Lannett Announces Fiscal 2020 Second-Quarter Financial Resul

|Feb 5|magazine57 min read

PHILADELPHIA, Feb. 5, 2020 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2020 second quarter ended December 31, 2019. 

"For our fiscal 2020 second quarter, strong sales across multiple product categories drove solid increases to our net sales and net income over our fiscal 2020 first-quarter results," said Tim Crew, chief executive officer of Lannett.  "Our improved topline was due in part to the introduction of seven new products in the second quarter of fiscal 2020, as well as a full quarter of sales of Posaconazole.  We plan to commence marketing an additional 10 or so products in the second half of the year, including Numbrino®, our recently approved, branded topical anesthetic product.

"We remain on track for launching a substantial number of new products in fiscal 2020.  At the same time, we are making excellent progress advancing multiple products in our pipeline that have significant upside, as evidenced by the recent human pharmacokinetics and pharmacodynamics clinical trial that met all primary endpoints for our insulin glargine product."

For the fiscal 2020 second quarter on a GAAP basis, net sales were $136.1 million compared with $193.7 million for the second quarter of fiscal 2019.  Gross profit was $41.3 million, or 30% of net sales, compared with $69.8 million, or 36% of net sales.  Net income was $5.1 million, or $0.13 per diluted share, compared with $12.4 million, or $0.32 per diluted share.

For the fiscal 2020 second quarter reported on a Non-GAAP basis, net sales were $136.1 million compared with $193.7 million for the second quarter of fiscal 2019.  Adjusted gross profit was $50.2 million, or 37% of net sales, compared with $86.0 million, or 44% of net sales, for the prior-year second quarter.  Adjusted interest expense was $13.1 million compared with $17.1 million for the second quarter of fiscal 2019.  Adjusted net income was $11.7 million, or $0.27 per diluted share, compared with $33.6 million, or $0.86 per diluted share, for the fiscal 2019 second quarter.  Adjusted EBITDA for the fiscal 2020 second quarter was $35.8 million.

Guidance for Fiscal 2020
Based on its current outlook, the company revised certain items in its GAAP guidance and adjusted guidance for fiscal year 2020, the net effect of which is not expected to have an impact on adjusted EBITDA.  The full guidance is as follows:


GAAP

Adjusted**

Net sales

$530 million to $550 million, up from $525 million to $545 million

$530 million to $550 million, up from $525 million to $545 million

Gross margin %

Approximately 32.5% to 34.5%, down from approximately 33.5% to 35.5%

Approximately 39% to 41%, down from approximately 40% to 42%

R&D expense

$34 million to $36 million, unchanged

$34 million to $36 million, unchanged

SG&A expense

$69 million to $72 million, unchanged

$63 million to $66 million, unchanged

Restructuring expense

$2 million to $3 million, down from $2 million to $4 million

$ --

Asset impairment charges

$2 million

$ --

Interest and other

$67 million to $69 million, down from $70 million to $72 million

$51 million to $53 million, down from $54 million to $56 million

Effective tax rate

Approximately 16% to 17%, unchanged

Approximately 21% to 22%, down from approximately 22% to 23%

Adjusted EBITDA*

N/A

$145 million to $160 million, unchanged

Capital expenditures

$20 million to $25 million, unchanged

$20 million to $25 million, unchanged

**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 second quarter ended December 31, 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 49357861.  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 10 or so products in the second half of the year, including Numbrino®, 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)






ASSETS

 (UNAUDITED)



Current assets:

December 31, 2019


June 30, 2019

Cash and cash equivalents

$                   119,176


$       140,249

Accounts receivable, net

158,498


164,752

Inventories

152,090


143,971

Prepaid income taxes

6,949


-

Assets held for sale

3,757


9,671

Other current assets

8,709


13,606

Total current assets

449,179


472,249

Property, plant and equipment, net

183,631


186,670

Intangible assets, net

422,849


411,229

Operating lease right-of-use assets

6,015


-

Deferred tax assets

111,514


109,305

Other assets

7,896


7,960

TOTAL ASSETS

$                1,181,084


$    1,187,413











LIABILITIES




Current liabilities:




Accounts payable

$                     30,883


$         13,493

Accrued expenses

10,750


5,805

Accrued payroll and payroll-related expenses

12,238


19,924

Rebates payable

48,447


46,175

Royalties payable

20,298


16,215

Restructuring liability

515


2,315

Income taxes payable

-


2,198

Current operating lease liabilities

1,848


-

Short-term borrowings and current portion of long-term debt

101,939


66,845

Other current liabilities

2,851


3,652

Total current liabilities

229,769


176,622

Long-term debt, net

606,073


662,203

Long-term operating lease liabilities

5,358


-

Other liabilities

14,712


14,547

TOTAL LIABILITIES

855,912


853,372






STOCKHOLDERS' EQUITY




Common stock ($0.001 par value, 100,000,000 shares authorized; 39,851,828 and 38,969,518 shares issued; 38,698,403 and 38,010,714 shares outstanding at

December 31, 2019 and June 30, 2019, respectively)

40


39

Additional paid-in capital

317,012


317,023

Retained earnings

25,002


32,075

Accumulated other comprehensive loss

(578)


(615)

Treasury stock(1,153,425 and 958,804 shares at December 31, 2019 and June 30, 2019, respectively)

(16,304)


(14,481)

Total stockholders' equity

325,172


334,041

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$                1,181,084


$    1,187,413

 

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)












 (UNAUDITED)


 (UNAUDITED)



Three months ended 


Six months ended 



December 31,


December 31,



2019


2018


2019


2018










Net sales


$      136,110


$        193,718


$      263,452


$        348,772

Cost of sales 


86,663


115,751


164,319


203,441

Amortization of intangibles


8,153


8,157


15,181


16,380

Gross profit


41,294


69,810


83,952


128,951

Operating expenses:









Research and development expenses


6,906


9,723


15,846


19,533

Selling, general, and administrative expenses


17,421


23,197


38,729


43,785

Restructuring expenses


192


213


1,580


1,235

Asset impairment charges


-


-


1,618


369,499

Total operating expenses


24,519


33,133


57,773


434,052

Operating income (loss)


16,775


36,677


26,179


(305,101)

Other income (loss):









Loss on extinguishment of debt


-


-


(2,145)


-

Investment income


430


556


1,159


935

Interest expense


(16,694)


(21,512)


(35,986)


(42,945)

Other


(735)


(712)


199


(1,008)

Total other loss


(16,999)


(21,668)


(36,773)


(43,018)

Income (loss) before income tax


(224)


15,009


(10,594)


(348,119)

Income tax expense (benefit)


(5,308)


2,647


(3,521)


(72,953)

Net income (loss)


$          5,084


$          12,362


$         (7,073)


$      (275,166)










Earnings (loss) per common share:









     Basic


$             0.13


$              0.33


$           (0.18)


$            (7.30)

     Diluted (1)


$             0.13


$              0.32


$           (0.18)


$            (7.30)










Weighted average common shares outstanding:









     Basic


38,605,052


37,761,176


38,457,159


37,674,200

     Diluted (1)


40,557,503


39,112,547


38,457,159


37,674,200


(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 December 31, 2019


Net sales

Cost of
sales

Amortization
of intangibles

Gross
Profit

Gross
Margin %

R&D
expense

SG&A
expense

Restructuring
expenses

Operating
income

Other
income
(loss)

Income (loss)
before income
tax

Income tax
expense
(benefit)

Net income 

Diluted
earnings per
share (i)




GAAP Reported

$ 136,110

$86,663

$        8,153

$ 41,294

30%

$    6,906

$   17,421

$            192

$    16,775

$ (16,999)

$            (224)

$    (5,308)

$     5,084

$          0.13

Adjustments:















Amortization of intangibles (a)

-

-

(8,153)

8,153


-

-

-

8,153

-

8,153

-

8,153


Cody API business (b)

-

(206)

-

206


(85)

(161)

-

452

-

452

-

452


Depreciation on capitalized software costs (c)

-

-

-

-


-

(1,058)

-

1,058

-

1,058

-

1,058


Decommissioning of Philadelphia sites (d)

-

(303)

-

303


-

-

-

303

-

303

-

303


Restructuring expenses (e)

-

-

-

-


-

-

(192)

192

-

192

-

192


Non-cash interest (f)

-

-

-

-


-

-

-

-

3,563

3,563

-

3,563


Other (g)

-

(209)

-

209


-

(135)

-

344

630

974

-

974


Tax adjustments (h)

-

-

-

-


-

-

-

-

-

-

8,111

(8,111)

















Non-GAAP Adjusted

$   136,110

$  85,945

$              -

$   50,165

37%

$     6,821

$    16,067

$               -

$      27,277

$   (12,806)

$           14,471

$       2,803

$     11,668

$           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 

(e)

To exclude expenses associated with the Cody API Restructuring Plan 

(f)

To exclude non-cash interest expense associated with debt issuance costs 

(g)

To primarily exclude a settlement related to a shareholder derivative lawsuit against certain current and former officers and directors of the Company 

(h)

To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 

(i)

The weighted average share number for the three months ended December 31, 2019 is 40,557,503 for GAAP and 46,198,445 for the non-GAAP earnings 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)

















Six months ended December 31, 2019


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 (k)




GAAP Reported

$ 263,452

$ 164,319

$      15,181

$ 83,952

32%

$  15,846

$   38,729

$         1,580

1,618

$    26,179

$ (36,773)

$       (10,594)

$    (3,521)

$    (7,073)

$      (0.18)

Adjustments:
















Amortization of intangibles (a)

-

-

(15,181)

15,181


-

-

-

-

15,181

-

15,181

-

15,181


Cody API business (b)

-

(1,928)

-

1,928


(505)

(375)

-

-

2,808

-

2,808

-

2,808


Depreciation on capitalized software costs (c)

-

-

-

-


-

(2,117)

-

-

2,117

-

2,117

-

2,117


Decommissioning of Philadelphia sites (d)

-

(1,292)

-

1,292


-

-

-

-

1,292

-

1,292

-

1,292


Restructuring expenses (e)

-

-

-

-


-

-

(1,580)

-

1,580

-

1,580

-

1,580


Asset impairment charges (f)

-

-

-

-


-

-

-

(1,618)

1,618

-

1,618

-

1,618


Non-cash interest (g)

-

-

-

-


-

-

-

-

-

7,571

7,571

-

7,571


Loss on extinguishment of debt (h)

-

-

-

-


-

-

-

-

-

2,145

2,145

-

2,145


Other (i)

-

(417)

-

417


-

(2,224)

-

-

2,641

(336)

2,305

-

2,305


Tax adjustments (j)

-

-

-

-


-

-

-

-

-

-

-

9,110

(9,110)


















Non-GAAP Adjusted

$   263,452

$   160,682

$              -

$ 102,770

39%

$    15,341

$    34,013

$               -

$            -

$      53,416

$   (27,393)

$           26,023

$       5,589

$     20,434

$        0.49



(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 

(e)

To exclude expenses associated with the Cody API Restructuring Plan 

(f)

To exclude impairment charges primarily associated with an operating lease right-of-use asset 

(g)

To exclude non-cash interest expense associated with debt issuance costs 

(h)

To exclude the loss on extinguishment of debt primarily related to the partial repayment of the outstanding Term Loan A balance 

(i)

To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale, partially offset by legal settlements 

(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 six months ended December 31, 2019 is 38,457,159 for GAAP and 43,723,412 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 December 31, 2018


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

$193,718

$   115,751

$        8,157

$ 69,810

36%

$    9,723

$      23,197

$           213

$     36,677

$ (21,668)

$ 15,009

$   2,647

$   12,362

$    0.32

Adjustments:















Depreciation of fixed assets step-up (a)

-

(1,124)

-

1,124


-

-

-

1,124

-

1,124

-

1,124


Amortization of intangibles (b)

-

-

(8,157)

8,157


-

-

-

8,157

-

8,157

-

8,157


Cody API business Held for Sale (c)

-

(3,486)

-

3,486


(862)

34

-

4,314

-

4,314

-

4,314


Depreciation on capitalized software costs (d)

-

-

-

-


-

(1,058)

-

1,058

-

1,058

-

1,058


Legal and financial advisory costs (e)

-

-

-

-


-

(2,430)

-

2,430

-

2,430

-

2,430


Decommissioning of Philadelphia sites (f)

-

(2,265)

-

2,265


-

-

-

2,265

583

2,848

-

2,848


Restructuring expenses (g)

-

-

-

-


-

-

(213)

213

-

213

-

213


Non-cash interest (h)

-

-

-

-


-

-

-

-

4,396

4,396

-

4,396


Other (i)

-

(1,126)

-

1,126


(210)

(2,318)

-

3,654

285

3,939

-

3,939


Tax adjustments (j)

-

-

-

-


-

-

-

-

-

-

7,199

(7,199)

















Non-GAAP Adjusted

$  193,718

$     107,750

$              -

$   85,968

44%

$     8,651

$        17,425

$              -

$       59,892

$   (16,404)

$  43,488

$    9,846

$     33,642

$     0.86



(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 non-cash interest expense associated with debt issuance costs 

(i)

To primarily exclude separation costs related to the Company's cost reduction plan, as well as a special recognition incentive payment 

(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 December 31, 2018 is 39,112,547 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)

















Six months ended December 31, 2018


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 (l)




GAAP Reported

$  348,772

$   203,441

$      16,380

$  128,951

37%

$  19,533

$43,785

$         1,235

$       369,499

$ (305,101)

$ (43,018)

$(348,119)

$  (72,953)

$     (275,166)

$  (7.30)

Adjustments:
















Depreciation of fixed assets step-up (a)

-

(2,459)

-

2,459


-

-

-

-

2,459

-

2,459

-

2,459


Amortization of intangibles (b)

-

-

(16,380)

16,380


-

-

-

-

16,380

-

16,380

-

16,380


Cody API business Held for Sale (c)

-

(3,486)

-

3,486


(862)

34

-

-

4,314

-

4,314

-

4,314


Depreciation on capitalized software costs (d)

-

-

-

-


-

(2,116)

-

-

2,116

-

2,116

-

2,116


Legal and financial advisory costs (e)

-

-

-

-


-

(2,430)

-

-

2,430

-

2,430

-

2,430


Decommissioning of Philadelphia sites (f)

-

(2,265)

-

2,265


-

-

-

-

2,265

583

2,848

-

2,848


Restructuring expenses (g)

-

-

-

-


-

-

(1,235)

-

1,235

-

1,235

-

1,235


Asset impairment charges (h)

-

-

-

-


-

-

-

(369,499)

369,499


369,499

-

369,499


Non-cash interest (i)

-

-

-

-


-

-

-

-

-

8,934

8,934

-

8,934


Other (j)

-

(1,126)

-

1,126


(210)

(2,600)

-

-

3,936

285

4,221

-

4,221


Tax adjustments (k)

-

-

-

-


-

-

-

-

-

-

-

88,703

(88,703)


















Non-GAAP Adjusted

$    348,772

$     194,105

$              -

$    154,667

44%

$    18,461

$  36,673

$               -

$                 -

$      99,533

$   (33,216)

$      66,317

$     15,750

$          50,567

$     1.30



(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 primarily exclude separation costs related to the Company's cost reduction plan, as well as a special recognition incentive payment 

(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 six months ended December 31, 2018 is 37,674,200 for GAAP and 38,937,705 for the non-GAAP earnings (loss) per share calculations 

 

LANNETT COMPANY, INC.

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED)

($ in thousands)






Three months ended 



December 31, 2019




Net income


$                          5,084




Interest expense


16,694

Depreciation and amortization


14,089

Income tax expense


(5,308)

EBITDA


30,559




Share-based compensation


2,007

Inventory write-down


2,544

Investment income


(430)

Other non-operating loss


735

Restructuring expenses


192

Restructuring payments


(844)

Cody API business (a)


452

Decommissioning of Philadelphia sites (b)


303

Other


269

Adjusted EBITDA (Non-GAAP)


$                        35,787



(a)

To exclude the operating results of the ceased Cody API business

(b)

To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites

 

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


 $530 - $550 


-


 $530 - $550 

Gross margin percentage


approx. 32.5% to 34.5%


6.5%

 (a) 

approx. 39% to 41%

R&D expense


 $34 - $36 


-


 $34 - $36 

SG&A expense


 $69 - $72 


($6)

 (b) 

 $63 - $66 

Restructuring expense


 $2 - $3 


 ($2 - $3) 

 (c) 

-

Asset impairment charges


$2


($2)

 (d) 

-

Interest and other


 $67 - $69 


($16)

 (e) 

 $51 - $53 

Effective tax rate


 approx. 16% to 17% 


5%

 (f) 

approx. 21% to 22%

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) This adjustment primarily excludes an impairment charge associated with an operating lease right-of-use asset

(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 INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)

($ in millions)






Fiscal Year 2020 Guidance


Low


High





Net income (loss)

$    (2.0)


$     6.0





Interest expense

67.0


69.0

Depreciation and amortization

56.0


57.0

Income taxes

-


2.0

EBITDA

121.0


134.0





Share-based compensation

10.0


11.0

Inventory write-down

9.0


10.0

Separation costs

1.0


1.0

Cody API business

3.0


3.0

Impairment

2.0


2.0

Restructuring expenses

2.0


3.0

Restructuring payments

(3.0)


(4.0)

Adjusted EBITDA (Non-GAAP)

$ 145.0


$ 160.0

 

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION










Three months ended


Six months ended

($ in thousands)

December 31, 


December 31, 

Medical Indication

2019


2018


2019


2018

Analgesic

$    2,111


$    2,547


$    3,995


$    4,376

Anti-Psychosis

22,697


14,036


50,730


24,925

Cardiovascular

23,972


25,680


45,579


47,450

Central Nervous System

19,331


7,373


38,588


21,659

Endocrinology

-


88,477


-


142,355

Gastrointestinal

18,313


12,943


35,275


30,537

Infectious Disease

18,078


4,616


29,973


9,096

Migraine

10,878


12,551


20,021


22,288

Respiratory/Allergy/Cough/Cold

3,075


3,388


5,781


6,972

Urinary

1,233


1,596


1,668


3,137

Other

9,934


12,606


19,796


23,411

Contract manufacturing revenue

6,488


7,905


12,046


12,566

   Total net sales

$ 136,110


$ 193,718


$ 263,452


$ 348,772

 

Contact:

Robert Jaffe


Robert Jaffe Co., LLC


(424) 288-4098

 

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SOURCE Lannett Company, Inc.