Lannett Company, Inc. (NYSE MKT: LCI) today reported continued
strong momentum, with sharply improved financial results for its
fiscal 2013 second quarter ended December 31, 2012, compared with
the prior year period.
Net sales for the fiscal 2013 second quarter rose significantly
to $36.6 million, up 32% from $27.7 million last year. Gross profit
nearly doubled to $13.4 million from $7.4 million for the fiscal
2012 second quarter. As a percentage of net sales, gross margin
increased to 37% from 27% last year. Research and development
(R&D) expenses were $3.6 million, compared with $2.5 million
for the fiscal 2012 second quarter. Selling, general and
administrative (SG&A) expenses were $5.2 million, compared with
$4.4 million in the same quarter of the prior year. Operating
income increased to $4.7 million from $495,000 for the second
quarter of fiscal 2012. Net income attributable to Lannett Company
rose to $2.9 million, or $0.10 per diluted share, from $609,000, or
$0.02 per diluted share, for the same period last year.
“The positive performance for our second quarter and the
favorable outlook for the second half of our fiscal year reflect
continued strong sales from our base products and market
penetration from our recently approved products,” said Arthur
Bedrosian, president and chief executive officer of Lannett. “Gross
margin was positively impacted by favorable sales mix and price
increases, along with enhanced manufacturing efficiencies that are
partially attributable to recent product launches. We believe
Lannett’s R&D investments, which are ratcheting up as the year
proceeds, combined with the operating momentum we are now
achieving, will pave the way for continued growth and progress in
the future,” Bedrosian added.
For the first half of fiscal 2013, net sales increased to $71.9
million from $56.6 million for the corresponding prior year period.
Gross profit rose to $27.0 million from $16.0 million last year. As
a percentage of net sales, gross margin increased to 38% from 28%
last year. R&D expenses were $7.3 million, compared with $4.9
million for the first six months of fiscal 2012. SG&A expenses
amounted to $11.3 million, versus $9.2 million for the first half
of fiscal 2012. Operating income advanced to $8.4 million from $1.9
million a year ago. Net income attributable to Lannett Company
increased to $5.8 million, equal to $0.20 per diluted share, from
$815,000, or $0.03 per diluted share, for the first half of fiscal
2012. Net income for the most recent six-month period included a
favorable litigation settlement of $1.3 million and other
non-operating items, equal to $0.03 per diluted share.
Upward Revised Guidance for Fiscal 2013
Based on Lannett’s current outlook, the company revised its
financial guidance upward for the fiscal 2013 full year as
follows:
- Net sales of $140 million to $142
million, up from the previous guidance of $132 million to $136
million;
- Gross margin as a percentage of net
sales of approximately 36% to 37%, up from 34% to 35%;
- R&D expense in the range of $17
million to $18 million, down slightly from $18 million to $20
million;
- SG&A expense ranging from $24
million to $25 million, versus $21 million to $23 million;
- Other income of approximately $1.5
million, essentially equal to the litigation settlement the company
reported in the first quarter; and
- Capital expenditures in the range of
$10 million to $12 million, unchanged from previous guidance.
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 2013
second quarter ended December 31, 2012. The conference call will be
available to interested parties by dialing 866-813-5647 from the
U.S. or Canada, or 847-619-6249 from international locations,
passcode 34177997. The conference call will also be available
through a live audio Internet broadcast at www.lannett.com. A
playback of the call will be archived and accessible at this site
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 and
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 upward
revised guidance, expected product approvals, the successful
commercialization of products in development, product applications
pending at the FDA and recently approved products, 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.
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In
thousands, except for share and per share data)
Three months ended Six months ended
December 31, December 31,
2012
2011
2012
2011
Net sales $ 36,564 $ 27,734 $ 71,858 $ 56,612 Cost of sales
22,620 19,771 43,784 39,513 Amortization of intangible assets 470
470 941 938 Product royalties 53 66
86 118 Gross profit 13,421 7,427
27,047 16,043 Research and development expenses 3,572 2,513
7,336 4,939 Selling, general, and administrative expenses
5,155 4,419 11,326 9,164
Operating income 4,694 495
8,385 1,940 Other income
(expense): Foreign currency gain (loss) - (8 ) 3 (3 ) Gain (loss)
on sale of assets (112 ) (3 ) (42 ) 4 Realized gain (loss) on
investments 132 27 96 (146 ) Unrealized gain (loss) on investments
(61 ) 675 209 (151 ) Litigation settlement - - 1,250 - Interest and
dividend income 27 36 62 89 Interest expense (72 )
(73 ) (135 ) (150 ) (86 ) 654
1,443 (357 ) Income before income tax
expense 4,608 1,149 9,828 1,583 Income tax expense 1,749
519 4,026 731 Net
income 2,859 630 5,802 852 Less net income (loss) attributable to
noncontrolling interest 22 (21 ) 5
(37 ) Net income attributable to Lannett
Company, Inc. $ 2,881 $ 609 $ 5,807 $ 815
Earnings per common share - Lannett Company, Inc.:
Basic 0.10 0.02 0.21 0.03 Diluted 0.10 0.02 0.20 0.03
Weighted average number of shares outstanding: Basic 28,347,464
28,526,658 28,312,989 28,479,195 Diluted 28,450,597 28,773,477
28,424,027 28,733,435
LANNETT COMPANY, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In
thousands, except share and per share data)
(Unaudited)
December 31,
2012
June 30,
2012
ASSETS
Current Assets Cash and cash equivalents $ 31,455 $ 22,562
Investment securities 6,638 6,667 Trade accounts receivable (net of
allowance of $111 and $124, respectively) 41,370 42,212
Inventories, net 30,688 27,064 Prepaid income taxes 249 2,120
Deferred tax assets 4,955 4,833 Other current assets 1,309
1,023
Total Current Assets 116,664
106,481 Property, plant and equipment, net 38,876 37,068
Intangible assets, net 3,488 4,429 Deferred tax assets 8,540 9,069
Other assets 810 1,171
TOTAL
ASSETS $ 168,378 $ 158,218
LIABILITIES
Current Liabilities Accounts payable $ 18,625 $ 17,989 Accrued
expenses 1,982 1,518 Accrued payroll and payroll related 3,810
3,198 Current portion of long-term debt 654 648 Rebates,
chargebacks and returns payable 18,961 17,039
Total Current Liabilities 44,032 40,392
Long-term debt, less current portion 6,255
6,513
TOTAL LIABILITIES 50,287
46,905 Commitment and Contingencies
SHAREHOLDERS'
EQUITY
Common stock - authorized 50,000,000
shares, par value $0.001; issued, 28,822,773 and 28,594,437 shares,
respectively; outstanding, 28,386,894 and 28,252,192 shares,
respectively
29 29 Additional paid in capital 100,913 99,515 Retained earnings
19,043 13,236 Accumulated other comprehensive loss (26 ) (63 )
Treasury stock at cost - 435,879 and 342,245 shares, respectively
(2,034 ) (1,594 )
Total Shareholders' Equity
Attributable to Lannett Company, Inc. 117,925 111,123
Noncontrolling interest 166 190
TOTAL SHAREHOLDERS' EQUITY 118,091
111,313
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 168,378 $ 158,218