TARO
$65.16
Taro Pharm Inds
($.65)
(.99%)
Earnings Details
Quarter March 2020
Tuesday, May 19, 2020 5:30:00 PM
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Summary

Taro Pharm Inds (TARO) Recent Earnings

Taro Pharm Inds (TARO) reported Quarter March 2020 earnings of $1.42 per share on revenue of $174.9 million. The consensus earnings estimate was $1.53 per share on revenue of $168.3 million. Revenue fell 2.8% compared to the same quarter a year ago.

Results
Reported Earnings
$1.42
Earnings Whisper
-
Consensus Estimate
$1.53
Reported Revenue
$174.9 Mil
Revenue Estimate
$168.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Taro Provides Results for the Year Ended March 31, 2020

HAWTHORNE, N.Y.--(BUSINESS WIRE)--Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and year ended March 31, 2020.

Quarter ended March 31, 2020 Highlights - compared to March 31, 2019

  • Net sales of $174.9 million decreased $5.0 million.
  • Gross profit of $102.3 million (58.5% of net sales compared to 66.4%) decreased $17.3 million.
  • Research and development (R&D) expenses of $15.8 million decreased $4.7 million.
  • Selling, marketing, general and administrative expenses (SG&A) of $29.1 million increased $5.8 million.
  • Operating income of $57.2 million (32.7% of net sales compared to 41.9%) decreased $18.2 million.
  • Interest and other financial income of $6.6 million decreased $1.6 million.
  • Foreign Exchange (FX) income of $3.7 million compared to FX expense of $9.4 million in the comparable period, an increase of $13.1 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 $13.9 million decreased $1.7 million, with a resulting effective tax rate of 20.4% compared to 21.1%.
  • Net income attributable to Taro was $54.2 million compared to $58.4 million, a $4.2 million decrease, resulting in diluted earnings per share of $1.42 compared to $1.52.

Year ended March 31, 2020 Highlights - compared to March 31, 2019

  • Net sales of $644.8 million decreased $25.1 million.
  • Gross profit of $399.7 million (62.0% of net sales compared to 66.5%) decreased $46.0 million.
  • R&D expenses of $59.8 million decreased $3.5 million.
  • SG&A of $93.4 million increased $3.4 million.
  • Operating income of $246.5 million (38.2% of net sales compared to 44.2%) decreased $49.7 million.
  • Interest and other financial income of $33.6 million remained in line with the prior year.
  • FX income of $14.8 million compared to $25.3 million in 2019 - an unfavorable impact of $10.5 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 $53.5 million decreased $21.2 million, with a resulting effective tax rate of 17.9% compared to 20.9%; principally the result of non-recurring items in the current year.
  • Net income attributable to Taro was $244.2 million compared to $281.8 million, a $37.5 million decrease, resulting in diluted earnings per share of $6.35 compared to $7.23.

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations for the year ended March 31, 2020, was $271.6 million compared to $323.7 million for the year ended March 31, 2019.
  • As of March 31, 2020, cash and cash equivalents and marketable securities (both short and long-term) increased $214.7 million to $1.6 billion from March 31, 2019. Cash and cash equivalents reflects the impact from the $27.0 million Tender Offer paid in December 2019.

Mr. Uday Baldota, Taro’s CEO, stated, “Despite the leading market position of many of our products, we continue to face a challenging U.S. generic market. In the short-term, even as we commercialize recently approved products, we expect operations and profitability to be temporarily impacted as a result of the COVID-19 pandemic—now more than ever, we continue to focus on better serving the needs of our customers and patients. We continue to concentrate on creating shareholder value by continuing our R&D investment, as well as exploring investments in inorganic strategic opportunities.”

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”); Mupirocin Cream USP, 2%, Ivermectin Lotion, 0.5%, Clindamycin Phosphate Foam, 1% and Clocortolone Pivalate Cream USP, 0.1%. The Company currently has a total of twenty-one ANDAs awaiting FDA approval, including five tentative approvals.

Earnings Call (8:00 am ET, May 20, 2020)

As previously announced, the Company will host an earnings call at 8:00 am ET on Wednesday, May 20, 2020, where senior management will discuss the Company’s performance and answer questions from participants. This call will be accessible through an audio dial-in and a web-cast. Audio conference participants can dial-in on the numbers below:

  • Participant Toll-Free Dial-In Number: +1 (844) 421-0601 ID: 5275616
  • Participant International Dial-In Number: +1 (716) 247-5800 ID: 5275616
  • Web-cast: Details are provided on our website, www.taro.com

To participate in the audio call, please dial the numbers provided above five to ten minutes ahead of the scheduled start time. The transcript of the event will be available on the Company’s website at www.taro.com. An audio playback will be available for ten (10) days following the call.

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.

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share data)

Quarter Ended

 

Year Ended

March 31,

 

March 31,

2020

 

2019

 

2020

 

2019

(unaudited)

 

(unaudited)

 

(unaudited)

 

(audited)

Sales, net

$

174,940

 

$

179,921

 

$

644,769

 

$

669,893

 

Cost of sales

 

72,668

 

 

60,384

 

 

245,044

 

 

224,169

 

Gross profit

 

102,272

 

 

119,537

 

 

399,725

 

 

445,724

 

 
Operating Expenses:
Research and development

 

15,799

 

 

20,512

 

 

59,777

 

 

63,238

 

Selling, marketing, general and administrative

 

29,111

 

 

23,321

 

 

93,413

 

 

89,971

 

Settlements and loss contingencies

 

150

 

 

322

 

 

(3,678

)

Operating income

 

57,212

 

 

75,382

 

 

246,535

 

 

296,193

 

 
Financial (income) expense, net:
Interest and other financial income

 

(6,633

)

 

(8,241

)

 

(33,645

)

 

(33,542

)

Foreign exchange (income) expense

 

(3,690

)

 

9,397

 

 

(14,837

)

 

(25,309

)

Other gain (loss), net

 

808

 

 

(100

)

 

3,018

 

 

1,810

 

Income before income taxes

 

68,343

 

 

74,126

 

 

298,035

 

 

356,854

 

Tax expense

 

13,920

 

 

15,649

 

 

53,485

 

 

74,732

 

Net income

 

54,423

 

 

58,477

 

 

244,550

 

 

282,122

 

Net income attributable to non-controlling interest

 

225

 

 

42

 

 

309

 

 

345

 

Net income attributable to Taro

$

54,198

 

$

58,435

 

$

244,241

 

$

281,777

 

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

$

1.42

 

$

1.52

 

$

6.35

 

$

7.23

 

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

 

38,258,337

 

 

38,548,516

 

 

38,460,056

 

 

38,990,058

 

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

March 31,

 

March 31,

2020

 

2019

ASSETS

(unaudited)

 

(audited)

CURRENT ASSETS:
Cash and cash equivalents

$

513,354

$

567,451

Marketable securities

 

595,383

 

481,883

Accounts receivable and other:
Trade, net

 

235,221

 

237,945

Other receivables and prepaid expenses

 

35,567

 

47,362

Inventories

 

153,073

 

148,079

TOTAL CURRENT ASSETS

 

1,532,598

 

1,482,720

Marketable securities

 

459,639

 

304,322

Property, plant and equipment, net

 

209,961

 

206,242

Deferred income taxes

 

106,693

 

110,974

Other assets

 

32,361

 

31,068

TOTAL ASSETS

$

2,341,252

$

2,135,326

 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables

$

28,858

$

35,060

Other current liabilities

 

193,873

 

181,761

TOTAL CURRENT LIABILITIES

 

222,731

 

216,821

Deferred taxes and other long-term liabilities

 

8,763

 

7,383

TOTAL LIABILITIES

 

231,494

 

224,204

 
Taro shareholders' equity

 

2,103,862

 

1,905,536

Non-controlling interest

 

5,896

 

5,586

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,341,252

$

2,135,326

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

Year Ended March 31,

2020

 

2019

(unaudited)

 

(audited)

Cash flows from operating activities:
Net income

$

244,550

 

$

282,122

 

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

 

21,383

 

 

18,597

 

Realized loss on sale of long-lived assets

 

28

 

 

27

 

Change in derivative instruments, net

 

(2,649

)

 

3,115

 

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

 

(11,600

)

 

(29,533

)

Deferred income taxes, net

 

7,584

 

 

12,262

 

Decrease (increase) in trade receivables, net

 

2,724

 

 

(32,088

)

Increase in inventories, net

 

(4,994

)

 

(5,515

)

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

 

12,137

 

 

74,256

 

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

 

782

 

 

529

 

Loss (income) from marketable securities, net

 

1,660

 

 

(63

)

Net cash provided by operating activities

 

271,605

 

 

323,709

 

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

 

(26,610

)

 

(27,018

)

Investment in other intangible assets

 

(1,783

)

 

(3,666

)

Proceeds from short-term bank deposits, net

 

225,503

 

Proceeds from long-term deposits and other assets

 

70,685

 

Investment in marketable securities, net

 

(269,769

)

 

(8,368

)

Net cash (used in) provided by investing activities

 

(298,162

)

 

257,136

 

 
Cash flows from financing activities:
Purchase of treasury stock

 

(26,984

)

 

(88,849

)

Dividends paid

 

(500,000

)

Net cash used in financing activities

 

(26,984

)

 

(588,849

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(556

)

 

(1,156

)

Decrease in cash and cash equivalents

 

(54,097

)

 

(9,160

)

Cash and cash equivalents at beginning of period

 

567,451

 

 

576,611

 

Cash and cash equivalents at end of period

$

513,354

 

$

567,451

 

 
Cash Paid during the year for:
Income taxes

$

54,536

 

$

71,096

 

Cash Received during the year for:
Income taxes

$

24,331

 

$

69,436

 

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

$

1,477

 

$

4,740

 

Non-cash financing transactions:
Purchase of marketable securities

$

9,159

 

$

2,003

 

 

Daphne Huang
VP, CFO
(914) 345-9001
Daphne.Huang@taro.com

William J. Coote
AVP, Treasurer and Investor Relations
(914) 345-9001
William.Coote@taro.com

Source: Taro Pharmaceutical Industries Ltd.