TARO Taro Pharmaceutical Industries Ltd

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter ended June 30, 2023.

Quarter ended June 30, 2023 Highlights ─ compared to June 30, 2022

• Net sales increased $2.2 million, or 1.4%, to $158.9 million.
• Gross profit of $64.1 million (40.3% of net sales) compared to $81.6 million (52.1% of net sales).
• Research and development (R&D) expenses of $16.1 million increased $4.6 million.
• Selling, marketing, general and administrative expenses (“SMGA”) of $55.9 million includes certain one-time items of $6.2 million related to transitional expenses for the planned relocation of our Alchemee operations from California to New York. Excluding this charge, SMGA was $49.7 million, or $6.4 million below the prior year quarter.
• Operating income/(loss) of $(7.9) million compared to an operating income of $14.0 million. Excluding the impact from the aforementioned certain one-time items, operating income/(loss) was $(1.7) million in the current year quarter.
• Interest and other financial income of $10.9 million increased $9.0 million.
• Foreign Exchange (FX) income of $2.1 compared to FX expense of $0.3 million in the prior year quarter; a favorable impact of $2.4 million.
• Tax/(benefit) of $(4.6) million compared to tax expense of $2.0 million in the prior year quarter.
• Net income was $10.0 million compared to net income of $14.1 million, resulting in earnings per share of $0.27 compared to net earnings per share of $0.37. Excluding the impact from the certain one-time items in the current year quarter, net income was $14.9 million resulting in earnings per share of $0.40.

Cash Flow and Balance Sheet Highlights

• Cash flow provided by operations for the quarter ended June 30, 2023, was $7.8 million; compared to cash flow used in operations for the quarter ended June 30, 2022, of $58.0 million (excluding the impact from the settlement and loss contingencies charges in the prior year quarter, cash flow provided by operations was $9.6 million).
• As of June 30, 2023, cash and cash equivalents, short-term bank deposits and marketable securities (both short- and long-term) was $1.3 billion in line with March 31, 2023.

Form 20-F Filings with the SEC

On June 29, 2023, Taro filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2023.

The Company cautions that the foregoing 2023 financial information is unaudited 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 2024. 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)   Quarter Ended June 30,

2023

2022

(unaudited) (unaudited) Sales, net

$

158,894

 

$

156,665

 

Cost of sales

 

94,810

 

 

75,059

 

Gross profit

 

64,084

 

 

81,606

 

  Operating Expenses: Research and development

 

16,145

 

 

11,508

 

Selling, marketing, general and administrative

 

55,861

 

 

56,122

 

Operating income/(loss) *

 

(7,922

)

 

13,976

 

  Financial (income) expense, net:

Interest and other financial income

 

(10,890

)

 

(1,926

)

Foreign exchange (income)/expense

 

(2,083

)

 

294

 

Other gain, net

 

390

 

 

445

 

Income/(loss) before income taxes

 

5,440

 

 

16,053

 

Tax expense/(benefit)

 

(4,593

)

 

1,974

 

Net income/(loss) *

$

10,033

 

$

14,079

 

  Net income/(loss) per ordinary share: Basic and Diluted *

$

0.27

 

$

0.37

 

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

 

37,584,891

 

 

37,584,891

 

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

2023

2023

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

$

124,165

$

154,495

Short-term bank deposits

 

119,980

 

119,980

Marketable securities

 

562,008

 

575,814

Accounts receivable and other: Trade, net

 

226,873

 

202,260

Other receivables and prepaid expenses

 

56,555

 

57,210

Inventories

 

204,592

 

226,669

TOTAL CURRENT ASSETS

 

1,294,173

 

1,336,428

Marketable securities

 

451,174

 

404,896

Property, plant and equipment, net

 

189,590

 

190,139

Deferred income taxes

 

101,386

 

103,672

Goodwill

 

17,231

 

17,231

Other assets

 

81,495

 

83,147

TOTAL ASSETS

$

2,135,049

$

2,135,513

  LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables

$

59,368

$

68,485

Other current liabilities

 

325,638

 

317,064

TOTAL CURRENT LIABILITIES

 

385,006

 

385,549

Deferred taxes and other long-term liabilities

 

11,511

 

19,106

TOTAL LIABILITIES

 

396,517

 

404,655

  Taro shareholders' equity

 

1,738,532

 

1,730,858

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,135,049

$

2,135,513

TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands)   Quarter Ended June 30,

2023

2022

(unaudited) (unaudited) Cash flows from operating activities: Net income

$

10,033

 

$

14,079

 

Adjustments required to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization

 

7,892

 

 

6,978

 

Change in derivative instruments, net

 

—

 

 

(24

)

Effect of change in exchange rate on marketable securities and bank deposits

 

(953

)

 

747

 

Deferred income taxes, net

 

2,379

 

 

2,415

 

Increase in trade receivables, net

 

(24,814

)

 

(19,321

)

Decrease (increase) in inventories, net

 

21,977

 

 

(6,566

)

Decrease (increase) in other receivables, income tax receivables, prepaid expenses and other

 

505

 

 

(467

)

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

 

(6,513

)

 

(59,819

)

(Income)/expense from amortization of marketable securities bonds, net

 

(2,729

)

 

3,950

 

Net cash provided by (used in) operating activities

 

7,777

 

 

(58,028

)

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

 

(6,793

)

 

(2,074

)

Investment in other intangible assets

 

(51

)

 

(34

)

Proceeds from short-term bank deposits, net

 

—

 

 

25,000

 

Investment in long-term deposits and other assets

 

—

 

 

(73

)

(Investment in) proceeds from marketable securities, net

 

(31,860

)

 

11,936

 

Net cash used in investing activities

 

(38,704

)

 

34,755

 

  Cash flows from financing activities: Net cash used in financing activities

 

—

 

 

—

 

  Effect of exchange rate changes on cash and cash equivalents

 

597

 

 

(2,060

)

Decrease in cash and cash equivalents

 

(30,330

)

 

(25,333

)

Cash and cash equivalents at beginning of period

 

154,495

 

 

251,134

 

Cash and cash equivalents at end of period

$

124,165

 

$

225,801

 

  Cash Paid during the year for: Income taxes

$

261

 

$

2,410

 

Cash Received during the year for: Income taxes

$

—

 

$

12,511

 

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

$

740

 

$

1,232

 

Non-cash financing transactions: Purchase of marketable securities, net

$

3,023

 

$

2,050

 

Sale of marketable securities

$

157

 

$

—

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726580223/en/

William J. Coote VP, CFO (914) 345-9001 William.Coote@taro.com