Lannett Announces Fiscal 2019 Fourth-Quarter, Full-Year Financial Results; Issues Guidance For Fiscal 2020
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
Gross Gross
R&D
SG&A
Restructuring
Asset impairment Operating
Other
Income
Income
Net Diluted
of intangibles Profit Margin expenses expenses expenses charges income income (loss) tax income earnings
% (loss) before expense (loss) (loss) per
income tax (benefit) 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
Amortization
Gross Gross
R&D
SG&A
Acquisition
Restructuring
Asset impairment Operating
Other
Income (loss)
Income
Net Diluted
sales of intangibles Profit Margin % expense expense and integration- expenses charges income income before income tax income earnings
related (loss) tax expense (loss) (loss) per
expenses (benefit) 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
Gross Gross
R&D
SG&A
Restructuring
Asset
Operating
Other
Income
Income tax
Net income Diluted
of intangibles Profit Margin expenses expenses expenses impairment income income (loss) expense (loss) earnings
% charges (loss) (loss) before (benefit) (loss) per
income tax 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
Amortization
Gross Gross
R&D
SG&A
Acquisition
Restructuring
Loss on sale of
Asset impairment
Operating
Other
Income
Income
Net Diluted
sales of intangibles Profit Margin % expense expense and expenses intangible asset charges income income before tax income earnings
integration- (loss) income expense per
related tax share (k)
expenses
---
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
View original content to download multimedia:http://www.prnewswire.com/news-releases/lannett-announces-fiscal-2019-fourth-quarter-full-year-financial-results-issues-guidance-for-fiscal-2020-300907999.html
SOURCE Lannett Company, Inc.
