Aceto Corp. (NASDAQ:ACET) Q2 2016 Earnings Conference Call - Final Transcript

Feb 05, 2016 • 09:00 am ET

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Aceto Corp. (NASDAQ:ACET) Q2 2016 Earnings Conference Call - Final Transcript

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Operator
Operator

Welcome to the Aceto Fiscal 2016 Second Quarter Financial Results Conference Call. My name is Ellen, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Jody Burfening. Ms. Burfening, you may begin.

Executive
Jody Burfening

Thank you, Ellen. Good morning, everyone, and welcome to Aceto Corporation's second quarter fiscal 2016 earnings conference call. With me on the call today are Sal Guccione, President and CEO; and Doug Roth, Chief Financial Officer. The Company issued its 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.

Before starting the call, I'd like to remind you that today's call will contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 that can be identified by words such as believe, expect, anticipate, plans, project, seeks and similar expressions and involves numerous risks and uncertainties. The Company's actual results could differ materially from those anticipated or implied in these forward-looking statements, as a result of certain factors as set forth in the Company's filings with the Securities and Exchange Commission. In addition, management will be referring to non-GAAP net income and earnings per share. Aceto defines these non-GAAP measures as excluding all costs related to acquisitions and to convertible debt.

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

Executive
Sal Guccione

Good morning, Jody. Thank you. And good morning, everyone. Thank you for joining us on Aceto's second quarter fiscal '16 earnings conference call. We're very pleased with the second quarter results, both in terms of profitability and profit growth, as we continue to make progress in our transition towards human health. Our strong operating income and EPS growth is a function of our ongoing sales mix shift and demonstrates the operating leverage that the shift provides.

For the second quarter of '16, our Human Health and Pharma Ingredients business segments collectively accounted for over 70% of our sales and over three-quarters of combined gross profit. Net sales for the quarter increased by about 6.5% to just under $132 million and gross profit increased by 19.5% to $35.9 million, so we're pleased with that growth. Once again, growth was led by gains in particular in our Human Health segment. And also as was the case in the first quarter, foreign currency was a headwind for us this quarter, reducing net sales by about $4 million in the second quarter. Absent that FX impact, net sales would have grown by about 9.5% in the quarter.

Operating income in the second quarter grew by 32% to a level of $14.1 million and GAAP EPS grew by 21.7% to $0.28 a share, that's up from $0.23 a