Lannett Reports Fiscal 2017 Fourth-Quarter And Full-Year Financial Results, Provides Guidance For Fiscal 2018
PHILADELPHIA, Aug. 23, 2017 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2017 fourth quarter and full year ended June 30, 2017.
"In the coming year, we expect a solid increase in net revenues compared with fiscal 2017 and, while much of our industry is facing pricing pressures, we expect our adjusted gross margins to continue to be above 50%, which exceeds the average of our peer companies," said Arthur Bedrosian, chief executive officer of Lannett. "For the fourth quarter and full year, our full financial results were in-line with the preliminary results issued two weeks ago. As we previously reported, our fourth quarter was impacted by unanticipated items, which totaled approximately $0.24 per diluted share, as well as pricing and volume pressures. However, planned product launches, combined with a number of initiatives we have put in place, make us confident in our near- and longer term growth."
For the fiscal 2017 fourth quarter, total net sales were $139.1 million compared with $168.9 million for the fourth quarter of fiscal 2016. Gross profit was $58.9 million, or 42% of net sales, compared with $79.9 million, or 47% of net sales. Research and development (R&D) expenses decreased to $11.4 million from $13.0 million for the fiscal 2016 fourth quarter. Selling, general and administrative (SG&A) expenses decreased to $16.5 million from $22.0 million. Acquisition and integration-related expenses were $0.3 million compared with $4.2 million in the prior-year fourth quarter. Restructuring expenses were $1.8 million compared with $2.4 million. In last year's fourth quarter, the company recorded an impairment charge of $8.0 million related to acquired intangible assets. Operating income was $28.8 million compared with $30.4 million. Interest expense declined to $20.7 million from $27.1 million for the fourth quarter of fiscal 2016. Income tax expense was $3.1 million versus income tax benefit of $2.9 million in the prior-year period. Net income attributable to Lannett was $5.7 million, or $0.15 per diluted share, compared with $3.6 million, or $0.10 per diluted share, for the fiscal 2016 fourth quarter.
For the fiscal 2017 fourth quarter reported on a Non-GAAP basis, adjusted total net sales were $139.1 million compared with $168.9 million for the fourth quarter of fiscal 2016. Adjusted gross profit was $68.0 million, or 49% of adjusted total net sales, compared with $91.9 million, or 54% of adjusted total net sales, for the prior year fourth quarter. Adjusted R&D expenses were $11.4 million compared with $13.1 million. Adjusted SG&A expenses declined to $16.2 million from $17.8 million. Adjusted operating income was $40.4 million compared with $61.0 million for the prior-year fourth quarter. Adjusted net income attributable to Lannett was $15.1 million, or $0.40 per diluted share, compared with $27.5 million, or $0.73 per diluted share, for the fiscal 2016 fourth quarter.
For the fiscal 2017 full year, net sales increased to $637.3 million from $566.1 million for fiscal 2016. During the third quarter of fiscal 2016, the company recorded a reduction to net sales of $23.6 million related to a pre-tax, one-time, settlement agreement with one of its customers. In the fiscal 2017 third quarter, the company recorded a $4.0 million adjustment to the settlement agreement. As a result, total net sales were $633.3 million compared with $542.5 million for fiscal 2016. Gross profit increased to $301.2 million from $286.5 million. Gross profit as a percentage of total net sales declined to 48% compared with 53% for fiscal 2016, primarily due to the inclusion of Kremer Urban Pharmaceutical's (KU) lower-margin business and purchase accounting related expenses. R&D expenses were $42.1 million compared with $45.1 million for fiscal 2016. SG&A expenses were $73.5 million compared with $68.3 million. Acquisition and integration-related expenses were $4.0 million compared with $27.2 million in the prior year. Restructuring expenses were $7.2 million for both fiscal 2017 and fiscal 2016. The company recorded impairment charges related to acquired intangible assets totaling $88.1 million in fiscal 2017 and $8.0 million in fiscal 2016. Operating income was $86.4 million compared with $130.8 million. Interest expense was $89.4 million compared with $65.9 million for fiscal 2016. Income tax expense was $1.1 million compared with $17.3 million. Net loss attributable to Lannett was $0.6 million, or $0.02 per share, versus net income attributable to Lannett of $44.8 million, or $1.20 per diluted share, for fiscal 2016.
For the fiscal 2017 full year reported on a Non-GAAP basis, adjusted total net sales increased to $637.3 million from $566.1 million for fiscal 2016. Adjusted gross profit was $343.7 million, or 54% of adjusted total net sales, compared with $348.1 million, or 61% of adjusted total net sales, for fiscal 2016. Adjusted R&D expenses were $42.1 million compared with $45.1 million. Adjusted SG&A expenses were $71.3 million compared with $59.0 million. Adjusted operating income was $230.3 million compared with $244.0 million for the prior year. Adjusted net income attributable to Lannett was $107.9 million, or $2.86 per diluted share, compared with $127.8 million, or $3.42 per diluted share, for fiscal 2016.
Guidance for Fiscal 2018
Based on its current outlook the company provided financial guidance for the 2018 fiscal year as follows:
|
GAAP |
Adjusted | |
|
Net sales |
$655 million to $665 million |
$655 million to $665 million |
|
Gross margin % |
46% to 47% |
51% to 52% |
|
R&D expense |
$46 million to $48 million |
$46 million to $48 million |
|
SG&A expense |
$75 million to $77 million |
$73 million to $75 million |
|
Acquisition and integration related, and restructuring expense |
$4 million to $5 million |
$- |
|
Interest expense |
$88 million to $89 million |
$67 million to $68 million |
|
Effective tax rate |
Approximately 35% |
Approximately 35% |
|
Capital expenditures |
$65 million to $75 million |
$65 million to $75 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 its fiscal 2017 fourth quarter and full year ended June 30, 2017. 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 45419254. 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, 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. 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) acquisition and integration-related expenses, (3) impairment charges, (4) non-cash interest expense, as well as (5) certain other items considered unusual or non-recurring in nature.
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, realizing the expected benefits of growth initiatives, receiving product approvals, successfully commercializing product approvals and achieving the financial metrics stated in the company's guidance for fiscal 2018, 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.
|
Contact: |
Robert Jaffe |
|
Robert Jaffe Co., LLC | |
|
(424) 288-4098 |
FINANCIAL SCHEDULES FOLLOW
|
LANNETT COMPANY, INC. | ||||||
|
CONSOLIDATED BALANCE SHEETS | ||||||
|
(In thousands, except share and per share data) | ||||||
|
(Unaudited) |
||||||
|
June 30, 2017 |
June 30, 2016 | |||||
|
ASSETS |
||||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ 117,737 |
$ 224,769 | ||||
|
Investment securities |
27,091 |
14,094 | ||||
|
Accounts receivable, net |
204,066 |
211,722 | ||||
|
Inventories |
122,604 |
114,904 | ||||
|
Prepaid income taxes |
16,703 |
- | ||||
|
Deferred tax assets |
28,905 |
40,892 | ||||
|
Other current assets |
6,592 |
6,434 | ||||
|
Total current assets |
523,698 |
612,815 | ||||
|
Property, plant and equipment, net |
243,148 |
216,638 | ||||
|
Intangible assets, net |
453,861 |
575,503 | ||||
|
Goodwill |
339,566 |
333,611 | ||||
|
Deferred tax assets |
23,848 |
11,556 | ||||
|
Other assets |
19,191 |
13,895 | ||||
|
TOTAL ASSETS |
$ 1,603,312 |
$ 1,764,018 | ||||
|
LIABILITIES |
||||||
|
Current liabilities: |
||||||
|
Accounts payable |
$ 44,720 |
$ 34,720 | ||||
|
Accrued expenses |
12,499 |
9,247 | ||||
|
Accrued payroll and payroll-related expenses |
4,833 |
10,572 | ||||
|
Rebates payable |
44,593 |
21,894 | ||||
|
Royalties payable |
3,015 |
5,127 | ||||
|
Restructuring liability |
5,431 |
4,130 | ||||
|
Settlement liability |
17,000 |
7,000 | ||||
|
Income taxes payable |
- |
743 | ||||
|
Acquisition-related contingent consideration |
- |
35,000 | ||||
|
Short-term borrowings and current portion of long-term debt |
60,117 |
178,236 | ||||
|
Total current liabilities |
192,208 |
306,669 | ||||
|
Long-term debt, net |
843,530 |
883,612 | ||||
|
Settlement liability |
- |
12,526 | ||||
|
Other liabilities |
6,452 |
6,754 | ||||
|
TOTAL LIABILITIES |
1,042,190 |
1,209,561 | ||||
|
Commitments and contingencies |
||||||
|
STOCKHOLDERS' EQUITY |
||||||
|
Common stock($0.001 par value, 100,000,000 shares authorized; 37,528,450 and 37,150,165 shares issued; 36,919,296 and 36,604,202 shares outstanding at June 30, 2017 and June 30, 2016, respectively) |
||||||
|
37 |
37 | |||||
|
Additional paid-in capital |
292,780 |
283,301 | ||||
|
Retained earnings |
277,774 |
278,355 | ||||
|
Accumulated other comprehensive loss |
(222) |
(295) | ||||
|
Treasury stock(609,154 and 545,963 shares at June 30, 2017 and June 30, 2016, respectively) |
(9,247) |
(7,349) | ||||
|
Total Lannett Company, Inc. stockholders' equity |
561,122 |
554,049 | ||||
|
Noncontrolling interest |
- |
408 | ||||
|
Total stockholders' equity |
561,122 |
554,457 | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,603,312 |
$ 1,764,018 | ||||
|
LANNETT COMPANY, INC. | ||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||
|
(In thousands, except share and per share data) | ||||||||
|
Three months ended |
Twelve months ended | |||||||
|
June 30, |
June 30, | |||||||
|
2017 |
2016 |
2017 |
2016 | |||||
|
Net sales |
$ 139,118 |
$ 168,887 |
$ 637,341 |
$ 566,091 | ||||
|
Settlement agreement |
- |
- |
(4,000) |
(23,598) | ||||
|
Total net sales |
$ 139,118 |
$ 168,887 |
$ 633,341 |
$ 542,493 | ||||
|
Cost of sales |
72,503 |
81,407 |
300,030 |
237,371 | ||||
|
Amortization of intangibles |
7,737 |
7,550 |
32,098 |
18,629 | ||||
|
Gross profit |
58,878 |
79,930 |
301,213 |
286,493 | ||||
|
Operating expenses: |
||||||||
|
Research and development expenses |
11,423 |
12,962 |
42,073 |
45,054 | ||||
|
Selling, general and administrative expenses |
16,519 |
21,966 |
73,477 |
68,325 | ||||
|
Acquisition and integration-related expenses |
291 |
4,190 |
3,965 |
27,190 | ||||
|
Restructuring expenses |
1,836 |
2,417 |
7,168 |
7,166 | ||||
|
Intangible asset impairment charges |
- |
8,000 |
88,084 |
8,000 | ||||
|
Total operating expenses |
30,069 |
49,535 |
214,767 |
155,735 | ||||
|
Operating income |
28,809 |
30,395 |
86,446 |
130,758 | ||||
|
Other income (loss) |
||||||||
|
Loss on extinguishment of debt |
- |
(3,009) |
- |
(3,009) | ||||
|
Investment income |
683 |
299 |
3,768 |
368 | ||||
|
Interest expense |
(20,720) |
(27,117) |
(89,420) |
(65,937) | ||||
|
Other |
54 |
75 |
(244) |
(1) | ||||
|
Total other loss |
(19,983) |
(29,752) |
(85,896) |
(68,579) | ||||
|
Income before income tax |
8,826 |
643 |
550 |
62,179 | ||||
|
Income tax expense (benefit) |
3,100 |
(2,948) |
1,097 |
17,322 | ||||
|
Net income (loss) |
5,726 |
3,591 |
(547) |
44,857 | ||||
|
Less: Net income attributable to noncontrolling interest |
- |
20 |
34 |
75 | ||||
|
Net income (loss) attributable to Lannett Company, Inc. |
$ 5,726 |
$ 3,571 |
$ (581) |
$ 44,782 | ||||
|
Earnings (loss) per common share attributable to Lannett Company, Inc. |
||||||||
|
Basic |
$ 0.16 |
$ 0.10 |
$ (0.02) |
$ 1.23 | ||||
|
Diluted |
$ 0.15 |
$ 0.10 |
$ (0.02) |
$ 1.20 | ||||
|
Weighted average common shares outstanding: |
||||||||
|
Basic |
36,892,902 |
36,578,020 |
36,812,524 |
36,442,782 | ||||
|
Diluted |
37,779,354 |
37,394,787 |
36,812,524 |
37,389,445 | ||||
|
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 June 30, 2017 | |||||||||||||||||
|
Total net |
Cost of |
Amortization |
Gross |
Gross |
R&D |
SG&A |
Acquisition and |
Restructuring |
Operating |
Other |
Income |
Income tax |
Net |
Net income |
Net income |
Diluted | |
|
GAAP Reported |
$ 139,118 |
$ 72,503 |
$ 7,737 |
$ 58,878 |
42% |
$ 11,423 |
$ 16,519 |
$ 291 |
$ 1,836 |
$ 28,809 |
$ (19,983) |
$ 8,826 |
$ 3,100 |
$ 5,726 |
$ - |
$ 5,726 |
$ 0.15 |
|
Adjustments: |
|||||||||||||||||
|
Depreciation of Fixed Assets step-up (a) |
- |
(1,335) |
- |
1,335 |
- |
- |
- |
- |
1,335 |
- |
1,335 |
- |
1,335 |
- |
1,335 |
||
|
Amortization of intangibles (b) |
- |
- |
(7,737) |
7,737 |
- |
(365) |
- |
- |
8,102 |
- |
8,102 |
- |
8,102 |
- |
8,102 |
||
|
Acquisition and integration-related expenses (c) |
- |
- |
- |
- |
- |
- |
(291) |
- |
291 |
- |
291 |
- |
291 |
- |
291 |
||
|
Restructuring expenses (d) |
- |
- |
- |
- |
- |
- |
- |
(1,836) |
1,836 |
- |
1,836 |
- |
1,836 |
- |
1,836 |
||
|
Non-cash interest (e) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
4,743 |
4,743 |
- |
4,743 |
- |
4,743 |
||
|
Tax adjustments (f) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
6,899 |
(6,899) |
- |
(6,899) |
||
|
Non-GAAP Adjusted |
$ 139,118 |
$ 71,168 |
$ - |
$ 67,950 |
49% |
$ 11,423 |
$ 16,154 |
$ - |
$ - |
$ 40,373 |
$ (15,240) |
$ 25,133 |
$ 9,999 |
$ 15,134 |
$ - |
$ 15,134 |
$ 0.40 |
|
(a) |
Relates to depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") | |||||||||||||||||
|
(b) |
Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. | |||||||||||||||||
|
(c) |
Relates to acquisition and integration-related expenses primarily related to the acquisition of KUPI | |||||||||||||||||
|
(d) |
To exclude expenses associated with the 2016 Restructuring Plan | |||||||||||||||||
|
(e) |
To exclude non-cash interest expense primarily associated with debt issuance costs | |||||||||||||||||
|
(f) |
The tax effect of the pre-tax adjustments included at applicable tax rates | |||||||||||||||||
|
(g) |
The weighted average share number for the three months ended June 30, 2017 is 37,779,354 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) | ||||||||||||||||||
|
Three months ended June 30, 2016 | ||||||||||||||||||
|
Total net |
Cost of |
Amortization |
Gross |
Gross |
R&D |
SG&A expense |
Acquisition |
Restructuring |
Intangible impairment |
Operating |
Other |
Income before |
Income tax |
Net |
Net income |
Net income |
Diluted | |
|
GAAP Reported |
$ 168,887 |
$ 81,407 |
$ 7,550 |
$ 79,930 |
47% |
$ 12,962 |
$ 21,966 |
$ 4,190 |
$ 2,417 |
$ 8,000 |
$ 30,395 |
$(29,752) |
$ 643 |
$ (2,948) |
$ 3,591 |
$ 20 |
$ 3,571 |
$ 0.10 |
|
Adjustments: |
||||||||||||||||||
|
Depreciation of Fixed Assets step-up (a) |
- |
(1,834) |
- |
1,834 |
108 |
117 |
- |
- |
- |
1,609 |
- |
1,609 |
- |
1,609 |
- |
1,609 |
||
|
Amortization of Inventory step-up (b) |
- |
(2,611) |
- |
2,611 |
- |
- |
- |
- |
- |
2,611 |
- |
2,611 |
- |
2,611 |
- |
2,611 |
||
|
Amortization of intangibles (c) |
- |
- |
(7,550) |
7,550 |
- |
(365) |
- |
- |
- |
7,915 |
- |
7,915 |
- |
7,915 |
- |
7,915 |
||
|
Separation expenses (d) |
- |
- |
- |
- |
- |
(1,669) |
- |
- |
- |
1,669 |
- |
1,669 |
- |
1,669 |
- |
1,669 |
||
|
Refinancing of debt (e) |
- |
- |
- |
- |
- |
(2,242) |
- |
- |
- |
2,242 |
- |
2,242 |
- |
2,242 |
- |
2,242 |
||
|
Acquisition and integration-related expenses (f) |
- |
- |
- |
- |
- |
- |
(4,190) |
- |
- |
4,190 |
- |
4,190 |
- |
4,190 |
- |
4,190 |
||
|
Restructuring expenses (g) |
- |
- |
- |
- |
- |
- |
- |
(2,417) |
- |
2,417 |
- |
2,417 |
- |
2,417 |
- |
2,417 |
||
|
Intangible assets impairment charges (h) |
- |
- |
- |
- |
- |
- |
- |
- |
(8,000) |
8,000 |
- |
8,000 |
- |
8,000 |
- |
8,000 |
||
|
Non-cash interest (i) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
5,341 |
5,341 |
- |
5,341 |
- |
5,341 |
||
|
Loss on Extinguishment of Debt (j) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
3,009 |
3,009 |
- |
3,009 |
- |
3,009 |
||
|
Tax adjustments (k) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
15,105 |
(15,105) |
- |
(15,105) |
||
|
Non-GAAP Adjusted |
$ 168,887 |
$ 76,962 |
$ - |
$ 91,925 |
54% |
$ 13,070 |
$ 17,807 |
$ - |
$ - |
$ - |
$ 61,048 |
$ (21,402) |
$ 39,646 |
$ 12,157 |
$ 27,489 |
$ 20 |
$ 27,469 |
$ 0.73 |
|
(a) |
Relates to depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") |
|||||||||||||||||
|
(b) |
Relates to amortization of a fair value step-up in inventory related to the acquisition of KUPI |
|||||||||||||||||
|
(c) |
Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. |
|||||||||||||||||
|
(d) |
Relates to separation expenses associated with a former executive officer |
|||||||||||||||||
|
(e) |
To exclude fees related to the refinancing of the 12.0% Senior Notes |
|||||||||||||||||
|
(f) |
Relates to acquisition and integration-related expenses primarily related to the acquisition of KUPI |
|||||||||||||||||
|
(g) |
To exclude expenses associated with the 2016 Restructuring Plan |
|||||||||||||||||
|
(h) |
To exclude an impairment charge related to certain intangible assets acquired as part of the Kremers Urban Pharmaceuticals Inc. acquisition |
|||||||||||||||||
|
(i) |
To exclude non-cash interest expense associated with debt issuance costs |
|||||||||||||||||
|
(j) |
To exclude a loss from the extinguishment of debt |
|||||||||||||||||
|
(k) |
The tax effect of the pre-tax adjustments included at applicable tax rates |
|||||||||||||||||
|
(l) |
The weighted average share number for the three months ended June 30, 2016 is 37,394,787 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) | ||||||||||||||||||
|
Twelve months ended June 30, 2017 | ||||||||||||||||||
|
Total net |
Cost of |
Amortization |
Gross Profit |
Gross |
R&D |
SG&A |
Acquisition and |
Restructuring |
Intangible asset |
Operating |
Other |
Income |
Income |
Net income |
Net income |
Net income (loss) |
Diluted | |
|
GAAP Reported |
$ 633,341 |
$300,030 |
$ 32,098 |
$ 301,213 |
48% |
$ 42,073 |
$ 73,477 |
$ 3,965 |
$ 7,168 |
$ 88,084 |
$ 86,446 |
$ (85,896) |
$ 550 |
$ 1,097 |
$ (547) |
$ 34 |
$ (581) |
$ (0.02) |
|
Adjustments: |
||||||||||||||||||
|
Settlement agreement (a) |
4,000 |
- |
- |
4,000 |
- |
- |
- |
- |
- |
4,000 |
- |
4,000 |
- |
4,000 |
- |
4,000 |
||
|
Depreciation of Fixed Assets step-up (b) |
- |
(4,410) |
- |
4,410 |
- |
- |
- |
- |
- |
4,410 |
- |
4,410 |
- |
4,410 |
- |
4,410 |
||
|
Amortization of Inventory step-up (c) |
- |
(1,938) |
- |
1,938 |
- |
- |
- |
- |
- |
1,938 |
- |
1,938 |
- |
1,938 |
- |
1,938 |
||
|
Amortization of intangibles (d) |
- |
- |
(32,098) |
32,098 |
- |
(1,460) |
- |
- |
- |
33,558 |
- |
33,558 |
- |
33,558 |
- |
33,558 |
||
|
Acquisition and integration-related expenses (e) |
- |
- |
- |
- |
- |
- |
(3,965) |
- |
- |
3,965 |
- |
3,965 |
- |
3,965 |
- |
3,965 |
||
|
Restructuring expenses (f) |
- |
- |
- |
- |
- |
- |
- |
(7,168) |
- |
7,168 |
- |
7,168 |
- |
7,168 |
- |
7,168 |
||
|
Intangible assets impairment charges (g) |
- |
- |
- |
- |
- |
- |
- |
- |
(88,084) |
88,084 |
- |
88,084 |
- |
88,084 |
- |
88,084 |
||
|
Non-cash interest (h) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
20,704 |
20,704 |
- |
20,704 |
- |
20,704 |
||
|
Other (i) |
- |
- |
- |
- |
- |
(715) |
- |
- |
- |
715 |
- |
715 |
- |
715 |
- |
715 |
||
|
Tax adjustments (j) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
56,094 |
(56,094) |
- |
(56,094) |
||
|
Non-GAAP Adjusted |
$ 637,341 |
$ 293,682 |
$ - |
$ 343,659 |
54% |
$ 42,073 |
$ 71,302 |
$ - |
$ - |
$ - |
$ 230,284 |
$ (65,192) |
$ 165,092 |
$ 57,191 |
$ 107,901 |
$ 34 |
$ 107,867 |
$ 2.86 |
|
(a) |
Relates to an adjustment to the Fiscal 2016 settlement agreement with a former customer |
|||||||||||||||||
|
(b) |
Relates to depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") |
|||||||||||||||||
|
(c) |
Relates to amortization of a fair value step-up in inventory related to the acquisition of KUPI |
|||||||||||||||||
|
(d) |
Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. |
|||||||||||||||||
|
(e) |
Relates to acquisition and integration-related expenses primarily related to the acquisition of KUPI |
|||||||||||||||||
|
(f) |
To exclude expenses associated with the 2016 Restructuring Plan |
|||||||||||||||||
|
(g) |
To exclude impairment charges related to certain intangible assets acquired as part of the KUPI acquisition |
|||||||||||||||||
|
(h) |
To exclude non-cash interest expense primarily associated with debt issuance costs |
|||||||||||||||||
|
(i) |
Primarily relates to separation expenses associated with a former employee |
|||||||||||||||||
|
(j) |
The tax effect of the pre-tax adjustments included at applicable tax rates |
|||||||||||||||||
|
(k) |
The weighted average share numbers for the twelve months ended June 30, 2017 are 36,812,524 and 37,695,061 for the GAAP and non-GAAP earnings (loss) per share calculations, respectively |
|||||||||||||||||
|
LANNETT COMPANY, INC. | ||||||||||||||||||
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) | ||||||||||||||||||
|
(In thousands, except percentages, share and per share data) | ||||||||||||||||||
|
Twelve months ended June 30, 2016 | ||||||||||||||||||
|
Total net |
Cost of sales |
Amortization |
Gross Profit |
Gross |
R&D |
SG&A |
Acquisition related |
Restructuring |
Intangible asset |
Operating |
Other |
Income |
Income |
Net income |
Net income |
Net income |
Diluted per share | |
|
GAAP Reported |
$ 542,493 |
$ 237,371 |
$ 18,629 |
$ 286,493 |
53% |
$ 45,054 |
$ 68,325 |
$ 27,190 |
$ 7,166 |
$ 8,000 |
$ 130,758 |
$(68,579) |
$ 62,179 |
$17,322 |
$ 44,857 |
$ 75 |
$ 44,782 |
$ 1.20 |
|
Adjustments: |
||||||||||||||||||
|
Settlement agreement (a) |
23,598 |
- |
- |
23,598 |
- |
- |
- |
- |
- |
23,598 |
- |
23,598 |
- |
23,598 |
- |
23,598 |
||
|
Depreciation of Fixed Assets step-up (b) |
- |
(2,222) |
- |
2,222 |
18 |
117 |
- |
- |
- |
2,087 |
- |
2,087 |
- |
2,087 |
- |
2,087 |
||
|
Amortization of Inventory step-up (c) |
- |
(17,127) |
- |
17,127 |
- |
- |
- |
- |
- |
17,127 |
- |
17,127 |
- |
17,127 |
- |
17,127 |
||
|
Amortization of intangibles (d) |
- |
- |
(18,629) |
18,629 |
- |
(878) |
- |
- |
- |
19,507 |
- |
19,507 |
- |
19,507 |
- |
19,507 |
||
|
Separation expenses (e) |
- |
- |
- |
- |
- |
(6,275) |
- |
- |
- |
6,275 |
- |
6,275 |
- |
6,275 |
- |
6,275 |
||
|
Refinancing of debt (f) |
- |
- |
- |
- |
- |
(2,242) |
- |
- |
- |
2,242 |
- |
2,242 |
- |
2,242 |
- |
2,242 |
||
|
Acquisition and integration-related expenses (g) |
- |
- |
- |
- |
- |
- |
(27,190) |
- |
- |
27,190 |
- |
27,190 |
- |
27,190 |
- |
27,190 |
||
|
Restructuring expenses (h) |
- |
- |
- |
- |
- |
- |
- |
(7,166) |
- |
7,166 |
- |
7,166 |
- |
7,166 |
- |
7,166 |
||
|
Intangible assets impairment charges (i) |
- |
- |
- |
- |
- |
- |
- |
(8,000) |
8,000 |
- |
8,000 |
- |
8,000 |
- |
8,000 |
|||
|
Non-cash interest (j) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
13,007 |
13,007 |
- |
13,007 |
- |
13,007 |
||
|
Loss on Extinguishment of Debt (k) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
3,009 |
3,009 |
- |
3,009 |
- |
3,009 |
||
|
Tax adjustments (l) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
46,145 |
(46,145) |
- |
(46,145) |
||
|
Non-GAAP Adjusted |
$ 566,091 |
$ 218,022 |
$ - |
$ 348,069 |
61% |
$ 45,072 |
$ 59,047 |
$ - |
$ - |
$ - |
$ 243,950 |
$ (52,563) |
$ 191,387 |
$ 63,467 |
$ 127,920 |
$ 75 |
$ 127,845 |
$ 3.42 |
|
(a) |
Relates to a settlement agreement with a former customer |
|||||||||||||||||
|
(b) |
Relates to depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") |
|||||||||||||||||
|
(c) |
Relates to amortization of fair value step-up in inventory primarily related to the acquisition of KUPI |
|||||||||||||||||
|
(d) |
Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. |
|||||||||||||||||
|
(e) |
Relates primarily to separation expenses associated with former employees |
|||||||||||||||||
|
(f) |
To exclude fees related to the refinancing of the 12.0% Senior Notes |
|||||||||||||||||
|
(g) |
Relates to acquisition and integration-related expenses primarily related to the acquisition of KUPI |
|||||||||||||||||
|
(h) |
To exclude expenses associated with the 2016 Restructuring Plan |
|||||||||||||||||
|
(i) |
To exclude an impairment charge related to certain intangible assets acquired as part of the KUPI acquisition |
|||||||||||||||||
|
(j) |
To exclude non-cash interest expense associated with debt issuance costs |
|||||||||||||||||
|
(k) |
To exclude a loss from the extinguishment of debt |
|||||||||||||||||
|
(l) |
The tax effect of the pre-tax adjustments included at applicable tax rates |
|||||||||||||||||
|
(m) |
The weighted average share number for the twelve months ended June 30, 2016 is 37,389,445 for both the GAAP and the non-GAAP earnings per share calculations |
|||||||||||||||||
|
LANNETT COMPANY, INC. |
|||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) |
|||||||||||||||
|
($ in millions) |
|||||||||||||||
|
Fiscal Year 2018 Guidance |
|||||||||||||||
|
Non-GAAP |
|||||||||||||||
|
GAAP |
Adjustments |
Adjusted |
|||||||||||||
|
Net sales |
$655 - $665 |
- |
$655 - $665 |
||||||||||||
|
Gross margin percentage |
46.0% - 47.0% |
5% |
(a) |
51.0% to 52.0% |
|||||||||||
|
R&D expense |
$46 - $48 |
- |
$46 - $48 |
||||||||||||
|
SG&A expense |
$75 - $77 |
($2) |
(b) |
$73 - $75 |
|||||||||||
|
Integration and Restructuring expense |
$4 - $5 |
($4 - $5) |
(c) |
- |
|||||||||||
|
Interest expense |
$88 - $89 |
($21) |
(d) |
$67 - $68 |
|||||||||||
|
Effective tax rate |
approx. 35% |
- |
approx. 35% |
||||||||||||
|
Capital expenditures |
$65 - $75 |
- |
$65 - $75 |
||||||||||||
|
(a) The adjustment primarily reflects amortization of purchased intangible assets and depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") | |||||||||||||||
|
(b) The adjustment reflects amortization of purchased intangible assets related to the acquisition of KUPI | |||||||||||||||
|
(c) The adjustment reflects expenses related to the 2016 Restructuring Plan as well as integration-related expenses associated with the acquisition of KUPI | |||||||||||||||
|
(d) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs |
|
LANNETT COMPANY, INC. | ||||||||
|
NET SALES BY MEDICAL INDICATION | ||||||||
|
(in thousands) |
Three months ended June 30, |
Fiscal Year Ended June 30, | ||||||
|
Medical Indication |
2017 |
2016 |
2017 |
2016 | ||||
|
Antibiotic |
$ 3,701 |
$ 5,842 |
$ 16,748 |
$ 14,558 | ||||
|
Anti Psychosis |
11,506 |
930 |
58,625 |
5,462 | ||||
|
Cardiovascular |
11,143 |
15,482 |
50,628 |
53,541 | ||||
|
Central Nervous System |
7,423 |
15,940 |
39,451 |
36,291 | ||||
|
Gallstone |
11,135 |
13,959 |
48,600 |
67,348 | ||||
|
Gastrointestinal |
15,418 |
22,268 |
71,887 |
52,699 | ||||
|
Glaucoma |
2,800 |
5,965 |
18,763 |
25,336 | ||||
|
Migraine |
6,948 |
5,438 |
29,014 |
21,776 | ||||
|
Muscle Relaxant |
3,427 |
1,157 |
13,636 |
5,403 | ||||
|
Obesity |
1,137 |
956 |
3,956 |
3,809 | ||||
|
Pain Management |
6,003 |
6,418 |
26,135 |
29,804 | ||||
|
Respiratory |
1,090 |
3,279 |
10,516 |
9,982 | ||||
|
Thyroid Deficiency |
43,738 |
45,868 |
174,005 |
162,411 | ||||
|
Urinary |
2,281 |
7,250 |
14,695 |
17,398 | ||||
|
Other |
9,191 |
8,474 |
43,240 |
38,230 | ||||
|
Contract manufacturing revenues |
2,177 |
9,661 |
17,442 |
22,043 | ||||
|
Net Sales |
139,118 |
168,887 |
637,341 |
566,091 | ||||
|
Settlement agreement |
- |
- |
(4,000) |
(23,598) | ||||
|
Total Net Sales |
$ 139,118 |
$ 168,887 |
$ 633,341 |
$ 542,493 | ||||
SOURCE Lannett Company, Inc.