Aceto Corporation (ACET)
F2Q10 Earnings Call
February 05, 2010, 10:00 a.m. ET
Ted Ayvas - Director Corporate Communications, IR
Doug Roth - CFO
Vincent Miata - CEO
Albert Eilender - Non-Executive Chairman of the Board
Dan Rizzo - Sidoti & Company
Alan Brochstein - AB Analytical Service
Lenny Dunn - Freedom Investors
Toni Pollock - Maxim Group
Previous Statements by ACET
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This conference call will contain forward-looking statements as that term is defined in the federal securities laws. All statements other than statements of historical facts may be forward-looking statements. Words such as may, well, expect, belief, anticipate, project, plan, intend, estimate and continue and are opposite and similar expressions are intended to identify forward-looking statements.
Generally these statements relate to our business plans initiatives or strategies projected or anticipated benefits or other consequences of Aceto's plans initiatives or strategies financing plans projected or anticipated benefits from acquisitions that Aceto may take or projections involving anticipated revenues earnings or other aspects of Aceto's operating results or financial position in the outcome of any contingencies.
The forward-looking statements contained in this conference call include but are not limited to statements regarding the company's strategic initiatives included but are not limited to providing vaccines for companion animals selling in to the Japanese pharmaceutical market, selling finished dosage from generic drugs and statements regarding the prospects for long-term growth. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances.
These statements involve risk and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements due to a variety of factors.
More information about these factors can be found in Aceto's filings with the Securities and Exchange Commission including but not limited to its latest Annual Report filed with the Securities and Exchange Commission on Form 10-K. Aceto undertakes no obligation to publicly update or revise any forward-looking statements whether as the result of new information, future events or otherwise.
I'll now like to turn the call over to Mr. Ted Ayvas. Mr. Ayvas you may begin.
Thank you. Good morning and welcome to Aceto Corporation fiscal 2010 second quarter conference call and audio webcast. With me today are Albert Eilender, our Non-Executive Chairman of the Board, Vincent Miata, our CEO and President and Douglas Roth, our Chief Financial Officer. During this call, Doug will give an overview of the company's financial results for the fiscal second quarter ended December 31st, 2009 and Vince will discuss the performance of our business segment and provide an update on our various business initiatives. Following that we will open the call for questions.
I'd now like to turn the call over to Doug Roth to discuss the company's second quarter financial results. Doug?
Thanks Ted, and good morning everyone. In the fiscal second quarter, net sales decreased a little more than 4% to $71 million from the $74 million in sales that we reported a year ago. Our gross profit decreased 8% to $11 million in the fiscal 2010 quarter compared to $12 million in the 2009 quarter.
SG&A expenses increased 37% to $14 million in the 2010 quarter compared to $10 million in the year ago comparable quarter. The fiscal 2010 quarter had been negatively, was negatively impacted by three, one-time pre-tax charges, which we previously discussed in our December 22nd 2009 press release. The first charge of approximately $2.6 million represents the cost associated with the separation of our former Chairman and CEO principally for salary and other related compensation.
The second charge approximately $1.2 million is related to the previously announced rationalization review of our SG&A. [Apps and Ps] charges, our SG&A would have been approximately $10.4 million. The third and final charge that negatively impacted our quarterly results was a $900,000 non-cash charge to the cost of goods sold related to the write-down of certain inventory items to their estimated net realizable value.
As a result, we ended the fiscal 2010 second quarter with a net loss of $2.5 million or $0.10 per diluted share compared to a net income of $1.1 million or $0.04 per diluted share in the 2009 quarter.
Had it not been for the charges resulting from these reviews and the cost related to the company separation with its former Chairman and CEO, we would have reported net income of $600,000 or $0.03 periods for the quarter.
Now, I would like to turn the call over to Vince Miata to discuss the performance of our business segments as well as our business initiatives. Vince?
Thanks Doug and good morning everyone. During the second quarter in our health science segment sales increased slightly more than 3% from last year's comparable quarter. Domestically the increase was primarily due to the realization of new products from our pipeline in the generics group and an increase penetration of our customer base in the domestic Nutraceutical products group, which was partially offset by sales in domestic pharmaceutical intermediates.
Overseas, our foreign operations experienced an increased level of reorders of existing products during the quarter. In order to more accurately put tray the scope of our business activities, we've changed the name of our chemicals and coloring segment, we call Specialty Chemicals. In the Specialty Chemicals segment, sales declined 16% on the same quarter comparison basis largely due to the tough economic conditions continuing to affect all of the chemical consuming industries that the Specialty Chemicals segment serves.