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CONTACTS:

VP, Chief Financial Officer

Mariano.Balaguer@Taro.com                        William.Coote@Taro.com

TARO PROVIDES RESULTS FOR SEPTEMBER 30, 2016

Hawthorne, NY, November 8, 2016 - Taro Pharmaceutical Industries Ltd. (NYSE: TARO) ("Taro" or the "Company") today provided unaudited financial results for the three and six months ended September 30, 2016.

Quarter ended September 30, 2016 Highlights - compared to September 30, 2015

●	Net sales of $228.8 million, increased $16.7 million or 7.9%, driven by increased volumes in the U.S. generic business.  The 2015 net sales were negatively impacted by a $19.6 million net charge taken to meet contractual obligations associated with price adjustments.  On a pro-forma basis, adjusting 2015 net sales for the price protection provision, net sales would have decreased 1.2%.
●	Gross profit of $177.3 million, increased $8.5 million, or 5.1%
●	Research and development (R&D) expenses decreased $3.9 million to $14.8 million with all of our activities, including clinical studies, proceeding according to plan as the R&D spend is not evenly distributed across quarters.
●	Selling, marketing, general and administrative expenses (SG&A) decreased $3.2 million to $20.9 million, principally the result of reduced Keveyis marketing spend.
●	Operating income increased $16.6 million to $141.6 million, or 61.9% of net sales compared to 58.9%
●	Foreign Exchange (FX) income decreased $21.5 million from $34.9 million to $13.4 million.
●	Tax expense of $35.6 million increased $5.1 million.
●	Net income attributable to Taro was $123.7 million compared to $133.3 million, a $9.7 million decrease, as the increase in operating income was offset by the decrease in FX income and an increase in tax expense, resulting in diluted earnings per share of $3.00 compared to $3.11.

 

Six Months ended September 30, 2016 Highlights - compared to September 30, 2015

●	Net sales of $462.6 million, increased $35.2 million, or 8.2%, with an increase in volumes, principally due to an increase in our U.S. generic volumes.  On a pro-forma basis, adjusted for the 2015 price protection provision, the net sales increase would have been 2.4%.
●	Gross profit increased $19.5 million to $360.1 million, and as a percentage of net sales, was 77.8% compared to 79.7%.
●	R&D expenses of $32.8 million remained in line with prior year expenses.
●	SG&A decreased $3.8 million to $43.1 million, principally as the result of reduced Keveyis spend.
●	Operating income increased $24.8 million to $284.2 million, or 61.4% of net sales compared to 60.7%
●	FX income decreased $23.2 million from $30.7 million to $7.5 million.
●	Tax expense of $66.0 million increased $5.5 million.
●	Net income attributable to Taro was $233.6 million compared to $237.0 million, a $3.4 million decrease, as the increase in operating income was offset by the decrease in FX income and increase in tax expense, resulting in diluted earnings per share of $5.59 compared to $5.54.

 

- more -

Mr. Kal Sundaram, Taro's CEO stated, "We are pleased with our sales and operating performance in the face of increasing competitive intensity and pricing pressure.  Our new product sales have met, and in some cases, exceeded our expectations, helping to off-set the decline in sales arising from the price erosion of existing products.  We continue to focus on building our R&D pipeline to deliver sustained long-term performance."

Cash Flow and Balance Sheet Highlights

The Company recently received approval from the U.S. Food and Drug Administration ("FDA") for the Abbreviated New Drug Application ("ANDA") Naftifine Hydrochloride Cream USP, 1%.  The Company has a total of thirty six ANDAs awaiting FDA approval.  

On August 19, 2016, the Company announced the completion of its $250 million share repurchase of ordinary shares.    The Company bought back 1,801,099 of its ordinary shares in open market transactions, in accordance with a 10b5-1 program, at an average price of $138.80 per share, as represented in the following table.

 

Period		Total Number of Shares Purchased as Part of the Current Program				Average Price Paid per Share
March 17, 2016 - March 31, 2016			67,339			$	140.30
April 1, 2016 - April 30, 2016			117,515			$	141.46
May 1, 2016 - May 31, 2016			552,474			$	134.86
June 1, 2016 - June 30, 2016			290,298			$	142.32
July 1, 2016 - July 31, 2016			318,080			$	141.28
August 1, 2016 - August 18, 2016			455,393			$	138.71
TOTAL			1,801,099			$	138.80

 

On October 3, Taro announced the appointment of Mariano Balaguer as Vice President, CFO and Chief Accounting Officer.  Mr. Balaguer has nearly 20 years of senior management experience in finance with global companies such as Novartis Consumer Health, Nestle and most recently, the Global Strategic Portfolio Division of Henry Schein.

On July 6, the Company announced that its' CEO, Mr. Kal Sundaram, plans to step down as CEO by the end of the current calendar year.  The Taro Board, with Mr. Sundaram's assistance, is conducting a search for his replacement.

 

As previously announced, the Company will host an earnings call at 8:30 am EST on Wednesday, November 9, 2016, where senior management will discuss the Company's performance and answer questions from participants.  This call will be accessible through an audio dial-in and a web-cast. Audio conference participants can dial-in on the numbers below:

 

	●	Participant Toll-Free Dial-In Number: +1 (844) 421-0601    ID: 10641252
	●	Participant International Dial-In Number: +1 (716) 247-5800   ID: 10641252
	●	Web-cast:  More details are provided on our website, www.taro.com

 

To participate in the audio call, please dial the numbers provided above five to ten minutes ahead of the scheduled start time.  The operator will provide instructions on asking questions before the call.  The transcript of the event will be available on the Company's website at www.taro.com.  An audio playback will be available for twelve (12) days following the call.

 

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change.

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About Taro

Taro Pharmaceutical Industries Ltd. is a multinational, science-based pharmaceutical company, dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products.  For further information on Taro Pharmaceutical Industries Ltd., please visit the Company's website at www.taro.com.

SAFE HARBOR STATEMENT

The unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments necessary to present fairly the financial condition and results of operations of the Company.  The unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 20-F, as filed with the SEC.

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, statements that do not describe historical facts or that refer or relate to events or circumstances the Company "estimates," "believes," or "expects" to happen or similar language, and statements with respect to the Company's financial performance, availability of financial information, and estimates of financial results and information for fiscal year 2017.  Although the Company believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurances that its expectations will be attained.  Factors that could cause actual results to differ include general domestic and international economic conditions, industry and market conditions, changes in the Company's financial position, litigation brought by any party in any court in Israel, the United States, or any country in which Taro operates, regulatory and legislative actions in the countries in which Taro operates, and other risks detailed from time to time in the Company's SEC reports, including its Annual Reports on Form 20-F.  Forward-looking statements are applicable only as of the date on which they are made.  The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.

 

**Financial Tables Follow**

 

 

		September 30,				March 31,
		2016				2016
ASSETS		(unaudited)				(audited)
CURRENT ASSETS:
Cash and cash equivalents		$	365,638			$	576,757
Short-term and current maturities of long-term bank deposits			540,326				648,297
Marketable securities			3,512				3,572
Accounts receivable and other:
Trade, net			249,750				238,611
Other receivables and prepaid expenses			269,150				270,724
Inventories			149,603				138,553
Long-term assets held for sale, net			1,062				1,081
TOTAL CURRENT ASSETS			1,579,041				1,877,595
Long-term bank deposits			366,438				115,173
Property, plant and equipment, net			171,427				159,459
Other assets			33,873				35,806
TOTAL ASSETS		$	2,150,779			$	2,188,033
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables and other current liabilities		$	225,972			$	245,462
TOTAL CURRENT LIABILITIES			225,972				245,462
Deferred taxes and other long-term liabilities			5,180				5,427
TOTAL LIABILITIES			231,152				250,889
Taro shareholders' equity			1,913,385				1,931,142
Non-controlling interest			6,242				6,002
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,150,779			$	2,188,033

 

 

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