Exhibit 99.1
[LOGO] Aceto
FOR IMMEDIATE RELEASE
ACETO CORPORATION ANNOUNCES FOURTH-QUARTER AND YEAR-END RESULTS
LAKE SUCCESS, NY - September 9, 2005 - Aceto Corporation (NASDAQ:ACET), a global
distributor of chemically-derived pharmaceuticals, biopharmaceuticals, specialty
chemicals and agrochemicals, today announced results of operations for its
fourth quarter and year ended June 30, 2005.
Net sales for the fourth quarter were $73.7 million, compared to $76.1 million
in the fourth quarter of fiscal year 2004, due to reduced sales of two active
pharmaceutical ingredients (APIs) as a result of intense competition. (Aceto
disclosed reduced sales of these APIs in its December 2004 and March 2005
quarterly reports). Sales for those two products in the fourth quarter of fiscal
year 2004 were $10.0 million, compared with zero in the fourth quarter of fiscal
year 2005. Fourth-quarter results were also adversely affected by a $0.9 million
increase in selling, general and administrative expenses, of which $0.2 million
represented increased Sarbanes-Oxley compliance costs, $0.5 million represented
increased payroll related expenses (including costs associated with Aceto's
Strategic Business Initiatives), and $0.2 million represented increased legal
fees and expenses. Net income (after a loss from discontinued operations
described below) was $2.8 million, or $0.11 per diluted share, versus $3.3
million, or $0.13 per diluted share, in the fourth quarter of fiscal year 2004.
Net income for the fourth quarter of fiscal year 2005 included a tax benefit of
$1.3 million, or $0.05 per diluted share, due to a reduction in the valuation
allowance for a portion of Aceto's deferred tax assets. (All per share amounts
have been adjusted for a 3-for-2 stock split, effected in the form of a
dividend, paid January 10, 2005).
During the fourth quarter, Aceto's CDC Products Corp. subsidiary, which formed
part of Aceto's non-core Institutional Sanitary Supplies segment and was held
for sale since December 31, 2004, was reclassified from "discontinued
operations" to "continuing operations" as a result of Aceto's decision to
maintain part of the business after having entered into an agreement to sell the
majority of the CDC product lines. The effect on net income from continuing
operations was a $0.1 million loss for the fourth quarter, which was less than
Aceto estimated. (Aceto disclosed that estimate in a press release dated July
13, 2005).
Net sales for the year ended June 30, 2005, increased 6% to $313.4 million from
$296.4 million in 2004. Net income was $10.0 million, or $0.41 per diluted
share, as compared to $13.1 million, or $0.53 per diluted share, last year. The
$3.1 million difference in net income was the lost profitability from the two
aforementioned APIs. Net income for 2005 included a loss from discontinued
operations of $0.6 million, net of income tax benefits, primarily related to a
non-cash goodwill impairment charge for Magnum Research Corp., the other
subsidiary forming Aceto's Institutional Sanitary Supplies segment.
Aceto closed the year in a strong financial position, highlighted by working
capital of $94.2 million, no long-term debt, and shareholders' equity of $107.7
million at June 30, 2005.
Leonard S. Schwartz, Chairman, CEO, and President of Aceto, stated, "With the
exception of the lost business from the two APIs, which we do not expect to
return, our three main segments grew at a steady pace during the fourth quarter.
Of particular note is the `second source' API business we are developing to
supply to the existing generic market. We have more than 20 products in this
pipeline and expect to sell five or six of these products during fiscal year
2006. In addition, we successfully divested most of our CDC unit and have
recently completed the sale of the balance of our Institutional Sanitary
Supplies segment."
Mr. Schwartz continued, "During the year we made substantial progress on the
Strategic Initiatives we have undertaken to grow our company beyond our core
business areas. I would like to provide an update on these initiatives:
o Biopharmaceuticals (Human)--We are pleased that the FDA has announced
that it plans to issue guidance before the end of 2005 regarding how
approval of generic biopharmaceuticals (also known as `follow-on
biologics') is to be handled.
o Biopharmaceuticals (Veterinary) --We have submitted to the USDA a
complete set of applications to market a range of vaccines for companion
animals. We hope to receive approvals on a timely basis and commence
commercial sales within fiscal year 2006.
o Landfill Odorend--Unfortunately, progress on Landfill Odorend has been
slower than anticipated. We completed successful commercial trials, and
some landfill operators have indicated to us that they consider that the
product works, but we have not yet received a commercial order. We
believe this is primarily due to the additional cost to the landfills
for using this product and the fact that regulations concerning odor
emissions have not strictly been enforced. We are strengthening our
efforts and still believe that this product will be commercialized,
although we do not know the timing.
o Organic color pigments--This business continues to grow and should
generate $5 million in business in fiscal year 2006, up from about $3
million in fiscal 2005.
o Eastern Europe operations--Our office in Poland, which we opened in
January 2004, is profitable and the business continues to grow, albeit
at a slower rate than we anticipated.
o Agrochemicals--Our improving overall position in the agrochemicals
market is further enhancing our future growth potential. Within the last
month, we submitted an application to the EPA for approval of a generic
herbicide for which we have already established distribution channels.
Also within the last month, we acquired another EPA registration for a
fumigant. Additionally, we have four other products under development.
We expect our Agrochemicals segment to become a larger contributor to
our overall business in fiscal year 2006."
Mr. Schwartz concluded, "In terms of financial guidance, we expect income from
continuing operations to be at least $0.07 per diluted share in the first
quarter of fiscal year 2006. The first quarter results will again reflect the
loss of the two APIs, which contributed $11.8 million in sales in the first
quarter of fiscal year 2005 and $19.8 million for the fiscal 2005 year as a
whole."
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 Friday, September 9, 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 Aceto's
website. To listen to the live call please go to the website at least 15 minutes
before the call to register, download and install any necessary audio software.
The conference call will be archived on Aceto's website, and a recorded phone
replay of the call will be available from 12:00 noon ET on Friday, September 9,
2005, until 5:00 p.m. ET on Monday, September 12, 2005. Dial 800-642-1687
(706-645-9291 for international callers) and enter the code 8862964 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
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. These forward-looking statements
are based on current expectations, estimates and projections of management.
Aceto intends for these 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, expectations regarding loss of sales of two
APIs, expectations regarding sales of "second source" API products, approval of
applications for, and sales of, veterinary vaccines, commercialization of
Landfill Odorend, growth of the organic color pigments business, growth of the
Poland office, growth of the Agrochemicals segment, results for the first
quarter of fiscal year 2006, and prospects for long-term growth arising from
opportunities in the core business coupled with Aceto's Strategic Initiatives.
All forward-looking statements in this press release are made as of the date of
this press release, and Aceto 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, Lauren Barbera
Chairman/CEO/President (212) 836-9610, LBARBERA@EQUITYNY.COM
Douglas Roth, CFO WWW.THEEQUITYGROUP.COM
(516) 627-6000 WWW.ACETO.COM
ACETO CORP.
Consolidated Statements of Income
(in thousands, except per share amounts)
THREE MONTHS ENDED FULL YEAR ENDED
JUNE 30, JUNE 30,
(UNAUDITED)
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $ 73,682 $ 76,130 $ 313,381 $ 296,359
Cost of sales 61,627 63,141 260,280 243,947
------------ ------------ ------------ ------------
Gross profit 12,055 12,989 53,101 52,412
Gross profit % 16.36% 17.06% 16.94% 17.69%
Selling, general and
administrative expenses 10,555 9,608 41,561 36,294
------------ ------------ ------------ ------------
Operating income 1,500 3,381 11,540 16,118
Other income, net of
interest expense 415 215 1,248 1,233
------------ ------------ ------------ ------------
Income from continuing operations before income taxes 1,915 3,596 12,788 17,351
(Benefit) provision for income taxes (923) 301 2,163 4,240
------------ ------------ ------------ ------------
Income from continuing operations 2,838 3,295 10,625 13,111
Loss from discontinued operations, net of taxes (45) (20) (610) (44)
------------ ------------ ------------ ------------
Net income $ 2,793 $ 3,275 $ 10,015 $ 13,067
============ ============ ============ ============
Basic income per common share (a):
Income from continuing operations $ 0.12 $ 0.14 $ 0.44 $ 0.55
Loss from discontinued operations $ (0.00) $ (0.00) $ (0.03) $ (0.00)
Net income $ 0.12 $ 0.14 $ 0.41 $ 0.55
Diluted income per common share (a):
Income from continuing operations $ 0.11 $ 0.13 $ 0.43 $ 0.53
Loss from discontinued operations $ (0.00) $ (0.00) $ (0.02) $ (0.00)
Net income $ 0.11 $ 0.13 $ 0.41 $ 0.53
Weighted average shares outstanding (a):
Basic 24,270 24,060 24,198 23,873
Diluted 24,610 24,622 24,670 24,477
(a) The number of shares outstanding and the per share information have been adjusted for stock splits, effected in the
form of a dividend, as appropriate.
ACETO CORPORATION
Consolidated Balance Sheet
(in thousands, except per share amounts)
June 30, 2005 June 30, 2004
------------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 19,950 $ 23,330
Investments 5,068 9,888
Receivables:
Trade, less allowance for doubtful
accounts: June 2005, $427; June 2004 $ 1,033 49,636 53,084
Other 1,421 1,504
------------- -------------
51,057 54,588
Inventory 51,722 41,784
Prepaid expenses and other current assets 821 1,165
Assets held for sale 242 -
Income taxes receivable - 606
Deferred income tax benefit, net 2,780 1,613
------------- -------------
Total current assets 131,640 132,974
Long-term notes receivable 624 747
Property and equipment, net 5,543 2,654
Goodwill 1,720 3,179
Intangible assets,net 3,153 3,701
Deferred income tax benefit, net 3,626 4,579
Other assets 2,722 1,863
------------- -------------
Total Assets $ 149,028 $ 149,697
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Drafts and acceptances payable $ 2,462 $ 4,610
Short term bank loans 126 -
Accounts payable 24,783 31,292
Note payable - related party 500 1,000
Accrued expenses 9,474 9,652
Liabilities related to assets held for sale 46 -
------------- -------------
Total current liabilities 37,391 46,554
Long-term liabilites 3,811 2,720
Minority interest 171 157
------------- -------------
Total liabilities 41,373 49,431
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value:
(40,000 shares authorized; 25,644 shares
issued; 24,282 and 24,118 shares
outstanding at June 30, 2005 and 2004,
respectively) 256 256
Capital in excess of par value 56,903 57,111
Retained earnings 62,864 56,490
Treasury stock, at cost:
(1,362 and 1,526 shares at June
30, 2005 and 2004, respectively) (13,505) (15,135)
Accumulated other comprehensive income 1,137 1,544
------------- -------------
Total shareholders' equity 107,655 100,266
------------- -------------
Total liabilities and shareholders' equity $ 149,028 $ 149,697
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