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Taro Provides Results for Quarter Ended June 30, 2019

HAWTHORNE, N.Y.--(BUSINESS WIRE)--

Taro Pharmaceutical Industries Ltd. (TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter ended June 30, 2019.

Quarter ended June 30, 2019 Highlights - compared to June 30, 2018

  • Net sales of $161.3 million, increased $6.7 million, or 4.3%, despite a single digit decrease in volumes primarily due to category mix.
  • Gross profit of $101.7 million increased $1.6 million, and as a percentage of net sales was 63.1% compared to 64.7%.
  • Research and development expenses of $13.4 million remained in line with prior year.
  • Selling, marketing, general and administrative expenses of $19.7 million decreased $3.9 million.
  • Operating income of $68.6 million increased $5.4 million and as a percentage of net sales was 42.5% as compared to 40.8%.
  • Interest and other financial income increased $1.8 million to $9.6 million.
  • Foreign Exchange (FX) income of $7.9 million decreased $2.1 million the result of the strengthening of the Canadian dollar vs. the U.S. dollar.
  • Tax expense of $20.4 million increased $6.3 million with the effective tax rate increasing to 23.6% from 17.3%.
  • Net income attributable to Taro was $66.2 million compared to $67.3 million, resulting in diluted earnings per share of $1.72 compared to $1.71.

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations was $82.6 million compared to $82.4 million for the three months ended June 30, 2018.
  • As of June 30, 2019, cash, including short-term and long-term marketable securities and bank deposits, increased $77.6 million to $1.431 billion from March 31, 2019.

Mr. Uday Baldota, Taro’s CEO stated, “Operating results of this quarter reflect the impact of many underlying challenges of our industry. Despite the headwinds, we remain steadfast in our commitment to customers and patients. We are executing on our strategy and continue to add to our portfolio of high quality products across business and markets.”

FDA Approvals and Filings

The Company recently received two approvals from the U.S. Food and Drug Administration (“FDA”) for Abbreviated New Drug Applications (“ANDAs”); Dapsone Gel, 7.5% and Iloperidone Tablets, 1 mg, 2 mg, 4 mg, 6 mg, 8 mg, 10 mg, and 12 mg. The Company currently has a total of twenty-six ANDAs awaiting FDA approval, including seven tentative approvals.

Form 20-F Filings with the SEC

On June 20, 2019, the Company filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2019.

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The Company cautions that the foregoing financial information is presented on an unaudited basis 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 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)
 
Three Months Ended June 30,

 

2019

 

 

2018

 

Sales, net

$

161,296

 

$

154,618

 

Cost of sales

 

59,572

 

 

54,536

 

Gross profit

 

101,724

 

 

100,082

 

 
Operating Expenses:
Research and development

 

13,443

 

 

13,345

 

Selling, marketing, general and administrative

 

19,718

 

 

23,582

 

Operating income

 

68,563

 

 

63,155

 

 
Financial income, net:
Interest and other financial income

 

(9,624

)

 

(7,804

)

Foreign exchange income

 

(7,905

)

 

(9,962

)

Other gain, net

 

594

 

 

603

 

Income before income taxes

 

86,686

 

 

81,524

 

Tax expense

 

20,445

 

 

14,096

 

Net income

 

66,241

 

 

67,428

 

Net income attributable to non-controlling interest

 

58

 

 

151

 

Net income attributable to Taro

$

66,183

 

$

67,277

 

 
Net income per ordinary share attributable to Taro:
Basic and Diluted

$

1.72

 

$

1.71

 

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

 

38,539,056

 

 

39,260,218

 

 
May not foot due to rounding.
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
     
    June 30, March 31,
   

 2019

 2019

ASSETS     (unaudited) (audited)
CURRENT ASSETS:    
Cash and cash equivalents    

$

632,986

$

567,451

Marketable securities    

 

506,751

 

481,883

Accounts receivable and other:    
Trade, net    

 

213,514

 

237,945

Corporate tax receivable    

 

9,476

 

25,969

Other receivables and prepaid expenses    

 

22,645

 

21,393

Inventories    

 

148,283

 

148,079

TOTAL CURRENT ASSETS    

 

1,533,655

 

1,482,720

Long-term deposits and marketable securities    

 

291,544

 

304,322

Property, plant and equipment, net    

 

205,654

 

206,242

Deferred income taxes    

 

108,852

 

110,974

Other assets    

 

32,495

 

31,068

TOTAL ASSETS    

$

2,172,200

$

2,135,326

     
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Trade payables    

$

37,210

$

35,060

Other current liabilities    

 

152,023

 

181,761

TOTAL CURRENT LIABILITIES    

 

189,233

 

216,821

Deferred taxes and other long-term liabilities    

 

8,122

 

7,383

TOTAL LIABILITIES    

 

197,355

 

224,204

     
Taro shareholders' equity    

 

1,969,201

 

1,905,536

Non-controlling interest    

 

5,644

 

5,586

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    

$

2,172,200

$

2,135,326

     
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
   

Three Months Ended June 30,

 

2019

 

 

2018

 

Cash flows from operating activities:  
Net income

$

66,241

 

$

67,428

 

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

 

5,071

 

 

4,299

 

Realized gain on sale of marketable securities

 

(7

)

Change in derivative instruments, net

 

(2,421

)

 

3,546

 

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

 

(5,624

)

 

(28,918

)

Deferred income taxes, net

 

2,930

 

 

1,575

 

Decrease (increase) in trade receivables, net

 

24,431

 

 

(2,897

)

(Increase) decrease in inventories, net

 

(205

)

 

2,653

 

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

 

15,671

 

 

52,479

 

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

 

(22,965

)

 

(17,408

)

Income from marketable securities, net

 

(525

)

 

(310

)

Net cash provided by operating activities

 

82,604

 

 

82,440

 

   
Cash flows from investing activities:  
Purchase of plant, property & equipment, net

 

(7,969

)

 

(6,078

)

Investment in other intangible assets

 

(30

)

 

(45

)

Proceeds from short-term bank deposits, net

 

51,345

 

Proceeds from long-term deposits and other assets

 

70,685

 

Investment in marketable securities, net

 

(9,070

)

 

(107,644

)

Net cash (used in) provided by investing activities

 

(17,069

)

 

8,263

 

   
Cash flows from financing activities:  
Purchase of treasury stock

 

(24,655

)

Net cash used in financing activities

 

(24,655

)

   
Effect of exchange rate changes on cash and cash equivalents

 

(670

)

Increase in cash and cash equivalents

 

65,535

 

 

65,378

 

Cash and cash equivalents at beginning of period

 

567,451

 

 

576,611

 

Cash and cash equivalents at end of period

$

632,986

 

$

641,989

 

   
Cash Paid during the year for:  
Income taxes

$

10,432

 

$

36,830

 

Cash Received during the year for:  
Income taxes

$

7,128

 

$

60,544

 

Non-cash investing transactions:  
Purchase of property, plant and equipment included in accounts payable

$

2,317

 

$

1,823

 

Non-cash financing transactions:  
Purchase of marketable securities

$

2,436

 

$

8,629

 

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