Adicet Bio (ACET) 4 May 182018 Q3 Earnings call transcript

Good morning, and welcome to the ACETO Third Quarter Fiscal 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jody Burfening. ahead. go Please

Kennally, and Corporation's Amy, me everyone, welcome Officer. are and and Roof, and Thank Chief Interim quarter good fiscal ACETO Financial Bill call this third comments Kaczmarek, With and XXXX to CEO; session. providing Becky ACETO's you, Rogers, its Walt on morning, to President conference Scally, today are also Officer, quarter Frances Officer; and participate Operating release the Legal the Vice President yesterday issued Chief market us Chief today The Accounting earnings press Chief close. Senior Officer; third in Q&A call. and company Steve after with

For copy who is have section you those the in yet Investor Relations of website seen a available Company's of the release, the not www.aceto.com. at

whether those factors factors publicly measures are of to I'd costs, and Exchange today's XXXX forth or anticipated measures, debt as the will similar and measures. seeks as to today's such other by intangible materially by forward-looking these of differ and uncertainties. financing new like to update press earnings on undertakes share, ACETO's of separation ACETO's that impact as of Securities The in deferred Reform income from defined are and prior as identified or referring compare Jobs expects, call, assets, the contain of identifiable the based projects, filings acquisitions statements, adjusted impact third outlined involve otherwise. on management from statements information, Private the that results anticipates, you revise and call future actual release. and and call, Company's performance Standards and costs Securities could financial management transaction the Litigation the Accounting that results impairment in and words related trends the investors to Company's the expressions amortization of earnings with income the operations Company's Commission current Act amortization obligation risks Also set non-GAAP believes, XXXX, that quarter These of and excluding debt Act of remind starting numerous Before result and or and operating to Tax costs by be any analyze forward-looking company no a implied will can the net business. costs, certain statements fiscal forward-looking fundamental plans, period per discounts, period goodwill to allow These defined adjusted issuance and Cuts the XXXX-XX. in net the non-GAAP results events certain Update The be

results the quarter. and like before turning call the to performance that today's and to the is operating to financial remind -- purpose over operational review Bill, and I'd of ACETO's discuss Finally, everyone third call for

transaction over understanding or are like law. appropriate likely board the underway. Therefore, of process board comment financial call As PJT way, comment to initiated assistance it out approved questions aware, advisers, housekeeping otherwise process The the indicated not while turn the to you items or a be respectively. would it alternative Bill. inappropriate by morning, Bill. the appreciate to or Partners it on unless of required for respond management Good We is the to its on that about your I has those has and disclosure patience. now would until Lowenstein is Sandler, With strategic the and and we'll and with the review that further has determined process legal

the it of run to difficulties. intense on a we're making of we supply we their government financial appeal selling entrants Thank disagree prices chain steps markets you, challenges we this conclusion deal with with the products, new harder supply for with the in are that these $XX.X our third this price quarter. some number facing. overcome products, average morning, for by were Since say to meet contained have softer think connection to into and and We our VA Jody. newly to continued in it's erosion country-of-origin identified, that of notification quarter we've of notified outcome. into our We penalties agency. Because in previously us failure-to-supply understatement covenants provisions contracts received Good we've We've compliance mature to second with of Rising's that's the million. I on everyone. not call, factors, taken with quarter obstacles the failed the And an launched this

asset revolver loans. repaid unit. of with business, non-cash related the challenges, all charges that by Rising in to about their do. $XX hard $XXX covering in company businesses are delivering batted I at I cash-generating in that a see operating million core our worked our flow not also cash. headwinds, bank to reliable, industry see when our pretax Pharmaceuticals cash the stable in issues. In Pharmaceutical than dedicated million as important the business, colleagues generic $XX Chemicals first as see be Ingredients in our solving were nutritionals Performance continues businesses ended some loan quarter in operational service we I to available we I Rising. $XX.X well recorded which first I segments our our business also and time, and the same these superior have point colleagues required and customers $XX partners. look in at million the And we've nine generated quarter, totaling against for to the want million We months, that's impairment Despite more paid down to We to million out

to this experience Rising, in with complex, turbulent decisions portfolio CEO because we because the the waters the the making the and higher-value have right We at time, will through in opportunities. business' the improve right team fortitude management navigate profitability get and corporate over more leadership through laying and to we're the right encountered, team has place

with address minutes. few balance collaboratively a to which on strengthen the have obtained working waiver a we're Becky our the in and lenders covenants, financial sheet Finally, will

performance take let's at the segments. of in Health, sales penalties. the reflect at $XX.X profits a Human the declines in failure-to-supply our in Rising, So million In reporting challenges including and look gross each the

in nutritionals of Our turned another stable results. business quarter

XX. Rising launched While operationally, products financial to the execute on results fiscal are challenged, launched quarter, Since have number year the we plans. total products, our we bringing continue of second to this X

these ANDAs In filed the in the status the ones the terms were the Of development status the two second approved under and new product pipeline. eight products increased ANDAs products of products products, added up status. have new filed compared points additional data as filed the to ANDA during versus launched, products difference quarter. from products into on of one currently currently eight on products had six XX back X two we XX in XXX and We moved three We the XX ANDAs from we as call. moved one The quarter. added XXX been period XX to and previously, development. approved pipeline, prior our to two reflects between and addition have two to launched file reported quarter last returned

we respect took and the incurred supply start key failure-to-supply a talking on in system to We and penalties $X on up last also chain ERP address we're that along are year. installing operational to chain I, slightly track been fully operational supply the warehouse challenges Rising. critical fully the to the to million to of realize with during fiscal should team, application. means we advanced by the is annualized critical ERP from achieve for new two and switch meet we functional critical about to the products. end can Lucid complete acquisition our Walt I'm year, longer warehouse partners close having unified fall to facility inventory, quarter of expansion larger which the of report system, our the setting initiatives, objectives sales be previously of phase pleased to flipping this point, in and the quarter, our a that savings we with The to decision the -- system taking issues. including and Citron a the due we've of traveled At gross-to--net supply our by point this the discussed point-of-sale to With

the position. last overall Over months, few our we've made inventory progress at significant improving

we with supplier key positively one our the inventory our This time the improve to with remain most impacts which of to exposure of rebuild of deliver I'm supply the And these a inventory all service past XX% to over realized, improvement will turn on India continue, end maximize that quarter of products example, that and confident in expect the on volume, position objective inventory our failure-to-supply lowers by XX% forward. portfolio. our our terms levels, our value in in been our and going that to trajectory we focused For May. customer the our supplies help of in improvements improvement has

to Turning to of last and stable third revenue, compared Ingredients. the Pharmaceutical gross margin We gross quarter profits year. posted

a boost gross $XX what's in results offset API a previously we reflecting our exclusivity. on gross where the have business our strong quarter, Performance strongest business business, had spec sales sales put more our one second ag typically And product on softness great market. and excellent was segment As This and by that one Hamburg million. U.S. period, expected, solid $XX chemicals in ever, a our more quarter stronger also quarters substantial numbers posted seasonally our from of business the than of protection we had management. greater protection when continued business our while soft with international quarter up product in million this second most ag partially than rebounded Chemicals, from our encountered some strength location quite notably of In competition to profits relative margin

on enter to value to And my to spent puts executing of dealing ag tough normal business. all rely And as the our time strategy with takes this niche is to remain competitive, on business. back plan. businesses quarter grow the market always quarter, as this deal business. while on partners continue year, focused our final we as game focusing I customers good This we quarter across of a visiting on our fiscal are that that is with our we its to well of this bring of source products and

We We fourth profitability. this have $X developing to commitment pipeline to a which or year. work our We're previously call XX in now to track to to a launch the keeping goals agree quarter are number and line quarter, necessary products Rising, turn about product related in intellectual to on achieve And like far more Becky? with million to delivering we more Becky are good expectations, payments launches financial endpoints to products. will critical the product communicated. also their thus soon balancing I'm in R&D provide for that planned long-term over And Roof, to CFO, we of we I'd plans At business meeting turn confident model remain milestone XX of enhance our results. will to partnerships. have focused the be our launched our and of ownership XX company's review on are new we either third on detailed property, developing continuing the business asset-light of spend

Thank morning, of review you, results. with good start a consolidated I'll and Bill, everyone. our

$XX.X a for Health $XXX margin fiscal million, was net Human in On million, third of was fiscal third XX.X% Gross $X.X the $XXX.X Gross to compared segment sales in from of decrease third period. of consolidated compared $XX.X XXXX. XX.X% in of million X.X% XX.X% of XXXX. quarter basis, fiscal decrease were million, million or the the decrease year quarter were reporting the sales a QX, quarter quarter X.X% a the the from XXXX. $XX.X third segment reported prior profit of million For to a

decline third XX.X% Human to $XX.X pricing protection In incurred the of segment $XX.X the XX% rise to supply be fiscal on XX.X% margin compared increased the increase to the mix X.X% by the sales $X.X last expenses, quarter both gross fringe to in XXXX, $X.X mix of Gross million investments Citron for offset million declines quarter and is from certain benefits, sales in the prior million million connection consolidation in charges were was failure-to-supply assets. million XX.X%. of to increase expect in and domestic third APIs. in from from liability sales quarter customers gross related $XX.X based, of addition, fees million acquisition million XX.X% year. the prior expenses SG&A last variance pressure, gross decline. and by in of of which Lucid. specialty higher we alternatives products, profit for $XX.X year's year's $X.X approximately from to reflecting third period. rose to of million to compared $X.X $X.X are Gross XX.X% in $XX of the consideration million slightly compared the in products. strategic to an the chemicals. profit million compared Ingredients related quarter largely increased margin million million product from year's segment $XX.X Rising and initiated somewhat with third sales quarter and continued related Health Gross a profit fourth due million in in Citron represent between our million payroll in million year. charges. period. Gross margin third profit two period. million product with Rising legal million and XXXX to of Gross Included In board, the R&D $XX.X X.X% Pharmaceutical the product $X $X.X The specialty agricultural margin million chemicals XXXX, reflect compared largely review quarter. to the our periods pharmaceutical contingent partially of product was last in process intense and sales failure-to-supply to recently $X.X related milestone decreased more XX.X% Performance quarter competition in generic with the $XX.X favorable unfavorable $XX.X professional higher year, lower from pipeline XXXX was higher prior in our fees intermediates, third the and $X.X certain sales by in was the the Chemicals sales offset to line the decreased on from than will

interim market the analysis adverse along contract management in XXXX. conditions issues an During XX, was generics the to impairment prolonged goodwill the VA, with Company's necessary quarter, March the the to it owing decided perform with at

we of a $XX.X totaling $XX.X for charge of $XXX.X goodwill our a million impairment the totaling $X.XX net $X.XX other $X.X The last million an quarter compared versus charges per and third result, compared impairment the $XXX.X intangible asset of net impairment per the operating consisting recorded year. Including As of Non-GAAP charges, per of $XXX.X year. for or million. impairment charges third $XXX.X pretax quarter income was million net last $X.XX year. in share million XXXX million, operating quarter identifiable we non-cash reported these to income of million million assets loss income quarter to or loss $X.X third last or third or share was per share $XX.X $X.XX for share of million

Turning to balance the sheet.

were million. was Trade Working million, receivables $XXX.X XXXX, As long-term cash, million million. totaled of the of unchanged $XX.X versus XX, XXXX. portion $XXX.X current as investments debt, June XX, and March capital, of cash $XXX.X equivalents short-term excluding essentially

the of days or for XX versus DSOs, June days from outstanding, XX were XX. quarter, XX and third December sales days XX Our of down as as days

shipments at Rising in to reflecting XX of as of Our days of product versus XX DSOs December quarter. $X.X agricultural related days XX, XXXX. million up anticipated June Inventory buildup primarily March inventory XX was fourth from were protection $XXX.X the XX, million, as our

under XXXX. liability of under indebtedness Our our credit total March of March accounting all standards, debt as In million accordance with company million classified facility XX, at a facility. senior the as XX, and $XXX rules as its stood including credit current applicable outstanding $XXX

leverage March with the coverage were ratio ratio compliance of the service total and maximum net debt not in covenants. financial XXXX, minimum we XX, As

owed unsecured Payment Also acquired included $XX our in deferred December obtained million We is products our December cash we quarter to days. of payment lender have for the a sellers few in SEC Lucid including language XXXX. the about covenants the for March ACETO waiver a the the Citron robust these XXXX. We're from XX-Q, ended on due filing long-term is with next XX, liabilities are XX, waiver and XXXX. in in which the

cash. a quarter, we to Finally, obligations. generator from continues of operations, resources the cash the million meet to our in in And company be steady $X.X giving us third generated ample

XXXX, first flow For cash cash million operating define the in we fiscal as investing and have of million cash nine $XX.X months operating in flow in free which cash we generated activities. $XX used less flow,

in $XX.X $XX repaid have we period, including same million loans, bank this During of prepayments. million

cash has operating will suspend generate finalize we I we and While for us XXXX. as of board like for would the directed turn to we operator guidance balance over least fiscal XXXX, comfortable steady to our flow Amy? questions. at continue budget the plans to for are to this now fiscal operating the

question you. Group. Matt [Operator first at Craig-Hallum is from Instructions] Thank Capital Hewitt The

their update Good morning. the providing Thanks for questions. taking and for

Good morning, Matt.

A few from me.

the First on is that on that of didn't all function start penalty, the some Or -- increases a Was manufacturing that you failure-to-deliver there. match? maybe off, the price let's it side.

manufacturing on all It's side. the

to did Or the not astray it case. as then at the side appears -- on supply. to have that's Lucid/Citron going product as And control it quarter? explained was result, transaction allow strengthen on something was the the would with on a side. Okay. what's time, portfolios, acquire Is over and, better with ACETO bit part relationship those going manufacturing that maybe over to the And little manufacturing go the more the a the this of a past detail

Yes, sure, Matt.

chain supply acquisition. mentioned and first had And this the in So we've the of issues realized we call, entire was end. our I think previously, we at team that candidly, to, from have what some on operational alluded rebuilt I kind

capacity what to also seen our and the which the partners. expect began came problem. those customers later, quarter of result fourth that a penalties really the to parcel reins materialize the in significantly We've of the of two failure-to-supply the year, to this challenges tightened probably of things, kind failure-to-supply in potential continue And second into the penalties, in that resulting we have some think with I results we've as in the with quarter. -- along see was run So that really part that on

but at are you've generic maybe Okay. competition done dig ones at products? bit as portfolio, On started a products have as enter, some already and a in where seen that you you you Can like little on the look optimization look are especially the I just currently you've that sounds bit either it of the you there, Or new further? in pressure? side, help little that portfolio market, the margin to discontinue to some contemplating

Yes.

queue I portfolio we're So we're continually going has for our products. looking added mean, that. when at makes it to we've do product additional into for rationalization the those well. it sense rationalize market back us out, product if But changed and dynamics also

both takes puts So there's and on sides.

like it's can where that's is me new purchase but side. claw you a that some understand good. given situation? And should on back help with do anything Okay, sounds issue advance, was that the known that the VA -- have how the of price? That to do ACETO and maybe deal you can in been maybe something it there what decision, Or VA can

Sure, Matt.

tell you beans to -- you transformational this In they're you that a we declared and that So non-TAA a was if non-TAA-compliant on. coffee is is products beans, VA summarize happened if compliant. country kind And border the of to ludicrous analogy actual coffee allowed. decision essence, situation, thus the example, kind the a is then here and result what's look, States, and coffee of it. that an is feel our I'll and good complicated roast take decision considered be how of it's there try And relying in this -- that is, United from the has the to that's a thus -- but are and take far

that finished be you to However, considered is if and India that States, in API you to have the transformational. United transform sourced products in not then

them at cases, first looking probably will for are we're to issue that first we courts. the decision the lengthy, on of based the and look And we TAA-compliant -- steps they process will So will feel the although don't that's the what next really with, be dealing had well, is we on, and we that products products appealed TAA-compliant all, have that that environment we contracted have with two definition. be their there the many VA that will substitutes. competitive on In feel

we'll to an a be there'll So products. rebid, have an opportunity rebid criteria exclusion the under and

guarantee secure no the we will that's business. that However,

us. can have as we forward surprise wasn't there down If take and now, that our clawback look we this to profits a from provisions out forecast. recover, But right those we are path. So certainly indeed of will that a sales gross taken

Okay. that question, Thank the more I'll you Maybe for detail. back hop one very in queue. and much

domestic maybe sounds side, to it's Thank like execute API business And the domestically those it the internationally, could things market, between strength you key On two the the markets? that here? help mentioned whereas soft. there what difference are you improve What's you. some still

Matt, on able as we difference the manufacturer API. of Hi the quarter, is, I discontinued explained Yes. market supply last a had we to that Therefore, has the U.S. the aren't we product. products the couple think

strong this international office, popped. particularly is it the Hamburg team, some our showing As and some timing, to Singapore of have of that just quarter orders out of also relates it is it our and

it's just puts general the the So of business. and takes

strategies forward, just of developing they're to continues solid their good team and move get a the base entrenched As business.

U.S. business that the So to is -- U.S. quarter. we particular the last discussed effects the subject was

much. Understood. you thank very right, All

Thanks, Matt.

Steadman next from is Dewey question Canaccord. at The

Hi, good morning.

us to a up of of Following terms way revenue? the sort VA is products impact frame any of and broad range on the question, number of in of can you that there

that XX and exclusion are think contracts, I I think the XX so of Dewey, we government. them VA involve specifically, met we products the have those have with XX – criteria. two with then the have of

contracts two So forward. we’ll those maintain going

is anticipate which But And with is Defense happened Agency, contracts. will to VA the discontinue DLA, Philadelphia. our also they in in not follow the at the point that that have we initiative XX% time, this We contracts we has have Logistics on gross of Rising’s or I is, on And about And the revenue. margins revenue, lower give It’s business total the side. yet. – don’t the XX% know, I’d of take. the say revenue

a product. failure And or for it involved is one to similar then question Or wide-ranging supply a Was the of thanks. products Okay, of products? the just that in terms sort product in basket it of it? were of number limited

Yes. the a number we’ve We been had to on of products that were recover. impacted, focusing products five and top

have you’ve do And remedies any is was responsible place was it team failure issue of now Is supply that with for that bolstered suppliers? chain your to supply? that fault? you sort an in the their your it Or

Well, ahead demonstrated we’ve that that that’ll of stay can to our great we it supplies. to category, process future And couple from get help have partner we state-of-the-art of failure in inclusive we that that combination overall to think And a stakeholders. as have to partners. supply kind process we put mentioned to plan in have progress sales S&OP the Dewey, situations our curve has ensure in factors What can think I comes team, we to across rebuilt necessary probably ability the expand of done is a can contributed say as earlier, a I plan I is actually entire it’s all remediation that of supply and of it. I us so chain our the our S&OP that what

so, business. obviously, fiscal is quarter impacted on Has quarter? a of XQ business, the And made if of distribution agricultural the then last half for the can out And Okay. that that business? weather be big up the in that

question your is please. Walt. this Dewey, So again, Say

is quarter way? obviously can the big business in that if plantings So and affected? for things be affected plantings made business occur fiscal has for very delayed it Has up And been that. weather that like the it and as any ag XQ business, a cold potentially

so supplying rebounding opportunities of Yes. that. a We an is The it helping product, liked but bit. a for did to performing be capitalize on one nicely. type us. weather having wish events, to our competitors overall, business have weather But We issue to where we’re biblical is able extent, going – of certain to the pretty helps never little some is

So a been little helping bit. it’s

walk waiver something the Okay. to they’ve each can covenants about and advance? where those quarter? we’ll are And that And know a of you have then in waivers? through that been in you such, Do and what is on the get terms covenants

I quarter as a XXXX. And terms for and waiver our in be XX-Q. the XX, explanation Well, the mentioned, detailed there’ll March is very the ending the of waiver

And to you’ll other quarter fourth place the you’re again? fiscal able meet in so those to covenants any if not quarter, or those have get waivers in

a As might I discussions lending group sheet in what with solution we’ll mentioned, are strengthening balance in our we be. keep as as And our to longer-term everyone apprised develop. those discussions

the answering question. right, Thanks for great. All

Thanks, Dewey.

from The Henry Investment Wright, next David question Trust. is

you Do anticipate the penalties quarter? questions. morning. fourth failure-to-supply in any Good Two

talk Nice Hi, have continued failure-to-supply, Yes, Thanks question. we anticipate with we David. forecasted the for that do to our in you. numbers. and

at end believe the tail of do we we that are However, situation. this

in answer we fourth mind they anticipate is to that in that run penalties a based get performance, failure-to-supply to on Keep your in So we yes, get quarter. the about customers some past failure-to-supply quarter our behind. so from question, do

subquestion just they flow And it withhold assessed? first How through? a how to – then. actually does you? Or the penalty is my from is question how that Do

Yes.

of So a ways. couple

First product they’ll that. higher another our of they’ll all, the are generally product, on penalty if priced, assess they that us and then can’t purchase get

periodically them then occur on have incurred, they, get supply – challenges when that. the So from and we fact, in that statement a for we get billed

the the on balance million $XX.X it’s falling third the – it’s sheet? somewhere quarter, is the So – in and around whole

Yes.

second call subsequent the the then of And what products? based Okay. Rising to assets, of sellers I’ll the portion that clawback contingent it is for, risk of at question, the consideration the performance on

Yes.

referring to the are David? So you payment, deferred

Yes.

Yes.

that’s… So

at – or it it? all risk at it or potentially risk of just Is all of of some

David, I here only second apologize. It’s Becky, in week. and I my am

products limited quarter contingent consideration. in And the give a reduced read in our to long-term the and It’s closely Citron, note based number terms were on purchased $XX definitive this of that $X,XXX,XXX. And enough recorded million reduced to was payment that a not of due that of also there then amount actually It’s contingent so answer. of sheet. I the balance section under amount you from a as liability we have been

All right, okay.

is see a just extent mechanism, in mechanism the just – the to check reduction there So consideration? some we have allows to the which have documents to and the

That’s correct.

Okay. luck. my Thanks taking for questions. Good

Thanks, David.

America. Lenny from Dunn is question next of at Mutual Trust The

that we just Good dropped morning. balls, management a looks at undervalued. But and you are really, in place again. always new drop to are it level to because that’s drop here the could there’s look now, try guards why the putting stock a that you again. again. right I aren’t things good looks to as make we’re and would Obviously, some going worry guess, if I don’t It the because people this to where kind And ball. forward me are balls where could you a dropped need can is discount concerned there. And tremendously number ever future obviously, be sure didn’t management, like going clearly, old you’re give do But of, this very the we of you’re the and go. But where we obviously comfort don’t that ball

I’m for looking little I just a comfort level guess So here.

appreciate and I the well. with talk look, you as And question, Lenny. to nice sure, Yes,

here. on two there’s things going think I

at the all, gross I’d First majority Rising Rising It And build we direction. of because effort company on revenue move primarily have and a this focus to of the strategic profit. the business. spent of is team the to the in our intention of it is lot

in been have business rebuilt. and other have business predictable. past been segments essentially reliable The and below Rising the The pretty leadership fairly team two

we as the believe that as of a the So future. this we into have And initiative and we’ve There’s this put place year. as release, we a company, result that and in have recorded the know, had from fiscal is bleeding in you to some guarantees, learned are any happening some that past the strategic into of press problems in past metrics the in never however. avoid from leaders

comment any – mistakes, there’s further, can’t I the from that that we unfortunately, any duplicate but never won’t on past. and So guarantees

we’ve confident faced and in in very the headwinds business. been I’m generic that the accomplish able have the despite to we team However, what

that hope question. address your helps I So to

get we the ACETO It be question And alternatives. But best almost – I clients and to pieces for Clearly, are sizzle ACETO and certainly way, And blew the The what it years. second cash-generating it to of of and – a But be best recent for did is and we Rising But I to just the ACETO. lot legacy by should as think as quadrupled part val. from is does has again the was I my up an the safe then another some. when in business I the well legacy back in company. can’t going it the back everything XX were But out my been what’s decades. – we mistake. afford potential at would and guess to not business mean, what’s margins the were maintain. disaster. – got sure best where run and looked And the or that pieces I the business don’t we keep strategic shareholder again, – directions in value I’m a with got we growth.

for a forward. we thanks the agree best the do and we you, to the with for support shareholder. And initiatives certainly has going board what go into strategic is And so. around and make to will thanks we can decision comments, your So that’s the as that, Lenny, taken decide company your outcome when why notification for

would I term I it deliberate out the shoot-from-the-hip want of and to some and be thought I kind decision. No, in make not I want understand. Okay. nor long- interest would you expect everybody. And to of

Thanks. assure I will, can be in you the that that, case. fact,

just just you’ve all expect some your when other Or the we to short-term? relative Okay. be guess asking And to which Q on? the an than would in other months more little to ways to going you, will more you us it announcements wait different give a what’s than can decisions? expect, be made Or I us three able keep now to release Or we all-in-one in information, the have will apprised do obviously Q, I’m as see?

Yes.

process prepared Q, probably that’ll be and some outside along the think I comments to about it in further until the we’re make publicly.

that be Okay. stage prior get the to And might it’s quarter? situation to end bank where on June permanent at you of a able is possible the more negotiation waiver the the

early too way It’s to tell that.

Okay, possible. little okay. it near a my you. nervous less Well, and term tuned. be I you’ve questions, is, as to say, stay we’d But Thank answered guess if I a guess of you like lot

Thank you, Lenny.

is question First from Schwartz Steve Analysis. at next The

Good morning everybody.

Steve. Hi,

Philly problem. us is eager was who there at report API VA last in help or across option can so, there? with came you and kind two you seemed something it on? to CPhI one of any your progress I suppliers try week to give if an And domestic Bill, Is

Well, I kind of indicated tenuous Steve, a as earlier, situation. it’s

process to VA kind kind with And wait we So exception criteria were to materialize. it two was In find – able has or to in have to so product, products. able not cases, bid of the TAA-compliant for the some one of that situation. a we we

We’re secure to the can business. we for either other with met we’ll that that. extent you alternatives API explore do some the always or with our that that to And partners folks, looking

ways situations a – can market improve can that in especially it any based a VA. However, processes can terms business, with they constrained you to But team the bring be API definitely can is the that our know, the on like be involved. when in time look at yes, the to as we taking of time

Yes.

problem horizon. when in of you’re the of this press able work you where terms the pretty Is things those announced some get March to that publicly, think order of out in trying release some mix those I in dates deadlines. And to short extended? your were stated

of were issuing occurrences this. that deadlines for products. gone, like to to the and the come extended they contracts But situation we’re those back-and-forth – Well, in no have and VA due just kind longer their the what take place a

an with are one in Okay, you’d mentioned respect issue, charges the just failure-to-supply to then Okay. And earlier response delayed. that quarter those

quarter second penalty? $XX.X I the in correctly? understand incurred third a that the was million Do quarter So that you from

Yes. wanes. of it kind and Look, lapses

don’t from past. things full that delayed an to when So the response quarter the just have XX me as days. example, hold use happened in I a the It’s

the really second you So quarter. first or I the quarter third part the tell everything into led can’t of if just some if from was

key I us that think time they then and in past, in bill at period reconcile the and the for is it’s it just occurs – it of future. a then the

is see the can asked others, it’s the maybe not that presuming third my you’re at XXXX, some reflects of fourth, first which getting that, Okay. past, comfortably of, of fiscal is the the quarter as say, I if we that’s resolved. and was question think, guess going down to way by winding I situation quarter anything then it’s today, in to in officially say that that that

trying If I’m understand confirm what kind of with you to you.

do, look, I do, a difficult And to yes no I give on a or Steve. it’s you that.

first that all, issues, there’s there’s quality to there’s may may failure-to-supply. So of recall issues lead that issues – API product lead

of haven’t experienced some strides. fixed for do And can made but with So that. key partners, the actually believe us, our there of impact issues are that all those. supply that unfortunately What we’ve we completely we’ve we great factors a number is of

be think won’t So third the going we them it that magnitude and had quarter we’ve we them the in past. of have will the forward, but in that do

okay. thank Bill. it, you Got question, Well, for taking the

Yes, you’re Steve. welcome,

Canaccord. is Steadman Dewey question next at from The

fourth wanted there’s I picture XX XXXX? for just the How Human we then into the first and focus ANDAs pipeline launch Health filed. products for know quarters look thanks the that at launch, I the Hey, approved, And pending should fiscal XX of to in flow and few the the bigger quarter follow-up. business. on fiscal

back have Nice to again. you Dewey. Sure,

the the probably past, to So launch area. the products singles I fourth think the plan we you’ve in are heard that me in use and quarter the baseball analogy in

reviewing budget of be what are be to as XXXX We’re for on kind XXXX. to be and – our prepared for announcements we’ll plans we’ll some able fiscal speak, we our make launch

Thanks, great. appreciate right, All it.

welcome. You’re

Wilbur question The James. from Elliot next comes from Raymond

morning, Good thanks. Bill. Hey,

sort How how capture sort to question situation just the quick your of product an open-ended securing on protection do there don’t for mean, of of any liability that the Just is sort failure-to-supply for dramatic the of in of price. about And some terms commentary contingencies you those to company around need? going increased a the in some or supply general supply you in of may where any may they out theoretically increase on work in limitations be you, – limited a thinking back customers’ whatever costs contracts. I going a them? terms, have there. and hook specifically is the a see of market, Or in necessarily there

tackle Hi, I’ll question. that Yes. Elliot.

it there feel reasonable of they a the most So within customer us construct have specific that for, we increase no agreements, goes what – asked forecast have above generally, over a is And of then provisions they our liability. specific give we estimated us is of a supply. if what

they’re failure supply, asking open in all volume, for it’s us not scenario they respect. out, a occur. to If competitor falls sudden and is say, and we can’t, the in hit would not ended that of a and that a to us that So of that marketplace fill XXX%

Bill to the to So be it so works, as we What if would on how far the it wholesaler’s substitute it’ll a go earlier. if product generic wholesaler is the a not small as is competitive contract, happen actually chain I the be dry mechanics supply product, product that of If contract, the be it’ll which there’s alluded price. and out on product completely for of WAC our difference. has will a maximum, think at

of is how it mechanics that the basically works. So

Okay.

mean, have whether difference there you guess if is to I theory, I could were a supply, – – for if what was I’m increase a getting So liable you WAC? if be at short in in significant

question – not WAC supply the the correlating on – I’m WAC. if Short high

a of and potential what if out of that the sort – on is figure of of – product you’re if there’s If some to portion supply that if increase competitors, trying there’s the to price capital that limitation. unable actual or some sort part liability open ended I’m liability

Rogers. different to There negotiation. each subject – Steve this and contract There – is is

to try of possible. restrictions can and you put as part, the For many in imagine, as caps as we, type most

terms For and initially. market of is XX vary. the the example, but that be a in best generic time be getting or we XX-day it But much terms to there possible, that And may as as a alternate. say function contract could the It of supply. very a have negotiate where we limited

Okay. financial And for a Becky. just question quick maybe

happen you we If to have depreciation can and get those? for quarter, figures amortization the the

I’m looking.

Yes.

to note. a stab So earlier question while answered $XX on take looking, million they going I’m that at just the are was a

is also and that don’t level. has earnout $XX that’ll the note the but – anticipate So that reduction get guaranteed, to payout we the a maximum of reduction million, was in

So question that that I on the addresses issue. earlier hope

the number for you. we’re looking for And depreciation

spirit Yes. time, if Is we Elliot, in get the all specifically of that we’ll I think right? on to about back – that? how you

appreciate Thank Yes, it. you.

you’re welcome. Okay,

Our next Investor. question at Private Lester is Petruzzi from

you. been the received Thank was inquiries. PJT a disclosed specific many A imagine the couple and if today, of to and to the created, one. question following in would of statements in to you’ve binary for any value ago, imagine, on story press you hire value you’ve recent morning. which board’s is the a you question strategic parties as the I Based where a it indications options. the over Have My Good interim, assist received release would. any prior And company? explore discussed shareholder from the that’s weeks long-term consultancy, would I our decision you interested

talk Thanks for are that with I Yes. question, hope the your that for question audience. and Hi, to you and can’t to address you Unfortunately, nice reasons Lester. as well. I obvious really

that So just I point I appreciate on comment time. can’t this it, but at in

you. Thank

turn would closing the to to I our over Kennally Bill concludes for back question-and-answer like session. remarks. conference And This the

Okay.

get And back to an before you. quarter. learned, some about closing So that, if comments, answers is depreciation, please we’ll information the I’ve on me million per require make the I you tag specific additional e-mail, $X and Elliot, with

to hope before So call, the points. I And close helps leave I wanted that you with of the look, there. following kind of all I

of is a significant the cash. generating amount company First,

business, our Pharmaceutical business Rising continues and our reliable We’re and deliver working flow. Ingredients Chemicals hard to to Performance stabilize cash

appreciate period. for challenging the colleagues navigating we’re through ACETO to to your and wanted support. I very a trust, And your commitment you Second, and at I say thank

appreciate Third, seasoned shareholders is partners, poised customers, I can to of weekend. all your late that August fourth and have stakeholders. you to our us through hope team support the in call. the financial last, Take value to I and to I our the the accept banks, and that today. business navigating operational with on Walt I’m to challenges the these for great a the us we’re And path company have has is will respect challenges. path all want speaking deliver look lead know best doing joining questions, leadership everything had forward us we thank care. creditors lead to an comments we faces, has feel extremely forward. and to fiscal our with this Becky you conference of from forward. us all and to confident and her you our great quarter impact, immediate highly I three We fortunate would XXXX and And like

today’s for The concluded. you presentation. attending conference now has Thank

now disconnect. You may