Aceto Corp. Reports Operating Results (10-Q)
Aceto Corp. has a market cap of $203.1 million; its shares were traded at around $7.54 with a P/E ratio of 15.9 and P/S ratio of 0.5. The dividend yield of Aceto Corp. stocks is 2.6%. Aceto Corp. had an annual average earning growth of 5.7% over the past 10 years.
Highlight of Business Operations:We are reporting net sales of $212,024 for the six months ended December 31, 2011, which represents a 22.3% increase from the $173,343 reported in the comparable prior period. Gross profit for the six months ended December 31, 2011 was $39,163 and our gross margin was 18.5% as compared to gross profit of $26,410 and gross margin of 15.2% in the comparable prior period. Our selling, general and administrative costs (SG&A) for the six months ended December 31, 2011 increased $6,073 to $27,097 from the amount we reported in the prior period. Our net income increased to $7,621, or $0.29 per diluted share, compared to net income of $1,628, or $0.06 per diluted share in the prior period.
Net sales for the Health Sciences segment increased $40,918 or 45.4% to $131,018 for the six months ended December 31, 2011, when compared to the prior period. Overall, the domestic Health Sciences group had an increase of $28,257, when compared to the prior period. This increase in domestic Health Sciences sales is primarily related to an increase in sales of nutritional supplements of $3,867, due to new business development from existing customers and new projects from our pipeline and $21,386 of sales of Rising products, for which there was no comparable amount in the prior period. On December 31, 2010, we acquired certain assets of Rising, a New Jersey based company that markets and distributes generic prescription and over the counter pharmaceutical products to leading wholesalers, chain drug stores, distributors, mass market merchandisers and others under its own label, throughout the United States. In addition, the Health Sciences segment saw an increase in sales from our international operations of $12,540 over the prior period, particularly increases in sales of APIs of $8,034 and a $2,877 increase in pharmaceutical intermediates sold abroad, which represent key components used in the manufacture of certain drug products.
SG&A increased $6,073 or 28.9%, to $27,097 for the six months ended December 31, 2011 compared to $21,024 for the prior period. As a percentage of sales, SG&A increased to 12.8% for the six months ended December 31, 2011 versus 12.1% for the prior period. The primary reason for the increase in SG&A is due to the Rising acquisition, which occurred on December 31, 2010, where there was no comparable amount in the prior period. SG&A included amortization expense related to acquired intangible assets related to the Rising acquisition. In addition, the Company recorded during the six months ended December 31, 2011 approximately $884 of one-time costs associated with the separation of certain executive management employees. We experienced additional accrued performance award expense and increased fringe benefits and stock-based compensation expense due to increased profitability. These increases in SG&A are offset in part by $1,060 of transaction costs related to the Rising acquisition, which was recorded in the second quarter of fiscal 2011.
Net sales for the Specialty Chemicals segment were $35,451 for the three months ended December 31, 2011, an increase of $3,093 or 9.6% from net sales of $32,358 for the prior period. Our chemical business consists of a variety of products, customers and consuming markets, most of which is affected by current economic conditions. As previously mentioned, the index for consumer durables, which impacts the Specialty Chemicals segment, had increased at an annual rate of 11.4%. Domestic sales of specialty chemicals increased $5,747, partially offset by a decline of $2,654 in sales from our international operations, particularly in France. The rise in sales of domestic specialty chemicals relates to increased sales of agricultural, dye, pigment and miscellaneous intermediates, which together grew by $6,494.
Our cash position at December 31, 2011 decreased $422 from the amount at June 30, 2011. Operating activities for the six months ended December 31, 2011 provided cash of $5,084, for this period, as compared to cash provided by operations of $2,698 for the comparable period. The $5,084 was comprised of $7,621 in net income and $2,624 derived from adjustments for non-cash items less a net $5,161 decrease from changes in operating assets and liabilities. The non-cash items included $3,460 in depreciation and amortization expense, $1,331 of earnings on an equity investment in a joint venture and $598 in non-cash stock compensation expense. Trade accounts receivable decreased $4,965 during the six months ended December 31, 2011, due to a decrease in days sales outstanding, from June 30, 2011. Inventories increased by $3,328 due primarily to an increase in inventories on hand for Rising as this subsidiary has launched several new products and as such, has built up stock for the third and fourth quarter sales. Other receivables decreased $1,423 due to payments received on royalties related to agricultural protection products as well as a decrease in value added taxes receivables in our German subsidiaries. Accounts payable decreased by $4,847 due to timing of payments processed at the end of the quarter. Accrued expenses and other liabilities decreased $4,336 due to a decline in advance payments from customers and a decrease in accrued compensation as performance payments were made in September 2011. Our cash position at December 31, 2010 decreased $6,045 from the amount at June 30, 2010. Operating activities for the six months ended December 31, 2010 provided cash of $2,698, for this period, as compared to cash used in operations of $10,491 for the comparable period. The $2,698 was comprised of $1,628 in net income and $1,136 derived from adjustments for non-cash items less a net $66 decrease from changes in operating assets and liabilities.
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