TARO - Earnings call transcript Q2 2021 | Taro Pharmaceutical Industries

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Operator

Good morning, ladies and gentlemen, and welcome to the Taro Pharmaceutical's Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host today, Mr. William Coote, Assistant Vice President and Treasurer. Please go ahead, sir.

William Coote

you. Thank and second everyone, conference XXXX-'XX to call. welcome morning, quarter our earnings Good is during are and and hope healthy We everyone safe call. is top virtual since our these priority, the we conducting safety times, trying

of Joining me Chairman Board Taro's and Directors; earnings of you copy which CFO. financial We many can CEO; release, markets, be Dilip We Uday anticipate Taro's only have Daphne press other not of of received website Baldota, on performance, a and matters. our the year-to-date have Mr. taro.com. at may Ms. are this today Mr. Shanghvi, found Huang, our hope also operations, you the and concerning strategies, questions that quarter's but

your and be to queries, we While sensitive try commercially we detail. will will share able of to product-specific including most respond pipeline information, not to

recorded this replay made on our being As website. will a call is be and reminder, transcript available a call and

may remind Reform Before forward-looking Act must Litigation we the proceed, of Securities statements I today's XXXX. you include of Private within certain meaning the discussion that

to forward-looking the such expectations I in as will now no risks our attained that expectations Dilip reports. will believes to be assumptions, from the Mr. can over detailed reflected Shanghvi. to turn business assurances its in on conjunction give the be time SEC should company's with company viewed and be it the in based the Although faces reasonable that statements call time

Dilip Shanghvi

financial we hope results reflection you all joining earning after second safe these call are Thank remain six-month quarter of facing. you, all Taro's Taro's results. challenging for of healthy. that Bill. us the today and I to times a you you XXXX-'XX for are Welcome of and of announcement thank and

but to our How delivering the COVID continuing will patients products the well-being on of evolve to and health to quality have communities on Taro impact more as focused world, to what to employees. time, said impact them, be, that long-term market we COVID-XX globe, generic the continue people's for the while safeguard pandemic be will measure the take U.S. from on difficult And the necessary competitive and importantly for Taro's the depend foreseeable and that and However, remains as will anticipate. for some precautions the health to business, believe continues pandemic we around not future. only is

positive XXth anniversary the of majority marks On September the Taro. of ownership Sun's side,

During this over the many time, filings the more with successes, and company than enjoyed FDA and approvals. grown XX has significantly including XX

now shareholder tender employees billion in to In serving of Board want the through as share to the $X.X entire over Directors, to On special combination behalf have values addition, excess additional will continuing of of this their of Uday. customers returned unprecedented I a repurchases, hand during we time. commitment offers, thank and I patients dedication call our the and for all Taro and dividend.

Uday Baldota

last minute you, the Thank and thank health. on the account for participants technical call good everyone, your hope difficulty. are for late I of to Apologies in today. and you you joining us Mr. on families start Shanghvi. Welcome,

on. aware, infection. of a to are you third or second In continue As and the a even wave geographies, impact its witnessed key have drag we pandemic our

as of infections a speak, trend Even show we definite don't decline.

caused has to quarter X. pandemic we opening seen this front, have in though an external the On doctor clinics close,

pharmacies now home, incidence though delayed, declined. of As trials footfalls have individuals has significantly spend see a families and have into ailment Clinical more reduced, recovery. at time we been

measures hybrid operate we have facility. home single place operated work to been a safety commitment much the and this to and and factories our and partly even have every to of these, dedication environment testament offices of the living On maintain possible. the a as format, Taro put stepped internal make any safe related Team invested to and office. employees to in avoid we for day our have COVID-XX we DCs to time, as has in able as Team the of Factories Due challenge healthy from front, of up follow to Taro. through COVID-proof and outbreak we a this continue

are While this reflect to volumes sales the of previous quarter, quarter improved over COVID-XX. our have impact principally result reduced below U.S. related as previous year, these that still a the

volumes first being We and to lockdown, both of and or the patients are traffic their products, OTC the share. In patients less was saw market we steady in quarter, change pharmacies, home. of bought is we the store holding generics our major leaving fear related by which believe reduced

make Our X the months which we of we were it's was the the encouraging. to does pandemic. a from a X saw In to due X, quarter not quarter high standpoint, in in in sequential experienced also volume response year, trend, stocking impacted by quarter volumes unusually one the increase initial while comparison. the our customer And overall an previous quarter-over-quarter

normalized. not completely have volumes However,

Shanghvi Mr. dictate during volume the said, how year will rest evolves of future As the the the levels. pandemic

some However, we and accomplishments encouraged are have trends. some by

the indicated, indication rank capabilities previously launched of XX% share include increase quarter-over-quarter our number an and As that market. X our with in over number comparison. expands to continue a our in specialty portfolio We products. We to in experienced I orphan market overall Deferiprone, volumes product the U.S. sequential products X by in generic

portfolio. of to approvals received continue have us in our to number help Canada. a And our investments R&D add We in

awaiting the X launched of months. received approvals approval have And products XX Currently, beginning We since approvals. we in FDA of X recent from number the FDA. the tentative have successfully year, with we ANDAs a U.S. have

strategic opportunities or through portfolio, to either growth, our to at continue through strengthen partnerships, organic acquisition. strategic through look We

we in the criteria. the financials. business will Daphne to be order now disciplined our hand With to opportunity that financial meets I emphasize, to evaluation continue over ensure any will this, as me in to Let as call our well both discuss

Daphne Huang

call. conference quarter Thank earnings you, to welcome and Taro Uday. Hi, everyone, second the

in financial some Let prior-year the of comparison are period. discuss the me highlights, comparable which key with

by comparison. highlights, quarter X-month second the then First, followed

quarter net second XXXX, XX, our million. million, $XXX ended a the $XX September decrease sales were For

However, on sales the comparison, first over quarter. our XX% sequential quarter-over-quarter net increased

a million, the $XX $XX in million, net decreased quarter, was compared profit was gross XX% percentage XX% QX. sales XX% prior-year sequentially and as from Our but in improved to of

Our we R&D quarters our case our $XX of activities, to remain committed was and about expenses million in across increased other including $X expenses. primarily investment. to due not vary expense and R&D distributed clinical as R&D certain R&D the timing million, are evenly studies and

SG&A Our quarter. was that with line in much and prior-year was million pretty $XX expenses the

X% the XX% on million, to EBITDA compared in XX% quarter. settlement the result earnings of the global $X increased quarter Interest rate XX% a Net in $XX percentage in from diluted million in quarter-over-quarter income $XX Income was as the quarter, expense, sales, EBITDA $XX million the sequential in million, of resulting low As tax tax year. compared interest margin operating year. other $X the income of impact to operating comparison and a period million first income of charges, the last were of contingency pro quarter and rate the XX% offset was $X.XX XX%. a per to loss of $XX to in Based compared to the as of contingency prior-year excluding the million an and increased a million, income financial effective million $X.XX and compared as first as of percentage of environment. excluding last to $XX million the quarter. of with When decreased compared same expense to loss XX%. and decrease attributable income decrease of tax $X XX% increased XX% charges, second in resulting the revenue net first of to and compared a Taro the in result above, quarter to million On net from the partially operating for settlements $XX impact as however, above, interest was $XX by EBITDA forma share decreased sales QX decreased prior-year

discuss year. million, was Now and last Net to $XX performance the comparison turn to let million. sales X-month $XXX decreased me

was at previously of $XX XX% SG&A of and professional back million net customer fees higher profit due of the to a $XXX expense first $XX as increased. some In quarter. we $XX million, FY the principally 'XX-'XX quarter, a indicated, related to and came and rates sales stated, costs. increased of Uday million, in experienced percentage sales, bounce compared XX%. Gross XX% 'XX-'XX $X fourth R&D net decreased million, quarter. slightly COVID stocking expenses in second was the as of as first million, we freight over legal higher as well quarter realized the of As FY

to EBITDA Operating operating $XX margin the settlement from the loss loss prior and $XXX quarter of million of compared the with impact million contingency million, $XXX Excluding XX%. year. of the in charges, EBITDA income was first

the time less of period million environment. lower same rate was compared FX million charges, income million of contingency was excluding Interest million was was income interest However, and $X loss the the was and global same to result compared net sales operating decreased XX%. XX% of year, that $XX pro prior and income forma from primarily other as the last $X financial the $X million, percent settlement to a $XX year.

to Our income decreased tax first for $XX the million. $XX million expense half

income loss to in loss Excluding million and same to impact Taro of prior compared compared the of diluted of XX% $X.XX attributable XX%. EPS contingency year loss effective Net income settlement the prior $XXX was $XXX period, the million in per to rate to compared from $XX.XX charges, of of period. share tax the loss the resulting was

loss contingency share was year half fiscal resulting of Excluding the first the earnings our of $X.XX. for diluted settlement forma from net $XX pro the income impacts and million, charges, per in

our sheet. cash flow balance turning to and Now

and XXXX. Our according partial and DOJ cash the to March primarily to to including cash There $X.X place, paying marketable in strong. sheet the equivalents, a settlement. due payment decreased That short-term Cash is billion and and to million from cash XX, $XX remain securities plan payment plan. we're balance reduction flow was long-term the

securities or operations with XX, to and the little for benchmark. high of Our outperform XXXX, marketable was are September securities the ended quality X months securities $XX continue industries and exposure policy marketable flow to no very remains to of investment conservative, million. from Cash our our negative distress

XXXX. contingency, I operations pro forma ended to September was However, settlement the will provided the now months loss by Uday. floor flow X XX, the million and $XX back the for million hand $XXX to excluding cash from compared impact

Uday Baldota

Daphne. Thanks,

multi-district the to of associated to drugs that generic with subject same settle in were and anti-competitive agreed USA and or are finalizing all the process connection Department settled. Civil DOJ DPA remaining programs. the of the Division company committed As U.S. cases July, state involving releases Pharmaceuticals fostering Concerning material Division counsel and litigation, Antitrust Justice terms with these company ongoing by an in antitrust Taro the the continue corporate were to all with with division and company the of investigation the these program civil of the related by is the to generic related federal settlement has claims. claims investigations purchased we resolved to with with to the civil time, the governance in alleged industry. subsidized the we of pharmaceutical culture and multiyear including our strong agreement the The Furthermore, civil At we losses remain defend work announced DOJ amount compliance. into conduct the the

and who say their dedication With every open your customers employees demonstrating our keep to I floor commitment day like the to for for throughout the questions. X,XXX and I you. flowing to patients this our thank their ultimately medicine. products Thank up would this, want on Taro you to depend Finally, pandemic, the to contributions

Operator

Ram [Operator of comes line the first with Instructions] Selvaraju question Wainwright. Your H.C from

Ram Selvaraju

avoid branded to U.S.? in the Curious if continue you the to space intend

Uday Baldota

what will the think past to that opportunities, in I space. sort said of us we've for branded participate we which continue help is the look in

evaluation our So, continues.

committed anything. necessarily ourselves haven't yet We to doing

on, is on work front. our this think I

Operator

And we the question of a America. Girish Bank have with do of Instructions] [Operator line from Bakhru

Girish Bakhru

simultaneously the clinics, visits, And how the of status The a in have let's if patient you percentage, current many have derm we of quarter? in particularly number the say, side? seen recovery

Uday Baldota

Can question. the of part repeat? hear only you could We Girish. Sorry,

Girish Bakhru

one, quarter in wave opening increasing? of are And X be said there third and up, certain you was in I my But have visits is the in take and clinics inpatient more that you recovery open do saw a So patient, that note mentioned trend that second indicating wave geographies. there is was, question some there started terms up? of can to you is that

Uday Baldota

see go trend But forward. of that is I I think that as what they we we as the also with said the positive. an uncertainty are, numbers, a is it bit

Girish Bakhru

detail some acquisition if this you had on that on that? was could have? color does that question company second announced, And you What

Uday Baldota

Aquinox? mean You

Girish Bakhru

Yes.

Uday Baldota

Yes.

at development Aquinox products very So is of stage. sort early company, a a stage

those we sort the is done of develop the So products intent. acquired what we've would those take That's further, company, further. we've and

Girish Bakhru

area, these indicate? products you therapy could if And in are which

Uday Baldota

cancer. In

Operator

We from Shyam Instructions] with [Operator the do question Goldman have of Sachs. line Srinivasan a

Shyam Srinivasan

question first on My is the R&D.

slightly at term, longer million million every we've $XX been $XX looking to year. spending Just about between

would Just pipeline, erosion kind are the trying we the dermatology the are towards and what of therapy in to see we in of space, terms there have built kind of price given to newer seeing on that some R&D dermatology could like kind you towards, share diversify this high areas If qualitative where you this. around which is aspects highlight incremental will topical dependence going products? of

Uday Baldota

which where, believe to Shyam, look have products think, we in have marketplace. say, potential for continue I we good would capabilities, So I a products we the

develop portfolio. effort. say, what sort to work give of which we to the active And an we any At we looking do. leading to to our other are want But would wouldn't use would at. that, I indicator say, I So that that's, areas an as is that's I moment, ongoing continue

Shyam Srinivasan

My the But space dermatology the Taro, comments weakness share. as the as the well second is intensity in release of underlying some around has competitive question you the the press market said, in demand. in maintained the, as on

So this, you in share? also the highlight that competitive could have of activities how as maintaining the stated. our are we pocket market seen derm some enabling you If

Uday Baldota

possible continue I as So think market continue us share serve in to good customers ensuring is way, my I our product and that supply the I our been. best what where helped in we think that has have we that readout has it keep mentioned to

cases, some well. in fact, as In probably it increase

good think we chain, been even the with So market supply while overall see falling shares. compressing we have I to keep demand able or our

Shyam Srinivasan

volume you year. volumes disaggregate declining well? signs price that if Have disaggregate seeing oral on stability know you this your last Uday, actually could trends But of the this seen have been help seen price for of I us? of as terms similar us lot a portfolio have the you year. any question. we something in could the versus space, erosion And

Uday Baldota

months, company the we've similar the no that price erosion think declines and sense that think probably to different, that the experience, in sees and the even it the declines in us that on stay. has. our in past in these at typically price X portfolio to gives we've least here I seen a said past the what price product And is the company dependent are I the

We haven't seen any major trend reversal.

Operator

Coote, this before At Mr. currently in there are there remarks [Operator Instructions] the time, no questions end closing queue. we any are call?

William Coote

No. operator. Thank you,

Operator

thank This for second today's concludes and Ladies gentlemen, earnings quarter participating. you call.

now disconnect. may You

Taro Pharmaceutical Industries (TARO) 31 Oct 202021 Q2 Earnings call transcript