Lannett Reports Strong Fiscal 2015 Financial Results

--Company Records Net Sales of $99 Million, EPS of $0.91; Provides Guidance for Fiscal 2016--

PHILADELPHIA, Aug. 25, 2015 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2015 fourth quarter and full year ended June 30, 2015.  On June 1, 2015, the company completed the acquisition of Silarx Pharmaceuticals, Inc.  The financial results presented below include approximately one month of operations for Silarx, which were not material.

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For the fiscal 2015 fourth quarter, net sales rose 23% to $99.3 million from $80.6 million in last year's fourth quarter.  Gross profit increased 29% to $72.0 million, or 72% of net sales, from $55.9 million, or 69% of net sales.  Research and development (R&D) expenses increased to $7.0 million from $6.6 million for the fiscal 2014 fourth quarter.  Selling, general and administrative (SG&A) expenses were $13.9 million, which included $1.6 million of acquisition-related expenses, compared with $12.0 million.  Operating income grew 37% to $51.0 million from $37.4 million.  Net income attributable to Lannett Company increased 44% to $33.9 million, or $0.91 per diluted share, from $23.5 million, or $0.64 per diluted share, for the prior year fourth quarter. 

"Our fourth quarter performance was in line with expectations and reflects higher sales and gross margin across a number of product categories," said Arthur Bedrosian, chief executive officer of Lannett.  "We have now reported fourteen consecutive quarters in which net sales and adjusted EPS exceeded the comparable prior-year period.

"Also during the fourth quarter, we completed the Silarx acquisition, which expands and diversifies our product pipeline, adds greater capacity to manufacture liquid pharmaceuticals and increases our current research and development capabilities.  I am pleased to report that we expect the acquisition to be immediately accretive to our fiscal 2016 financial results and the integration of Silarx's operations is proceeding smoothly and is nearly complete."

For the fiscal 2015 full year, net sales rose 49% to $406.8 million from $273.8 million in the prior year.  Gross profit was $306.4 million, or 75% of net sales.  This compares with gross profit for fiscal 2014 of $154.4 million, or 56% 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 $174.5 million, or 64% of net sales.  R&D expenses increased to $30.3 million from $27.7 million.  SG&A expenses were $49.5 million, compared with $38.6 million.  Included in SG&A expenses for fiscal 2015 were $4.3 million in acquisition-related expenses.  Operating income was $226.5 million compared with $88.1 million for the prior year.  Excluding the JSP contract renewal charge, operating income for the prior-year period was $108.2 million.  Net income attributable to Lannett Company was $149.9 million, or $4.04 per diluted share, compared with $57.1 million, or $1.62 per diluted share, for fiscal 2014.  Adjusted net income, which excludes the impact of the JSP contract renewal charge equal to $12.6 million after-tax, was $69.7 million, or $1.98 per diluted share, in fiscal 2014.

Guidance for Fiscal 2016

  • Based on Lannett's current outlook, the company provided financial guidance for the fiscal 2016 full year as follows:
  • Net sales in the range of $425 million to $435 million;
  • Gross margin as a percentage of net sales of approximately 71% to 73%;
  • R&D expense in the range of $33 million to $35 million;
  • SG&A expense ranging from $57 million to $59 million, which includes approximately $5.0 million in acquisition-related expenses;
  • The full year effective tax rate to be in the range of 34% to 35%; and
  • Capital expenditures in fiscal 2016 in the range of $60 million to $70 million, which includes $30 million to continue the partial fit-out of company-owned buildings.

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 fourth quarter and full year ended June 30, 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 40464835.  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 2016, 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 TABLES FOLLOW

 




LANNETT COMPANY, INC.







CONSOLIDATED BALANCE SHEETS







(In thousands, except share and per share data)

(Unaudited)







June 30, 2015


June 30, 2014








ASSETS






Current assets:





Cash and cash equivalents

$               200,340


$          105,587

Investment securities

13,467


40,693

Accounts receivable, net

91,103


61,325

Inventories, net


46,191


44,844

Deferred tax assets


16,270


11,265

Other current assets


3,175


1,833

Total current assets

370,546


265,547

Property, plant and equipment, net

94,556


61,704

Intangible assets, net


29,090


927

Goodwill



141


-

Deferred tax assets


12,495


14,234

Other assets


1,938


361

TOTAL ASSETS


$               508,766


$          342,773















LIABILITIES





Current liabilities:





Accounts payable


$                  19,195


$            20,982

Accrued expenses


4,928


3,901

Accrued payroll and payroll-related expenses

10,397


12,860

Rebates payable


7,553


4,558

Income taxes payable

1,918


4,569

Current portion of long-term debt

135


129

Total current liabilities

44,126


46,999

Long-term debt, less current portion

874


1,009

TOTAL LIABILITIES


45,000


48,008

Commitments and Contingencies











STOCKHOLDERS' EQUITY




Common stock ($0.001 par value, 100,000,000 shares authorized; 36,783,381




 and 36,088,272 shares issued; 36,264,585 and 35,571,280 shares outstanding at




June 30, 2015 and 2014, respectively)

37


36

Additional paid-in capital

236,178


216,793

Retained earnings


233,573


83,654

Accumulated other comprehensive loss

(295)


(54)

Treasury stock (518,796 and 516,992 shares at June 30, 2015 and 2014, respectively)

(6,080)


(5,959)

Total Lannett Company, Inc. stockholders' equity

463,413


294,470

Noncontrolling interest

353


295

Total stockholders' equity

463,766


294,765

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$               508,766


$          342,773

 

LANNETT COMPANY, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)





(In thousands, except share and per share data)
















Three months ended 


Fiscal Year ended 



June 30,


June 30,



2015


2014


2015


2014










Net sales


$         99,276


$           80,619


$        406,837


$         273,771

Cost of sales 


27,326


24,691


100,481


99,263

JSP contract renewal cost


-


-


-


20,100

Gross profit


71,950


55,928


306,356


154,408

Operating expenses:









Research and development


6,984


6,600


30,342


27,713

Selling, general, and administrative


13,948


11,977


49,527


38,606

Total operating expenses


20,932


18,577


79,869


66,319

Operating income


51,018


37,351


226,487


88,089

Other income (loss):









Foreign currency gain (loss)


-


-


(21)


1

Gain (loss) on sale of assets


18


-


33


(142)

Gain on investment securities


113


142


705


1,907

Interest and dividend income


122


91


425


295

Interest expense


(88)


(13)


(207)


(130)

Total other income


165


220


935


1,931

Income before income taxes


51,183


37,571


227,422


90,020

Income tax expense


17,222


14,019


77,430


32,857

Net income


33,961


23,552


149,992


57,163

Less: Net income attributable to noncontrolling interest


18


17


73


62

Net income attributable to Lannett Company, Inc.


$         33,943


$           23,535


$        149,919


$           57,101










Earnings per common share attributable to Lannett Company, Inc.









     Basic


$              0.94


$               0.66


$               4.18


$               1.70

     Diluted


$              0.91


$               0.64


$               4.04


$               1.62










Weighted average common shares outstanding:









     Basic


36,164,719


35,413,363


35,827,167


33,663,589

     Diluted


37,321,633


36,913,944


37,127,117


35,193,376

 

Contact:

Robert Jaffe


Robert Jaffe Co., LLC


(424) 288-4098

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SOURCE Lannett Company, Inc.


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