PHILADELPHIA, Feb. 5, 2020 /PRNewswire/ -- Lannett Company,
Inc. (NYSE: LCI) today reported financial results for its fiscal
2020 second quarter ended December
31, 2019.
"For our fiscal 2020 second quarter, strong sales across
multiple product categories drove solid increases to our net sales
and net income over our fiscal 2020 first-quarter results," said
Tim Crew, chief executive officer of
Lannett. "Our improved topline was due in part to the
introduction of seven new products in the second quarter of fiscal
2020, as well as a full quarter of sales of Posaconazole. We
plan to commence marketing an additional 10 or so products in the
second half of the year, including Numbrino®, our
recently approved, branded topical anesthetic product.
"We remain on track for launching a substantial number of new
products in fiscal 2020. At the same time, we are making
excellent progress advancing multiple products in our pipeline that
have significant upside, as evidenced by the recent human
pharmacokinetics and pharmacodynamics clinical trial that met all
primary endpoints for our insulin glargine product."
For the fiscal 2020 second quarter on a GAAP basis, net sales
were $136.1 million compared with
$193.7 million for the second quarter
of fiscal 2019. Gross profit was $41.3
million, or 30% of net sales, compared with $69.8 million, or 36% of net sales. Net
income was $5.1 million, or
$0.13 per diluted share, compared
with $12.4 million, or $0.32 per diluted share.
For the fiscal 2020 second quarter reported on a Non-GAAP basis,
net sales were $136.1 million
compared with $193.7 million for the
second quarter of fiscal 2019. Adjusted gross profit was
$50.2 million, or 37% of net sales,
compared with $86.0 million, or 44%
of net sales, for the prior-year second quarter. Adjusted
interest expense was $13.1 million
compared with $17.1 million for the
second quarter of fiscal 2019. Adjusted net income was
$11.7 million, or $0.27 per diluted share, compared with
$33.6 million, or $0.86 per diluted share, for the fiscal 2019
second quarter. Adjusted EBITDA for the fiscal 2020 second
quarter was $35.8 million.
Guidance for Fiscal 2020
Based on its current outlook, the company revised certain items in
its GAAP guidance and adjusted guidance for fiscal year 2020,
the net effect of which is not expected to have an impact on
adjusted EBITDA. The full guidance is as follows:
|
GAAP
|
Adjusted**
|
Net sales
|
$530 million to $550
million, up from $525 million to $545 million
|
$530 million to $550
million, up from $525 million to $545 million
|
Gross margin
%
|
Approximately 32.5%
to 34.5%, down from approximately 33.5% to 35.5%
|
Approximately 39% to
41%, down from approximately 40% to 42%
|
R&D
expense
|
$34 million to $36
million, unchanged
|
$34 million to $36
million, unchanged
|
SG&A
expense
|
$69 million to $72
million, unchanged
|
$63 million to $66
million, unchanged
|
Restructuring
expense
|
$2 million to $3
million, down from $2 million to $4 million
|
$ --
|
Asset impairment
charges
|
$2 million
|
$ --
|
Interest and
other
|
$67 million to $69
million, down from $70 million to $72 million
|
$51 million to $53
million, down from $54 million to $56 million
|
Effective tax
rate
|
Approximately 16% to
17%, unchanged
|
Approximately 21% to
22%, down from approximately 22% to 23%
|
Adjusted
EBITDA*
|
N/A
|
$145 million to $160
million, unchanged
|
Capital
expenditures
|
$20 million to $25
million, unchanged
|
$20 million to $25
million, unchanged
|
**A reconciliation of
Adjusted amounts to most directly comparable GAAP amounts can be
found in the attached financial tables.
|
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 its fiscal 2020 second quarter ended December 31, 2019. The conference call will
be available to interested parties by dialing 800-447-0521 from the
U.S. or Canada, or 847-413-3238
from international locations, passcode 49357861. 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 EBITDA, which are financial measures
that are not prepared in conformity with United States generally accepted accounting
principles (U.S. GAAP). Management uses these measures
internally for evaluating its operating performance. 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. The
company also believes that including Adjusted EBITDA, as defined in
the company's existing Credit Agreement, is appropriate to provide
additional information to investors to demonstrate the company's
ability to comply with financial debt covenants. 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.
Detailed reconciliations of non-GAAP financial measures to the
most directly comparable GAAP financial measures are included with
this release.
Non-GAAP financial measures exclude, among others, the effects
of (1) amortization of purchased intangibles and other purchase
accounting entries, (2) restructuring expenses, (3) non-cash
interest expense, as well as (4) certain other items considered
unusual or non-recurring in nature.
*Adjusted EBITDA excludes the same adjustments discussed above,
as well as additional adjustments permitted under the company's
existing Credit Agreement.
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 – see financial schedule below for net
sales by medical indication. 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, successfully commercializing recently introduced products,
launching an additional 10 or so products in the second half of the
year, including Numbrino®, and achieving the financial
metrics stated in the company's guidance for fiscal 2020, 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
acquired products, and 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)
|
|
|
|
|
|
ASSETS
|
(UNAUDITED)
|
|
|
Current
assets:
|
December 31,
2019
|
|
June 30,
2019
|
Cash and cash
equivalents
|
$
119,176
|
|
$
140,249
|
Accounts receivable,
net
|
158,498
|
|
164,752
|
Inventories
|
152,090
|
|
143,971
|
Prepaid income
taxes
|
6,949
|
|
-
|
Assets held for
sale
|
3,757
|
|
9,671
|
Other current
assets
|
8,709
|
|
13,606
|
Total current
assets
|
449,179
|
|
472,249
|
Property, plant
and equipment, net
|
183,631
|
|
186,670
|
Intangible assets,
net
|
422,849
|
|
411,229
|
Operating lease
right-of-use assets
|
6,015
|
|
-
|
Deferred tax
assets
|
111,514
|
|
109,305
|
Other
assets
|
7,896
|
|
7,960
|
TOTAL
ASSETS
|
$
1,181,084
|
|
$
1,187,413
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
30,883
|
|
$
13,493
|
Accrued
expenses
|
10,750
|
|
5,805
|
Accrued payroll and
payroll-related expenses
|
12,238
|
|
19,924
|
Rebates
payable
|
48,447
|
|
46,175
|
Royalties
payable
|
20,298
|
|
16,215
|
Restructuring
liability
|
515
|
|
2,315
|
Income taxes
payable
|
-
|
|
2,198
|
Current operating
lease liabilities
|
1,848
|
|
-
|
Short-term borrowings
and current portion of long-term debt
|
101,939
|
|
66,845
|
Other current
liabilities
|
2,851
|
|
3,652
|
Total current
liabilities
|
229,769
|
|
176,622
|
Long-term debt,
net
|
606,073
|
|
662,203
|
Long-term
operating lease liabilities
|
5,358
|
|
-
|
Other
liabilities
|
14,712
|
|
14,547
|
TOTAL
LIABILITIES
|
855,912
|
|
853,372
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
Common stock
($0.001 par value, 100,000,000 shares authorized;
39,851,828 and 38,969,518 shares issued; 38,698,403 and
38,010,714 shares outstanding at
December 31, 2019 and
June 30, 2019, respectively)
|
40
|
|
39
|
Additional paid-in
capital
|
317,012
|
|
317,023
|
Retained
earnings
|
25,002
|
|
32,075
|
Accumulated other
comprehensive loss
|
(578)
|
|
(615)
|
Treasury
stock(1,153,425 and 958,804 shares at December 31, 2019 and June
30, 2019, respectively)
|
(16,304)
|
|
(14,481)
|
Total stockholders'
equity
|
325,172
|
|
334,041
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
1,181,084
|
|
$
1,187,413
|
LANNETT COMPANY,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
(UNAUDITED)
|
|
(UNAUDITED)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
136,110
|
|
$
193,718
|
|
$
263,452
|
|
$
348,772
|
Cost of
sales
|
|
86,663
|
|
115,751
|
|
164,319
|
|
203,441
|
Amortization of
intangibles
|
|
8,153
|
|
8,157
|
|
15,181
|
|
16,380
|
Gross
profit
|
|
41,294
|
|
69,810
|
|
83,952
|
|
128,951
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
6,906
|
|
9,723
|
|
15,846
|
|
19,533
|
Selling, general, and
administrative expenses
|
|
17,421
|
|
23,197
|
|
38,729
|
|
43,785
|
Restructuring
expenses
|
|
192
|
|
213
|
|
1,580
|
|
1,235
|
Asset impairment
charges
|
|
-
|
|
-
|
|
1,618
|
|
369,499
|
Total operating
expenses
|
|
24,519
|
|
33,133
|
|
57,773
|
|
434,052
|
Operating income
(loss)
|
|
16,775
|
|
36,677
|
|
26,179
|
|
(305,101)
|
Other income
(loss):
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
|
-
|
|
-
|
|
(2,145)
|
|
-
|
Investment
income
|
|
430
|
|
556
|
|
1,159
|
|
935
|
Interest
expense
|
|
(16,694)
|
|
(21,512)
|
|
(35,986)
|
|
(42,945)
|
Other
|
|
(735)
|
|
(712)
|
|
199
|
|
(1,008)
|
Total other
loss
|
|
(16,999)
|
|
(21,668)
|
|
(36,773)
|
|
(43,018)
|
Income (loss)
before income tax
|
|
(224)
|
|
15,009
|
|
(10,594)
|
|
(348,119)
|
Income tax expense
(benefit)
|
|
(5,308)
|
|
2,647
|
|
(3,521)
|
|
(72,953)
|
Net income
(loss)
|
|
$
5,084
|
|
$
12,362
|
|
$
(7,073)
|
|
$
(275,166)
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.13
|
|
$
0.33
|
|
$
(0.18)
|
|
$
(7.30)
|
Diluted (1)
|
|
$
0.13
|
|
$
0.32
|
|
$
(0.18)
|
|
$
(7.30)
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
38,605,052
|
|
37,761,176
|
|
38,457,159
|
|
37,674,200
|
Diluted (1)
|
|
40,557,503
|
|
39,112,547
|
|
38,457,159
|
|
37,674,200
|
|
(1) Effective with
the 4.5% Senior Convertible Note issued on September 27, 2019, the
diluted earnings per share was calculated based on the
"if-converted" method.
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2019
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expense
|
SG&A
expense
|
Restructuring
expenses
|
Operating
income
|
Other
income
(loss)
|
Income (loss)
before income
tax
|
Income tax
expense
(benefit)
|
Net
income
|
Diluted
earnings per
share (i)
|
|
|
|
GAAP
Reported
|
$
136,110
|
$86,663
|
$
8,153
|
$
41,294
|
30%
|
$
6,906
|
$
17,421
|
$
192
|
$
16,775
|
$
(16,999)
|
$
(224)
|
$
(5,308)
|
$
5,084
|
$
0.13
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(8,153)
|
8,153
|
|
-
|
-
|
-
|
8,153
|
-
|
8,153
|
-
|
8,153
|
|
Cody API business
(b)
|
-
|
(206)
|
-
|
206
|
|
(85)
|
(161)
|
-
|
452
|
-
|
452
|
-
|
452
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,058)
|
-
|
1,058
|
-
|
1,058
|
-
|
1,058
|
|
Decommissioning of
Philadelphia sites (d)
|
-
|
(303)
|
-
|
303
|
|
-
|
-
|
-
|
303
|
-
|
303
|
-
|
303
|
|
Restructuring
expenses (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(192)
|
192
|
-
|
192
|
-
|
192
|
|
Non-cash interest
(f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
3,563
|
3,563
|
-
|
3,563
|
|
Other (g)
|
-
|
(209)
|
-
|
209
|
|
-
|
(135)
|
-
|
344
|
630
|
974
|
-
|
974
|
|
Tax adjustments
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
8,111
|
(8,111)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
136,110
|
$
85,945
|
$
-
|
$
50,165
|
37%
|
$
6,821
|
$
16,067
|
$
-
|
$
27,277
|
$
(12,806)
|
$
14,471
|
$
2,803
|
$
11,668
|
$
0.27
|
|
|
(a)
|
To exclude
amortization of purchased intangible assets primarily related to
the acquisitions of KUPI and Silarx Pharmaceuticals,
Inc.
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
(c)
|
To exclude
depreciation on previously capitalized software integration costs
associated with the KUPI acquisition
|
(d)
|
To exclude the costs
related to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites
|
(e)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
(f)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(g)
|
To primarily exclude
a settlement related to a shareholder derivative lawsuit against
certain current and former officers and directors of the
Company
|
(h)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(i)
|
The weighted average
share number for the three months ended December 31, 2019 is
40,557,503 for GAAP and 46,198,445 for the non-GAAP earnings per
share calculations. Effective with the 4.5% Senior Convertible Note
issued on September 27, 2019, the diluted earnings per share was
calculated based on the "if-converted" method.
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2019
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expense
|
SG&A
expense
|
Restructuring
expenses
|
Asset
impairment
charges
|
Operating
income
|
Other
income
(loss)
|
Income (loss)
before income
tax
|
Income tax
expense
(benefit)
|
Net income
(loss)
|
Diluted
earnings
(loss) per
share (k)
|
|
|
|
GAAP
Reported
|
$
263,452
|
$
164,319
|
$
15,181
|
$
83,952
|
32%
|
$
15,846
|
$
38,729
|
$
1,580
|
1,618
|
$
26,179
|
$
(36,773)
|
$
(10,594)
|
$
(3,521)
|
$
(7,073)
|
$
(0.18)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(15,181)
|
15,181
|
|
-
|
-
|
-
|
-
|
15,181
|
-
|
15,181
|
-
|
15,181
|
|
Cody API business
(b)
|
-
|
(1,928)
|
-
|
1,928
|
|
(505)
|
(375)
|
-
|
-
|
2,808
|
-
|
2,808
|
-
|
2,808
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(2,117)
|
-
|
-
|
2,117
|
-
|
2,117
|
-
|
2,117
|
|
Decommissioning of
Philadelphia sites (d)
|
-
|
(1,292)
|
-
|
1,292
|
|
-
|
-
|
-
|
-
|
1,292
|
-
|
1,292
|
-
|
1,292
|
|
Restructuring
expenses (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(1,580)
|
-
|
1,580
|
-
|
1,580
|
-
|
1,580
|
|
Asset impairment
charges (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(1,618)
|
1,618
|
-
|
1,618
|
-
|
1,618
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
7,571
|
7,571
|
-
|
7,571
|
|
Loss on
extinguishment of debt (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
2,145
|
2,145
|
-
|
2,145
|
|
Other (i)
|
-
|
(417)
|
-
|
417
|
|
-
|
(2,224)
|
-
|
-
|
2,641
|
(336)
|
2,305
|
-
|
2,305
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
9,110
|
(9,110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
263,452
|
$
160,682
|
$
-
|
$ 102,770
|
39%
|
$
15,341
|
$
34,013
|
$
-
|
$
-
|
$
53,416
|
$
(27,393)
|
$
26,023
|
$
5,589
|
$
20,434
|
$
0.49
|
|
|
(a)
|
To exclude
amortization of purchased intangible assets primarily related to
the acquisitions of KUPI and Silarx Pharmaceuticals,
Inc.
|
(b)
|
To exclude the
operating results of the ceased Cody API business
|
(c)
|
To exclude
depreciation on previously capitalized software integration costs
associated with the KUPI acquisition
|
(d)
|
To exclude the costs
related to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites
|
(e)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
(f)
|
To exclude impairment
charges primarily associated with an operating lease right-of-use
asset
|
(g)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(h)
|
To exclude the loss
on extinguishment of debt primarily related to the partial
repayment of the outstanding Term Loan A balance
|
(i)
|
To primarily exclude
accrued separation costs related to the Company's former Chief
Financial Officer as well as gains on sales of assets previously
held for sale, partially offset by legal
settlements
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(k)
|
The weighted average
share number for the six months ended December 31, 2019 is
38,457,159 for GAAP and 43,723,412 for the non-GAAP earnings (loss)
per share calculations. Effective with the 4.5% Senior Convertible
Note issued on September 27, 2019, the diluted earnings per share
was calculated based on the "if-converted" method.
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2018
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Operating
income
|
Other
income
(loss)
|
Income
before
income tax
|
Income tax
expense
|
Net
income
|
Diluted
earnings
per share (k)
|
|
|
|
GAAP
Reported
|
$193,718
|
$
115,751
|
$
8,157
|
$
69,810
|
36%
|
$
9,723
|
$
23,197
|
$
213
|
$
36,677
|
$
(21,668)
|
$
15,009
|
$
2,647
|
$
12,362
|
$
0.32
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of fixed
assets step-up (a)
|
-
|
(1,124)
|
-
|
1,124
|
|
-
|
-
|
-
|
1,124
|
-
|
1,124
|
-
|
1,124
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(8,157)
|
8,157
|
|
-
|
-
|
-
|
8,157
|
-
|
8,157
|
-
|
8,157
|
|
Cody API business
Held for Sale (c)
|
-
|
(3,486)
|
-
|
3,486
|
|
(862)
|
34
|
-
|
4,314
|
-
|
4,314
|
-
|
4,314
|
|
Depreciation on
capitalized software costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(1,058)
|
-
|
1,058
|
-
|
1,058
|
-
|
1,058
|
|
Legal and financial
advisory costs (e)
|
-
|
-
|
-
|
-
|
|
-
|
(2,430)
|
-
|
2,430
|
-
|
2,430
|
-
|
2,430
|
|
Decommissioning of
Philadelphia sites (f)
|
-
|
(2,265)
|
-
|
2,265
|
|
-
|
-
|
-
|
2,265
|
583
|
2,848
|
-
|
2,848
|
|
Restructuring
expenses (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(213)
|
213
|
-
|
213
|
-
|
213
|
|
Non-cash interest
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
4,396
|
4,396
|
-
|
4,396
|
|
Other (i)
|
-
|
(1,126)
|
-
|
1,126
|
|
(210)
|
(2,318)
|
-
|
3,654
|
285
|
3,939
|
-
|
3,939
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
7,199
|
(7,199)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
193,718
|
$
107,750
|
$
-
|
$
85,968
|
44%
|
$
8,651
|
$
17,425
|
$
-
|
$
59,892
|
$
(16,404)
|
$
43,488
|
$
9,846
|
$
33,642
|
$
0.86
|
|
|
(a)
|
To exclude
depreciation of a fair value step-up in property, plant and
equipment related to the acquisition of Kremers Urban
Pharmaceuticals, Inc. ("KUPI")
|
(b)
|
To exclude
amortization of purchased intangible assets primarily related to
the acquisitions of KUPI and Silarx Pharmaceuticals,
Inc.
|
(c)
|
To exclude the
operating results of the Cody API business Held for Sale which was
classified as Held for Sale as of September 30,
2018
|
(d)
|
To exclude
depreciation on previously capitalized software integration costs
associated with the KUPI acquisition
|
(e)
|
To exclude legal and
financial advisory costs primarily related to exploring and
evaluating debt and capital structure alternatives, including the
December 2018 amendment to our Credit Agreement
|
(f)
|
To exclude the costs
associated with the decommissioning and shutdown of the
Philadelphia manufacturing and distribution sites
|
(g)
|
To exclude expenses
associated with the 2016 Restructuring Plan as well as the Cody
Restructuring Plan
|
(h)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(i)
|
To primarily exclude
separation costs related to the Company's cost reduction plan, as
well as a special recognition incentive payment
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(k)
|
The weighted average
share number for the three months ended December 31, 2018 is
39,112,547 for both the GAAP and the non-GAAP earnings per share
calculations
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
December 31, 2018
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Asset
impairment
charges
|
Operating
income
(loss)
|
Other
income
(loss)
|
Income
before
income tax
(loss)
|
Income tax
expense
(benefit)
|
Net income
(loss)
|
Diluted
earnings
(loss) per
share (l)
|
|
|
|
GAAP
Reported
|
$
348,772
|
$
203,441
|
$
16,380
|
$
128,951
|
37%
|
$
19,533
|
$43,785
|
$
1,235
|
$
369,499
|
$
(305,101)
|
$
(43,018)
|
$(348,119)
|
$
(72,953)
|
$
(275,166)
|
$
(7.30)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of fixed
assets step-up (a)
|
-
|
(2,459)
|
-
|
2,459
|
|
-
|
-
|
-
|
-
|
2,459
|
-
|
2,459
|
-
|
2,459
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(16,380)
|
16,380
|
|
-
|
-
|
-
|
-
|
16,380
|
-
|
16,380
|
-
|
16,380
|
|
Cody API business
Held for Sale (c)
|
-
|
(3,486)
|
-
|
3,486
|
|
(862)
|
34
|
-
|
-
|
4,314
|
-
|
4,314
|
-
|
4,314
|
|
Depreciation on
capitalized software costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(2,116)
|
-
|
-
|
2,116
|
-
|
2,116
|
-
|
2,116
|
|
Legal and financial
advisory costs (e)
|
-
|
-
|
-
|
-
|
|
-
|
(2,430)
|
-
|
-
|
2,430
|
-
|
2,430
|
-
|
2,430
|
|
Decommissioning of
Philadelphia sites (f)
|
-
|
(2,265)
|
-
|
2,265
|
|
-
|
-
|
-
|
-
|
2,265
|
583
|
2,848
|
-
|
2,848
|
|
Restructuring
expenses (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(1,235)
|
-
|
1,235
|
-
|
1,235
|
-
|
1,235
|
|
Asset impairment
charges (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(369,499)
|
369,499
|
|
369,499
|
-
|
369,499
|
|
Non-cash interest
(i)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
8,934
|
8,934
|
-
|
8,934
|
|
Other (j)
|
-
|
(1,126)
|
-
|
1,126
|
|
(210)
|
(2,600)
|
-
|
-
|
3,936
|
285
|
4,221
|
-
|
4,221
|
|
Tax adjustments
(k)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
88,703
|
(88,703)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
348,772
|
$
194,105
|
$
-
|
$
154,667
|
44%
|
$
18,461
|
$
36,673
|
$
-
|
$
-
|
$
99,533
|
$
(33,216)
|
$
66,317
|
$
15,750
|
$
50,567
|
$
1.30
|
|
|
(a)
|
To exclude
depreciation of a fair value step-up in property, plant and
equipment related to the acquisition of Kremers Urban
Pharmaceuticals, Inc. ("KUPI")
|
(b)
|
To exclude
amortization of purchased intangible assets primarily related to
the acquisitions of KUPI and Silarx Pharmaceuticals,
Inc.
|
(c)
|
To exclude the
operating results of the Cody API business Held for Sale which was
classified as Held for Sale as of September 30,
2018
|
(d)
|
To exclude
depreciation on previously capitalized software integration costs
associated with the KUPI acquisition
|
(e)
|
To exclude legal and
financial advisory costs primarily related to exploring and
evaluating debt and capital structure alternatives, including the
December 2018 amendment to our Credit Agreement
|
(f)
|
To exclude the costs
associated with the decommissioning and shutdown of the
Philadelphia manufacturing and distribution sites
|
(g)
|
To exclude expenses
associated with the 2016 Restructuring Plan as well as the Cody
Restructuring Plan
|
(h)
|
To exclude asset
impairment charges related to goodwill and other long-lived
assets
|
(i)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(j)
|
To primarily exclude
separation costs related to the Company's cost reduction plan, as
well as a special recognition incentive payment
|
(k)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(l)
|
The weighted average
share number for the six months ended December 31, 2018 is
37,674,200 for GAAP and 38,937,705 for the non-GAAP earnings (loss)
per share calculations
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA (UNAUDITED)
|
($ in
thousands)
|
|
|
|
|
|
Three months
ended
|
|
|
December 31,
2019
|
|
|
|
Net
income
|
|
$
5,084
|
|
|
|
Interest
expense
|
|
16,694
|
Depreciation and
amortization
|
|
14,089
|
Income tax
expense
|
|
(5,308)
|
EBITDA
|
|
30,559
|
|
|
|
Share-based
compensation
|
|
2,007
|
Inventory
write-down
|
|
2,544
|
Investment
income
|
|
(430)
|
Other non-operating
loss
|
|
735
|
Restructuring
expenses
|
|
192
|
Restructuring
payments
|
|
(844)
|
Cody API business
(a)
|
|
452
|
Decommissioning of
Philadelphia sites (b)
|
|
303
|
Other
|
|
269
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
35,787
|
|
|
(a)
|
To exclude the
operating results of the ceased Cody API business
|
(b)
|
To exclude the costs
related to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
|
($ in
millions)
|
|
|
|
|
|
Fiscal Year 2020
Guidance
|
|
|
|
|
|
|
Non-GAAP
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
Net
sales
|
|
$530 -
$550
|
|
-
|
|
$530 -
$550
|
Gross margin
percentage
|
|
approx. 32.5% to
34.5%
|
|
6.5%
|
(a)
|
approx. 39% to
41%
|
R&D
expense
|
|
$34 -
$36
|
|
-
|
|
$34 -
$36
|
SG&A
expense
|
|
$69 -
$72
|
|
($6)
|
(b)
|
$63 -
$66
|
Restructuring
expense
|
|
$2 -
$3
|
|
($2 -
$3)
|
(c)
|
-
|
Asset impairment
charges
|
|
$2
|
|
($2)
|
(d)
|
-
|
Interest and
other
|
|
$67 -
$69
|
|
($16)
|
(e)
|
$51 -
$53
|
Effective tax
rate
|
|
approx. 16% to
17%
|
|
5%
|
(f)
|
approx. 21% to
22%
|
Adjusted
EBITDA
|
|
N/A
|
|
N/A
|
|
$145 -
$160
|
Capital
expenditures
|
|
$20 -
$25
|
|
-
|
|
$20 -
$25
|
|
(a) The adjustment
primarily reflects amortization of purchased intangible assets
related to the acquisition of Kremers Urban Pharmaceuticals, Inc.
("KUPI")
|
(b) The adjustment
primarily excludes depreciation on previously capitalized software
integration costs associated with the KUPI acquisition
|
(c) To exclude
expenses associated with the Cody API Restructuring Plan
|
(d) This adjustment
primarily excludes an impairment charge associated with an
operating lease right-of-use asset
|
(e) The adjustment
primarily reflects non-cash interest expense associated with debt
issuance costs
|
(f) The adjustment
reflects the impact of tax credits and deductions relative to
expected annual pre-tax income
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)
|
($ in
millions)
|
|
|
|
|
|
Fiscal Year 2020
Guidance
|
|
Low
|
|
High
|
|
|
|
|
Net income
(loss)
|
$
(2.0)
|
|
$
6.0
|
|
|
|
|
Interest
expense
|
67.0
|
|
69.0
|
Depreciation and
amortization
|
56.0
|
|
57.0
|
Income
taxes
|
-
|
|
2.0
|
EBITDA
|
121.0
|
|
134.0
|
|
|
|
|
Share-based
compensation
|
10.0
|
|
11.0
|
Inventory
write-down
|
9.0
|
|
10.0
|
Separation
costs
|
1.0
|
|
1.0
|
Cody API
business
|
3.0
|
|
3.0
|
Impairment
|
2.0
|
|
2.0
|
Restructuring
expenses
|
2.0
|
|
3.0
|
Restructuring
payments
|
(3.0)
|
|
(4.0)
|
Adjusted EBITDA
(Non-GAAP)
|
$ 145.0
|
|
$ 160.0
|
LANNETT COMPANY,
INC.
|
NET SALES BY
MEDICAL INDICATION
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
($ in
thousands)
|
December
31,
|
|
December
31,
|
Medical
Indication
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Analgesic
|
$
2,111
|
|
$
2,547
|
|
$
3,995
|
|
$
4,376
|
Anti-Psychosis
|
22,697
|
|
14,036
|
|
50,730
|
|
24,925
|
Cardiovascular
|
23,972
|
|
25,680
|
|
45,579
|
|
47,450
|
Central Nervous
System
|
19,331
|
|
7,373
|
|
38,588
|
|
21,659
|
Endocrinology
|
-
|
|
88,477
|
|
-
|
|
142,355
|
Gastrointestinal
|
18,313
|
|
12,943
|
|
35,275
|
|
30,537
|
Infectious
Disease
|
18,078
|
|
4,616
|
|
29,973
|
|
9,096
|
Migraine
|
10,878
|
|
12,551
|
|
20,021
|
|
22,288
|
Respiratory/Allergy/Cough/Cold
|
3,075
|
|
3,388
|
|
5,781
|
|
6,972
|
Urinary
|
1,233
|
|
1,596
|
|
1,668
|
|
3,137
|
Other
|
9,934
|
|
12,606
|
|
19,796
|
|
23,411
|
Contract
manufacturing revenue
|
6,488
|
|
7,905
|
|
12,046
|
|
12,566
|
Total
net sales
|
$ 136,110
|
|
$ 193,718
|
|
$ 263,452
|
|
$ 348,772
|
Contact:
|
Robert
Jaffe
|
|
Robert Jaffe Co.,
LLC
|
|
(424)
288-4098
|
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SOURCE Lannett Company, Inc.