Lannett Reports Strong Fiscal 2015 Third-quarter Financial Results

--Company Records Net Sales of $99 Million, EPS of $0.97; Raises Guidance for Fiscal 2015--

PHILADELPHIA, May 6, 2015 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2015 third quarter ended March 31, 2015. 

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For the fiscal 2015 third quarter, net sales rose 24% to $99.4 million from $80.0 million in last year's third quarter.  Gross profit increased 35% to $75.6 million, or 76% of net sales, from $56.1 million, or 70% of net sales.  Research and development (R&D) expenses decreased to $9.2 million from $10.6 million for the fiscal 2014 third quarter.  Selling, general and administrative (SG&A) expenses were $12.2 million, compared with $9.6 million.  Operating income grew 51% to $54.3 million from $36.0 million.  Net income attributable to Lannett Company increased 58% to $36.2 million, or $0.97 per diluted share, from $23.0 million, or $0.63 per diluted share, for the prior year third quarter. 

"We have now reported thirteen consecutive quarters in which net sales and adjusted EPS exceeded the comparable prior-year period," said Arthur Bedrosian, chief executive officer of Lannett.  "Our third quarter performance reflects higher sales and gross margin across a number of product categories, partially offset by lower sales of our cardiovascular products, which as expected faced new entrants in the market.  With our strong third quarter and outlook for a solid fourth quarter, we have raised our fiscal 2015 full-year guidance."

For the first nine months of fiscal 2015, net sales rose 59% to $307.6 million from $193.2 million in the comparable prior-year period.  Gross profit was $234.4 million, or 76% of net sales.  This compares with gross profit for the first nine months of fiscal 2014 of $98.5 million, or 51% of net sales, which included a non-recurring pre-tax charge of $20.1 million related to the contract extension with Jerome Stevens Pharmaceuticals, Inc. (JSP).  Excluding the JSP contract renewal charge, gross profit was $118.6 million, or 61% of net sales.  R&D expenses increased to $23.4 million from $21.1 million.  SG&A expenses were $35.6 million, compared with $26.6 million.  Operating income was $175.5 million compared with $50.7 million for the first nine months of the prior year.  Excluding the JSP contract renewal charge, operating income for the prior-year period was $70.8 million.  Net income attributable to Lannett Company was $116.0 million, or $3.13 per diluted share, compared with $33.6 million, or $0.97 per diluted share, for the first nine months of fiscal 2014.  Adjusted net income, which excludes the impact of the JSP contract renewal charge equal to $12.6 million after-tax, was $46.2 million, or $1.34 per diluted share, in the first nine months of fiscal 2014.

Guidance for Fiscal 2015

Based on Lannett's current outlook, the company raised its financial guidance for the fiscal 2015 full year as follows:

  • Net sales in the range of $403 million to $408 million, up from previous guidance of $395 million to $405 million;
  • Gross margin as a percentage of net sales of approximately 75% to 76%, up from 74% to 75%;
  • R&D expense in the range of $30 million to $31 million, up from previous guidance of $29 million to $31 million;
  • SG&A expense ranging from $51 million to $52 million, up from $47 million to $49 million;
  • The full year effective tax rate to be in the range of 34% to 35%, unchanged from previous guidance; and
  • Capital expenditures in fiscal 2015 in the range of $30 million to $35 million, which includes $4 million to continue the partial fit-out of two buildings recently acquired by the company, revised from previous guidance of $40 million to $50 million.

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 2015 third quarter ended March 31, 2015.  The conference call will be available to interested parties by dialing 877-261-8992 from the U.S. or Canada, or 847-619-6548 from international locations, passcode 39586832.  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.

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, achieving the financial metrics stated in the company's guidance for fiscal 2015, 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, 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 TABLES FOLLOW

 

LANNETT COMPANY, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)





(In thousands, except share and per share data)
















Three months ended 


Nine months ended 



March 31,


March 31,



2015


2014


2015


2014










Net sales


$         99,352


$           79,997


$       307,561


$         193,152

Cost of sales 


23,714


23,865


73,155


74,572

JSP contract renewal cost


-


-


-


20,100

Gross profit


75,638


56,132


234,406


98,480

Operating expenses:









Research and development


9,159


10,583


23,358


21,113

Selling, general, and administrative


12,204


9,560


35,579


26,629

Total operating expenses


21,363


20,143


58,937


47,742

Operating income


54,275


35,989


175,469


50,738

Other income (loss):









Foreign currency gain (loss)


(21)


1


(21)


1

Gain (loss) on sale of assets


(5)


-


15


(55)

Gain (loss) on investment securities


(103)


200


592


1,765

Interest and dividend income


95


109


303


204

Interest expense


(8)


(13)


(119)


(117)

Other


-


-


-


(87)

Total other income (loss)


(42)


297


770


1,711

Income before income tax


54,233


36,286


176,239


52,449

Income tax expense


17,973


13,280


60,208


18,838

Net income


36,260


23,006


116,031


33,611

Less: Net income attributable to noncontrolling interest


27


11


55


45

Net income attributable to Lannett Company, Inc.


$         36,233


$           22,995


$       115,976


$           33,566










Earnings per common share attributable to Lannett Company, Inc.









     Basic


$              1.01


$               0.66


$              3.25


$               1.01

     Diluted


$              0.97


$               0.63


$              3.13


$               0.97










Weighted average common shares outstanding:









     Basic


35,880,954


35,025,968


35,715,061


33,082,460

     Diluted


37,210,138


36,769,593


37,082,138


34,586,007

 




LANNETT COMPANY, INC.







CONSOLIDATED BALANCE SHEETS







(In thousands, except share and per share data)

(Unaudited)







March 31, 2015


June 30, 2014








ASSETS






Current assets:





Cash and cash equivalents

$              208,772


$           105,587

Investment securities

16,614


40,693

Accounts receivable, net

79,715


61,325

Inventories, net


42,474


44,844

Prepaid income taxes


4,604


-

Deferred tax assets


11,894


11,265

Other current assets


3,157


1,833

Total current assets

367,230


265,547

Property, plant and equipment, net

80,265


61,704

Intangible assets, net


1,166


927

Deferred tax assets


12,777


14,234

Other assets


1,638


361

TOTAL ASSETS


$              463,076


$           342,773















LIABILITIES





Current liabilities:





Accounts payable


$                 16,994


$             20,982

Accrued expenses


3,843


3,901

Accrued payroll and payroll-related expenses

8,062


12,860

Rebates payable


5,889


4,558

Income taxes payable

-


4,569

Current portion of long-term debt

134


129

Total current liabilities

34,922


46,999

Long-term debt, less current portion

908


1,009

TOTAL LIABILITIES


35,830


48,008

Commitments and Contingencies











STOCKHOLDERS' EQUITY




Common stock($0.001 par value, 100,000,000 shares authorized; 36,651,983




 and 36,088,272 shares issued; 36,134,991, and 35,571,280 shares outstanding at




March 31, 2015 and June 30, 2014, respectively)

37


36

Additional paid-in capital

233,488


216,793

Retained earnings


199,630


83,654

Accumulated other comprehensive loss

(285)


(54)

Treasury stock(516,992 shares at March 31, 2015 and June 30, 2014)

(5,959)


(5,959)

Total Lannett Company, Inc. stockholders' equity

426,911


294,470

Noncontrolling interest

335


295

Total stockholders' equity

427,246


294,765

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$              463,076


$           342,773

 

Contact:

Robert Jaffe


Robert Jaffe Co., LLC


(424) 288-4098

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

 

SOURCE Lannett Company, Inc.


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