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Aceto Corporation Reports Operating Results (10-K)

September 07, 2012 | About:

10qk

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Aceto Corporation (ACET) filed Annual Report for the period ended 2012-06-30.

Aceto Corporation has a market cap of $239.7 million; its shares were traded at around $8.93 with a P/E ratio of 14.7 and P/S ratio of 0.6. The dividend yield of Aceto Corporation stocks is 2.2%. Aceto Corporation had an annual average earning growth of 7.8% over the past 10 years.

Highlight of Business Operations:

Selling, general and administrative expenses (SG&A) increased $7,378, or 15.0%, to $56,666 for the year ended June 30, 2012 compared to $49,288 for the prior year. As a percentage of sales, SG&A increased to 12.8% for the year ended June 30, 2012 versus 12.0% for the prior year. On December 31, 2010, we acquired certain assets of Rising, thus we now have a full year of SG&A for this subsidiary, including amortization expense related to acquired intangible assets, compared to six months in the prior year. In addition, we recorded during fiscal 2012 approximately $884 of one-time costs associated with the separation of certain executive management employees, as well as $761 additional accrued contingent consideration related to the Rising acquisition. We experienced additional accrued performance award expense and increased fringe benefits and stock-based compensation expense due to increased financial performance. These increases in SG&A are offset in part by $1,060 of transaction costs related to the Rising acquisition, which was recorded in fiscal 2011.

Net sales for the Performance Chemicals segment were $193,232 for the year ended June 30, 2011, compared to $163,131 for the prior year, representing a $30,101 or 18.5% increase. Sales of our chemicals used in surface coatings increased $8,187 from the prior year, as well as sales of agricultural, dye, pigment and miscellaneous intermediates which together increased $6,704. In addition, sales of our polymer additives increased $3,254 from the prior year, as well as a rise in sales of dyes of $1,993 from the prior year. These four increases represent increased demand in sectors that are affected by general economic conditions. In March 2010, we acquired certain assets of Andrews Paper & Chemical, Co., Inc., a supplier of diazos and couplers to the paper, film, and electronics industries. Since there was only four months of sales in the prior year versus a full year in 2011, we experienced a sales increase of these products of $1,114. In addition, we experienced an increase in sales of performance chemicals from our international operations of $1,781, primarily in France. $7,762 of the increase in Performance Chemicals relates to our Agricultural Protection products, primarily glyphosate. However, our entry into this market has proven to be much more challenging than had been expected. The increase in sales of Agricultural Protection products is also due in part to a wide-range insecticide that began selling in the third quarter of 2011, which is used on various crops including cereals, citrus, cotton, grapes, ornamental grasses and vegetables and a new herbicide that also began selling in the third quarter of fiscal 2011, which is used primarily on grass, to control broadleaf weeds and on some crops, flowers and shrubs. In addition, the increase in sales of our Agricultural Protection Products business is due to a rise in sales of an herbicide used on sugar cane.

Selling, general and administrative expenses (SG&A) increased $4,571, or 10.2%, to $49,288 for the year ended June 30, 2011 compared to $44,717 for the prior year. As a percentage of sales, SG&A decreased to 12.0% for the year ended June 30, 2011 versus 12.9% for the prior year. On December 31, 2010, we acquired certain assets of Rising, thus we now have six months of SG&A for this subsidiary, including amortization expense related to acquired intangible assets. We also incurred approximately $1,060 of transaction costs related to this acquisition in the second quarter of fiscal 2011. These increases are offset by approximately $3,802 of one-time costs associated with the separation of our former Chairman of the Board of Directors and CEO, which was recorded in the year ended June 30, 2010, as well as an overall decline in costs, resulting from the rationalization project we undertook in fiscal 2010.

Our cash position at June 30, 2012 decreased $3,802 from the amount at June 30, 2011. Operating activities for the year ended June 30, 2012 provided cash of $13,269 as compared to cash provided of $14,038 for the comparable 2011 period. The $13,269 was comprised of $16,981 in net income, $5,707 derived from adjustments for non-cash items and a net $9,419 decrease from changes in operating assets and liabilities. The non-cash items included $6,942 in depreciation and amortization expense, $1,598 of earnings on an equity investment in a joint venture and $1,168 in non-cash stock compensation expense. Trade accounts receivable decreased $5,711 during the year ended June 30, 2012 due to an improvement in days sales outstanding. Inventories increased by approximately $9,926 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 fiscal 2013 sales. In addition, our Netherlands subsidiary as well as our German subsidiaries for both nutritional and pharmaceutical ingredients, have increased inventory on-hand due to anticipated first quarter sales. This rise in inventories is also due to purchases of domestic specialty chemicals, as a result of a ramp-up in orders for products expected to be shipped in fiscal 2013 as well as overall improvement in consumer durables, which has a direct effect on this business. Other receivables decreased $1,446 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. Accrued expenses and other liabilities decreased $5,834 due to a decline in advance payments from customers.

Our cash position at June 30, 2011 decreased $2,186 from the amount at June 30, 2010. Operating activities for the year ended June 30, 2011 provided cash of $14,038 as compared to a use of cash of $15,499 for the comparable 2010 period. The $14,038 was comprised of $8,968 in net income, $4,089 derived from adjustments for non-cash items and a net $981 increase from changes in operating assets and liabilities. The non-cash items included $5,502 in depreciation and amortization expense, $1,624 of earnings on an equity investment in a joint venture and $854 in non-cash stock compensation expense. Trade accounts receivable decreased $1,915 during the year ended June 30, 2011 due to an improvement in days sales outstanding. Inventories decreased by approximately $2,224 due primarily to the prior year in which the Company made advance purchases of Glyphosate, an Agricultural Protection Product, for sales that occurred in the fiscal 2011 growing season. This decrease in inventories is offset in part by purchases of domestic Specialty Chemicals, as a result of a ramp-up in orders for products that shipped in fiscal 2012 as well as overall improvement in consumer durables, which has a direct affect on the Specialty Chemicals business. Other receivables decreased $7,659 due primarily to a decrease in Value Added Tax (VAT) receivables in our European subsidiaries, primarily related to timing. Accounts payable increased by $2,473 due to timing of payments processed at the end of the year. Accrued expenses and other liabilities decreased $13,465 during the year ended June 30, 2011, due primarily to the decline in advance payments from customers and decrease in VAT for our foreign subsidiaries, particularly Germany. Our cash position at June 30, 2010 decreased $26,911 from the amount at June 30, 2009. Operating activities for the year ended June 30, 2010 used cash of $15,499 as compared to cash provided by operations of $22,511 for the comparable 2009 period. The $15,499 was comprised of $6,581 in net income, $2,957 derived from adjustments for non-cash items and a net $25,037 decrease from changes in operating assets and liabilities. Trade accounts receivable increased $30,853 during the year ended June 30, 2010 due to an increase in sales during the fourth quarter of 2010 as compared to the fourth quarter of 2009. Inventories and accounts payable increased by approximately $23,069 and $16,206, respectively, due primarily to Agricultural Protection advance purchases of Glyphosate, for sales that occurred in the fiscal 2011 growing season. Inventories and accounts payable have also increased related to purchases of domestic Specialty Chemicals, as a result of a ramp-up in orders for products shipped in the first and second quarters of fiscal 2011, as well as overall improvement in the economy during fiscal 2010. Accrued expenses and other liabilities increased $16,347 during the year ended June 30, 2010, due primarily to advance payments from customers and an increase in Value Added Tax (VAT) for our foreign subsidiaries, particularly Germany.

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