PHILADELPHIA, Aug. 27, 2019 /PRNewswire/ -- Lannett Company,
Inc. (NYSE: LCI) today reported financial results for its fiscal
2019 fourth quarter and full year ended June
30, 2019.
"In fiscal 2019, we made excellent progress rebuilding our
business," said Tim Crew, chief
executive officer of Lannett. "We feel positive about our
company's future following a number of significant
accomplishments. Since January
2018, we have launched 25 products with annualized sales of
approximately $100 million, acquired
or in-licensed more than 40 ANDAs and paid down approximately
$187 million of our outstanding debt,
which included $87 million of
voluntary payments. In the past year, we have expanded
existing strategic alliances and established new ones, and
submitted to the FDA nine product applications, all while we
implemented and recently completed a net $33
million cost savings plan.
"Financial results for our fiscal 2019 fourth quarter, the first
full quarter of the fiscal year without sales of Levothyroxine,
exceeded or were at the upper end of our expectations. The
quarter did benefit from a few items that were related to
timing.
"Looking ahead, we expect to launch a number of new products
that will continue to build our business in the near term and have
begun adding products to our pipeline that have significant
potential in the medium term and beyond."
For the fiscal 2019 fourth quarter, on a GAAP basis, net sales
were $133.8 million compared with
$170.9 million for the fourth quarter
of fiscal 2018. Gross profit was $49.3
million, or 37% of total net sales, compared with
$66.5 million, or 39% of total net
sales. Research and development (R&D) expenses were
$9.4 million compared with
$8.3 million for the fiscal 2018
fourth quarter. Selling, general and administrative
(SG&A) expenses were $22.2
million compared with $20.6
million. Restructuring expenses were $2.4 million compared with $4.1 million. Asset impairment charges were
$5.9 million compared with
$25.0 million for the prior year
fourth quarter. Operating income increased to $9.4 million from $8.6
million. Interest expense decreased to $20.2 million from $21.2
million for the fourth quarter of fiscal 2018. Net
loss was $7.6 million, or
$0.20 per share, compared with
$11.4 million, or $0.30 per share, for the fiscal 2018 fourth
quarter.
For the fiscal 2019 fourth quarter reported on a Non-GAAP basis,
net sales were $133.8 million
compared with $170.9 million for the
fourth quarter of fiscal 2018. Adjusted gross profit was
$59.8 million, or 45% of adjusted net
sales, compared with $76.0 million,
or 44% of adjusted net sales, for the prior-year fourth
quarter. Adjusted R&D expenses were $8.6 million compared with $8.3 million. Adjusted SG&A expenses
were $17.0 million compared with
$17.4 million. Adjusted
operating income was $34.1 million
compared with $50.3 million for the
prior-year fourth quarter. Adjusted interest expense was
$16.0 million compared with
$16.6 million for the fourth quarter
of fiscal 2018. Adjusted net income was $14.7 million, or $0.37 per diluted share, compared with
$24.5 million, or $0.64 per diluted share, for the fiscal 2018
fourth quarter.
For the fiscal 2019 full year, on a GAAP basis, net sales were
$655.4 million compared with
$684.6 million for the fiscal 2018
full year. Gross profit was $243.6
million, or 37% of total net sales, compared with
$288.7 million, or 42% of total net
sales. R&D expenses were $38.8
million compared with $29.2
million for the fiscal 2018 full year. SG&A
expenses were $87.6 million compared
with $82.2 million.
Restructuring expenses were $4.1
million compared with $7.1
million. The company reported operating loss of
$262.3 million, which included asset
impairment charges of $375.4
million. This compares to fiscal 2018 full year
operating income of $129.7 million,
which included asset impairment charges of $25.0 million and a loss on sale of intangible
asset of $15.5 million.
Interest expense decreased to $84.6
million from $85.6
million. Net loss was $272.1
million, or $7.20 per share,
versus net income of $28.7 million,
or $0.75 per diluted share, for
fiscal 2018.
For the fiscal 2019 full year reported on a Non-GAAP basis, net
sales were $655.4 million compared
with $684.6 million for the fiscal
2018 full year. Adjusted gross profit was $291.4 million, or 44% of adjusted net sales,
compared with $326.2 million, or 48%
of adjusted net sales, for the prior year. Adjusted R&D
expenses were $36.1 million compared
with $29.2 million. Adjusted
SG&A expenses were $71.2 million
compared with $71.0 million.
Adjusted operating income was $184.1
million compared with $226.0
million for the prior year. Adjusted interest expense
was $67.0 million compared with
$65.4 million for fiscal 2018.
Adjusted net income was $91.8
million, or $2.35 per diluted
share, compared with $118.2 million,
or $3.10 per diluted share, for the
fiscal 2018 full year.
Guidance for Fiscal 2020
Based on its current outlook,
the company provided guidance for fiscal year 2020, as follows:
|
GAAP
|
Adjusted**
|
|
Net sales
|
$525 million to $545
million
|
$525 million to $545
million
|
|
Gross margin
%
|
Approximately 33.5%
to 35.5%
|
Approximately 40% to
42%
|
|
R&D
expense
|
$34 million to $36
million
|
$34 million to $36
million
|
|
SG&A
expense
|
$68 million to $71
million
|
$63 million to $66
million
|
|
Restructuring
expense
|
$2 million to $4
million
|
$ --
|
|
Interest and
other
|
$71 million to $73
million
|
$56 million to $58
million
|
|
Effective tax
rate
|
Approximately 26% to
29%
|
Approximately 22% to
23%
|
|
Adjusted
EBITDA*
|
N/A
|
$145 million to $160
million
|
|
Capital
expenditures
|
$20 million to $25
million
|
$20 million to $25
million
|
|
**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 2019 fourth quarter and full
year ended June 30, 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 48926565. 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) acquisition and integration-related
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 launching and commercializing recently acquired
and previously approved products, achieving expected savings from
the cost reduction program, successfully consummating transactions
with new and existing alliance partners and successfully launching
and commercializing products included therein, 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)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
140,249
|
|
$
98,586
|
|
Accounts receivable,
net
|
|
164,752
|
|
252,651
|
|
Inventories
|
|
143,971
|
|
141,635
|
|
Prepaid income
taxes
|
|
-
|
|
15,159
|
|
Assets held for
sale
|
|
9,671
|
|
13,976
|
|
Other current
assets
|
|
13,606
|
|
4,863
|
|
Total current
assets
|
|
472,249
|
|
526,870
|
|
Property, plant
and equipment, net
|
|
186,670
|
|
233,247
|
|
Intangible assets,
net
|
|
411,229
|
|
424,425
|
|
Goodwill
|
|
-
|
|
339,566
|
|
Deferred tax
assets
|
|
109,305
|
|
22,063
|
|
Other
assets
|
|
7,960
|
|
29,133
|
|
TOTAL
ASSETS
|
|
$
1,187,413
|
|
$
1,575,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
13,493
|
|
$
56,767
|
|
Accrued
expenses
|
|
5,805
|
|
7,425
|
|
Accrued payroll and
payroll-related expenses
|
|
19,924
|
|
7,819
|
|
Rebates
payable
|
|
46,175
|
|
49,400
|
|
Royalties
payable
|
|
16,215
|
|
5,955
|
|
Restructuring
liability
|
|
2,315
|
|
6,706
|
|
Other current
liabilities
|
|
3,652
|
|
-
|
|
Income taxes
payable
|
|
2,198
|
|
-
|
|
Short-term borrowings
and current portion of long-term debt
|
|
66,845
|
|
66,845
|
|
Total current
liabilities
|
|
176,622
|
|
200,917
|
|
Long-term debt,
net
|
|
662,203
|
|
772,425
|
|
Other
liabilities
|
|
14,547
|
|
3,047
|
|
TOTAL
LIABILITIES
|
|
853,372
|
|
976,389
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Common stock
($0.001 par value, 100,000,000 shares authorized; 38,969,518
and 38,256,839 shares issued; 38,010,714
and 37,380,517 shares outstanding at June 30, 2019 and June 30, 2018,
respectively)
|
|
39
|
|
38
|
|
Additional paid-in
capital
|
|
317,023
|
|
306,817
|
|
Retained
earnings
|
|
32,075
|
|
306,464
|
|
Accumulated other
comprehensive loss
|
|
(615)
|
|
(515)
|
|
Treasury stock
(958,804 and 876,322 shares at June 30, 2019 and June 30, 2018,
respectively)
|
|
(14,481)
|
|
(13,889)
|
|
Total stockholders'
equity
|
|
334,041
|
|
598,915
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
1,187,413
|
|
$
1,575,304
|
|
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,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
133,841
|
|
$
170,911
|
|
$
655,407
|
|
$
684,563
|
|
Cost of
sales
|
|
76,589
|
|
96,226
|
|
379,601
|
|
363,729
|
|
Amortization of
intangibles
|
|
7,910
|
|
8,157
|
|
32,196
|
|
32,128
|
|
Gross
profit
|
|
49,342
|
|
66,528
|
|
243,610
|
|
288,706
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
9,436
|
|
8,335
|
|
38,807
|
|
29,196
|
|
Selling, general and
administrative expenses
|
|
22,214
|
|
20,553
|
|
87,648
|
|
82,196
|
|
Acquisition and
integration-related expenses
|
|
-
|
|
-
|
|
-
|
|
83
|
|
Restructuring
expenses
|
|
2,408
|
|
4,078
|
|
4,095
|
|
7,061
|
|
Loss on sale of
intangible asset
|
|
-
|
|
-
|
|
-
|
|
15,514
|
|
Asset impairment
charges
|
|
5,882
|
|
24,960
|
|
375,381
|
|
24,960
|
|
Total operating
expenses
|
|
39,940
|
|
57,926
|
|
505,931
|
|
159,010
|
|
Operating income
(loss)
|
|
9,402
|
|
8,602
|
|
(262,321)
|
|
129,696
|
|
Other income
(loss):
|
|
|
|
|
|
|
|
|
|
Investment
income
|
|
1,306
|
|
545
|
|
3,166
|
|
4,753
|
|
Interest
expense
|
|
(20,194)
|
|
(21,194)
|
|
(84,624)
|
|
(85,634)
|
|
Loss on
extinguishment of debt
|
|
(35)
|
|
-
|
|
(448)
|
|
-
|
|
Other
|
|
(609)
|
|
(195)
|
|
(2,018)
|
|
2,278
|
|
Total other
loss
|
|
(19,532)
|
|
(20,844)
|
|
(83,924)
|
|
(78,603)
|
|
Income (loss)
before income tax
|
|
(10,130)
|
|
(12,242)
|
|
(346,245)
|
|
51,093
|
|
Income tax expense
(benefit)
|
|
(2,544)
|
|
(883)
|
|
(74,138)
|
|
22,403
|
|
Net income
(loss)
|
|
$
(7,586)
|
|
$
(11,359)
|
|
$
(272,107)
|
|
$
28,690
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.20)
|
|
$
(0.30)
|
|
$
(7.20)
|
|
$
0.77
|
|
Diluted
|
|
$
(0.20)
|
|
$
(0.30)
|
|
$
(7.20)
|
|
$
0.75
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
37,932,509
|
|
37,315,567
|
|
37,779,812
|
|
37,127,306
|
|
Diluted
|
|
37,932,509
|
|
37,315,567
|
|
37,779,812
|
|
38,162,514
|
|
|
|
|
|
|
|
|
|
|
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, 2019
|
|
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
|
Other
income
(loss)
|
Income
(loss)
before
income tax
|
Income
tax
expense
(benefit)
|
Net
income
(loss)
|
Diluted
earnings
(loss) per
share (m)
|
|
|
|
|
GAAP
Reported
|
$133,841
|
$
76,589
|
$
7,910
|
$
49,342
|
37%
|
$
9,436
|
$
22,214
|
$
2,408
|
$
5,882
|
$
9,402
|
$(19,532)
|
$
(10,130)
|
$(2,544)
|
$
(7,586)
|
$
(0.20)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(7,910)
|
7,910
|
|
-
|
-
|
-
|
-
|
7,910
|
-
|
7,910
|
-
|
7,910
|
|
|
Cody API business
(b)
|
-
|
(2,233)
|
-
|
2,233
|
|
(760)
|
(1,394)
|
-
|
-
|
4,387
|
-
|
4,387
|
-
|
4,387
|
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,058)
|
-
|
-
|
1,058
|
-
|
1,058
|
-
|
1,058
|
|
|
Legal and financial
advisory costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(237)
|
-
|
-
|
237
|
-
|
237
|
-
|
237
|
|
|
Decommissioning of
Philadelphia sites (e)
|
-
|
(89)
|
-
|
89
|
|
(64)
|
-
|
-
|
-
|
153
|
-
|
153
|
-
|
153
|
|
|
Restructuring
expenses (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(2,408)
|
-
|
2,408
|
-
|
2,408
|
-
|
2,408
|
|
|
Indemnification asset
write-off (g)
|
-
|
-
|
-
|
-
|
|
-
|
(2,284)
|
-
|
-
|
2,284
|
|
2,284
|
-
|
2,284
|
|
|
Asset impairment
charges (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(5,882)
|
5,882
|
|
5,882
|
|
5,882
|
|
|
Non-cash interest
(i)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
4,201
|
4,201
|
-
|
4,201
|
|
|
Loss on
extinguishment of debt (j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
34
|
34
|
-
|
34
|
|
|
Other (k)
|
-
|
(209)
|
-
|
209
|
|
-
|
(195)
|
-
|
-
|
404
|
(242)
|
162
|
-
|
162
|
|
|
Tax adjustments
(l)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
6,460
|
(6,460)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
133,841
|
$
74,058
|
$
-
|
$
59,783
|
45%
|
$
8,612
|
$
17,046
|
$
-
|
$
-
|
$
34,125
|
$
(15,539)
|
$
18,586
|
$
3,916
|
$
14,670
|
$
0.37
|
|
|
(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 legal and
financial advisory costs primarily related to exploring and
evaluating debt and capital structure alternatives
|
|
(e)
|
To exclude the costs
associated with the decommissioning and shutdown of the
Philadelphia manufacturing and distribution sites
|
|
(f)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
|
(g)
|
To exclude the
write-off of an indemnification asset related to the KUPI
acquisition
|
|
(h)
|
To exclude asset
impairment charges primarily associated with the Cody API assets as
well as obsolete equipment and computer software related to the
consolidation of manufacturing functions
|
|
(i)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
|
(j)
|
To exclude the loss
on extinguishment of debt related to repurchases of Term
Loans
|
|
(k)
|
To primarily exclude
accrued separation costs related to the Company's Chief Financial
Officer
|
|
(l)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
(m)
|
The weighted average
share number for the three months ended June 30, 2019 is 37,932,509
for GAAP and 39,345,258 for non-GAAP earnings (loss) 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, 2018
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expense
|
SG&A
expense
|
Acquisition
and integration-
related
expenses
|
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 (h)
|
|
|
|
|
GAAP
Reported
|
$
170,911
|
$
96,226
|
$
8,157
|
$
66,528
|
39%
|
$
8,335
|
$
20,553
|
$
-
|
$
4,078
|
$
24,960
|
$
8,602
|
$(20,844)
|
$
(12,242)
|
$
(883)
|
$(11,359)
|
$
(0.30)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of Fixed
Assets step-up (a)
|
-
|
(1,335)
|
-
|
1,335
|
|
-
|
-
|
-
|
-
|
-
|
1,335
|
-
|
1,335
|
-
|
1,335
|
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(8,157)
|
8,157
|
|
-
|
-
|
-
|
-
|
-
|
8,157
|
-
|
8,157
|
-
|
8,157
|
|
|
Restructuring
expenses (c)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(4,078)
|
-
|
4,078
|
-
|
4,078
|
-
|
4,078
|
|
|
Asset impairment
charges (d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
(24,960)
|
24,960
|
|
24,960
|
-
|
24,960
|
|
|
Non-cash interest
(e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
4,557
|
4,557
|
-
|
4,557
|
|
|
Other (f)
|
-
|
-
|
-
|
-
|
|
-
|
(3,188)
|
-
|
-
|
-
|
3,188
|
-
|
3,188
|
-
|
3,188
|
|
|
Tax adjustments
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
10,443
|
(10,443)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
170,911
|
$
94,891
|
$
-
|
$
76,020
|
44%
|
$
8,335
|
$
17,365
|
$
-
|
$
-
|
$
-
|
$
50,320
|
$
(16,287)
|
$
34,033
|
$
9,560
|
$
24,473
|
$
0.64
|
|
|
(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)
|
To exclude expenses
associated with the Cody Restructuring Plan and, to a lesser
extent, the 2016 Restructuring Plan
|
|
(d)
|
To exclude asset
impairment charges primarily related to the Cody Restructuring
Plan, and to a lesser extent, the consolidation of manufacturing
activities with respect to plant-related assets located at the
Company's Townsend Road facility
|
|
(e)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
|
(f)
|
To primarily exclude
separation benefits associated with the former Senior Vice
President of Sales as well as other employees
|
|
(g)
|
The tax effect of the
pre-tax adjustments included at applicable tax
rates
|
|
(h)
|
The weighted average
share number for the three months ended June 30, 2018 is 37,315,567
and 38,285,208 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, 2019
|
|
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
(loss)
before
income tax
|
Income tax
expense
(benefit)
|
Net income
(loss)
|
Diluted
earnings
(loss) per
share (n)
|
|
|
|
|
GAAP
Reported
|
$
655,407
|
$
379,601
|
$
32,196
|
$
243,610
|
37%
|
$
38,807
|
$
87,648
|
$
4,095
|
$
375,381
|
$(262,321)
|
$
(83,924)
|
$(346,245)
|
$(74,138)
|
$
(272,107)
|
$
(7.20)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of fixed
assets step-up (a)
|
-
|
(2,459)
|
-
|
2,459
|
|
-
|
-
|
-
|
-
|
2,459
|
-
|
2,459
|
-
|
2,459
|
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(32,196)
|
32,196
|
|
-
|
-
|
-
|
-
|
32,196
|
-
|
32,196
|
-
|
32,196
|
|
|
Cody API business
(c)
|
-
|
(7,061)
|
-
|
7,061
|
|
(2,397)
|
(2,340)
|
-
|
-
|
11,798
|
-
|
11,798
|
-
|
11,798
|
|
|
Depreciation on
capitalized software costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(4,233)
|
-
|
-
|
4,233
|
-
|
4,233
|
-
|
4,233
|
|
|
Legal and financial
advisory costs (e)
|
-
|
-
|
-
|
-
|
|
-
|
(3,626)
|
-
|
-
|
3,626
|
-
|
3,626
|
-
|
3,626
|
|
|
Decommissioning of
Philadelphia sites (f)
|
-
|
(4,114)
|
-
|
4,114
|
|
(64)
|
|
-
|
-
|
4,178
|
-
|
4,178
|
-
|
4,178
|
|
|
Restructuring
expenses (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(4,095)
|
-
|
4,095
|
-
|
4,095
|
-
|
4,095
|
|
|
Asset impairment
charges (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(375,381)
|
375,381
|
|
375,381
|
-
|
375,381
|
|
|
Indemnification asset
write-off (i)
|
-
|
-
|
-
|
-
|
|
-
|
(3,094)
|
-
|
-
|
3,094
|
|
3,094
|
|
3,094
|
|
|
Non-cash interest
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
17,649
|
17,649
|
-
|
17,649
|
|
|
Loss on
extinguishment of debt (k)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
448
|
448
|
-
|
448
|
|
|
Other (l)
|
-
|
(1,960)
|
-
|
1,960
|
|
(210)
|
(3,173)
|
-
|
-
|
5,343
|
977
|
6,320
|
-
|
6,320
|
|
|
Tax adjustments
(m)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
101,526
|
(101,526)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
655,407
|
$
364,007
|
$
-
|
$
291,400
|
44%
|
$
36,136
|
$
71,182
|
$
-
|
$
-
|
$
184,082
|
$
(64,850)
|
$
119,232
|
$
27,388
|
$
91,844
|
$
2.35
|
|
|
(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 ceased Cody API business
|
|
(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, the Cody Restructuring
Plan as well as the Cody API Restructuring Plan
|
|
(h)
|
To exclude asset
impairment charges primarily related to goodwill and other
long-lived assets
|
|
(i)
|
To exclude the
write-off of indemnification assets related to the KUPI
acquisition
|
|
(j)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
|
(k)
|
To exclude the loss
on extinguishment of debt related to repurchases of Term
Loans
|
|
(l)
|
To primarily exclude
separation costs related to the Company's cost reduction plan, a
special recognition incentive payment as well as a litigation
settlement
|
|
(m)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
|
(n)
|
The weighted average
share number for the twelve months ended June 30, 2019 is
37,779,812 for GAAP and 39,135,719 for the non-GAAP earnings (loss)
per share calculations
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended June 30, 2018
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expense
|
SG&A
expense
|
Acquisition
and
integration-
related
expenses
|
Restructuring
expenses
|
Loss on sale of
intangible asset
|
Asset impairment
charges
|
Operating
income
|
Other
income
(loss)
|
Income
before
income
tax
|
Income
tax
expense
|
Net
income
|
Diluted
earnings
per
share (k)
|
|
|
|
|
GAAP
Reported
|
$
684,563
|
$
363,729
|
$
32,128
|
$
288,706
|
42%
|
$
29,196
|
$
82,196
|
$
83
|
$
7,061
|
$
15,514
|
$
24,960
|
$
129,696
|
$(78,603)
|
$
51,093
|
$
22,403
|
$
28,690
|
$
0.75
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of Fixed
Assets step-up (a)
|
-
|
(5,340)
|
-
|
5,340
|
|
-
|
-
|
-
|
-
|
-
|
-
|
5,340
|
-
|
5,340
|
-
|
5,340
|
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(32,128)
|
32,128
|
|
-
|
(582)
|
-
|
-
|
-
|
-
|
32,710
|
-
|
32,710
|
-
|
32,710
|
|
|
Acquisition and
integration-related expenses (c)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(83)
|
-
|
-
|
-
|
83
|
-
|
83
|
-
|
83
|
|
|
Restructuring
expenses (d)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(7,061)
|
-
|
-
|
7,061
|
-
|
7,061
|
-
|
7,061
|
|
|
Loss on sale of
intangible asset (e)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
(15,514)
|
-
|
15,514
|
-
|
15,514
|
-
|
15,514
|
|
|
Asset impairment
charges (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
(24,960)
|
24,960
|
-
|
24,960
|
-
|
24,960
|
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
20,213
|
20,213
|
-
|
20,213
|
|
|
Litigation settlement
gain (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,500)
|
(3,500)
|
-
|
(3,500)
|
|
|
Other (i)
|
-
|
-
|
-
|
-
|
|
-
|
(10,593)
|
-
|
-
|
-
|
-
|
10,593
|
-
|
10,593
|
-
|
10,593
|
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
23,421
|
(23,421)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
684,563
|
$
358,389
|
$
-
|
$
326,174
|
48%
|
$
29,196
|
$
71,021
|
$
-
|
$
-
|
$
-
|
$
-
|
$
225,957
|
$
(61,890)
|
$
164,067
|
$
45,824
|
$
118,243
|
$
3.10
|
|
|
|
(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 and Cody Restructuring
Plan
|
|
(e)
|
To exclude a loss
realized on a sale of an intangible asset
|
|
(f)
|
To exclude asset
impairment charges primarily related to the Cody Restructuring
Plan, and to a lesser extent, the consolidation of manufacturing
activities with respect to plant-related assets located at the
Company's Townsend Road facility
|
|
(g)
|
To exclude non-cash
interest expense primarily associated with debt issuance
costs
|
|
(h)
|
To exclude a
settlement gain associated with patent litigation
|
|
(i)
|
To primarily exclude
separation benefits associated with the former Chief Executive
Officer and former Senior Vice President of Sales as well as a
reversal of indemnified unrecognized tax benefits due to
expirations in the statute of limitations, related to the KUPI
acquisition
|
|
(j)
|
To exclude the impact
of the revaluation of net long term deferred tax assets related to
the Tax Cut and Jobs Act legislation ("2017 Tax Reform"), partially
offset by the tax effect of the pre-tax adjustments included at
applicable tax rates as well as the reversal of indemnified
unrecognized tax benefits related to the KUPI
acquisition
|
|
(k)
|
The weighted average
share number for the twelve months ended June 30, 2018 is
38,162,514 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 2020
Guidance
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
GAAP
|
|
Adjustments
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$525 -
$545
|
|
-
|
|
$525 -
$545
|
|
|
Gross margin
percentage
|
|
approx. 33.5% to
35.5%
|
|
(6.5%)
|
(a)
|
approx. 40% to
42%
|
|
|
R&D
expense
|
|
$34 -
$36
|
|
-
|
|
$34 -
$36
|
|
|
SG&A
expense
|
|
$68 -
$71
|
|
($5)
|
(b)
|
$63 -
$66
|
|
|
Restructuring
expense
|
|
$2 -
$4
|
|
($2 -
$4)
|
(c)
|
-
|
|
|
Interest and
other
|
|
$71 -
$73
|
|
($15)
|
(d)
|
$56 -
$58
|
|
|
Effective tax
rate
|
|
approx. 26% to
29%
|
|
(4% - 6%)
|
(e)
|
approx. 22% to
23%
|
|
|
Adjusted
EBITDA
|
|
N/A
|
|
N/A
|
|
$145 -
$160
|
|
|
Capital
expenditures
|
|
$20 -
$25
|
|
-
|
|
$20 -
$25
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The adjustment
primarily reflects amortization of purchased intangible assets
related to the acquisition of Kremers Urban Pharmaceuticals, Inc.
("KUPI")
|
|
(b)
|
The adjustment
primarily excludes depreciation on previously capitalized software
integration costs associated with the KUPI acquisition
|
|
(c)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
|
(d)
|
The adjustment
primarily reflects non-cash interest expense associated with debt
issuance costs
|
|
(e)
|
The adjustment
reflects the impact of tax credits and deductions relative to
expected annual pre-tax income
|
|
LANNETT COMPANY,
INC.
|
|
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA (UNAUDITED)
|
|
($ in
millions)
|
|
|
|
|
|
|
|
Fiscal Year 2020
Guidance
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Net
income
|
$
0.6
|
|
$
6.7
|
|
|
|
|
|
|
Interest
expense
|
71.0
|
|
73.0
|
|
Depreciation and
amortization
|
56.0
|
|
57.0
|
|
Income
taxes
|
0.2
|
|
2.7
|
|
EBITDA
|
127.8
|
|
139.4
|
|
|
|
|
|
|
Share-based
compensation
|
9.0
|
|
10.0
|
|
Inventory
write-down
|
7.0
|
|
8.0
|
|
Separation
costs
|
0.7
|
|
0.7
|
|
Cody API
business
|
1.5
|
|
2.0
|
|
Restructuring
expenses
|
2.0
|
|
4.0
|
|
Restructuring
payments
|
(3.0)
|
|
(4.0)
|
|
Adjusted EBITDA
(Non-GAAP)
|
$
145.0
|
|
$
160.1
|
|
LANNETT COMPANY,
INC.
|
|
NET SALES BY
MEDICAL INDICATION
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
($ in
thousands)
|
June
30,
|
|
June
30,
|
|
Medical
Indication
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Antibiotic
|
$
3,325
|
|
$
3,807
|
|
$
15,391
|
|
$
14,509
|
|
Anti-Psychosis
|
27,913
|
|
12,430
|
|
73,453
|
|
59,557
|
|
Cardiovascular
|
31,235
|
|
24,056
|
|
101,467
|
|
64,011
|
|
Central Nervous
System
|
11,362
|
|
7,652
|
|
34,170
|
|
31,789
|
|
Gallstone
|
1,860
|
|
4,605
|
|
9,604
|
|
20,280
|
|
Gastrointestinal
|
11,783
|
|
14,123
|
|
48,566
|
|
60,294
|
|
Glaucoma
|
1,301
|
|
833
|
|
3,021
|
|
6,540
|
|
Migraine
|
9,458
|
|
10,627
|
|
41,592
|
|
54,015
|
|
Muscle
Relaxant
|
2,806
|
|
3,187
|
|
12,344
|
|
13,496
|
|
Pain
Management
|
8,439
|
|
4,553
|
|
28,210
|
|
23,036
|
|
Respiratory
|
742
|
|
1,690
|
|
3,418
|
|
7,891
|
|
Thyroid
Deficiency
|
(42)
|
|
59,945
|
|
197,522
|
|
245,929
|
|
Urinary
|
1,520
|
|
2,790
|
|
6,783
|
|
8,661
|
|
Other
|
19,278
|
|
16,549
|
|
56,507
|
|
54,720
|
|
Contract
Manufacturing revenue
|
2,861
|
|
4,064
|
|
23,359
|
|
19,835
|
|
Net
Sales
|
$ 133,841
|
|
$ 170,911
|
|
$ 655,407
|
|
$ 684,563
|
|
Contact:
|
Robert
Jaffe
|
|
Robert Jaffe Co.,
LLC
|
|
(424)
288-4098
|
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SOURCE Lannett Company, Inc.