ACETO Reports Fiscal 2017 Third Quarter Results
Third Quarter Fiscal 2017 versus Third Quarter Fiscal 2016
- Net sales of
$190.1 million versus$157.9 million , a 20.4% increase - Gross profit of
$42.3 million versus$38.3 million , a 10.5% increase - Net income of
$5.6 million versus net income of$10.4 million , a 46.4% decrease - Diluted EPS of
$0.16 versus$0.35 , a 54.3% decrease - Non-GAAP Adjusted Net Income of
$13.6 million versus$12.5 million , a 8.7% increase - Non-GAAP Adjusted EPS of
$0.39 versus$0.42 , a 7.1% decrease
Management Commentary
"The third quarter represents our first operating quarter with full inclusion of the recently-acquired Citron and Lucid products. The expansion of our product portfolio also brought us one step further along in our strategic transition towards human health with our human health and pharma ingredients business segments collectively accounting for over 75% of total sales for the first time ever," said
"Human Health sales and gross profit for the quarter grew to
"During the quarter, we resolved the API supply disruptions that had previously caused back orders on two Rising products and we launched four Rising products for a total of nine products year-to-date. We also launched two Citron products," added Mr. Guccione. "We continue to expect to launch three to six additional Rising generic products during the fourth quarter. We also expect to launch seven Citron products in the fourth quarter, fewer than previously anticipated, for a total of 19 to 22 generic product launches during fiscal 2017."
"In part because of these launch delays and also due to competitive pressures on our generics products portfolio, we now expect fiscal year 2017 sales growth to be in the low-to-mid teens percentage range and non-GAAP Adjusted EPS to be flat to 10% below fiscal 2016, largely dependent upon the timing and success of a particular anticipated new product launch. On a GAAP basis, which reflects costs related to the strategic acquisition and non-cash purchase accounting charges, EPS is expected to be below last year by approximately 50% to 60%. Despite this fiscal year's operational challenges and difficult industry conditions, we are encouraged by the progress we have made in working through these challenges, and expect to see sequential growth by the legacy Rising products in the fiscal fourth quarter. Our resolve in returning to a steady annual growth state is unwavering," concluded Mr. Guccione.
Third Quarter Financial Review
Net sales for the third quarter of fiscal 2017 were
Pharmaceutical Ingredients segment sales were
Performance Chemicals segment sales were
Total selling, general and administrative expenses were
Operating income in the third quarter of fiscal 2017 was
Conference Call
Management will host a conference call to discuss the operating and financial results at
The call is also being webcast with an accompanying presentation, which can be accessed through the investor relations section of the Company's website, www.aceto.com. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software and download the presentation.
A telephone replay of the conference call will be available from
Use of Non-GAAP Financial Information
In addition to U.S. GAAP results, this press release also includes certain non-GAAP financial measures as defined by the
Pursuant to the requirements of Regulation G, reconciliations of Adjusted Net Income and Adjusted EPS to U.S. GAAP net income and GAAP EPS are presented in the table Non-GAAP Reconciliation of this press release.
About
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this news release may not occur. Generally, these statements relate to our business plans or strategies, projected or anticipated benefits or other consequences of ACETO's plans or strategies, financing plans, projected or anticipated benefits from acquisitions that
Any one or more of these uncertainties, risks and other influences could materially affect ACETO's results of operations and whether forward-looking statements made by
(Financial Tables Follow)
Aceto Corporation and Subsidiaries | |||||||||||||||||
Consolidated Statements of Income | |||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net sales | $ | 190,128 | $ | 157,926 | $ | 443,698 | $ | 423,100 | |||||||||
Cost of sales | 147,809 | 119,637 | 339,735 | 314,362 | |||||||||||||
Gross profit | 42,319 | 38,289 | 103,963 | 108,738 | |||||||||||||
Gross profit % | 22.26 | % | 24.24 | % | 23.43 | % | 25.70 | % | |||||||||
Selling, general and | |||||||||||||||||
administrative expenses | 26,519 | 19,498 | 75,614 | 56,377 | |||||||||||||
Research and development expenses | 2,607 | 2,319 | 4,998 | 6,280 | |||||||||||||
Operating income | 13,193 | 16,472 | 23,351 | 46,081 | |||||||||||||
Other expense, net of interest expense | (4,681 | ) | (928 | ) | (8,993 | ) | (2,461 | ) | |||||||||
Income before income taxes | 8,512 | 15,544 | 14,358 | 43,620 | |||||||||||||
Income tax provision | 2,924 | 5,120 | 4,949 | 15,628 | |||||||||||||
Net income | $ | 5,588 | $ | 10,424 | $ | 9,409 | $ | 27,992 | |||||||||
Net income per common share | $ | 0.16 | $ | 0.36 | $ | 0.30 | $ | 0.96 | |||||||||
Diluted net income per common share | $ | 0.16 | $ | 0.35 | $ | 0.30 | $ | 0.95 | |||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 34,769 | 29,158 | 31,453 | 29,085 | |||||||||||||
Diluted | 35,121 | 29,620 | 31,792 | 29,536 | |||||||||||||
Aceto Corporation and Subsidiaries | |||||||||
Consolidated Balance Sheets | |||||||||
(in thousands, except per-share amounts) | |||||||||
(unaudited) | |||||||||
March 31, 2017 |
June 30, 2016 |
||||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 59,962 | $ | 66,828 | |||||
Investments | 1,966 | 881 | |||||||
Trade receivables: less allowance for doubtful | |||||||||
accounts: March 31, 2017 $470; and June 30, 2016 $513 | 260,530 | 167,612 | |||||||
Other receivables | 10,802 | 12,650 | |||||||
Inventory | 139,941 | 98,107 | |||||||
Prepaid expenses and other current assets | 5,155 | 3,339 | |||||||
Deferred income tax asset, net | 2,595 | 3,244 | |||||||
Total current assets | 480,951 | 352,661 | |||||||
Property and equipment, net | 10,289 | 10,044 | |||||||
Property held for sale | 7,152 | 6,868 | |||||||
Goodwill | 241,741 | 67,871 | |||||||
Intangible assets, net | 292,788 | 79,071 | |||||||
Deferred income tax asset, net | 16,655 | 18,053 | |||||||
Other assets | 9,044 | 6,210 | |||||||
Total Assets | $ | 1,058,620 | $ | 540,778 | |||||
Liabilities and Shareholders' Equity | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt | $ | 14,466 | $ | 197 | |||||
Accounts payable | 111,364 | 46,034 | |||||||
Accrued expenses | 106,243 | 52,675 | |||||||
Total current liabilities | 232,073 | 98,906 | |||||||
Long-term debt, net | 353,324 | 118,592 | |||||||
Long-term liabilities | 60,302 | 6,344 | |||||||
Environmental remediation liability | 3,008 | 3,352 | |||||||
Deferred income tax liability | 7,762 | 9,142 | |||||||
Total liabilities | 656,469 | 236,336 | |||||||
Commitments and contingencies | |||||||||
Shareholders' equity: | |||||||||
Preferred stock, 2,000 shares authorized; no shares issued and outstanding | - | - | |||||||
Common stock, $.01 par value: | |||||||||
(75,000 shares authorized; 30,105 and 29,595 shares issued | |||||||||
and outstanding at March 31, 2017 and June 30, 2016, respectively) | 301 | 296 | |||||||
Capital in excess of par value | 212,486 | 115,667 | |||||||
Retained earnings | 198,139 | 194,804 | |||||||
Accumulated other comprehensive loss | (8,775 | ) | (6,325 | ) | |||||
Total shareholders' equity | 402,151 | 304,442 | |||||||
Total liabilities and shareholders' equity | $ | 1,058,620 | $ | 540,778 | |||||
Aceto Corporation | ||||||||||||||||||||||||||||||||
Diluted Net Income Per Common Share Excluding Charges (Non-GAAP Reconciliation) | ||||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
(unaudited) Three Months Ended March 31, 2017 |
(unaudited) Diluted Net Income Per Common Share Three Months Ended March 31, 2017 |
(unaudited) Three Months Ended March 31, 2016 |
(unaudited) Diluted Net Income Per Common Share Three Months Ended March 31, 2016 |
(unaudited) Nine Months Ended March 31, 2017 |
(unaudited) Diluted Net Income Per Common Share Nine Months Ended March 31, 2017 |
(unaudited) Nine Months Ended March 31, 2016 |
(unaudited) Diluted Net Income Per Common Share Nine Months Ended March 31, 2016 |
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Net income, as reported | $ | 5,588 | $ | 0.16 | $ | 10,424 | $ | 0.35 | $ | 9,409 | $ | 0.30 | $ | 27,992 | $ | 0.95 | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | 8,001 | 0.22 | 2,883 | 0.10 | 14,167 | 0.44 | 8,325 | 0.29 | ||||||||||||||||||||||||
Transaction costs related to acquisitions | (191 | ) | (0.01 | ) | - | - | 8,818 | 0.28 | - | - | ||||||||||||||||||||||
Separation and relocation costs | 246 | 0.01 | - | - | 529 | 0.02 | - | - | ||||||||||||||||||||||||
Step-up of inventory | 2,100 | 0.06 | - | - | 2,266 | 0.07 | - | - | ||||||||||||||||||||||||
Contingent consideration | - | - | (1,074 | ) | (0.04 | ) | - | - | (1,074 | ) | (0.04 | ) | ||||||||||||||||||||
Amortization of debt discount (non-cash interest expense) | 1,263 | 0.04 | 1,184 | 0.04 | 3,729 | 0.12 | 1,771 | 0.06 | ||||||||||||||||||||||||
Amortization of debt issuance costs | 208 | 0.01 | 209 | 0.01 | 626 | 0.02 | 313 | 0.01 | ||||||||||||||||||||||||
Amortization of deferred financing costs | 300 | 0.01 | - | - | 300 | 0.01 | - | - | ||||||||||||||||||||||||
Termination of interest rate swap | - | - | - | - | - | - | 420 | 0.01 | ||||||||||||||||||||||||
Environmental remediation charge | 733 | 0.02 | - | - | 903 | 0.03 | - | - | ||||||||||||||||||||||||
Adjusted income excluding charges | 18,248 | 0.52 | 13,626 | 0.46 | 40,747 | 1.29 | 37,747 | 1.28 | ||||||||||||||||||||||||
Adjustments to provision for income taxes | 4,684 | 0.13 | 1,152 | 0.04 | 11,642 | 0.37 | 3,609 | 0.12 | ||||||||||||||||||||||||
Adjusted net income (Non-GAAP) | $ | 13,564 | $ | 0.39 | $ | 12,474 | $ | 0.42 | $ | 29,105 | $ | 0.92 | $ | 34,138 | $ | 1.16 | ||||||||||||||||
Diluted weighted average shares outstanding | 35,121 | 35,121 | 29,620 | 29,620 | 31,792 | 31,792 | 29,536 | 29,536 | ||||||||||||||||||||||||
NOTE: Items identified in the above table are not in accordance with, or an alternative method for, generally accepted accounting principles (GAAP) in the United States. These items should not be reviewed in isolation or considered substitutes of the Company's financial results as reported in accordance with GAAP. Due to the nature of these items, it is important to identify these items and to review them in conjunction with the Company's financial results reported in accordance with GAAP. The exclusion of these items also allows investors to compare results of operations in the current period to prior period's results based on the Company's fundamental business performance and analyze the operating trends of the business. The exclusion of these items also allows management to evaluate performance of its business units. The Company does not provide reconciliations of GAAP and non-GAAP projections as such projections are intended for directional purposes only. |
Investor Relations Contact: LHA Jody Burfening jburfening@lhai.com (212) 838-3777