Welcome to the Aceto Fiscal 2016 First Quarter Financial Results Conference Call. My name is Allen, 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.

Thank you, Allen. Good morning, everyone. And welcome to Aceto Corporation's first quarter fiscal 2016 earnings 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 its first 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, projects, seeks and similar expressions that involve 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 on today’s call. Aceto defines those non-GAAP measures as excluding all transaction costs related to acquisitions. With those housekeeping items out of the way, I would now like to turn the call over to Sal. Good morning, Sal.

Great. Good morning, Jody, and thank you. Good morning, everyone. And thank you for joining us on Aceto's first quarter fiscal 2016 earnings conference call. I would like to start up by saying that, overall we are very pleased with our start to fiscal 2016. Our net sales increased by just over 2% in the quarter to $133.5 million and gross profit increased by 25.1% to $34.6 million in the quarter. The performance gains were led by in particular our Human Health segment and to a lesser extent our Performance Chemicals. Foreign currency headwinds again did impact results a bit, reducing net sales for the quarter by $6 million. Absence this impact, net sales would have grown by 6.5% during the quarter versus last year's quarter. Our transition towards becoming the Human Health business continues on pace, for the first quarter of fiscal ’16, our Human Health and Pharma Ingredients business segments together accounted for 72% of our total sales. That’s an all-time high and it compares to 67% for the same time last year. In part, because of our ongoing sales mix shift and in part because of operating leverage in our business, we continue to deliver strong operating income and earnings per share growth. For the quarter, operating income grew by 80% to $15.5 million and non-GAAP adjusted EPS grew by about 61% to $0.37 a share. That's up from $0.23 a share last year. On a GAAP basis, earnings per share were $0.32, compared to $0.17 for the first quarter of fiscal ’15. Turning to the individual business segments, Human Health sales grew by just over 17% in the quarter to a level of $57.5 million and that reflects continued solid performance by Rising Pharmaceuticals, as well as stabilization in our Nutritional Products business. In addition to…

Thank you, Sal and good morning everyone. I plan to walk you through our financial results for the first quarter. Net sales for the first quarter were $133.5 million, a 2.1% increase from the $130.8 million reported in the first quarter of fiscal 2015. On a constant euro currency basis, net sales increased by 6.5% in fiscal 2016 compared to the same quarter last year. Our gross profit was $34.6 million, an increase of 25.1% compared to $27.7 million in the first quarter of fiscal 2016. Gross margin for the first quarter was 25.9% as compared to 21.1% in the prior year. On a reporting segment basis, Human Health segment sales were $57.5 million, an increase of 17.1% from the first quarter of fiscal 2015. Rising Pharma sales increased by 19.4% due to pricing on certain products affected during Q2 of fiscal 2015 and new generic product launches that occurred over the last 18 months. On the Nutritional side, the softness that we experienced throughout fiscal 2015 has leveled out, as we indicated in our last call and this business saw modest improvements in both domestic and foreign sales during the quarter. Our Pharmaceutical Ingredients segment sales were $38.4 million, an increase of 1% versus the first quarter of 2015, as growth was tempered by the negative impact of a strong U.S. dollar versus the euro. Gross profit in the first quarter decreased slightly to $6.1 million, a $100,000 reduction from the prior year. Applying a constant euro currency basis, sales were up by 11% and gross profit increased by 9.3%. Now finally, our Performance Chemicals segment sales decreased by just under 14% to $37.7 million, largely due to reduced sales of our agricultural, pigment and other intermediates, as well as chemicals used in surface coatings. However, gross profit rose…

Thank you. [Operator Instructions] Our first question is from Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Good morning, gentlemen and congratulations on the progress.

Good morning. Thank you.

Thanks, Matt.

A couple of questions. First, I’m trying to understand the pipeline a little bit as there is lot of numbers there, just want to make sure I have everything accurate. So last quarter you had 60 ANDAs of the FDA, three have been approved and are waiting to launch. Currently you’re at 50, I think I heard you say you had eight tentative approval, I’m not sure if that’s part of the decline from last quarter. And then did I hear you have 10 approved products awaiting launch?

Not 10, so just to clarifying that. I think, we said, we have eight -- we have eight products approved and getting ready for the launch. So, basically, in the nutshell, I don’t have the exact comparison from the last quarter. But basically, I think, last quarter was something like 57 with the FDA and now its 50, so that's a drop of seven. But last quarters approved pending launch was like two or three and now that’s eight. So, in bulk you’ve seen a movement from the filed to approve. Now as you know, we don’t make announcements upon approvals, we make announcement upon launches. So that -- those will be coming as we launch, but that’s essentially the movement that we saw. I think, in the quarter, we did maybe dropped one product and have one product sent back by the FDA, which we’re going to have to refile. So essentially the movement from filed to approved pending launch and a couple of drops would net out the numbers. I think last quarter, we're around 107 total pipeline and now we’re at 105 or something like that.

No. That’s -- it’s still pretty remarkable, I mean, to pickup eight approvals over the quarter that’s fantastic. Do you have a market size for the 50 that are pending for us?

I don’t have -- the 50 that are pending?

Yeah.

Oh! We have a 50, yes. I think it’s just a hair under $6 -- $5.8 billion.

Okay. Great.

Our current IMS marking as we know by the time they get fully genera sized and we’re going to approve within our shares, obviously, much smaller number than that, but that’s the current IMS annual sales.

Okay. Great. And I guess, kind of, sticking on that front for one more question. Target action dates, several of your peers at September received -- I’m going to use -- plethora of target action dates for the old portfolio that is the pipeline pre-PDUFA year three. Did you receive similar types of communications regarding your old pipeline? And if so, can you give us a sense for when -- not specific dates but when that window opens up and extends to?

Yeah. So I can’t say that we receive the plethora of target action dates. We did receive, as I said, a handful of approvals here since the last quarter. And of the eight that are currently approved pending launch, I would say that we’re highly confident that we would get six of those launched this year. Now again, there maybe some other approvals that occur between now and the end of the year and two of the eight are in a category that from a supply chain point of view are a little bit more challenging at this stage now that we’ve gotten the approval. So of the eight, I’m highly confident on the six.

Okay. Great. And then regarding the Human Health segment and specifically the Rising segment, were there any price increases here in the past quarter where you would see chargebacks hitting in the first quarter but then you would get the full benefit of that price increase in Q2 and beyond?

No. Nothing in the first quarter.

Okay. Nothing in the first quarter, how about here in the second quarter?

I don’t -- so far let’s put up it’s sweating.

Okay. All right, all right.

No, nothing so far.

Okay. All right. Well, I’ll jump off. Let somebody else jump in but congratulations on the progress so far.

Great. Thank you.

Thanks, Matt.

The next question is from [John Van] [ph] with Singular Research.

Hi, everybody. It’s John Vandermosten with Singular. Just had a question regarding seasonality and little bit your story than some of the other analyst wanted to seek if you could help me understand just kind of how we should flow throughout the year in terms of seasonal ups and downs? Thank you.

There is not too much seasonality in our business. As you look at the different segments in our agricultural products, we do have some seasonality. Doug?

Yeah, John, if you go back and look at the last, let’s say, eight quarters or so, you will see that the only business that we have that is truly seasonal will be our ag business. So our ag business is more concentrated in our fiscal third and our fiscal fourth quarter. So the other segments are not what you would call seasonal.

So as you -- again, you may have noticed what we said is we expect the second half of the year to be strong than the first half and that’s due to two primary factors. One would be what Doug just said, so some seasonality in the ag business. And second, as we launch products rising, we would expect to have that impact in the second half?

Okay. Thank you.

Thank you.

[Operator Instructions] The next question is from Steve Howard with Morgan Stanley.

Good morning, Sal.

Good morning.

Couple of quick questions. One, on the chemical business, it was a very solid margin quarter, how should we kind of expect that, or couple of moving parts and things like that? How should we expect the margin profile going forward to look relative to this quarter? And then in terms of the ag and pigment and intermediates, how should that flow through, is that stuff that you expect to come back, or is that kind of rationalization of the portfolio as started year and half ago?

So two things. One, in terms of the margin, as this point, at least, we do not expect that 21.7% gross margin to continue for the balance of the year. That’s a little bit on the higher side. We are trying, but I don’t expect that. We did receive and may be Doug know the percent. We received this one-time duty refund that helped the margins. I think that business will be more than 19-ish percent range over the course of the year.

Yes, which is consistency with what we did last year, on a full year basis that segment in total was 19%. For this first quarter, we did 21s, is probably 1% in there due to that duty refund if you will. So as we said before, we think there might be a little bit of upward room there, but we will probably be at the 19s or just short of 20 seems appropriate.

Something like, something in that range. With respect to the sales, I think it’s -- two things, some of the sales drop is primarily in the intermediates business, some of it is timing and we expect to recover later in the year. And some of it is actually big business that we lost this year. I would not say that this was active pruning at this particular time. Some was just lower margin thankfully, but business that we just think getting better this year. And it’s 50-50 in terms of timing and lost business for that amount of drop this year, this quarter.

That’s helpful. And then just overall on pricing, that’s been touched upon a little bit. But given the headlines that the larger scale areas of farmer, I want to get a sense kind of what your normalized expectations for pricing on the portfolio is as it matures and as we move forward through the year and into the future?

I just missed the beginning of the question. Could you just repeat it?

On pricing of the farmer portfolio?

Okay. So the pricing on the farmer portfolio, again we leave it to the guys who run the business. They basically assess the market over the course of the year. And if there are opportunities, they would try to take advantage of that. As you know, in this industry, there's continued price pressure down and then there are once in a while opportunities up. And so -- honest, I don't have any crystal balls for the balance of the year. But as I mentioned earlier I think to Matt’s question, so far this year there are no price increases.

Right. So just I guess broadly it’s business as usual as competitive and you’re trying to find but you can’t, but nothing has changed relative to the political environment?

Exactly.

Okay. And then final one and this was also just touched upon, the 6 to 10 number that you’ve lined in your guidance last quarter and reiterated today. Can we just walk through how that’s reconciled with the Endo stuff as well as the eight approved but not launched?

Sure. So the two Endo that we brought and launched, they are launched, but that’s not in my opinion part of six to ten. The six to ten will come out of the eight that are currently approved pending launch as well as if we get another approval or two or whatever we might get over the balance of the year.

And given the eight versus six, I mean, is there risk between approval and launch that something might not go at this point? I know you’ve had to re-file when you’ve had one that didn’t make it through. But at this point, do you have expectations that eight will be going through?

Well, we feel those eight we feel very comfortable on six of them. And the other two, maybe this year they may slip to next year. We’re working through some manufacturing hurdles on the other two, so highly confident on six of those eight.

That’s very helpful. Thank you very much.

Thank you.

[Operator Instructions] And I’m not showing any further questions at this time. I’d like to turn the call back to Sal for closing remarks.

Okay. Well, again, thank you so much everybody for joining us here today. And as you can see from our results that we reported for first quarter, our growth continues to be driven primarily by the Human Health and finished dosage business. We continue though to push hard on all of our segments and expect growth out of all three, but we’re pleased with the first quarter. So with that, we look forward to speaking with you again in February at our second quarter results and as well as possibly seeing some of you in our upcoming December shareholder meeting. So thank you so much and see you soon.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.