Aceto Corporation (ACET)
F1Q13 Earnings Call
November 9, 2012 9:00 am ET
Theodore Ayvas – Director of Corporate Communications & Investor Relations
Albert L. Eilender - Chairman and Chief Executive Officer
Douglas Roth - Senior Vice President and Chief Financial Officer
Daniel D. Rizzo – Sidoti & Co. LLC
Kevin McCanine – Main Line Capital
Bruce Winter – Private Investor
Lenny Dunn – Freedom Investors Corporation
Bill Jones – Singular Research
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This conference call may contain forward-looking statements as that term is defined in the federal securities laws. All statements that address expectations or projections about the future are forward-looking statements. Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks and assumptions.
We urge you to review Aceto’s filings with the SEC, including but not limited to Aceto’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 for a discussion of some of the factors that could cause actual results to differ materially. Copies of these filings are available at www.sec.gov. We do not undertake any duty to update any forward-looking statements.
I'll now turn the call over to Mr. Ted Ayvas, Investor Relations Consultant at Aceto. Mr. Ayvas, you may begin.
Thanks, Kim. Good morning and welcome to Aceto Corporation’s fiscal 2013 first quarter conference call and audio webcast. With me today are Albert Eilender, Chairman of the Board and CEO; Sal Guccione, President and Chief Operating Officer of Aceto; Ronald Gold, President and Chief Operating Officer of Rising Pharmaceuticals; and Douglas Roth, Chief Financial Officer of Aceto.
During this call, Al will provide a strategic overview, Sal will discuss the performance of our business segments, and Doug will provide an overview of the company's financial results for the fiscal 2013 first quarter ended September 30, 2012. Following that we will open up the call for questions.
With that, I'd like to turn the call over to Al Eilender. Al?
Albert L. Eilender
Thanks, Ted, and good morning, everyone. We are very pleased with our results for the fiscal 2013 first quarter with total company sales of 10.3% to $111.7 million.
Our sales increase reflects strong growth in both Human Health and Performance Chemicals, which had increases respectively of 16.1% and 23.4%. We continue to experience margin expansion in the quarter with 100 basis point increase in gross margin. This was primarily due to a more favorable product mix in Human Health and Performance Chemicals.
Combined with the operating leverage we have spoken about in the past as business volume increases, these overall factors resulted in an 38.5% increase in earnings per share, compared to the first quarter of 2012 after adjusting for a one-time charges in that previous period. Doug will review the adjustment in more details in this portion of the call.
These financial results clearly demonstrate our continued successful execution of our business plan. Our long-term pipeline is Rising Pharmaceuticals continues to be robust with good visibilities through fiscal 2013. As you may have seen, last Friday, we announced the signing of a definitive agreement to market and authorized generic of the FDA approved Covis Pharma’s Parnate product. This represents our first marketing agreement for an authorized generic and as part of our growth strategy for Rising Pharma. The authorized generics space is highly covenant and we have initiative in place to enhance our offerings in this regard.
In total, we expect to launch approximately nine generic products in fiscal 2013 and we are also in excellent start in this first quarter. Overall, we remain optimistic about our growth prospects in all three of our business segments and I’m looking forward to reporting our continued success for the balance of fiscal 2013.
As we said on our press release, while we remain confident in our ability to continue to drive overall corporate profitability, we would like to remind you that sales growth in Performance Chemicals is directly tied to the global economic environment and may show fluctuation from quarter-to-quarter. With the strong balance sheet, we are very well positioned to invest in our internal growth initiatives and to continue to pursue strategic acquisitions.
One last point that I’d like to mention before I turn the call over to Sal is the 8-K we filed on November 1. The agreement that issued in the lawsuit filed in the United Kingdom by UPL Limited three days is in my joining the Aceto Board in 2000. UPL is a legend that a subsidiary of Aceto as agricultural chemical business has been reaching an agreement that was signed in 1995.
As we stated, upon our review in the fact to the matter, we not only deny the allegations, but strongly believe that the claims are without merit. The matter is obviously complicated and despite the council, we cannot go into specifics. But less than short, we will vigorously defend our subsidiary and also when we expect to prevail.
With that I now hand the call over to Salv for a review of our segments performance. Salv?
Thanks, Al, and good morning, everyone. I am going to start off with our Human Health segment, but this segment had a really solid first quarter. We achieved sales of $26.4 million in the first quarter of 2013, that’s a solid increase of 16% versus the first quarter of last year. Both Rising Pharmaceuticals and the Nutritionals businesses contributed to that growth. Rising accounted for most of the top line growth due to new products launched over the past year.