Exhibit 99.1
FOR IMMEDIATE RELEASE
---------------------
ACETO CORPORATION ANNOUNCES 163% INCREASE IN FOURTH QUARTER OPERATING INCOME
COMPARED TO YEAR AGO QUARTER
LAKE SUCCESS, NY - September 8, 2006 - 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 fiscal year ended June 30, 2006.
Net sales for the fourth quarter were marginally down to $71.8 million from
$73.7 million in the year ago quarter and gross profit increased $1.3 million,
or 10.7%, to $13.3 million from $12.0 in the fiscal 2005 quarter. This, coupled
with a 10.9% reduction in the Company's selling, general and administrative
expenses, produced a 162.7% increase in operating income to $3.9 million.
Net income increased by 6.2% to $3.0 million, or $0.12 per diluted share, up
from $2.8 million or $0.11 per diluted share in the 2005 quarter. Last years
fourth quarter net income included a one- time tax benefit of $1.3 million, or
$0.05 per diluted share.
For the fiscal year ended June 30, 2006, net sales were $297.1 million compared
to $313.4 million in 2005, a decrease of 5.2%, attributable to the previously
disclosed decrease in sales of two active pharmaceutical ingredients (APIs) due
to intense competition. These APIs generated $19.8 million in sales in 2005
compared to $3.8 million in 2006. Gross margin increased slightly to 17.1% from
16.9%, and combined with a 6.7% reduction in selling, general and administrative
expenses, operating income increased 3.8% to $12.0 million from $11.5 million in
fiscal 2005. Aceto's pre-tax income from continued operations increased 3.7% to
$13.3 million from $12.8 million last year. Net income was $9.2 million or $0.38
per diluted share in 2006, compared to $10.0 million or $0.41 per diluted share
in 2005, which included a $0.02 per diluted share loss from the Company's
discontinued Institutional Sanitary Supply segment and the previously discussed
$0.05 per share tax benefit.
Leonard S. Schwartz, Chairman, CEO, and President of Aceto, stated, "We are
pleased with the results that we have reported today, especially in light of the
challenging economic conditions in the chemical and pharmaceutical industries.
Operating income in the fourth quarter of 2006 increased by more than two and
one half times the 2005 level which can largely be attributed to the huge
strides that we have made in the reduction of our SG&A expense in 2006. In the
fourth quarter, while increasing our focus on our strategic initiatives, we
reduced overall SG&A expense by almost 11% compared to last year's fourth
quarter, without having any noticeable effect on our operating capabilities."
Mr. Schwartz continued, "During the fourth quarter, sales in our Health Sciences
segment were up 3% in the face of a very competitive generic drug market. Our
Chemicals & Colorants sales decreased 6% primarily due to lower sales in the
Agricultural Intermediates product group, and our Agrochemicals sales declined
2% because of the hot, dry weather
throughout much of the US. Nonetheless, our higher gross profit margin and
continued reduction in SG&A expenses enabled us to achieve strong operating
results despite the slightly lower overall sales level."
Highlighting recent developments on some of Aceto's strategic initiatives, Mr.
Schwartz commented, "Our initiative to provide vaccines for companion animals
remains on track as we have completed all documentary requirements which the
USDA has accepted. We are awaiting the final results of animal testing and have
a high level of confidence the testing will be successful. As a result, we
expect to receive USDA approval by the end of calendar 2006, at which time we
will implement our marketing program and immediately enter the market with Aceto
branded product."
Mr. Schwartz continued, "In the fourth quarter, we continued to make progress in
the three key areas of our initiative to sell Aceto branded generic drugs in
finished dosage form. We have deals in place with three reputable, highly
qualified, Indian producers to purchase four products for Aceto to sell in the
United States. One of the products already has an approved ANDA, one product has
a filed ANDA and expects approval within the next three months and the other two
products have filed ANDAs and approvals are expected within twelve months. As
discussed before, it is the Company's intention to sell directly into multiple
distribution channels including large retail pharmacies and to direct
distributors to hospitals. As it relates to our entry into the market, we now
have a ready customer base that understands, and is anxious to participate in,
Aceto's new business model. With respect to regulatory compliance, the Company
is very confident that it has achieved the capability to satisfy all of the
regulatory requirements and still maintain its status as a distributor.
"During the fourth quarter, we announced our plans to expand Aceto's
capabilities in servicing the global pharmaceutical and chemical industries by
purchasing or constructing a facility in or near Mumbai, India and establishing
Indian headquarters. The facility will house state-of-the-art pharmaceutical
quality control/quality assurance and analytical laboratories, will serve as
Aceto's Indian logistics center and will provide quality and analytical services
in support of other Aceto operations worldwide."
Mr. Schwartz concluded, "We ended fiscal 2006 with working capital of $104.7
million, no long-term debt and shareholders' equity of $115.1 million. We
believe this level of working capital provides us the financial strength to move
our strategic initiatives forward. We remain optimistic about the Company's
long-term business prospects, with our core businesses serving as a solid
foundation for future growth. In terms of financial guidance, we expect to earn
approximately $0.07 per diluted share in the first quarter of fiscal 2007,
compared to $0.08 in the first quarter of fiscal 2006 which included a free
trade zone rebate in China of $ 0.6 million."
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 8, 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 # 5113640). The conference call will also
be webcast live via the Investor Relations section of the Company's website,
WWW.ACETO.COM. 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 will also be available from 1:00 p.m. ET on Friday, September 8,
2006 until 5:00 p.m. ET on Monday, September 11, 2006. Dial 800-642-1687
(706-645-9291 for international callers) and enter the code 5113640 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, entering the market for finished dosage
forms, results for the first quarter of fiscal year 2007, 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.
CONTACTS:
AT THE COMPANY:
Aceto Corporation
Leonard S. Schwartz, Chairman/CEO/President
Douglas Roth, CFO
Theodore Ayvas, Director Corporate Communications & Investor Relations
(516) 627-6000
WWW.ACETO.COM
Aceto Corp.
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Year Ended
June 30, June 30,
2006 2005 2006 2005
-------- --------- ---------- ----------
(unaudited)
Net sales $ 71,824 $ 73,683 $ 297,130 $ 313,381
Cost of sales 58,480 61,628 246,371 260,280
-------- --------- ---------- ----------
Gross profit 13,344 12,055 50,759 53,101
Gross profit % 18.58% 16.36% 17.08% 16.94%
Selling, general and
administrative expenses 9,406 10,556 38,786 41,561
-------- --------- ---------- ----------
Operating income 3,938 1,499 11,973 11,540
Other income, net of
interest expense 191 415 1,285 1,248
-------- --------- ---------- ----------
Income from continuing operations before income taxes 4,129 1,914 13,258 12,788
Provision for income taxes 1,164 (923) 3,994 2,163
-------- --------- ---------- ----------
Income from continuing operations 2,965 2,837 9,264 10,625
Loss from discontinued operations, net of taxes - (45) (27) (610)
-------- --------- ---------- ----------
Net income $ 2,965 $ 2,792 $ 9,237 $ 10,015
======== ========= ========== ==========
Basic income per common share:
Income from continuing operations $ 0.12 $ 0.12 $ 0.38 $ 0.44
Loss from discontinued operations $ - $ - $ - $ (0.03)
Net income $ 0.12 $ 0.12 $ 0.38 $ 0.41
Diluted income per common share:
Income from continuing operations $ 0.12 $ 0.11 $ 0.38 $ 0.43
Loss from discontinued operations $ - $ - $ - $ (0.02)
Net income $ 0.12 $ 0.11 $ 0.38 $ 0.41
Weighted average shares outstanding:
Basic 24,270 24,270 24,267 24,198
Diluted 24,602 24,610 24,590 24,670
ACETO CORPORATION
Consolidated Balance Sheet
(in thousands, except per-share amounts)
June 30, 2006 June 30, 2005
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ASSETS
Current Assets:
Cash and cash equivalents $ 33,732 $ 19,950
Investments 3,309 5,068
Trade receivables: less allowances for doubtful
accounts:June 30, 2006 $416; and June 30, 2005 $427 50,993 49,636
Other receivables 1,406 1,421
--------- ---------
52,399 51,057
Inventory 47,259 51,722
Prepaid expenses and other current assets 1,011 821
Assets held for sale - 242
Deferred income tax asset, net 3,396 2,780
--------- ---------
Total current assets 141,106 131,640
Long-term notes receivable 557 624
Property and equipment, net 4,808 5,217
Property held for sale 4,531 326
Goodwill 1,755 1,720
Intangible assets,net 3,789 3,153
Deferred income tax benefit, net 7,356 3,626
Other assets 2,690 2,722
--------- ---------
Total Assets $ 166,592 $ 149,028
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,424 $ 27,245
Short term bank loans - 126
Note payable - related party 500 500
Accrued expenses 10,612 9,474
Deferred income tax liability 863 -
Liabilities related to assets held for sale - 46
--------- ---------
Total current liabilities 36,399 37,391
Long-term liabilites 6,379 3,811
Environmental remediation liability 5,200 -
Deferred income tax liability 3,329 -
Minority interest 232 171
--------- ---------
Total liabilities 51,539 41,373
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value:
(40,000 shares authorized; 25,644 shares issued;
24,278 and 24,282 shares outstanding at
June 30, 2006 and 2005, respectively) 256 256
Capital in excess of par value 56,691 56,903
Retained earnings 68,464 62,864
Treasury stock, at cost:
(1,366 and 1,362 shares at June
30, 2006 and 2005, respectively) (13,198) (13,505)
Accumulated other comprehensive income 2,840 1,137
--------- ---------
Total shareholders' equity 115,053 107,655
--------- ---------
Total liabilities and shareholders' equity $ 166,592 $ 149,028
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