NASDAQ:ACET ACETO Corporation Investor Presentation November 2, 2016 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 Transforming Towards Pharmaceuticals Focus on niche products Consultative selling Highly skilled, technically trained sales force Human Health Pharma Ingredients Performance Chem. Partnership model Global reach Finished Dosage Form Generics Nutritionals: supply app. 250 popular dietary supplements Active Pharmaceutical Ingredients Pharmaceutical Intermediates Specialty Chemicals Agricultural Protection Products Int l technical network Regional managers in US, Europe & Asia SOURCING REGULATORY SUPPORT QUALITY ASSURANCE 3
Mix Shifting Toward Human Health Oriented Businesses Net Sales- 8% CAGR Gross Profit- 18% CAGR FY 2010 FY 2016 FY 2010 FY 2016 47% 14% 39% 30% 29% 41% 45% 14% 41% 25% 20% 55% $346.6 Million $558.5 Million $54.2 Million (Gross Margin- 15.6%) $142.8 Million (Gross Margin- 25.6%) Date Dec. '10 May '12 Mar. '14 Sept. '14 Dec. '14 Feb. '15 Sept. '15 Sept. '15 Timeline of Transformation Toward Human Health Oriented Business Event Acquired Rising Pharmaceutical New logo and renamed business segments Acquired Pack Pharmaceuticals Acquired three ANDAs from Par utilizing softgel technology SIC code changed to 5122- Wholesale- Drugs, Proprietaries and Druggists Sundries GICS code changed to 35102010 (Health Care - Health Care Distributors) Acquired 3 Opthalmic ANDAs from NEXUS Pharmaceuticals Acquired 3 ANDAs from ENDO International via FTC process 4
Investment Highlights Strategically positioned for growth through geographic expansion, new product offerings and bolt-on acquisitions Primary focus on human health products Rising Pharmaceuticals is a platform for higher margin finished dosage form generics 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 50 consecutive years of dividend payments, providing return to shareholders 5
Human Health Product Groups Finished dosage form generic drugs (Rising Pharmaceuticals) 60+ commercial products 100+ pipeline products Nutritionals Nutraceutical ingredients Packaged dietary supplements Growth Strategy Expand portfolio of high margin finished dosage form generic products Globalize and expand nutraceutical ingredients 6
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 7
Rising Drug Development Pipeline Product Development Biostudies Underway Filed with FDA Approved / Pending Launch Launched 3 ANDAs 8 ANDAs 46 ANDAs 7 Products 39 Products 100* Pipeline Projects *Does not include the 3 products on this chart launched in FY2017. 8
Aging of Filed ANDAs 9
Value* of Filed ANDAs *Based on total market, including brand & generic where applicable, using August 2016 IMS sales data 10
Broad Based Nutritional Products Offered on Global Basis Supply approximately 250 popular dietary supplements: Amino Acids Quercetin Coenzyme Q10 Lactoferrin Chondroitin Sulfate Fish Oil/Omega 3 Vitamins EU 39% Fiscal 2016 Sales Asia 4% United States 57% 11
Human Health Customers (representative) 12
Pharmaceutical Ingredients Product Groups Active Pharmaceutical Ingredients (API s) - bulk ingredients which impart therapeutic value to the drug Pharmaceutical intermediates building block chemicals used in the manufacturing of API s Growth Strategy Focus on niche, small/mid-size products with a limited number of competitors Serve as second source for branded drugs and generics 13
Pharmaceutical Ingredients Customers (representative) 14
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 Globalization of product offering Creation of new product opportunities through new suppliers Developing new products for existing customers Continue to seek new generic Ag registrations 15
Performance Chemicals Customers (representative) 16
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 business development/sales force: >270 employees worldwide Well versed in science, regulations, chemistry and assessing customer and marketing needs to develop opportunities Function as virtual manufacturing company Match customers with fully vetted suppliers 17
Worldwide Presence UNITED KINGDOM GERMANY NETHERLANDS JAPAN USA Corporate HQ New York CHINA PHILIPPINES SINGAPORE FRANCE INDIA 18
Global Sourcing China: Predominately source specialty chemicals, agricultural protection products and intermediates 26 local professionals India: Predominately source active ingredients and nutritionals 12 local professionals North America: Predominately source finished dosage form generics North America 22% 16% Europe Fiscal 2016 Other 6% Asia 56% 19
Support: Technical & Regulatory with emphasis on Quality Assurance KEY differentiator between Aceto and other distribution companies International Technical Network with regional managers in U.S., Europe and Asia International Regulatory Support Provides substantial global assistance as required Enables manufacturers to bring products to market in conformance with regulations that they might not otherwise accomplish on their own Worldwide Quality Assurance ensures that product quality meets both the customers specifications and intended use 20
Strong Financial Position Provides Financial Flexibility Financial position at September 30, 2016: Cash, cash equivalents and short-term investments of $75 million Convertible debt of $117 million Other bank debt of $3 million Working capital of $263 million Shareholders equity of $310 million Strong cash flow affords an expected $0.26 per share annual dividend rate 21
Strong Track Record of Growth ($ in millions) $600 $500 $400 $300 $200 $100 $0 $346.6 CAGR 8% Net Sales $412.4 $444.4 $547.0 $558.5 $499.7 $510.2 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 EPS (non-gaap) CAGR 23% $1.33 $1.22 $1.01 $0.78 $0.58 $0.44 $1.50 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 22
Expanding EBITDA & EBITDA Margin (non-gaap) $80 EBITDA ($ in millions) $70 $60 $50 $40 $30 $20 $10 $0 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 EBITDA EBITDA Margins EBITDA Margin 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 23
Investment Highlights Strategically positioned for growth through geographic expansion, new product offerings and bolt-on acquisitions Primary focus on human health products Rising Pharmaceuticals is a platform for higher margin finished dosage form generics 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 50 consecutive years of dividend payments, providing return to shareholders 24
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 3 rd Avenue, 17 th Fl. New York, NY 10022 Tel: 212-838-3777 jburfening@lhai.com Sourcing & Supplying Quality Products Worldwide 25