Taro Provides Results for Year Ended March 31, 2023

Rhea-AI Summary

Taro Pharmaceutical Industries Ltd. reports unaudited financial results for Q1 and FY 2023. Net sales increased by 2.3% in Q1 compared to the previous year, while gross profit decreased. R&D expenses and SG&A expenses increased in Q1. Operating income decreased, while interest and other financial income increased. Net income and earnings per share were lower in Q1 compared to the previous year. For FY 2023, net sales increased, but gross profit decreased. R&D expenses decreased, while SG&A expenses increased significantly. Operating income decreased, but excluding settlement charges, it increased. Interest and other financial income increased. Net income and earnings per share were lower in FY 2023 compared to the previous year. Cash flow provided by operations improved in FY 2023 compared to the previous year. Cash and cash equivalents remained stable.

Positive

• Taro Pharmaceutical Industries reports a 2.3% increase in net sales for Q1 2023 compared to the previous year

Negative

• Gross profit decreased in Q1 and FY 2023 for Taro Pharmaceutical Industries

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, 2023.

Quarter ended March 31, 2023* Highlights ─ compared to March 31, 2022

• Net sales of $146.6 million increased $3.3 million, or 2.3%.
• Gross profit of $75.7 million (51.6% of net sales) compared to $77.3 million (54.0% of net sales).
• Research and development (R&D) expenses of $16.3 million increased $1.4 million.
• Selling, marketing, general and administrative expenses (SG&A) of $50.1 million increased $9.0 million.
• Operating income of $9.3 million compared to operating income of $21.3 million.
• Interest and other financial income of $8.0 million increased $7.4 million.
• Foreign Exchange (FX) expense of $0.5 million compared to FX income of $2.5 million ─ an unfavorable impact of $3.0 million.
• Tax expense of $11.0 million compared to a tax benefit of $2.4 million ─ an unfavorable impact of $13.4 million.
• Net income attributable to Taro was $6.9 million compared to net income of $27.4 million, resulting in earnings per share of $0.18 compared to earnings per share of $0.73.

Year ended March 31, 2023* Highlights ─ compared to March 31, 2022

• Net sales of $573.0 million increased $11.6 million.
• Gross profit of $268.3 million (46.8% of net sales compared to 52.2%) decreased $24.8 million.
• R&D expenses of $52.2 million decreased $2.3 million.
• SG&A of $198.4 million increased $84.7 million.
• In the prior year, settlements and loss contingencies of $61.4 million consisted of a $60.0 million legal contingency related to ongoing multi-jurisdiction civil antitrust matters and $1.4 million related to the global resolution with the Department of Justice (“DOJ”) in connection with its investigations into the U.S. generic pharmaceutical industry.
• Operating income of $17.7 million compared to $63.5 million. Excluding the $61.4 million impact from the settlement and loss contingencies charges in the prior year, operating income was $124.9 million.
• Interest and other financial income of $20.9 million increased $12.7 million.
• FX expense of $2.8 million compared to FX income of $2.0 million ─ an unfavorable impact of $4.8 million.
• Tax expense of $12.8 million compared to tax expense of $19.6 million, a decrease of $6.8 million.
• Net income attributable to Taro was $25.4 million compared to $58.3 million, resulting in earnings per share of $0.68 compared to earnings per share of $1.55. Excluding the impact from the settlement and loss contingencies charges in the prior year, net income was $126.4 million, resulting in diluted earnings per share of $3.36.

Cash Flow and Balance Sheet Highlights

• Cash flow provided by operations for the year ended March 31, 2023 was $31.8 million compared to cash used in operations of $158.7 million for the year ended March 31, 2022. Excluding the impact from the settlement payments and settlement and loss contingencies charges impacting both periods, cash flow provided by operations was $99.0 million compared to $165.6 million for the year ended March 31, 2022.
• As of March 31, 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, 2022; principally the result of settlement payments.

* The March 31, 2023 results include full-year results from the February 28, 2022 acquisition of Alchemee.

The Company cautions that the foregoing 2023 financial information is unaudited 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.

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
(U.S. dollars in thousands, except share data)
	Quarter Ended								Twelve Months Ended
	March 31st								March 31st
		2023				2022				2023				2022
Sales, net	$	146,587			$	143,264			$	572,952			$	561,347
Cost of sales		70,879				65,919				304,629				268,212
Impairment		—				—				—				13
Gross profit		75,708				77,345				268,323				293,122
Operating Expenses:
Research and development		16,306				14,892				52,243				54,540
Selling, marketing, general and administrative		50,128				41,175				198,366				113,677
Settlements and loss contingencies		—				—				—				61,446
Operating income *		9,274				21,278				17,714				63,459
Financial (income) expense, net:
Interest and other financial income		(8,036	)			(685	)			(20,850	)			(8,187	)
Foreign exchange (income) expense		469				(2,541	)			2,813				(1,986	)
Other gain, net		1,059				512				2,462				4,226
Income before income taxes		17,900				25,016				38,213				77,858
Tax expense		10,987				(2,388	)			12,768				19,592
Net income attributable to Taro *	$	6,913			$	27,404			$	25,445			$	58,266
Net income per ordinary share attributable to Taro:
Basic and Diluted *	$	0.18			$	0.73			$	0.68			$	1.55
Diluted	$	0.18			$	0.73			$	0.68			$	1.55
Weighted-average number of shares used to compute net income per share:
Basic and Diluted		37,584,891				37,584,891				37,584,891				37,641,087
May not foot due to rounding.

Note: Quarter and year ended March 2023 includes results from Alchemee (acquired February 28, 2022).

* Excluding the settlement and loss contingencies charges of $61.4 million for the year ended March 31, 2022, Operating income was $124.9 million, Net income attributable to Taro was $126.4 million, and basic and diluted earnings per share was $3.36.

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
		March 31,			March 31,
		2023			2022
ASSETS		(unaudited)			(audited)
CURRENT ASSETS:
Cash and cash equivalents		$	154,495		$	251,134
Short-term bank deposits			119,980			47,586
Marketable securities			575,814			522,028
Accounts receivable and other:
Trade, net			202,260			246,973
Other receivables and prepaid expenses			57,210			59,726
Inventories			226,669			210,439
TOTAL CURRENT ASSETS			1,336,428			1,337,886
Marketable securities			404,896			435,189
Property, plant and equipment, net			190,139			199,692
Deferred income taxes			103,672			124,882
Goodwill			17,231			11,820
Other assets			83,147			66,892
TOTAL ASSETS		$	2,135,513		$	2,176,361
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	68,485		$	68,232
Other current liabilities			317,064			363,887
TOTAL CURRENT LIABILITIES			385,549			432,119
Deferred taxes and other long-term liabilities			19,106			32,799
TOTAL LIABILITIES			404,655			464,918
Taro shareholders' equity			1,730,858			1,711,443
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,135,513		$	2,176,361

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
		Twelve Months Ended March 31,
			2023				2022
		(unaudited)				(audited)
Cash flows from operating activities:
Net income		$	25,445			$	58,266
Adjustments required to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			32,127				25,915
Impairment of long-lived assets			—				13
Realized loss on sale of long-lived assets			136				689
Change in derivative instruments, net			(24	)			(631	)
Adjustments to Opening Balance-Sheet (PPA)			(15,292	)			—
Effect of change in exchange rate on marketable securities and bank deposits			2,291				(449	)
Deferred income taxes, net			16,802				23,200
Increase (decrease) in trade receivables, net			37,482				(6,229	)
Increase in inventories, net			(16,922	)			(2,082	)
Increase (decrease) in other receivables, income tax receivables, prepaid expenses and other			2,240				(5,451	)
Decrease in trade, income tax, accrued expenses and other payables			(60,707	)			(265,278	)
Expense from amortization of marketable securities bonds, net			8,172				13,339
Net cash provided by (used in) operating activities			31,750				(158,698	)
Cash flows from investing activities:
Purchase of plant, property & equipment, net			(17,553	)			(11,796	)
Acquisition, net of cash acquired			—				(91,872	)
Investment in other intangible assets			(294	)			(243	)
Investment in short-term bank deposits, net			(72,394	)			(47,586	)
Proceeds from (investment in) marketable securities, net			(33,315	)			(19,084	)
Investment in other investments			(2,000	)			—
Net cash used in investing activities			(125,556	)			(170,581	)
Cash flows from financing activities:
Purchase of treasury stock			—				(24,934	)
Net cash used in financing activities			—				(24,934	)
Effect of exchange rate changes on cash and cash equivalents			(2,833	)			170
Decrease in cash and cash equivalents			(96,639	)			(354,043	)
Cash and cash equivalents at beginning of period			251,134				605,177
Cash and cash equivalents at end of period		$	154,495			$	251,134
Cash Paid during the year for:
Income taxes		$	4,175			$	7,753
Cash Received during the year for:
Income taxes		$	14,156			$	2,351
Non-cash investing transactions:
Purchase of property, plant and equipment included in accounts payable		$	1,242			$	1,468
Non-cash financing transactions:
Purchase of intangible assets		$	—			$	—
Purchase of treasury stock		$	—			$	—
Purchase of marketable securities, net		$	3,038			$	3,890
Sale of marketable securities		$	(314	)		$	21

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230523006054/en/

William J. Coote

VP, CFO

(914) 345-9001

William.Coote@taro.com

Source: Taro Pharmaceutical Industries Ltd.

FAQ

What were the financial results of Taro Pharmaceutical Industries for Q1 2023?

Taro Pharmaceutical Industries reported a 2.3% increase in net sales, a decrease in gross profit, an increase in R&D and SG&A expenses, a decrease in operating income, and lower net income and earnings per share compared to the previous year.

What were the financial results of Taro Pharmaceutical Industries for FY 2023?

Taro Pharmaceutical Industries reported an increase in net sales, a decrease in gross profit, a decrease in R&D expenses, a significant increase in SG&A expenses, a decrease in operating income (excluding settlement charges), an increase in interest and other financial income, and lower net income and earnings per share compared to the previous year.

How did cash flow and cash equivalents change for Taro Pharmaceutical Industries in FY 2023?

Cash flow provided by operations improved in FY 2023 compared to the previous year, and cash and cash equivalents remained stable.