Lannett Reports Solid Fiscal 2016 First Quarter Results

--Net Sales of $106 Million, GAAP EPS OF $0.89, Adjusted EPS of $0.99--

Nov 04, 2015, 16:15 ET from Lannett Company, Inc.

PHILADELPHIA, Nov. 4, 2015 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2016 first quarter ended September 30, 2015. 

For the fiscal 2016 first quarter, net sales increased to $106.4 million from $93.4 million in last year's first quarter.  Gross profit was $77.4 million, or 73% of net sales, compared with $71.6 million, or 77% of net sales.  Research and development expenses increased to $6.5 million from $6.4 million for the fiscal 2015 first quarter.  Selling, general and administrative (SG&A) expenses were $15.5 million compared with $10.5 million.  Acquisition-related expenses increased to $3.9 million from $70 thousand in the comparable prior-year period.  Operating income was $51.4 million compared with $54.7 million.  Net income attributable to Lannett was $33.2 million, or $0.89 per diluted share, compared with $34.9 million, or $0.94 per diluted share, for the fiscal 2015 first quarter. 

On a Non-GAAP adjusted basis, gross profit was $77.8 million, or 73% of net sales, compared with $71.6 million, or 77% of net sales, for the fiscal 2015 first quarter.  Adjusted SG&A expenses were $13.9 million compared with $10.5 million.  Adjusted operating income increased to $57.3 million from $54.7 million for the prior year first quarter.  Adjusted net income attributable to Lannett increased to $37.1 million, or $0.99 per diluted share, from $35.0 million, or $0.95 per diluted share, for the fiscal 2015 first quarter.

"A key driver of our strong first quarter performance was higher sales volumes across a number of therapeutic product categories," said Arthur Bedrosian, chief executive officer of Lannett.  "We have now reported fifteen consecutive quarters in which net sales and adjusted EPS exceeded the comparable prior-year period.

"With respect to our acquisition initiatives, Silarx is proving to be a significant contributor to the company portfolio with two recent product approvals.  Additionally, the pending Kremers Urban acquisition is on track and we anticipate closing the deal shortly."

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for the fiscal 2016 first quarter ended September 30, 2015.  The conference call will be available to interested parties by dialing 888-895-5271 from the U.S. or Canada, or 847-619-6547 from international locations, passcode 41121801.  The call will be broadcast via the Internet at www.lannett.com.  Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software.  A playback of the call will be archived and accessible on the same website for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's financial status and performance, regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

Use of Non-GAAP Financial Measures: This news release contains references to Non-GAAP financial measures, including Adjusted net income attributable to the Company, and its components, as well as Adjusted earnings per diluted share, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP).  The Company's management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor's overall understanding of the financial results for the Company's core business.  Additionally, it provides a basis for the comparison of the financial results for the Company's core business between current, past and future periods.  Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP.

About Lannett Company, Inc.: Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications.  For more information, visit the company's website at www.lannett.com.

This news release contains certain statements of a forward-looking nature relating to future events or future business performance.  Any such statements, including, but not limited to, the anticipated closing of the Kremers Urban Pharmaceuticals acquisition whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, including products acquired in the Silarx transaction, Lannett's estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company's Form 10-K and other documents filed with the Securities and Exchange Commission from time to time.  These forward-looking statements represent the company's judgment as of the date of this news release.  The company disclaims any intent or obligation to update these forward-looking statements.

FINANCIAL SCHEDULES FOLLOW

LANNETT COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

September 30, 2015

June 30, 2015

ASSETS

Current assets:

Cash and cash equivalents

$                      207,768

$         200,340

Investment securities

14,890

13,467

Accounts receivable, net

107,216

91,103

Inventories, net

45,231

46,191

Prepaid income taxes

4,953

-

Deferred tax assets

15,854

16,270

Other current assets

4,512

3,175

Total current assets

400,424

370,546

Property, plant and equipment, net

98,621

94,556

Intangible assets, net

28,903

29,090

Goodwill

141

141

Deferred tax assets

12,471

12,495

Other assets

2,441

1,938

TOTAL ASSETS

$                      543,001

$         508,766

LIABILITIES

Current liabilities:

Accounts payable

$                        17,259

$           19,195

Accrued expenses

6,675

4,928

Accrued payroll and payroll-related expenses

4,748

10,397

Rebates payable

11,458

7,553

Income taxes payable

-

1,918

Current portion of long-term debt

137

135

Total current liabilities

40,277

44,126

Long-term debt, less current portion

839

874

TOTAL LIABILITIES

41,116

45,000

Commitments and Contingencies

STOCKHOLDERS' EQUITY

Common stock($0.001 par value, 100,000,000 shares authorized; 36,896,482 and 36,783,381 shares issued; 36,362,052 and 36,264,585 shares outstanding at September 30, 2015 and June 30, 2015, respectively)

37

37

Additional paid-in capital

242,025

236,178

Retained earnings

266,754

233,573

Accumulated other comprehensive loss

(311)

(295)

Treasury stock(534,430 and 518,796 shares at September 30, 2015 and June 30, 2015, respectively)

(6,988)

(6,080)

Total Lannett Company, Inc. stockholders' equity

501,517

463,413

Noncontrolling interest

368

353

Total stockholders' equity

501,885

463,766

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$                      543,001

$         508,766

 

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

Three months ended 

September 30,

2015

2014

Net sales

$            106,433

$          93,387

Cost of sales 

28,819

21,800

Amortization of intangibles

187

20

Gross profit

77,427

71,567

Operating expenses:

 Research and development expenses

6,528

6,363

 Selling, general, and administrative expenses

15,536

10,483

 Acquisition-related expenses

3,942

70

 Total operating expenses

26,006

16,916

Operating income

51,421

54,651

Other income (loss):

 Gain on sale of assets

-

20

 Gain (loss) on investment securities

(1,196)

15

 Interest and dividend income

86

102

 Interest expense

(60)

(38)

 Total other income (loss)

(1,170)

99

Income before income taxes

50,251

54,750

Income tax expense

17,055

19,800

Net income

33,196

34,950

 Less: Net income attributable to noncontrolling interest

15

18

Net income attributable to Lannett Company, Inc.

$              33,181

$          34,932

Earnings per common share attributable to Lannett Company, Inc.

      Basic

$                   0.91

$              0.98

      Diluted

$                   0.89

$              0.94

Weighted average common shares outstanding:

      Basic

36,310,653

35,597,931

      Diluted

37,414,724

36,972,646

 

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

(In thousands, except share and per share data)

Three months ended

Three months ended

September 30,

September 30,

GAAP

Non-GAAP

GAAP

Non-GAAP

Reported

Adjustments

Adjusted

Reported

Adjustments

Adjusted

2015

2015

2015

2014

2014

2014

Net sales

$       106,433

$                     -

$       106,433

$         93,387

$                     -

$         93,387

Cost of sales 

28,819

(140)

(a)

28,679

21,800

-

21,800

Amortization of intangibles

187

(187)

(b)

-

20

(20)

(b)

-

Gross profit

77,427

327

77,754

71,567

20

71,587

Operating expenses:

 Research and development expenses

6,528

-

6,528

6,363

-

6,363

 Selling, general, and administrative expenses

15,536

(1,652)

(c)

13,884

10,483

-

10,483

 Acquisition-related expenses

3,942

(3,942)

(d)

-

70

(70)

(d)

-

 Total operating expenses

26,006

(5,594)

20,412

16,916

(70)

16,846

Operating income

51,421

5,921

57,342

54,651

90

54,741

Other income (loss)

(1,170)

-

(1,170)

99

-

99

Income before income tax

50,251

5,921

56,172

54,750

90

54,840

Income tax expense

17,055

2,034

(e)

19,089

19,800

33

(e)

19,833

Net income

33,196

3,887

37,083

34,950

57

35,007

 Less: Net income attributable to noncontrolling interest

15

-

15

18

-

18

Net income attributable to Lannett Company, Inc.

$         33,181

$              3,887

$         37,068

$         34,932

$                   57

$         34,989

Earnings per common share attributable to Lannett Company, Inc.

      Basic

$             0.91

$             1.02

$             0.98

$             0.98

      Diluted

$             0.89

$             0.99

$             0.94

$             0.95

Weighted average common shares outstanding:

      Basic

36,310,653

36,310,653

35,597,931

35,597,931

      Diluted

37,414,724

37,414,724

36,972,646

36,972,646

(a)

To exclude amortization of a fair value step-up in inventory related to the acquisition of Silarx Pharmaceuticals, Inc.

(b)

To exclude amortization of purchased intangible assets primarily related to the acquisition of Silarx Pharmaceuticals, Inc.

(c)

To exclude separation payments associated with the retirement of an executive officer

(d)

To exclude acquisition-related expenses primarily related to the pending acquisition of Kremers Urban Pharmaceuticals Inc. and the completed acquisition of Silarx Pharmaceuticals Inc.

(e)

The tax effect of the pre-tax adjustments included above at applicable tax rates

Contact:

Robert Jaffe

Robert Jaffe Co., LLC

(424) 288-4098

Logo - http://photos.prnewswire.com/prnh/20150417/199461LOGO

 

SOURCE Lannett Company, Inc.



RELATED LINKS

http://www.lannett.com