[LOGO] ACETO Exhibit 99.1
FOR IMMEDIATE RELEASE
ACETO CORPORATION ANNOUNCES THIRD QUARTER RESULTS
WITH BEST-EVER QUARTERLY SALES
LAKE SUCCESS, NY - May 5, 2005 - Aceto Corporation (NASDAQ:ACET), a global
distributor of chemically-derived pharmaceuticals, biopharmaceuticals, specialty
chemicals and agrochemicals, today announced quarterly results of operations for
its fiscal 2005 third quarter and nine months ended March 31, 2005.
For the third quarter, net sales increased 4% to $81.6 million, from $78.3
million in the third quarter of fiscal 2004. Gross profit was $14.2 million for
the quarter, compared to $14.5 million in the fiscal 2004 period, and gross
margin was 17.4% compared to 18.5%. The gross margin was lower because of
previously announced pricing pressures related to two of the Company's
chemical-based active pharmaceutical ingredients ("APIs"). While selling,
general and administrative expenses increased by $779,000, of this, $598,000 was
incurred for compliance with the Sarbanes-Oxley Act and $209,000 for Aceto's
strategic business initiatives. Management is pleased that the balance of the
Company's SG&A expenses were flat compared to last year. Income from continuing
operations was $2.7 million or $0.11 per diluted share, compared to $3.8 million
or $0.16 per diluted share in the third quarter of last year. Net income was
$1.9 million or $0.08 per diluted share, versus $3.7 million or $0.15 per
diluted share in the comparable period of last year. Net income for the third
quarter included losses from discontinued operations of $0.03 and $0.01 per
diluted share in the 2005 and 2004 periods, respectively, net of income tax
benefits, related to the Company's planned sale of its Institutional Sanitary
Supplies business. Presently, Aceto is in final negotiations with two separate
parties to sell two sets of Institutional Sanitary Supplies product lines, and
is pursuing a buyer for the remaining product lines.
Net sales for the nine months ended March 31, 2005 increased 9% to $236.7
million from $217.2 million in the same period of the prior year. Income from
continuing operations was $8.9 million or $0.36 per diluted share, compared to
$10.2 million or $0.42 per diluted share in last year's period. Net income was
$7.2 million or $0.29 per diluted share for the first nine months of fiscal
2005, as compared to $9.8 million or $0.40 per diluted share in the same period
of fiscal 2004.
Leonard S. Schwartz, Chairman, CEO and President of Aceto, stated, "The third
quarter marks the greatest quarterly sales level in the Company's history, as
well as our second-highest gross profit. Double-digit sales increases in our
Agrochemicals and Chemicals & Colorants segments offset a slight decrease (2%)
in our Health Sciences group caused by competitive pricing on certain APIs. This
more competitive environment in the Generic drug industry and APIs is already
providing new business opportunities for Aceto. In
addition to our traditional business of supplying APIs to Generic companies for
their new product introductions, which we continue to pursue aggressively, we
are now supplying them APIs for their existing drugs on the market. Our ability
to do this is based on the leveraging of our unique worldwide sourcing and
regulatory capabilities. As a result of this strategy, as stated during the last
investor conference call, we expect to introduce a greater number of new APIs."
Mr. Schwartz continued, "During the quarter we continued to focus on Strategic
Business Initiatives to produce long-term growth for the Company. With regard to
our Landfill Odorend product, the intensive marketing campaign we launched in
early January has begun to generate interest. We delivered product to five
landfills for current and pending commercial trials. These landfills are in our
target market as they are experiencing significant odor problems. We expect to
have results from the commercial trials in 60 to 90 days. Also during the
quarter, we completed the purchase of our Chinese headquarters in Shanghai, and
are expanding our staff in China from 24 to 28 people. We expect to move into
the new location by the end of this month. Additionally, we remain committed and
on track with our Biopharmaceutical Initiative, which encompasses patented
products for humans, the emerging generic market, specialty vaccines for humans,
and a segment of the veterinary market. We are targeting specific products for
which regulatory pathways already exist as well as products that will require
regulatory changes to bring to market. We are also making progress with the
expansion of our Agrochemicals segment. Our organic color pigments business is
growing very nicely, and our business in Eastern Europe is showing signs of
growth."
Mr. Schwartz concluded, "Our strong financial position continues to serve as a
solid foundation to support our initiatives. We closed the quarter with working
capital of $94.3 million, no long-term debt and shareholders' equity of $108.0
million. In terms of financial guidance, we anticipate income from continuing
operations of approximately $0.09 - $0.11 per diluted share in the fourth
quarter, which includes an estimated $0.6 million related to costs associated
with SOX 404 compliance. We remain focused on optimizing the performance of our
core businesses, as well as capitalizing on the opportunities related to our
Strategic Business Initiatives, and continue to be enthusiastic about Aceto's
long-term prospects for growth."
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, May 5, 2005. Interested
parties may participate in the call by dialing 888-787-0577 (706-679-3204 for
international callers) - please call in 10 minutes before the call is scheduled
to begin. 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. The conference call
will be archived on the Company's website, and a recorded phone replay of the
call will be available from 1:00 p.m. on Thursday, May 5, 2005 until 5:00 p.m.
ET on Friday, May 6, 2005. Dial 800-642-1687 (706-645-9291 for international
callers) and enter the code 5455975 for the phone replay.
ABOUT ACETO
Aceto Corporation, which was incorporated in 1947, is a global leader in the
distribution and marketing of biopharmaceuticals, chemically-derived
pharmaceuticals, specialty chemicals and agrochemicals used principally as raw
materials in the agricultural, color, pharmaceutical, surface coating/ink and
general chemical consuming industries. With offices in ten countries, Aceto
Corporation distributes over 1,000 chemicals in these and other fields.
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, the introduction of a greater number of new
API's, receiving results from trials within 60 to 90 days regarding the Landfill
Odorend product, the earnings guidance for the Company's fourth quarter of
fiscal 2005 and Aceto's long-term prospects for growth. 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, other than as required by
law. 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, the mix of products sold and the profit margins thereon, order
cancellation or a reduction in orders from customers, competitive product
offerings and pricing actions, the availability and pricing of key raw
materials, dependence on key members of management, risk of entering into new
European markets, continued successful integration of acquisitions, 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 at WWW.SEC.GOV.
CONTACT: -OR- INVESTOR RELATIONS COUNSEL:
Aceto Corporation The Equity Group Inc.
Leonard S. Schwartz, Chairman/CEO/President Lauren Barbera
Douglas Roth, CFO (212) 836-9610
(516) 627-6000 lbarbera@equityny.com
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www.aceto.com www.theequitygroup.com
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ACETO CORP.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net sales $ 81,578 $ 78,264 $ 236,745 $ 217,154
Cost of sales 67,420 63,809 196,416 178,796
---------- ---------- ---------- ----------
Gross profit 14,158 14,455 40,329 38,358
Gross profit % 17.36% 18.47% 17.03% 17.66%
Selling, general and
administrative expenses 10,138 9,359 28,518 25,030
---------- ---------- ---------- ----------
Operating income 4,020 5,096 11,811 13,328
Other income, net of
interest expense 18 198 833 1,018
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Income from continuing operations before income taxes 4,038 5,294 12,644 14,346
Provision for income taxes 1,292 1,458 3,759 4,175
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Income from continuing operations 2,746 3,836 8,885 10,171
Loss from discontinued operations, net of taxes (851) (126) (1,662) (379)
---------- ---------- ---------- ----------
Net income 1,895 3,710 7,223 9,792
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Basic income per common share (a):
Income from continuing operations $ 0.11 $ 0.16 $ 0.37 $ 0.43
Loss from discontinued operations $ (0.03) $ (0.01) $ (0.07) $ (0.02)
Net income $ 0.08 $ 0.15 $ 0.30 $ 0.41
Diluted income per common share (a):
Income from continuing operations $ 0.11 $ 0.16 $ 0.36 $ 0.42
Loss from discontinued operations $ (0.03) $ (0.01) $ (0.07) $ (0.02)
Net income $ 0.08 $ 0.15 $ 0.29 $ 0.40
Weighted average shares outstanding (a):
Basic 24,235 23,969 24,193 23,863
Diluted 24,690 24,584 24,708 24,482
(a) The number of shares outstanding and the per-share information have been
adjusted for a 3-for-2 stock split, effected in the form of a dividend, paid
January 10, 2005.
ACETO CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, June 30,
2005 2004
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(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 20,855 $ 23,330
Investments 5,009 9,888
Receivables:
Trade, less allowance for doubtful
accounts: March, $400; June $ 1,033 55,220 53,084
Other 1,543 1,504
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56,763 54,588
Inventory 48,122 41,784
Prepaid expenses and other current assets 2,080 1,165
Assets held for sale 1,437 -
Income taxes receivable 148 606
Deferred income tax benefit, net 2,119 1,613
----------- -----------
Total current assets 136,533 132,974
Long-term notes receivable 671 747
Property and equipment 9,170 7,044
Less accumulated depreciation and amortization 3,796 4,390
----------- -----------
5,374 2,654
Goodwill 2,295 3,179
Intangible assets,net 3,512 3,701
Deferred income tax benefit, net 2,774 4,579
Other assets 2,363 1,863
----------- -----------
Total Assets $ 153,522 $ 149,697
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Drafts and acceptances payable $ 4,623 $ 4,610
Accounts payable 25,173 31,292
Note payable - related party 500 1,000
Accrued compensation 2,202 2,836
Accrued environmental remediation 1,240 1,326
Other accrued expenses 7,952 6,070
Liabilities related to assets held for sale 494 -
----------- -----------
Total current liabilities 42,184 47,134
Long-term liabilites 3,151 2,140
Minority interest 215 157
----------- -----------
Total liabilities 45,550 49,431
Shareholders' equity:
Common stock, $.01 par value:
(40,000 shares authorized; 25,644 shares
issued; 24,248 and 24,118 shares outstanding
at March 31, 2005 and June 30, 2004,
respectively) 256 256
Capital in excess of par value 57,157 57,111
Retained earnings 61,893 56,490
Treasury stock, at cost:
(1,396 and 1,526 shares at March
31, 2005 and June 30, 2004, respectively) (13,848) (15,135)
Accumulated other comprehensive income 2,514 1,544
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Total shareholders' equity 107,972 100,266
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Total liabilities and shareholders' equity $ 153,522 $ 149,697
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