Aceto Corp. (NASDAQ:ACET) Q2 2015 Earnings Conference Call - Final Transcript

Feb 06, 2015 • 09:00 am ET

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Aceto Corp. (NASDAQ:ACET) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning and welcome to the Aceto fiscal 2015, second quarter financial results conference. My name is Brandon, and I will be your operator for today. (Operator Instructions) And I will now turn it over to Jody Burfening. You may begin.

Executive
Jody Burfening

Thank you, Brandon. Good morning, everyone, and welcome to Aceto Corporation's second quarter fiscal 2015 conference call. This is Jody Burfening of LHA. With me today are Sal Guccione, President and CEO; and Doug Roth, Chief Financial Officer. The company issued second quarter earnings press release yesterday after the market closed. For those of you who have not yet seen the release, a copy is available in the Investor Relations section of the company's website at www.aceto.com.

(forward-looking statements)

Aceto defines adjusted net income and adjusted EPS as excluding total cost related to acquisitions, including amortization of intangibles. These measures allow investors to compare results of operations in the current period to prior periods based on the company's fundamental business performance.

With those housekeeping items out of the way, I would now like to turn the call over to Sal. Good morning, Sal.

Executive
Salvatore Guccione

Good morning, everyone, and thanks for joining us on Aceto's second quarter fiscal 2015 earnings call. Overall, we're pleased with our second quarter results, and they trended pretty much as we had expected. In particular, we're very pleased with the continued growth and development of our finished dosage form business, Rising Pharmaceuticals, which I'll talk a little bit more about in a few minutes.

But first, just from a total company perspective, sales increased by 6.2% to just about $124 million this quarter. Gross profit increased by 11% to $30 million. On a GAAP basis, earnings per share were $0.23 in this quarter that compares to $0.24 a share in the fiscal second quarter of 2014. Non-GAAP adjusted EPS was $0.28 a share versus $0.27 last year's quarter.

Executive
Salvatore Guccione

Our growth this quarter was driven by gains in our Human Health segment. With PACK Pharmaceuticals now under our belt for about two-and-a-half quarters, our Human Health segment has grown to become Aceto's largest business segment, accounting for about 45% of our sales in the quarter and about 54% of our gross profit here in the second quarter.

For the first half of the year, our Human Health and Pharma Ingredients business segments together accounted for 69% of our total sales and about three quarters over gross profit. So this increased mix of Human Health-oriented business allowed us during the quarter to apply for a change in our SIC code classification, which as many of you know, that code is not something we control, but instead is determined by the Securities and Exchange Commission.

And we are very pleased to announce in December that the request for change was granted by the SEC. And we think it just better reflects our strategy and our results now going forward. We're now classified as a wholesale drug category SIC 5122, which is Wholesale-Drugs, Proprietaries and Druggists' Sundries. Taking a look at