term) was $1.3 billion in line with March 31, 2023.

Form 20-F Filings with the SEC

On June 29, 2023, Taro filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission ("SEC") for the fiscal year ended March 31, 2023.

The Company cautions that the foregoing 2023 financial information is unaudited and is subject to change.

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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 2024. 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 June 30,
	2023				2022
	(unaudited)				(unaudited)
Sales, net	$	158,894			$	156,665
Cost of sales		94,810				75,059
Gross profit		64,084				81,606
Operating Expenses:
Research and development		16,145				11,508
Selling, marketing, general and administrative		55,861				56,122
Operating income/(loss) *		(7,922	)			13,976
Financial (income) expense, net:
Interest and other financial income		(10,890	)			(1,926	)
Foreign exchange (income)/expense		(2,083	)			294
Other gain, net		390				445
Income/(loss) before income taxes		5,440				16,053
Tax expense/(benefit)		(4,593	)			1,974
Net income/(loss) *	$	10,033			$	14,079
Net income/(loss) per ordinary share:
Basic and Diluted *	$	0.27			$	0.37
Weighted-average number of shares used to compute net income/(loss) per share:
Basic and Diluted		37,584,891				37,584,891
May not foot due to rounding.

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
		June 30,			March 31,
		2023			2023
ASSETS		(unaudited)			(audited)
CURRENT ASSETS:
Cash and cash equivalents		$	124,165		$	154,495
Short-term bank deposits			119,980			119,980
Marketable securities			562,008			575,814
Accounts receivable and other:
Trade, net			226,873			202,260
Other receivables and prepaid expenses			56,555			57,210
Inventories			204,592			226,669
TOTAL CURRENT ASSETS			1,294,173			1,336,428
Marketable securities			451,174			404,896
Property, plant and equipment, net			189,590			190,139
Deferred income taxes			101,386			103,672
Goodwill			17,231			17,231
Other assets			81,495			83,147
TOTAL ASSETS		$	2,135,049		$	2,135,513
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	59,368		$	68,485
Other current liabilities			325,638			317,064
TOTAL CURRENT LIABILITIES			385,006			385,549
Deferred taxes and other long-term liabilities			11,511			19,106
TOTAL LIABILITIES			396,517			404,655
Taro shareholders' equity			1,738,532			1,730,858
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,135,049		$	2,135,513

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
		Quarter Ended June 30,
		2023				2022
		(unaudited)				(unaudited)
Cash flows from operating activities:
Net income		$	10,033			$	14,079
Adjustments required to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			7,892				6,978
Change in derivative instruments, net			—				(24	)
Effect of change in exchange rate on marketable securities and bank deposits			(953	)			747
Deferred income taxes, net			2,379				2,415
Increase in trade receivables, net			(24,814	)			(19,321	)
Decrease (increase) in inventories, net			21,977				(6,566	)
Decrease (increase) in other receivables, income tax receivables, prepaid expenses and other			505				(467	)
Decrease in trade, income tax, accrued expenses and other payables			(6,513	)			(59,819	)
(Income)/expense from amortization of marketable securities bonds, net			(2,729	)			3,950
Net cash provided by (used in) operating activities			7,777				(58,028	)
Cash flows from investing activities:
Purchase of plant, property & equipment, net			(6,793	)			(2,074	)
Investment in other intangible assets			(51	)			(34	)
Proceeds from short-term bank deposits, net			—				25,000
Investment in long-term deposits and other assets			—				(73	)
(Investment in) proceeds from marketable securities, net			(31,860	)			11,936
Net cash used in investing activities			(38,704	)			34,755
Cash flows from financing activities:
Net cash used in financing activities			—				—
Effect of exchange rate changes on cash and cash equivalents			597				(2,060	)
Decrease in cash and cash equivalents			(30,330	)			(25,333	)
Cash and cash equivalents at beginning of period			154,495				251,134
Cash and cash equivalents at end of period		$	124,165			$	225,801
Cash Paid during the year for:
Income taxes		$	261			$	2,410
Cash Received during the year for:
Income taxes		$	—			$	12,511
Non-cash investing transactions:
Purchase of property, plant and equipment included in accounts payable		$	740			$	1,232
Non-cash financing transactions:
Purchase of marketable securities, net		$	3,023			$	2,050
Sale of marketable securities		$	157			$	—

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Contacts

William J. Coote
VP, CFO
(914) 345-9001
William.Coote@taro.com