Exhibit 99.1
FOR IMMEDIATE RELEASE
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ACETO CORPORATION ANNOUNCES THIRD QUARTER FINANCIAL RESULTS WITH
EPS OF $0.11 VS. $0.08 IN LAST YEAR'S THIRD QUARTER
RECEIVES EPA APPROVAL FOR ASULAM HERBICIDE
LAKE SUCCESS, NY - May 5, 2006 - Aceto Corporation (NASDAQ:ACET), a global
distributor of chemically-derived pharmaceuticals, biopharmaceuticals, specialty
chemicals and agrochemicals, today announced results of operations for its
fiscal 2006 third quarter and nine months ended March 31, 2006.
Net sales for the third quarter were $80.8 million, compared to $82.5 million in
the third quarter of fiscal year 2005. The Company's selling, general and
administrative expenses decreased 18% from the third quarter of last year,
producing a 43% increase in operating income to $4.1 million. Aceto reported net
income of $2.8 million or $0.11 per diluted share, a 45% increase from $1.9
million or $0.08 per diluted share in the 2005 quarter. The 2005 quarter
includes a $0.01 loss from the Company's discontinued Institutional Sanitary
Supplies ("ISS") segment.
For the nine months ended March 31, 2006, net sales were $225.3 million compared
to $239.7 million in the same period of the prior year, attributable to the
previously disclosed decrease in sales of two active pharmaceutical ingredients
(APIs) due to intense competition. Net income was $6.3 million or $0.26 per
diluted share in the nine-month period, compared to $7.2 million or $0.29 per
diluted share in the same period of fiscal 2005. The 2006 period includes an
after tax charge of $0.01 per diluted share for exiting the ISS facility, and
the 2005 period includes a $0.02 loss from the Company's discontinued ISS
segment.
Leonard S. Schwartz, Chairman, CEO, and President of Aceto, stated, "I am
pleased with our performance in the third quarter. Importantly, despite the
highly competitive environment for APIs, our Health Sciences margins rose on a
comparable quarter basis, and our market position for APIs is strengthening as a
result of our continued focus on enhancing our regulatory capabilities and our
sourcing operations in India and China. Combined, these skills enable us to grow
our position in the rapidly consolidating generic pharmaceuticals market. We
have also been successful in controlling SG&A costs with no diminution of our
operational capabilities, while at the same time continuing to invest resources
and funds in our new business initiatives. We realized additional cost savings
during the quarter, and believe the SG&A level recorded in the third quarter
will be our approximate run rate going forward."
Providing an update on Aceto's new business initiatives, Mr. Schwartz commented,
"With regard to our vaccines for companion animals, the USDA recently approved
and gave high marks to the factory of our supplier. However, the USDA is
requiring Aceto to perform an additional study to confirm that the testing for
the vaccines completed in the EU (which was part of the basis for the supplier's
EU approval and provided highly satisfactory results), is in accordance with
USDA standards under 9 CFR regulations. We believe this cautionary action by the
agency is a direct result of our application being the first ever companion
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animal vaccines from any supplier outside of the U.S. This additional study
extends the anticipated date of approval from late fiscal 2006 to the first half
of fiscal 2007. Nevertheless, our marketing program remains on track to sell
product under the Aceto label, and we plan to enter the market immediately
following receipt of the license."
Mr. Schwartz continued, "We are also proceeding with our initiative to sell
Aceto branded generic drugs in finished dosage form directly into distribution
channels. Integral to the development of this business initiative are: 1)
customer acceptance of our marketing strategy, 2) regulatory compliance and 3)
supply of approved generic drugs. I am pleased to say that we are progressing
well on all three fronts."
"As we have stated previously, regarding human generic biopharmaceuticals there
is no definitive time frame for regulatory pathways in the U.S. However, we are
encouraged by the movement toward regulatory action stemming from developments
in the EU as well as some recent progress in the U.S. Last month, a U.S. federal
judge ordered the FDA to make a decision on Omnitrope, a generic
biopharmaceutical recombinant human growth hormone that was granted marketing
authorization by the European Commission. If/when U.S. regulatory pathways are
put in place, which would certainly help combat the continuing rise in health
care costs, we would capitalize on Aceto's unique position and bring products to
the U.S. market from our portfolio of 38 products, three of which are covered
under our agreement with Three Rivers Pharmaceuticals."
Mr. Schwartz further stated, "With respect to expanding our Agrochemicals
segment, we received EPA approval of Asulam, a herbicide used on sugar cane, and
will commence supply under a multi-year contract with a major agricultural
chemical distributor beginning in the spring 2007 season. The Agrochemicals
segment generates higher margins than our other two segments, and should become
a larger contributor to our earnings next year."
As relates to Aceto's Chemicals & Colorants segment, Mr. Schwartz commented, "We
are very pleased with the results in our Chemicals & Colorants segment. The
efforts we are putting forth in China for the development of our sourcing
operations, combined with the recent acquisition of our own office space, are
keeping pace with the rapid growth of the Chinese chemical industry and are
bearing fruit. One illustration of this is the success we are having with
organic color pigments."
Mr. Schwartz concluded, "Our financial position remains extremely strong. We
closed the third quarter with working capital of $101.8 million, no long-term
debt and shareholders' equity of $112.4 million. We are enthusiastic about
Aceto's long-term outlook based on strength in our core businesses, as well as
the prospects for our new initiatives. In the fourth quarter of fiscal 2006, we
expect to earn approximately $0.09 per diluted share, compared to $0.11 in the
final quarter of fiscal 2005. The final quarter of 2005 included a tax benefit
of $0.05 per diluted share due to a one-time reduction in the valuation
allowance for a portion of Aceto's deferred tax assets in that quarter."
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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, May 5, 2006. 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, and ask for the Aceto call (conference ID # 8368842). 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, May 5, 2006, until 5:00 p.m. ET on Monday, May 8, 2006.
Dial 800-642-1687 (706-645-9291 for international callers) and enter the code
8368842 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, agrochemicals and specialty chemicals 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. 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, statements regarding approval of applications
for, and sales of, veterinary vaccines, emergence of a market for human generic
biopharmaceuticals, entering distribution channels with finished dosage forms,
commencing supply of Asulam herbicide, continued rapid growth in the Chinese
chemical industry, launching four new agrochemical products before the end of
calendar 2007, results for the fourth quarter of fiscal year 2006, and prospects
for long-term growth. 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.
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CONTACT: -OR- INVESTOR RELATIONS COUNSEL:
Aceto Corporation The Equity Group Inc.
Leonard S. Schwartz, Chairman/CEO/President Lauren Till
Douglas Roth, CFO (212) 836-9610, LTILL@EQUITYNY.COM
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(516) 627-6000 WWW.THEEQUITYGROUP.COM
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WWW.ACETO.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,
2006 2005 2006 2005
------------ ------------ ------------- --------------
Net sales $ 80,846 $82,512 $ 225,306 $ 239,699
Cost of sales 67,402 68,263 187,891 198,653
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Gross profit 13,444 14,249 37,415 41,046
Gross profit % 16.63% 17.27% 16.61% 17.12%
Selling, general and
administrative expenses 9,361 11,386 29,380 31,005
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Operating income 4,083 2,863 8,035 10,041
Other income, net of
interest expense (23) 18 1,094 833
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Income from continuing operations before income taxes 4,060 2,881 9,129 10,874
Provision for income taxes 1,309 853 2,830 3,086
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Income from continuing operations 2,751 2,028 6,299 7,788
Loss from discontinued operations, net of taxes - (133) (27) (565)
------------ ------------ ------------- --------------
Net income $ 2,751 $ 1,895 $ 6,272 $ 7,223
============ ============ ============= ==============
Basic income per common share:
Income from continuing operations $ 0.11 $ 0.09 $ 0.26 $ 0.32
Loss from discontinued operations $ - $ (0.01) $ - $ (0.02)
Net income $ 0.11 $ 0.08 $ 0.26 $ 0.30
Diluted income per common share:
Income from continuing operations $ 0.11 $ 0.09 $ 0.26 $ 0.31
Loss from discontinued operations $ - $ (0.01) $ - $ (0.02)
Net income $ 0.11 $ 0.08 $ 0.26 $ 0.29
Weighted average shares outstanding:
Basic 24,237 24,235 24,265 24,193
Diluted 24,569 24,690 24,586 24,708
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ACETO CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, 2006 June 30, 2005
(unaudited)
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Assets
Current Assets:
Cash in banks $ 21,875 $ 19,950
Investments 3,276 5,068
Trade receivables: less allowances for doubtful
accounts: Mar, $512; June $427 62,156 49,636
Other receivables 1,316 1,421
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63,472 51,057
Inventory 47,540 51,722
Prepaid expenses and other current assets 1,460 821
Assets held for sale -- 242
Deferred income tax benefit, net 2,799 2,780
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Total current assets 140,422 131,640
Long-term notes receivable 574 624
Property and equipment, net 5,237 5,543
Goodwill 1,721 1,720
Intangible assets,net 3,698 3,153
Deferred income tax benefit, net 1,650 3,626
Other assets 2,695 2,722
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Total Assets $ 155,997 $ 149,028
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Liabilities and Shareholders' Equity
Current liabilities:
Drafts and acceptances payable $ 1,795 $ 2,462
Short term bank loans 17 126
Accounts payable 24,086 24,783
Note payable - related party 500 500
Accrued expenses 12,184 9,474
Liabilities related to assets held for sale -- 46
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Total current liabilities 38,582 37,391
Long-term liabilites 4,876 3,811
Minority interest 175 171
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Total liabilities 43,633 41,373
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value:
(40,000 shares authorized; 25,644 shares issued;
24,257 and 24,282 shares outstanding at
Mar. 31, 2006 and June 30, 2005, respectively) 256 256
Capital in excess of par value 56,669 56,903
Retained earnings 67,320 62,864
Treasury stock, at cost:
(1,387 and 1,362 shares at Mar
31, 2006 and June 30, 2005, respectively) (13,403) (13,505)
Accumulated other comprehensive income 1,522 1,137
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Total shareholders' equity 112,364 107,655
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Total liabilities and shareholders' equity $ 155,997 $ 149,028
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