PHILADELPHIA, May 6, 2020 /PRNewswire/ -- Lannett Company,
Inc. (NYSE: LCI) today reported financial results for its fiscal
2020 third quarter ended March 31,
2020.
"I am incredibly proud of the effort and dedication of all of
our employees in response to the COVID-19 public health crisis,"
said Tim Crew, chief executive
officer of Lannett. "We focused on employee safety and our team
continues to produce important medications for patients. We also
recently brought a number of new drug products to market.
Fortunately for Lannett, all of our finished-dose manufacturing is
U.S. based. We have long articulated our supply chain has less
global fragmentation than that of many of our competitors. As a
result, our supply chain for products and key ingredients has to
date been only modestly affected by challenges associated with
COVID-19.
"For our fiscal 2020 third quarter, net sales were higher than
expected due to COVID-19, as patients appear to have purchased
extra supply of their medications and some customers increased
their purchases of some of our products to address patient demand
and avoid shortages.
"We plan to launch several new products in the next several
months, and look forward to our scheduled meeting in early June
with the FDA to plan next steps for the clinical advancement of our
biosimilar insulin glargine partnered product candidate."
For the fiscal 2020 third quarter on a GAAP basis, net sales
were $144.4 million compared with
$172.8 million for the third quarter
of fiscal 2019. Gross profit was $41.7
million, or 29% of net sales, compared with $65.3 million, or 38% of net sales. For the
fiscal 2020 third quarter, operating expenses included an asset
impairment charge of $14.0 million
related to the write-down of the value of a product license
agreement. Net loss was $16.6
million, or $0.43 per share,
versus net income of $10.6 million,
or $0.27 per diluted share, for the
third quarter of fiscal 2019.
For the fiscal 2020 third quarter reported on a Non-GAAP basis,
net sales were $144.4 million
compared with $172.8 million for the
third quarter of fiscal 2019. Adjusted gross profit was
$52.3 million, or 36% of net sales,
compared with $77.0 million, or 45%
of net sales, for the prior-year third quarter. Adjusted interest
expense was $12.7 million compared
with $17.0 million for the third
quarter of fiscal 2019. Adjusted net income was $11.7 million, or $0.27 per diluted share, compared with
$26.6 million, or $0.68 per diluted share, for the fiscal 2019
third quarter. Adjusted EBITDA for the fiscal 2020 third quarter
was $35.9 million.
Guidance for Fiscal 2020
Based on its current outlook, the company tightened the range
for net sales and revised certain other items in its GAAP and
adjusted guidance for fiscal year 2020. The full guidance is
as follows:
|
GAAP
|
Adjusted**
|
Net sales
|
$535 million to $545
million, from $530 million to $550 million
|
$535 million to $545
million, from $530 million to $550 million
|
Gross margin
%
|
Approximately 29.5%
to 31.5%, down from approximately 32.5% to 34.5%
|
Approximately 37% to
39%, down from approximately 39% to 41%
|
R&D
expense
|
$31 million to $32
million, down from $34 million to $36 million
|
$31 million to $32
million, down from $34 million to $36 million
|
SG&A
expense
|
$75 million to $77
million, up from $69 million to $72 million
|
$65 million to $67
million, up from $63 million to $66 million
|
Restructuring
expense
|
$2 million to $3
million, unchanged
|
$ --
|
Asset impairment
charges
|
$16 million, up from
$2 million
|
$ --
|
Interest and
other
|
$66 million to $68
million, down from $67 million to $69 million
|
$50 million to $51
million, down from $51 million to $53 million
|
Effective tax
rate
|
Approximately 16% to
17%, unchanged
|
Approximately 21% to
22%, unchanged
|
Adjusted
EBITDA*
|
N/A
|
$137 million to $147
million, down from $145 million to $160 million
|
Capital
expenditures
|
$15 million to $20
million, down from $20 million to $25 million
|
$15 million to $20
million, down from $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 2020 third quarter ended March 31, 2020. 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 49654451. 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) restructuring 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 commercializing recently introduced products,
launching an additional products in the coming months, the
potential material impact of COVID-19 on future financial results,
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
|
(UNAUDITED)
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
March 31,
2020
|
|
June 30,
2019
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
101,455
|
|
$
140,249
|
Accounts receivable,
net
|
180,356
|
|
164,752
|
Inventories
|
|
135,955
|
|
143,971
|
Prepaid income
taxes
|
8,414
|
|
-
|
Assets held for
sale
|
2,678
|
|
9,671
|
Other current
assets
|
14,450
|
|
13,606
|
Total current
assets
|
443,308
|
|
472,249
|
Property, plant
and equipment, net
|
181,408
|
|
186,670
|
Intangible assets,
net
|
401,044
|
|
411,229
|
Operating lease
right-of-use assets
|
9,774
|
|
-
|
Deferred tax
assets
|
|
111,793
|
|
109,305
|
Other
assets
|
|
11,824
|
|
7,960
|
TOTAL
ASSETS
|
|
$
1,159,151
|
|
$
1,187,413
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
33,834
|
|
$
13,493
|
Accrued
expenses
|
|
14,115
|
|
5,805
|
Accrued payroll and
payroll-related expenses
|
13,121
|
|
19,924
|
Rebates
payable
|
|
43,304
|
|
46,175
|
Royalties
payable
|
|
21,362
|
|
16,215
|
Restructuring
liability
|
61
|
|
2,315
|
Income taxes
payable
|
-
|
|
2,198
|
Current operating
lease liabilities
|
1,045
|
|
-
|
Short-term borrowings
and current portion of long-term debt
|
95,064
|
|
66,845
|
Other current
liabilities
|
2,850
|
|
3,652
|
Total current
liabilities
|
224,756
|
|
176,622
|
Long-term debt,
net
|
599,553
|
|
662,203
|
Long-term
operating lease liabilities
|
10,189
|
|
-
|
Other
liabilities
|
|
14,115
|
|
14,547
|
TOTAL
LIABILITIES
|
848,613
|
|
853,372
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
Common
stock($0.001 par value, 100,000,000 shares authorized;
39,898,838
|
|
|
|
and 38,969,518
shares issued; 38,741,712 and 38,010,714 shares outstanding
at
|
|
|
|
March 31, 2020 and
June 30, 2019, respectively)
|
40
|
|
39
|
Additional paid-in
capital
|
319,064
|
|
317,023
|
Retained
earnings
|
|
8,410
|
|
32,075
|
Accumulated other
comprehensive loss
|
(641)
|
|
(615)
|
Treasury
stock(1,157,126 and 958,804 shares at March 31, 2020 and June 30,
2019, respectively)
|
(16,335)
|
|
(14,481)
|
Total stockholders'
equity
|
310,538
|
|
334,041
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
1,159,151
|
|
$
1,187,413
|
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,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
144,372
|
|
$
172,794
|
|
$
407,824
|
|
$
521,566
|
|
Cost of
sales
|
|
94,380
|
|
99,571
|
|
258,699
|
|
303,012
|
|
Amortization of
intangibles
|
|
8,316
|
|
7,906
|
|
23,497
|
|
24,286
|
|
Gross
profit
|
|
41,676
|
|
65,317
|
|
125,628
|
|
194,268
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
7,441
|
|
9,838
|
|
23,287
|
|
29,371
|
|
Selling, general, and
administrative expenses
|
|
22,147
|
|
21,649
|
|
60,876
|
|
65,434
|
|
Restructuring
expenses
|
|
191
|
|
452
|
|
1,771
|
|
1,687
|
|
Asset impairment
charges
|
|
13,989
|
|
-
|
|
15,607
|
|
369,499
|
|
Total operating
expenses
|
|
43,768
|
|
31,939
|
|
101,541
|
|
465,991
|
|
Operating income
(loss)
|
|
(2,092)
|
|
33,378
|
|
24,087
|
|
(271,723)
|
|
Other income
(loss):
|
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
|
-
|
|
(413)
|
|
(2,145)
|
|
(413)
|
|
Investment
income
|
|
393
|
|
925
|
|
1,552
|
|
1,860
|
|
Interest
expense
|
|
(16,177)
|
|
(21,485)
|
|
(52,163)
|
|
(64,430)
|
|
Other
|
|
(380)
|
|
(401)
|
|
(181)
|
|
(1,409)
|
|
Total other
loss
|
|
(16,164)
|
|
(21,374)
|
|
(52,937)
|
|
(64,392)
|
|
Income (loss)
before income tax
|
|
(18,256)
|
|
12,004
|
|
(28,850)
|
|
(336,115)
|
|
Income tax expense
(benefit)
|
|
(1,664)
|
|
1,359
|
|
(5,185)
|
|
(71,594)
|
|
Net income
(loss)
|
|
$
(16,592)
|
|
$
10,645
|
|
$
(23,665)
|
|
$
(264,521)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.43)
|
|
$
0.28
|
|
$
(0.61)
|
|
$
(7.01)
|
|
Diluted (1)
|
|
$
(0.43)
|
|
$
0.27
|
|
$
(0.61)
|
|
$
(7.01)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
38,707,049
|
|
37,842,224
|
|
38,539,850
|
|
37,729,099
|
|
Diluted (1)
|
|
38,707,049
|
|
39,330,847
|
|
38,539,850
|
|
37,729,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Effective with
the 4.5% Senior Convertible Note issued on September 27, 2019, the
diluted earnings per share was calculated based on the
"if-converted" method.
|
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
March 31, 2020
|
|
Net sales
|
Cost of
sales
|
Amortization of
intangibles
|
Gross
Profit
|
Gross Margin
%
|
R&D
expense
|
SG&A
expense
|
Restructuring
expenses
|
Asset impairment
charge
|
Operating income
(loss)
|
Other income
(loss)
|
Income (loss)
before income tax
|
Income tax expense
(benefit)
|
Net income
(loss)
|
Diluted earnings
(loss) per share (k)
|
|
|
|
GAAP
Reported
|
$
144,372
|
$
94,380
|
$
8,316
|
$
41,676
|
29%
|
$
7,441
|
$
22,147
|
$
191
|
13,989
|
$
(2,092)
|
$
(16,164)
|
$
(18,256)
|
$
(1,664)
|
$
(16,592)
|
$
(0.43)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(8,316)
|
8,316
|
|
-
|
-
|
-
|
-
|
8,316
|
-
|
8,316
|
-
|
8,316
|
|
Cody API business
(b)
|
-
|
(983)
|
-
|
983
|
|
(47)
|
(58)
|
-
|
-
|
1,088
|
-
|
1,088
|
-
|
1,088
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,058)
|
-
|
-
|
1,058
|
-
|
1,058
|
-
|
1,058
|
|
Decommissioning of
Philadelphia sites (d)
|
-
|
(192)
|
-
|
192
|
|
-
|
-
|
-
|
-
|
192
|
-
|
192
|
-
|
192
|
|
Branded prescription
drug fee (e)
|
-
|
-
|
-
|
-
|
|
-
|
(2,957)
|
-
|
-
|
2,957
|
-
|
2,957
|
-
|
2,957
|
|
Restructuring
expenses (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(191)
|
-
|
191
|
-
|
191
|
-
|
191
|
|
Asset impairment
charge (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(13,989)
|
13,989
|
-
|
13,989
|
-
|
13,989
|
|
Non-cash interest
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
3,430
|
3,430
|
-
|
3,430
|
|
Other (i)
|
-
|
(1,168)
|
-
|
1,168
|
|
(29)
|
(354)
|
-
|
-
|
1,551
|
357
|
1,908
|
-
|
1,908
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
4,832
|
(4,832)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
144,372
|
$
92,037
|
$
-
|
$
52,335
|
36%
|
$
7,365
|
$
17,720
|
$
-
|
$
-
|
$
27,250
|
$
(12,377)
|
$
14,873
|
$
3,168
|
$
11,705
|
$
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 the costs
related to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites, including costs to transfer
products to other locations
|
(e)
|
To exclude the
federally mandated branded prescription drug fee related to
Levothyroxine, a product the Company no longer
sells
|
(f)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
(g)
|
To exclude an
impairment charge associated with an agreement to distribute
Methylphenidate AB
|
(h)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(i)
|
To exclude costs
primarily related to the write-down of property, plant and
equipment as well as COVID-19 special recognition
payments
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(k)
|
The weighted average
share number for the three months ended March 31, 2020 is
38,707,049 for GAAP and 46,132,471 for the non-GAAP earnings (loss)
per share calculations. Effective with the 4.5% Senior Convertible
Note issued on September 27, 2019, the diluted earnings per share
was calculated based on the "if-converted" method.
|
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
March 31, 2019
|
|
Net sales
|
Cost of
sales
|
Amortization of
intangibles
|
Gross
Profit
|
Gross Margin
%
|
R&D
expenses
|
SG&A
expenses
|
Restructuring
expenses
|
Operating
income
|
Other income
(loss)
|
Income before
income tax
|
Income tax
expense
|
Net
income
|
Diluted earnings
per share (k)
|
|
|
|
GAAP
Reported
|
$
172,794
|
$
99,571
|
$
7,906
|
$
65,317
|
38%
|
$
9,838
|
$
21,649
|
$
452
|
$
33,378
|
$
(21,374)
|
$
12,004
|
$
1,359
|
$
10,645
|
$
0.27
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(7,906)
|
7,906
|
|
-
|
-
|
-
|
7,906
|
-
|
7,906
|
-
|
7,906
|
|
Cody API business
Held for Sale (b)
|
-
|
(1,342)
|
-
|
1,342
|
|
(775)
|
(979)
|
-
|
3,096
|
-
|
3,096
|
-
|
3,096
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(1,058)
|
-
|
1,058
|
-
|
1,058
|
-
|
1,058
|
|
Legal and financial
advisory costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(961)
|
-
|
961
|
-
|
961
|
-
|
961
|
|
Decommissioning of
Philadelphia sites (e)
|
-
|
(1,760)
|
-
|
1,760
|
|
-
|
-
|
-
|
1,760
|
-
|
1,760
|
-
|
1,760
|
|
Restructuring
expenses (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(452)
|
452
|
-
|
452
|
-
|
452
|
|
Non-cash interest
(g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
4,514
|
4,514
|
-
|
4,514
|
|
Loss on
extinguishment of debt (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
413
|
413
|
-
|
413
|
|
Other (i)
|
-
|
(625)
|
-
|
625
|
|
-
|
(1,188)
|
-
|
1,813
|
352
|
2,165
|
-
|
2,165
|
|
Tax adjustments
(j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
6,363
|
(6,363)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
172,794
|
$
95,844
|
$
-
|
$
76,950
|
45%
|
$
9,063
|
$
17,463
|
$
-
|
$
50,424
|
$
(16,095)
|
$
34,329
|
$
7,722
|
$
26,607
|
$
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Cody API business Held for Sale which was
classified as Held for Sale as of September 30,
2018
|
(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 2016 Restructuring Plan as well as the Cody
Restructuring Plan
|
(g)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(h)
|
To exclude the loss
on extinguishment of debt related to open market repurchases of
Term Loans
|
(i)
|
To primarily exclude
separation costs related to the Company's cost reduction plan, a
reversal of indemnified unrecognized tax benefits due to
expirations in the statute of limitations, as well as a write-down
of certain assets related to the Company's foreign
subsidiary
|
(j)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(k)
|
The weighted average
share number for the three months ended March 31, 2019 is
39,330,847 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
March 31, 2020
|
|
Net sales
|
Cost of
sales
|
Amortization
of intangibles
|
Gross
Profit
|
Gross
Margin %
|
R&D
expense
|
SG&A
expense
|
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 (l)
|
|
|
|
GAAP
Reported
|
$
407,824
|
$
258,699
|
$
23,497
|
$
125,628
|
31%
|
$
23,287
|
$
60,876
|
$
1,771
|
15,607
|
$
24,087
|
$
(52,937)
|
$
(28,850)
|
$
(5,185)
|
$
(23,665)
|
$
(0.61)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
-
|
-
|
(23,497)
|
23,497
|
|
-
|
-
|
-
|
-
|
23,497
|
-
|
23,497
|
-
|
23,497
|
|
Cody API business
(b)
|
-
|
(2,911)
|
-
|
2,911
|
|
(552)
|
(433)
|
-
|
-
|
3,896
|
-
|
3,896
|
-
|
3,896
|
|
Depreciation on
capitalized software costs (c)
|
-
|
-
|
-
|
-
|
|
-
|
(3,175)
|
-
|
-
|
3,175
|
-
|
3,175
|
-
|
3,175
|
|
Decommissioning of
Philadelphia sites (d)
|
-
|
(1,484)
|
-
|
1,484
|
|
-
|
-
|
-
|
-
|
1,484
|
-
|
1,484
|
-
|
1,484
|
|
Branded prescription
drug fee (e)
|
-
|
-
|
-
|
-
|
|
-
|
(2,957)
|
-
|
-
|
2,957
|
-
|
2,957
|
-
|
2,957
|
|
Restructuring
expenses (f)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(1,771)
|
-
|
1,771
|
-
|
1,771
|
-
|
1,771
|
|
Asset impairment
charges (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(15,607)
|
15,607
|
-
|
15,607
|
-
|
15,607
|
|
Non-cash interest
(h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
11,001
|
11,001
|
-
|
11,001
|
|
Loss on
extinguishment of debt (i)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
2,145
|
2,145
|
-
|
2,145
|
|
Other (j)
|
-
|
(1,585)
|
-
|
1,585
|
|
(29)
|
(2,578)
|
-
|
-
|
4,192
|
21
|
4,213
|
-
|
4,213
|
|
Tax adjustments
(k)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
13,942
|
(13,942)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
407,824
|
$
252,719
|
$
-
|
$
155,105
|
38%
|
$
22,706
|
$
51,733
|
$
-
|
$
-
|
$
80,666
|
$
(39,770)
|
$
40,896
|
$
8,757
|
$
32,139
|
$
0.76
|
|
|
(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 the costs
related to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites, including costs to transfer
products to other locations
|
(e)
|
To exclude the
federally mandated branded prescription drug fee related to
Levothyroxine, a product the Company no longer
sells
|
(f)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
(g)
|
To exclude impairment
charges primarily associated with an agreement to distribute
Methylphenidate AB
|
(h)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(i)
|
To exclude the loss
on extinguishment of debt primarily related to the partial
repayment of the outstanding Term Loan A balance
|
(j)
|
To primarily exclude
accrued separation costs related to the Company's former Chief
Financial Officer, COVID-19 special recognition payments, as well
as legal settlements, partially offset by gains on sales of assets
previously held for sale
|
|
(k)
|
To exclude the tax
effect of the pre-tax adjustments included above at applicable tax
rates
|
(l)
|
The weighted average
share number for the nine months ended March 31, 2020 is 38,539,850
for GAAP and 44,248,722 for the non-GAAP earnings (loss) per share
calculations. Effective with the 4.5% Senior Convertible Note
issued on September 27, 2019, the diluted earnings per share was
calculated based on the "if-converted" method.
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(UNAUDITED)
|
(In thousands, except
percentages, share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
March 31, 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 before
income tax (loss)
|
Income tax
expense (benefit)
|
Net income
(loss)
|
Diluted
earnings
(loss) per share (m)
|
|
|
|
GAAP
Reported
|
$
521,566
|
$
303,012
|
$
24,286
|
$
194,268
|
37%
|
$
29,371
|
$
65,434
|
$
1,687
|
$
369,499
|
$
(271,723)
|
$
(64,392)
|
$
(336,115)
|
$
(71,594)
|
$
(264,521)
|
$
(7.01)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of fixed
assets step-up (a)
|
-
|
(2,459)
|
-
|
2,459
|
|
-
|
-
|
-
|
-
|
2,459
|
-
|
2,459
|
-
|
2,459
|
|
Amortization of
intangibles (b)
|
-
|
-
|
(24,286)
|
24,286
|
|
-
|
-
|
-
|
-
|
24,286
|
-
|
24,286
|
-
|
24,286
|
|
Cody API business
Held for Sale (c)
|
-
|
(4,828)
|
-
|
4,828
|
|
(1,637)
|
(945)
|
-
|
-
|
7,410
|
-
|
7,410
|
-
|
7,410
|
|
Depreciation on
capitalized software costs (d)
|
-
|
-
|
-
|
-
|
|
-
|
(3,175)
|
-
|
-
|
3,175
|
-
|
3,175
|
-
|
3,175
|
|
Legal and financial
advisory costs (e)
|
-
|
-
|
-
|
-
|
|
-
|
(3,389)
|
-
|
-
|
3,389
|
-
|
3,389
|
-
|
3,389
|
|
Decommissioning of
Philadelphia sites (f)
|
-
|
(4,025)
|
-
|
4,025
|
|
-
|
-
|
-
|
-
|
4,025
|
583
|
4,608
|
-
|
4,608
|
|
Restructuring
expenses (g)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
(1,687)
|
-
|
1,687
|
-
|
1,687
|
-
|
1,687
|
|
Asset impairment
charges (h)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
(369,499)
|
369,499
|
|
369,499
|
-
|
369,499
|
|
Non-cash interest
(i)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
13,448
|
13,448
|
-
|
13,448
|
|
Loss on
extinguishment of debt (j)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
413
|
413
|
-
|
413
|
|
Other (k)
|
-
|
(1,751)
|
-
|
1,751
|
|
(210)
|
(3,789)
|
-
|
-
|
5,750
|
637
|
6,387
|
-
|
6,387
|
|
Tax adjustments
(l)
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
95,066
|
(95,066)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted
|
$
521,566
|
$
289,949
|
$
-
|
$
231,617
|
44%
|
$
27,524
|
$
54,136
|
$
-
|
$
-
|
$
149,957
|
$
(49,311)
|
$
100,646
|
$
23,472
|
$
77,174
|
$
1.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Cody API business Held for Sale which was
classified as Held for Sale as of September 30,
2018
|
(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 as well as the Cody
Restructuring Plan
|
(h)
|
To exclude asset
impairment charges related to goodwill and other long-lived
assets
|
(i)
|
To exclude non-cash
interest expense associated with debt issuance
costs
|
(j)
|
To exclude the loss
on extinguishment of debt related to open market repurchases of
Term Loans
|
(k)
|
To primarily exclude
separation costs related to the Company's cost reduction plan, a
special recognition incentive payment, as well as reversals of
indemnified unrecognized tax benefits due to expirations in the
statute of limitations
|
(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 nine months ended March 31, 2019 is 37,729,099
for GAAP and 39,066,670 for the non-GAAP earnings (loss) per share
calculations
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
|
($ in
thousands)
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
2020
|
|
|
|
Net
loss
|
|
$
(16,592)
|
|
|
|
Interest
expense
|
|
16,177
|
Depreciation and
amortization
|
|
14,508
|
Income tax
benefit
|
|
(1,664)
|
EBITDA
|
|
12,429
|
|
|
|
Share-based
compensation
|
|
1,870
|
Inventory
write-down
|
|
2,432
|
Asset impairment
charge
|
|
13,989
|
Investment
income
|
|
(393)
|
Other non-operating
loss
|
|
380
|
Restructuring
expenses
|
|
191
|
Restructuring
payments
|
|
(537)
|
Cody API business
(a)
|
|
1,088
|
Branded prescription
drug fee (b)
|
|
2,957
|
Other (c)
|
|
1,519
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
35,925
|
|
|
(a)
|
To exclude the
operating results of the ceased Cody API business
|
(b)
|
To exclude the
federally mandated branded prescription drug fee related to
Levothyroxine, a product the Company no longer sells
|
(c)
|
To primarily exclude
COVID-19 special recognition payments as well as the costs related
to the decommissioning and shutdown of the Philadelphia
manufacturing and distribution sites, including costs to transfer
products to other locations
|
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
|
|
$535 -
$545
|
|
-
|
|
$535 -
$545
|
|
Gross margin
percentage
|
|
approx. 29.5% to
31.5%
|
|
7.5%
|
(a)
|
approx. 37% to
39%
|
|
R&D
expense
|
|
$31 -
$32
|
|
-
|
|
$31 -
$32
|
|
SG&A
expense
|
|
$75 -
$77
|
|
($10)
|
(b)
|
$65 -
$67
|
|
Restructuring
expense
|
|
$2 -
$3
|
|
($2 -
$3)
|
(c)
|
-
|
|
Asset impairment
charges
|
|
$16
|
|
($16)
|
(d)
|
-
|
|
Interest and
other
|
|
$66 -
$68
|
|
($16 -
$17)
|
(e)
|
$50 -
$51
|
|
Effective tax
rate
|
|
approx. 16% to
17%
|
|
5%
|
(f)
|
approx. 21% to
22%
|
|
Adjusted
EBITDA
|
|
N/A
|
|
N/A
|
|
$137 -
$147
|
|
Capital
expenditures
|
|
$15 -
$20
|
|
-
|
|
$15 -
$20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The adjustment
primarily reflects amortization of purchased intangible assets
related to the acquisition of Kremers Urban Pharmaceuticals, Inc.
("KUPI")
|
(b)
|
The adjustment
primarily excludes depreciation on previously capitalized software
integration costs associated with the KUPI acquisition as well as a
federally mandated branded prescription drug fee related to
Levothyroxine, a product the Company no longer sells
|
(c)
|
To exclude expenses
associated with the Cody API Restructuring Plan
|
(d)
|
This adjustment
primarily excludes an impairment charge associated with an
agreement to distribute Methylphenidate AB
|
(e)
|
The adjustment
primarily reflects non-cash interest expense associated with debt
issuance costs
|
(f)
|
The adjustment
reflects the impact of tax credits and deductions relative to
expected annual pre-tax income
|
LANNETT COMPANY,
INC.
|
RECONCILIATION OF
NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
|
($ in
millions)
|
|
|
|
|
|
Fiscal Year 2020
Guidance
|
|
Low
|
|
High
|
|
|
|
|
Net
loss
|
$ (26.0)
|
|
$ (20.7)
|
|
|
|
|
Interest
expense
|
66.0
|
|
68.0
|
Depreciation and
amortization
|
56.0
|
|
57.0
|
Income
taxes
|
(5.0)
|
|
(4.3)
|
EBITDA
|
91.0
|
|
100.0
|
|
|
|
|
Share-based
compensation
|
10.0
|
|
10.0
|
Inventory
write-down
|
10.0
|
|
11.0
|
Asset impairment
charges
|
16.0
|
|
16.0
|
Branded prescription
drug fee
|
3.0
|
|
3.0
|
Cody API
business
|
4.0
|
|
4.0
|
Decommissioning of
Philadelphia sites
|
2.0
|
|
2.0
|
Separation
costs
|
1.0
|
|
1.0
|
Restructuring
expenses
|
2.0
|
|
3.0
|
Restructuring
payments
|
(3.0)
|
|
(4.0)
|
Other
|
1.0
|
|
1.0
|
Adjusted EBITDA
(Non-GAAP)
|
$ 137.0
|
|
$ 147.0
|
LANNETT COMPANY,
INC.
|
NET SALES BY
MEDICAL INDICATION
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
($ in
thousands)
|
March
31,
|
|
March
31,
|
Medical
Indication
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Analgesic
|
$
2,811
|
|
$
946
|
|
$
6,806
|
|
$
5,322
|
Anti-Psychosis
|
27,858
|
|
20,616
|
|
78,588
|
|
45,541
|
Cardiovascular
|
21,746
|
|
22,783
|
|
67,325
|
|
70,233
|
Central Nervous
System
|
18,566
|
|
15,906
|
|
57,154
|
|
37,565
|
Endocrinology
|
-
|
|
55,210
|
|
-
|
|
197,565
|
Gastrointestinal
|
20,745
|
|
16,501
|
|
56,020
|
|
47,038
|
Infectious
Disease
|
21,749
|
|
4,162
|
|
51,722
|
|
13,258
|
Migraine
|
12,886
|
|
9,846
|
|
32,907
|
|
32,134
|
Respiratory/Allergy/Cough/Cold
|
2,966
|
|
2,549
|
|
8,747
|
|
9,521
|
Urinary
|
1,149
|
|
2,096
|
|
2,817
|
|
5,233
|
Other
|
8,051
|
|
14,247
|
|
27,847
|
|
37,658
|
Contract
manufacturing revenue
|
5,845
|
|
7,932
|
|
17,891
|
|
20,498
|
Total
net sales
|
$ 144,372
|
|
$ 172,794
|
|
$ 407,824
|
|
$ 521,566
|
Contact:
|
Robert
Jaffe
|
|
Robert Jaffe Co.,
LLC
|
|
(424)
288-4098
|
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SOURCE Lannett Company, Inc.