ACETO Corporation Investor Presentation October 8, 2014

NASDAQ:ACET
ACETO Corporation
Investor Presentation
October 8, 2014
“Sourcing & Supplying Quality Products Worldwide”
Disclosure
This presentation contains “forward-looking statements,” as defined
by the Private Securities Litigation Reform Act of 1995, that can be
identified by words such as “believes”, “expects”, “anticipates”,
“plans”, “projects”, “seeks” and similar expressions and involve
numerous risks and uncertainties. The Company’s actual results
could differ materially from those anticipated or implied in such
forward-looking statements as a result of certain factors, as set forth in
the Company’s filings with the Securities and Exchange Commission.
2
Company Overview
Value Added Distributor Transforming Towards Pharmaceuticals
o
Focus on niche products
o
Consultative selling
o
Human Health
• Finished Dosage
Form Generics
• Branded Generic
Drugs
• Nutritionals: supply
app. 250 popular
dietary supplements
Pharma Ingredients
• Pharmaceutical
Intermediates
• Active
Pharmaceutical
Ingredients
Performance Chem.
• Specialty
Chemicals
• Agricultural
Protection Products
Highly skilled, technically
trained sales force
o
Partnership model
o
Distribute >1,110 chemical
compounds
o
Global reach
o
Int’l technical network
o
Regional managers in US,
Europe & Asia
SOURCING
REGULATORY SUPPORT
QUALITY ASSURANCE
3
Mix Shifting Toward
Human Health Oriented Businesses
Net Sales
FY 2010
FY 2014
o 10% revenue CAGR
14%
31%
34%
47%
39%
35%
$346.6 Million
$510.2 Million
Gross Profit
FY 2010
14%
o Human Health growth
boosted by acquisition of
Pack Pharmaceuticals in
April 2014.
o Blended gross margin
expanded 280 bps from
19.7% to 22.5%
FY 2014
26%
42%
45%
41%
32%
$54.2 Million
$114.7 Million
4
Investment Highlights
 Strategically positioned for growth through geographic expansion, new
product offerings and bolt-on acquisitions*
• Primary focus on pharmaceuticals and human health products
 Rising Pharmaceuticals is a platform for higher margin finished dosage
form generics
 Scalable business model, SG&A leverage and improving product mix
drives margin expansion
 Asset-light business model generates strong free cash flow
 Strong financial position supports growth initiatives
 Experienced executive management team
 Track record of 48 consecutive years of dividend payments, providing
return to shareholders
*PACK Pharmaceuticals, LLC acquisition closed April 30, 2014
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Human Health
 Product Groups
• Finished dosage form generic drugs (Rising Pharmaceuticals)
• 60+ commercial products
• 90+ pipeline products
• Branded Generics
• Nutritionals
• Nutraceutical ingredients
• Packaged dietary supplements
 Growth Strategy
• Expand pipeline of high margin finished dosage form generic
products
• Branded generics platform
• Globalize and expand nutraceutical ingredients
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Rising Pharmaceuticals
 Platform for growth as developer and marketer with established
generics brand
 Strong brand recognition of “Rising” label among pharmacists and
pharmaceutical product buyers
 Long-standing commitment to quality, service, supply and integrity
 Strategically utilizes partnership model






Product development programs
ANDA acquisitions
Paragraph IV product partnerships
Authorized generic marketer
Licensing opportunities on late stage product assets
Branded generic additions
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Rising Active Projects
Rising Anticipated Fiscal Year of
Launch*
Number of
Projects
Products With No
Current Generic
Competition
2015
12
2
$
14
2016
21
3
$
115
$ 1,786
2017
21
2
$
20
$ 1,024
2018 and beyond
41
16
$
784
$ 3,087
Portfolio Total
95
23
FTM Total
Market Sales
$
933
Total Market
Sales ($MM)**
$
485
$ 6,382
*Subject to current FDA approval timelines
**Based on the latest IMS sales information for both branded and generic markets
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Rising – Updated for Acquisition
Drug Development Pipeline
Finalizing Formulation Scale Up
Contract
Biostudies
Underway
Pending
with FDA
Approved Launched
FY2015
0 ANDAs
1 ANDAs
51 ANDAs
14 Products
9 Products
18 Products
2 ANDAs
95 Portfolio Projects
9
Broad Based Nutritional Products
Offered on Global Basis
Fiscal 2014 Sales
 Supply approximately 250
popular dietary supplements:
•
•
•
•
•
•
•
Fish Oil/Omega 3
Glucosamine
Chondroitin Sulfate
Probiotics
Vitamins
Amino Acids
Minerals
Asia
4%
EU
44%
United States
52%
10
Human Health Customers (representative)
11
Pharmaceutical Ingredients
 Product Groups
• Pharmaceutical intermediates - chemicals used to make API’s
• Active Pharmaceutical Ingredients (API’s) - bulk ingredients which
impart therapeutic value to the drug
 Growth Strategy
• Focus on niche, small/mid-size products with a limited number of
competitors
• Serve as second source for branded drugs and generics
 >100 New Opportunities in Pipeline
12
Pharmaceutical Ingredients Customers
(representative)
13
Performance Chemicals
 Product Groups
• Specialty Chemicals - for coatings, inks, plastics, food, electronics,
agricultural intermediates & other industrial applications
• Agricultural Protection Products - fungicides, insecticides and
sprout inhibitors
 Growth Strategy
• Specialty Chemicals
o Globalization of product offering
o New suppliers create new product opportunities
o New products for existing customers
• Agricultural Protection Products
o Generic products subject to regulation & registration
o Partner with suppliers, customers or act as sole principal
14
Performance Chemicals Customers
(representative)
15
Value Proposition to Customers
 Core business competencies serve as sales and marketing
drivers:
• Sourcing
• Regulatory Support
• Quality Assurance
Relieves customer of logistical
concerns; ensures that products
meet regulatory requirements
 Highly skilled, technically trained sales force:
• >280 employees worldwide; >1/2 technically trained
• Well versed in science, regulations and in discussing chemistry
and/or performance characteristics to address customer needs
 Function as virtual manufacturing company
•
Match customers with fully vetted suppliers
16
Worldwide Presence
UNITED KINGDOM
GERMANY
NETHERLANDS
JAPAN
CHINA
USA
SINGAPORE
Corporate HQ
New York
FRANCE
INDIA
17
Global Sourcing
 China:
• Predominately source specialty
chemicals, agricultural protection
products and intermediates
• 24 local professionals
Fiscal 2014
Other
North America
6%
16%
 India:
• Predominately source active
ingredients and nutritionals
• 12 local professionals
Europe
14%
Asia
64%
 North America:
• Predominately source finished
dosage form generics
18
Support: Technical & Regulatory with
emphasis on Quality Assurance
 KEY differentiator between Aceto and commodity distribution
companies
 International Technical Network with regional managers in U.S., Europe
and Asia
 International Regulatory Support
o Provides substantial global assistance as required
o Enables manufacturers to bring products to market in conformance with
regulations that they might not otherwise be able to bring on their own
 Worldwide Quality Assurance ensures that product quality meets both
the customers’ specifications and intended use
19
Strong Financial Position Provides
Financial Flexibility
 Financial position at June 30, 2014:
•
•
•
•
Cash, cash equivalents and short-term investments of $44 million
Bank debt of $105.5 million*
Working capital of $158 million
Shareholders’ equity of $234 million
 Strong cash flow affords an expected $0.24 per share annual
dividend rate
*(Note: Increased to $105.5 million as of 4/30/14 due to
acquisition of PACK Pharmaceuticals, LLC)
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Strong Track Record of Growth
Net Sales
EPS (non-GAAP)
($ in millions)
$500
$499.7 $510.2
CAGR 10%
$444.4
$412.4
$400
$346.6
$300
$200
$100
$0
FY '10
FY '11
FY '12
FY '13
FY '14
$1.10
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
$1.07
CAGR 29%
$0.89
$0.65
$0.47
$0.39
FY '10
FY '11
FY '12
FY '13
FY '14
21
Expanding EBITDA &
EBITDA Margin (non-GAAP)
EBITDA
($ in millions)
EBITDA Margin
$70
12.0%
$60
10.0%
$50
8.0%
$40
6.0%
$30
4.0%
$20
$10
2.0%
$0
0.0%
FY '10
FY '11
FY '12
EBITDA
FY '13
FY '14
EBITDA Margins
22
Investment Highlights
 Strategically positioned for growth through geographic expansion, new
product offerings and bolt-on acquisitions*
• Primary focus on pharmaceuticals and human health products
 Rising Pharmaceuticals is a platform for higher margin finished dosage
form generics
 Scalable business model, SG&A leverage and improving product mix
drives margin expansion
 Asset-light business model generates strong free cash flow
 Strong financial position supports growth initiatives
 Experienced executive management team
 Track record of 48 consecutive years of dividend payments, providing
return to shareholders
*PACK Pharmaceuticals, LLC acquisition closed April 30, 2014
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NASDAQ:ACET
Global Leader in the Marketing and Distribution of
Pharmaceutical Intermediates & Active Ingredients, Finished
Dosage Form Generics, Nutraceutical Products, Agricultural
Protection Products, and Specialty Chemicals
For additional information please contact:
Jody Burfening
LHA
Investor Relations
800 3rd Avenue, 17th Fl.
New York, NY 10022
Tel: 212-838-3777
[email protected]
“Sourcing & Supplying Quality Products Worldwide”
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