|ACETO CORP filed this Form 10-Q on 11/03/2017|
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Net sales for the Pharmaceutical Ingredients segment decreased $4,040 or 9.9% to $36,576 when compared to the prior period net sales of $40,616. The decrease in sales for this segment was due primarily to a decline in sales of domestic APIs of $2,792, mainly due to reduced orders of a customer-launched API, as well as a drop in customer demand for two other API products, sold in the U.S. Domestic sales of intermediates have decreased $1,036 from the prior period due to customer inventory reduction and a delay in timing of orders for certain intermediate products.
Net sales for the Performance Chemicals segment was $42,664 for the three months ended September 30, 2017, representing an increase of $3,151 or 8.0%, from net sales of $39,513 for the prior period. Specialty Chemicals business experienced a rise in sales of $4,251 over the prior period. The rise in Specialty Chemicals sales is partly due to an increase in domestic sales of $1,658, primarily from increased sales of agricultural and pigment intermediates. In addition, sales of specialty chemical products sold abroad, increased $2,593 over the prior period, predominantly at our subsidiaries in France and Germany. Performance Chemicals sales were impacted by a $1,100 drop in sales of our agricultural protection products, predominantly from a decline in sales of a fungicide used to prevent disease on pecan crops, which we expect to sell in our second quarter of fiscal year 2018.
Gross profit increased $9,144 to $39,983 (21.6% of net sales) for the three months ended September 30, 2017, as compared to $30,839 (24.1% of net sales) for the prior period.
Human Health segment’s gross profit of $24,647 for the three months ended September 30, 2017 increased $10,442, or 73.5%, over the prior period. The gross margin of 23.2% was lower than the prior period’s gross margin of 29.7%, but consistent with quarters subsequent to the product acquisition. The increase in Human Health’s gross profit was partially related to gross profit of $11,332 on sales from the product acquisition, which is included in the three months ended September 30, 2017. This increase was partially offset by the decline of gross profit and gross margin on other Rising products, primarily driven by unfavorable product mix on certain products and increased competition.
Pharmaceutical Ingredients’ gross profit of $5,840 for the three months ended September 30, 2017 decreased $1,114, or 16.0%, over the prior period. The gross margin of 16.0% was lower than the prior period’s gross margin of 17.1%. The decrease in gross profit and gross margin was predominantly the result of the decrease in the sales volume of APIs sold domestically, as well as a drop in reorders of a certain API which typically yields a significantly higher gross margin. In addition, our international subsidiaries experienced an unfavorable product mix on API sales.
Gross profit for the Performance Chemicals segment decreased to $9,496 for the three months ended September 30, 2017, versus $9,680 for the prior year, a decrease of $184 or 1.9%. The gross margin at 22.3% for the three months ended September 30, 2017 was lower than the prior year’s gross margin of 24.5%. The decrease in gross profit was due to a $429 decline in gross profit for the Agricultural Protection Products business, as a result of the sales volume decline. The drop in gross margin from the prior period is a result of an unfavorable product mix on sales of specialty chemical products sold domestically.
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