FOR IMMEDIATE RELEASE
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ACETO CORPORATION REPORTS BEST EVER QUARTERLY
RESULTS
LAKE SUCCESS, NY - November 6, 2003 - Aceto Corporation (Nasdaq:ACET), a global
distributor of pharmaceutical and specialty chemicals, today announced record
quarterly results of operations for its first quarter ended September 30, 2003.
FIRST QUARTER FINANCIAL HIGHLIGHTS - versus fiscal 2003 first quarter
o Net sales rose 6% to $72.3 million.
o Operating income grew 17% to $4.2 million.
o Income, before the cumulative effect of a non-cash accounting charge
of $1.9 million in the first quarter of last year, increased 34% to
$3.1 million or $0.29 per diluted share, from $2.3 million or $0.24
per diluted share in the same period last year.
Leonard S. Schwartz, Chairman, CEO and President of Aceto, stated, "We are
pleased to report our best quarter ever in terms of sales and net income, during
which our Health Sciences segment launched one new Active Pharmaceutical
Ingredient (API), and three smaller volume products to the generic
pharmaceutical industry. We define a product launch as a launch in which we
expect to realize more than $2 million in sales during the six-month launch
period. Additionally, our existing generic pharmaceutical business showed
continued strength.
"In addition, we achieved sales, gross profit, and gross profit margin increases
in our three main business segments - Health Sciences, Chemicals and Colorants,
and Agrochemicals - which together generated an overall gross profit margin of
17.04%, versus 16.53% in the first quarter of last year. SG&A expenses, net of a
$300,000 non-recurring gain from the sale of property in last year's period,
remained essentially flat as a percent of net sales, producing a 34% increase in
income, before the cumulative effect of a non-cash accounting charge, on a 6%
sales increase."
Mr. Schwartz further stated, "In addition to focusing on organic growth in our
core businesses and our Health Sciences segment's plans to launch at least four
Active Pharmaceutical Ingredients (APIs) per year, we are pursuing other avenues
for continued growth. As recently announced, we signed a letter of intent to
form a joint venture with Nufarm Limited to market a herbicide that we presently
market under a different label. This partnership reflects our strategy to
capitalize on the consolidation and impending disintermediation of traditional
supply channels in the agrochemical
industry by forming alliances with major agrochemical companies. We expect to
formally commence the joint venture within two weeks.
"We also announced plans to expand our presence in Eastern Europe to facilitate
the supply of European Union-approved APIs to pharmaceutical manufacturers in
countries that will soon join the EU. Through our new office in Poland, which
will enhance and expand upon our existing business in that region, which is
currently serviced by our Hamburg office, we will continue to provide
comprehensive technical, regulatory and quality control support to the Eastern
European market of 120 million people, which is presently unregulated in terms
of pharmaceuticals. Additionally, we are in active discussions to establish
another business location in Eastern Europe."
Mr. Schwartz continued, "Most recently, we signed a letter of intent to acquire
a biopharmaceutical distribution company with 2002 sales in excess of $10
million. We are enthusiastic about this potential acquisition, which would
represent Aceto's entree into the rapidly growing biopharmaceuticals market and
would position the Company to participate in the generic biopharmaceutical
business, which is in its infancy. The proposed acquisition, if completed, would
be immediately accretive to our earnings and would broaden our product offerings
to the pharmaceutical industry. We anticipate the closing to take place on or
about December 31, 2003.
Douglas Roth, CFO of Aceto, added, "With regard to the Company's financial
position, as of September 30, 2003, we had working capital of $75.7 million, no
long-term debt and shareholders' equity of $88.4 million. Our financial strength
and flexibility forms a solid foundation to support our growth endeavors."
Mr. Schwartz continued, "We have revised our guidance policy to now include
expected product launches. In this regard, for the second quarter of fiscal
2004, we anticipate earning $0.25 - $0.30 per diluted share, which compares to
$0.23 per diluted share in the second quarter of last year. "
Mr. Schwartz concluded, "We remain focused on utilizing our sourcing and
regulatory strengths, as well as our unique worldwide distribution capabilities
to pursue continued growth. We are optimistic about Aceto's short and long-term
prospects, and look forward to updating you with our progress."
CONFERENCE CALL
Leonard S. Schwartz, Chairman, CEO, and President, and Douglas Roth, CFO, will
conduct a conference call at 10:00 a.m. ET on Thursday, November 6, 2003.
Interested parties may participate in the call by dialing 877-807-0527
(973-935-8504 for international callers) - please call in 10 minutes before the
call is scheduled to begin, and ask for the Aceto call. The conference call will
also be broadcast live over the Internet via the Investor Relations section
(Conference Calls) of the Company's website. To listen to the live call please
go to the website at least 15 minutes early to register, download and install
any necessary audio software. If you are unable to listen live, the conference
call will be archived on the Company's website. A recorded phone replay of the
call will also be available from 12:00 noon ET on Thursday, November 6, 2003
until 5:00 p.m. ET on Friday, November 7, 2003. Interested parties may dial
877-519-4471
(973-341-3080 for international callers) and enter the code 4254679 for the
phone replay.
ABOUT ACETO
Aceto Corporation, which was incorporated in 1947, is a global leader in the
distribution and marketing of pharmaceutical and specialty chemicals used
principally in the agricultural, color, pharmaceutical, surface coating/ink and
general chemical industries. With offices in nine countries, Aceto Corporation
distributes over 1,000 chemicals in these and other fields. For more
information, please view our web slide show presentation.
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking statements are
based on current expectations, estimates and projections made by management. The
Company intends for the forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
or variations of such words are intended to identify such forward-looking
statements. The forward looking statements contained in this press release
include, but are not limited to, new product launches, formerly commencing a
joint venture with Nufarm Limited within two weeks, establishing other business
locations in Eastern Europe, acquiring a biopharmaceutical distribution company,
as well as the earnings guidance for the Company's second quarter of fiscal
2004. All forward-looking statements in this press release are made as of the
date hereof, and the Company assumes no obligation to update these
forward-looking statements whether as a result of new information, future events
or otherwise. The forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth or implied by any forward-looking statements. These uncertainties
include, but are not limited to, economic and political conditions in the United
States and abroad, as well as other risks detailed in the Company's SEC reports,
including the Company's Form 10-K and other filings. Copies of these filings are
available through the SEC's electronic data gathering analysis and retrieval
system (EDGAR) at www.sec.gov.
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CONTACT: -OR- INVESTOR RELATIONS
COUNSEL:
Aceto Corporation The Equity Group Inc.
Leonard S. Schwartz, Chairman/CEO Loren G. Mortman
Douglas Roth, CFO (212) 836-9604,
LMortman@equityny.com
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(516) 627-6000 Lauren Barbera
www.aceto.com (212) 836-9610,
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LBarbera@equityny.com
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www.theequitygroup.com
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ACETO CORP.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXPECT PER SHARE AMOUNTS)
(UNAUDITED)
FIRST QUARTER ENDED
SEPTEMBER 30,
2003 2002
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Net Sales $ 72,337 $ 68,022
Cost of Sales 60,013 56,777
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Gross Profit 12,324 11,245
Gross Profit % 17.04% 16.53%
Selling, General and
Administrative Expenses 8,127 7,661
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Operating Income 4,197 3,584
Other Income (Expense) Net of
Interest Expense 357 (194)
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Income before Income Taxes and Cumulative
effect of accounting change 4,554 3,390
Provision for Income Taxes 1,435 1,067
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Income before cumulative effect of
accounting change 3,119 2,323
Cumulative effect of accounting change
net of income taxes (1) - 1,873
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Net Income $ 3,119 $ 450
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Basic income per common share (2):
Before accounting change $ 0.30 $ 0.24
Cumulative effect of accounting change $ - $ 0.19
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$ 0.30 $ 0.05
Diluted income per common share (2):
Before accounting change $ 0.29 $ 0.24
Cumulative effect of accounting change $ - $ 0.19
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$ 0.29 $ 0.05
Weighted Average Shares Outstanding
Basic 10,329 9,801
Diluted 10,646 9,855
(1) In accordance with SFAS142, any impairment loss resulting from the
completion of the transitional impairment test of goodwill will be
recognized as a cumulative effect of an accounting change and will be
recognized in the first interim reporting period.
(2) Retroactively adjusted to reflect a 3-for-2 stock dividend distributed on
January 2, 2003 to common stockholders of record as of the close of
business December 18, 2002.
ACETO CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30,2003 June 30,2003
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ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 25,716 $ 20,263
Short-term investments 861 877
Receivables:
Trade, less allowance for doubtful accounts:
9/30/03 $1,100; 6/30/03 $939 46,484 43,841
Other 1,502 1,320
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47,986 45,161
Inventory 36,507 41,696
Prepaid expenses and other current assets 1,310 1,015
Income taxes receivable 190 939
Deferred income tax benefit, net 301 301
Property held for sale 326 326
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Total current assets 113,197 110,578
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Long-term notes receivable 904 1,017
Property and equipment 6,076 5,956
Less: accumulated depreciation and amortization 3,800 3,681
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2,276 2,275
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Goodwill 7,716 7,783
Deferred income tax benefit 1,107 1,107
Other assets 704 759
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Total Assets $ 125,904 $ 123,519
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Drafts and acceptances payable $ 835 $ 1,315
Short term bank loans 2,777 3,286
Accounts payable 16,477 17,372
Accrued merchandise purchases 6,893 4,048
Accrued compensation 3,336 4,117
Accrued environmental remediation 1,550 1,550
Other accrued expenses 5,654 7,262
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Total current liabilities 37,522 38,950
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Shareholders' equity:
Common stock, $.01 par value per share; 123 123
Authorized 20,000,000 shares
Issued: 9/30/03 & 6/30/03: 12,292,684 shares;
Outstanding: 9/30/03, 10,344,568; 6/30/03, 10,286,175 shares
Capital in excess of par value 57,147 57,100
Retained earnings 49,261 46,142
Accumulated other comprehensive income 1,109 1,040
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107,640 104,405
Less: Treasury stock, at cost:
9/30/03, 1,948,116; 6/30/03, 2,006,509 shares 19,258 19,836
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Total shareholders' equity 88,382 84,569
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Total liabilities and shareholders' equity $ 125,904 $ 123,519
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