Taro Provides Results for Quarter Ended June 2017 | Digital Conqueror

Taro Provides Results for Quarter Ended June 2017

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter ended June 30, 2017.


Quarter ended June 30, 2017 Highlights – compared to June 30, 2016


  • Net sales of $161.3 million, decreased $72.5 million, or 31.0%, the result of continuing increased competition and the challenging pricing environment; despite an overall increase in volumes.
  • Gross profit of $116.5 million, decreased $66.2 million and as a percentage of net sales, was 72.2% compared to 78.2%.
  • Research and development (R&D) expenses of $14.7 million decreased $3.3 million; as our R&D spending is not evenly distributed across quarters. R&D as a percentage of net sales increased to 9.1% from 7.7% in the previous year quarter.
  • Selling, marketing, general and administrative expenses of $24.2 million increased $2.0 million.
  • Operating income of $77.6 million decreased $65.0 million and as a percentage of net sales was 48.1% as compared to 61.0%.
  • Foreign exchange expense of $19.6 million increased $13.7 million from $5.9 million, principally due to the weakening of the U.S. dollar vs. Canadian dollar at a higher degree than the prior year quarter.
  • Tax expense of $10.0 million decreased $20.4 million with the effective tax rate improving to 15.5% from 21.7%.
  • Net income attributable to Taro was $54.5 million compared to $109.9 million, a $55.4 million decrease, resulting in diluted earnings per share of $1.35 compared to $2.59.

Cash Flow and Balance Sheet Highlights


  • Cash flow provided by operations was $72.7 million compared to $56.0 million for the three months ended June 30, 2016.
  • Cash, including short-term bank deposits and marketable securities, increased $58.2 million to $1.4 billion.

Mr. Abhay Gandhi, Taro’s interim CEO stated, “Our results reflect the difficult generic pricing environment, particularly in the U.S., driven by more intense competition among manufacturers, new entrants to the market, buying consortium pressures, and a higher ANDA approval rate from the FDA. We expect this product-specific pricing pressure to continue into the future.” Mr. Gandhi continued, “We believe our long-term strategy is well balanced, with a leadership position in many of our key molecules, our pipeline, our commitment to providing quality products, and strong manufacturing and customer service capabilities.”


FDA Approvals and Filings


The Company recently received approvals from the U.S. Food and Drug Administration (“FDA”) for four Abbreviated New Drug Applications (“ANDAs”): Children’s Ibuprofen Oral Suspension USP (OTC) 100mg/5mL, Ibuprofen Oral Suspension 100mg/5mL, Betamethasone Valerate Topical Foam 0.12%, and Felbamate Oral Suspension USP 600mg/5mL. The Company currently has a total of thirty-three ANDAs awaiting FDA approval, including six tentative approvals.


Share Repurchase Program – Returning Capital to Shareholders


On November 23, 2016, the Company announced that its Board of Directors approved a new $250 million share repurchase of ordinary shares. Under this authorization, repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its stock, and general market conditions. No time period has been set for the repurchase program, and any such program may be suspended or discontinued at any time. The repurchase authorization enables the Company to purchase its ordinary shares from time to time through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws or other restrictions. During the quarter, the Company repurchased 80,007 shares at an average price of $106.07. Under this program, in total, the Company has repurchased 598,972 shares, with $187.2 million remaining under the authorization.


Form 20-F Filings with the SEC


On June 21,2017, 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, 2017.


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.




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 2018.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**


(U.S. dollars in thousands, except share data)
    Three Months Ended June 30,  
      2017       2016    
Sales, net   $ 161,321     $ 233,784    
Cost of sales     44,778       50,885    
Impairment           108    
Gross profit     116,543       182,791    
Operating Expenses:          
Research and development     14,658       17,920    
Selling, marketing, general and administrative     24,249       22,252    
Operating income     77,636       142,619    
Financial (income) expense, net:          
Interest and other financial income     (4,476 )     (3,306 )  
Foreign exchange expense     19,642       5,909    
Other gain, net     2,119       403    
Income before income taxes     64,589       140,419    
Tax expense     9,987       30,425    
Income from continuing operations     54,602       109,994    
Net loss from discontinued operations attributable to Taro     (47 )     (101 )  
Net income     54,555       109,893    
Net income (loss) attributable to non-controlling interest     58       (4 )  
Net income attributable to Taro   $ 54,497     $ 109,897    
Net income per ordinary share from continuing operations attributable to Taro:      
Basic   $ 1.35     $ 2.59    
Diluted   $ 1.35     $ 2.59    
Net loss per ordinary share from discontinued operations attributable to Taro:      
Basic   $ (0.00 ) * $ (0.00 ) *
Diluted   $ (0.00 ) * $ (0.00 ) *
Net income per ordinary share attributable to Taro:          
Basic   $ 1.35     $ 2.59    
Diluted   $ 1.35     $ 2.59    
Weighted-average number of shares used to compute net income per share:      
Basic     40,489,470       42,370,644    
Diluted     40,489,470       42,370,644    
* Amount is less than $0.01          
May not foot due to rounding.          
(U.S. dollars in thousands)
    June 30,   March 31,
      2017     2017
ASSETS   (unaudited)   (audited)
Cash and cash equivalents   $ 430,713   $ 600,399
Short-term and current maturities of long-term bank deposits     806,558     782,813
Marketable securities     207,712     3,548
Accounts receivable and other:        
Trade, net     185,881     203,924
Other receivables and prepaid expenses     157,755     266,280
Inventories     144,354     141,045
Long-term assets held for sale, net     1,083     1,015
TOTAL CURRENT ASSETS     1,934,056     1,999,024
Long-term deposits and marketable securities     71,376     70,685
Property, plant and equipment, net     183,415     180,085
Deferred income taxes     137,706     10,324
Other assets     31,094     29,635
TOTAL ASSETS   $ 2,357,647   $ 2,289,753
Trade payables and other current liabilities   $ 205,767   $ 209,837
TOTAL CURRENT LIABILITIES     205,767     209,837
Deferred taxes and other long-term liabilities     5,995     6,110
TOTAL LIABILITIES     211,762     215,947
Taro shareholders’ equity     2,139,515     2,067,494
Non-controlling interest     6,370     6,312
(U.S. dollars in thousands)
    Three Months Ended June 30,
      2017       2016  
Cash flows from operating activities:        
Net income   $ 54,555     $ 109,893  
Adjustments required to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization     3,775       3,692  
Impairment for long-lived assets           108  
Realized gain on sale of marketable securities and long-lived assets     (247 )      
Change in derivative instruments, net     (3,093 )     2,671  
Effect of change in exchange rate on inter-company balances and bank deposits     22,078       4,101  
Deferred income taxes, net     4,825       (20,282 )
Decrease (increase) in trade receivables, net     18,270       (51,220 )
Increase in inventories, net     (2,114 )     (9,190 )
(Increase) decrease in other receivables, income tax receivable, prepaid expenses and other     (21,483 )     19,612  
Decrease in trade, income tax, accrued expenses, and other payables     (3,377 )     (3,420 )
Income from marketable securities     (521 )      
Net cash provided by operating activities     72,668       55,965  
Cash flows from investing activities:        
Purchase of plant, property & equipment, net     (4,557 )     (9,184 )
Investment in other intangible assets     (2,056 )     (11 )
Proceeds from short-term bank deposits     46,940       90,754  
Investment in long-term deposits and other assets           (143,503 )
(Investment in) proceeds from marketable securities, net     (275,128 )     80  
Net cash used in investing activities     (234,801 )     (61,864 )
Cash flows from financing activities:        
Purchase of treasury stock     (8,489 )     (132,489 )
Net cash used in financing activities     (8,489 )     (132,489 )
Effect of exchange rate changes on cash and cash equivalents     936       363  
Decrease in cash and cash equivalents     (169,686 )     (138,025 )
Cash and cash equivalents at beginning of period     600,399       576,757  
Cash and cash equivalents at end of period   $ 430,713     $ 438,732  
Cash paid during the quarter for:        
Income taxes   $ 29,595     $ 37,721  
Non-cash investing transactions:        
Purchase of property, plant and equipment included in accounts payable  


1,180     $ 617  
Non-cash financing transactions:        
Purchase of treasury stock  


    $ 8,341  




Amol Wagh

Author of Game Marketing Book: Market Your Indie Game Like A Pro! 7 years of Tech Blogging & Digital Marketing. Co-founder at Dotline Inc & a Gamer. Follow me on Twitter @amolwagh, @amol.wagh


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