Lannett Announces Fiscal 2020 Fourth-Quarter, Full-Year Financial Results
PHILADELPHIA, Aug. 26, 2020 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2020 fourth quarter and full year ended June 30, 2020.
"For both the fiscal 2020 full year and fourth quarter, our net sales and profitability exceeded expectations, driven in large part by a strong performance of our base portfolio and 18 and six new product launches during the year and quarter, respectively," said Tim Crew, chief executive officer of Lannett. "Moreover, during the fourth quarter, we increased our cash position by more than $40 million to approximately $144 million at year end, due to initiatives implemented to improve working capital. We intend to use a portion of the cash to pay down, in full, our Term A Loans at their maturity in November of this year.
"Thus far in fiscal 2021, we have implemented and nearly completed a restructuring and cost reduction plan that we estimate will lower our expenses by approximately $15 million, annually, and launched four new products, including Levothyroxine Tablets. Over the course of the coming year, we intend to continue to launch a number of new products and expand our pipeline through in-house development efforts, as well as in-licensing agreements. We are especially excited and optimistic about recent clinical progress related to a number of drug candidates in our portfolio that have very large addressable markets; we believe these products also have durable value and the potential to be catalysts for significant growth.
"We have provided guidance for the upcoming year, which includes the expected contribution from a number of new product launches in the coming year and a full year of contribution from the 18 products we launched in fiscal 2020. Our outlook also reflects recent and anticipated competitive pressure on certain key products, as well as lower operating expenses as a result of our recently announced restructuring and cost reduction plan."
For the fiscal 2020 fourth quarter on a GAAP basis, net sales were $137.9 million compared with $133.8 million for the fourth quarter of fiscal 2019. Gross profit was $39.6 million, or 29% of net sales, compared with $49.3 million, or 37% of net sales. The company recorded asset impairment charges of $18.8 million compared with $5.9 million in the prior-year fourth quarter. Net loss was $9.7 million, or $0.25 per share, compared with $7.6 million, or $0.20 per share, for the fourth quarter of fiscal 2019.
For the fiscal 2020 fourth quarter reported on a Non-GAAP basis, net sales were $137.9 million compared with $133.8 million for the fourth quarter of fiscal 2019. Adjusted gross profit was $48.9 million, or 35% of net sales, compared with $59.8 million, or 45% of net sales, for the prior-year fourth quarter. Adjusted interest expense decreased to $11.3 million compared with $16.0 million for the fourth quarter of fiscal 2019. Adjusted net income was $13.4 million, or $0.31 per diluted share, compared with $14.7 million, or $0.37 per diluted share, for the fiscal 2019 fourth quarter. Adjusted EBITDA for the fiscal 2020 fourth quarter was $35.2 million.
For the fiscal 2020 full year, on a GAAP basis, net sales were $545.7 million compared with $655.4 million for the fiscal 2019 full year. Gross profit was $165.2 million, or 30% of total net sales, compared with $243.6 million, or 37% of total net sales. The company recorded asset impairment charges of $34.4 million compared with $375.4 million for fiscal 2019. Net loss was $33.4 million, or $0.86 per share, compared with $272.1 million, or $7.20 per diluted share, for fiscal 2019.
For the fiscal 2020 full year reported on a Non-GAAP basis, net sales were $545.7 million compared with $655.4 million for the fiscal 2019 full year. Adjusted gross profit was $204.0 million, or 37% of adjusted net sales, compared with $291.4 million, or 44% of adjusted net sales, for the prior year. Adjusted interest expense significantly declined to $52.5 million from $67.0 million for fiscal 2019. Adjusted net income was $45.6 million, or $1.07 per diluted share, compared with $91.8 million, or $2.35 per diluted share, for the fiscal 2019 full year.
Guidance for Fiscal 2021
Based on its current outlook, the company provided guidance for fiscal year 2021, as follows:
GAAP Adjusted**
Net
sales
$520 million to $545 million
$520 million to $545 million
---
Gross
margin
% Approximately 23% to 25% Approximately 29% to 31%
---
R&D
expense
$29 million to $32 million
$29 million to $32 million
---
SG&A
expense
$59 million to $62 million
$55 million to $58 million
---
Restructuring
expense
$4 million to $5 million
$ --
---
Interest
and
other
$53 million to $54 million
$41 million to $42 million
---
Effective
tax
rate Approximately 34% to 35% Approximately 21% to 22%
---
Adjusted
EBITDA* N/A
$100 million to $110 million
---
Capital
expenditures
$15 million to $20 million
$15 million to $20 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 fourth quarter ended June 30, 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 49903262. 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 and successfully commercializing additional products in fiscal 2021, achieving cost savings from the recently announced restructuring and cost savings plan, the potential material impact of COVID-19 on future financial results, and achieving the financial metrics stated in the company's guidance for fiscal 2021, 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.
Contact: Robert Jaffe
Robert Jaffe Co.,
LLC
(424) 288-4098
FINANCIAL SCHEDULES FOLLOW
LANNETT COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
June 30, 2020
June 30, 2019
ASSETS
---
Current assets:
Cash and cash equivalents $144,329 $140,249
Accounts receivable, net 125,688 164,752
Inventories 142,867 143,971
Income taxes receivable 14,419 -
Assets held for sale 2,678 9,671
Other current assets 13,227 13,606
Total current assets 443,208 472,249
Property, plant and equipment,
net 179,518 186,670
Intangible assets, net 374,735 411,229
Operating lease right-of-use
asset 9,343 -
Deferred tax assets 117,890 109,305
Other assets 11,861 7,960
TOTAL ASSETS $1,136,555 $1,187,413
===
LIABILITIES
---
Current liabilities:
Accounts payable $32,535 $13,493
Accrued expenses 14,962 5,805
Accrued payroll and payroll-
related expenses 16,304 19,924
Rebates payable 38,175 46,175
Royalties payable 20,863 16,215
Restructuring liability 27 2,315
Income taxes payable - 2,198
Current operating lease
liabilities 1,097 -
Short-term borrowings and
current portion of long-term
debt 88,189 66,845
Other current liabilities 2,713 3,652
Total current liabilities 214,865 176,622
Long-term debt, net 592,940 662,203
Long-term operating lease
liabilities 9,844 -
Other liabilities 16,010 14,547
TOTAL LIABILITIES 833,659 853,372
STOCKHOLDERS' EQUITY
---
40 39
Common stock ($0.001 par value, 100,000,000
shares authorized; 39,963,127 and 38,969,518
shares issued; 38,798,787 and 38,010,714
shares outstanding at June 30, 2020 and June
30, 2019, respectively)
Additional paid-in capital 321,164 317,023
Retained earnings (1,291) 32,075
Accumulated other comprehensive
loss (627) (615)
Treasury stock (1,164,340 and
958,804 shares at June 30,
2020 and June 30, 2019,
respectively) (16,390) (14,481)
Total stockholders' equity 302,896 334,041
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,136,555 $1,187,413
===
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,
---
2020 2019 2020 2019
---
Net sales $137,920 $133,841 $545,744 $655,407
Cost of sales 89,809 76,589 348,508 379,601
Amortization of
intangibles 8,519 7,910 32,016 32,196
Gross profit 39,592 49,342 165,220 243,610
---
Operating expenses:
Research and development
expenses 6,691 9,436 29,978 38,807
Selling, general and
administrative expenses 18,591 22,214 79,467 87,648
Restructuring expenses 2,408 1,771 4,095
Asset impairment charges 18,841 5,882 34,448 375,381
---
Total operating expenses 44,123 39,940 145,664 505,931
---
Operating income (loss) (4,531) 9,402 19,556 (262,321)
---
Other income (loss):
Loss on extinguishment
of debt (35) (2,145) (448)
Investment income 94 1,306 1,646 3,166
Interest expense (14,682) (20,194) (66,845) (84,624)
Other (659) (609) (840) (2,018)
---
Total other loss (15,247) (19,532) (68,184) (83,924)
---
Loss before income tax (19,778) (10,130) (48,628) (346,245)
Income tax benefit (10,077) (2,544) (15,262) (74,138)
---
Net loss $(9,701) $(7,586) $(33,366) $(272,107)
Loss per common share:
Basic $(0.25) $(0.20) $(0.86) $(7.20)
Diluted (1) $(0.25) $(0.20) $(0.86) $(7.20)
Weighted average common shares outstanding:
Basic 38,752,080 37,932,509 38,592,618 37,779,812
Diluted (1) 38,752,080 37,932,509 38,592,618 37,779,812
(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 June 30, 2020
---
Net sales
Cost of sales Amortization of intangibles Gross Profit Gross Margin %
R&D expenses
SG&A expenses
Asset impairment charges Operating income
Other income (loss)
Income
Income
Net Diluted earnings (loss) per share (i)
(loss) (loss) tax income
before expense (loss)
income tax (benefit)
---
GAAP Reported $137,920 $89,809 $8,519 $39,592 29% $6,691 $18,591 $18,841 $(4,531) $(15,247) $(19,778) $(10,077) $(9,701) $(0.25)
Adjustments:
---
Amortization of intangibles
(a) - (8,519) 8,519 8,519 8,519 8,519
Cody API business (b) - 158 (158) (66) (95) 3 3 3
Depreciation on capitalized
software costs (c) - (1,058) 1,058 1,058 1,058
Decommissioning of
Philadelphia sites (d) - (419) 419 419 419 419
Asset impairment charges
(e) - (18,841) 18,841 18,841 18,841
Non-cash interest (f) - 3,335 3,335 3,335
Other (g) - (508) 508 (64) (1,817) 2,389 2,389 2,389
Tax adjustments (h) - 11,436 (11,436)
Non-GAAP Adjusted $137,920 $89,040
$ - $48,880 35% $6,561 $15,621
$ - $26,698 $(11,912) $14,786 $1,359 $13,427 $0.31
===
(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 associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
(e)
To exclude asset impairment charges primarily related to the abandonment of several pipeline products within the KUPI IPR&D and Silarx IPR&D asset portfolios
(f)
To exclude non-cash interest expense associated with debt issuance costs
(g) To exclude costs primarily related to separation costs related to the Company's cost reduction plan, COVID-19 special recognition payments, as well as costs previously incurred as part of
the Company's refinancing efforts
(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 June 30, 2020 is 38,752,080 for GAAP and 46,111,366 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, 2019
---
Net sales
Cost of sales
Amortization
Gross Profit Gross
R&D expense
SG&A
Restructuring
Asset
Operating
Other income
Income (loss)
Income tax
Net income
Diluted
of intangibles Margin % expense expenses impairment income (loss) before expense (loss) earnings
charges income tax (benefit) (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)
Twelve months ended June 30, 2020
---
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) before expense (loss) e
arnings
% charges (loss) income tax (benefit) (loss) per
share (l)
GAAP Reported $545,744 $348,508 $32,016 $165,220 30% $29,978 $79,467 $1,771 $34,448 $19,556 $(68,184) $(48,628) $(15,262) $(33,366) $(0.86)
Adjustments:
---
Amortization of intangibles
(a) - (32,016) 32,016 32,016 32,016 32,016
Cody API business (b) - (2,752) 2,752 (617) (528) 3,897 3,897 3,897
Depreciation on capitalized
software costs (c) - (4,233) 4,233 4,233 4,233
Decommissioning of
Philadelphia sites (d) - (1,903) 1,903 1,903 1,903 1,903
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) - (34,448) 34,448 34,448 34,448
Non-cash interest (h) - 14,336 14,336 14,336
Loss on extinguishment of
debt (i) - 2,145 2,145 2,145
Other (j) - (2,094) 2,094 (94) (4,395) 6,583 21 6,604 6,604
Tax adjustments (k) - 25,378 (25,378)
Non-GAAP Adjusted $545,744 $341,759
$ - $203,985 37% $29,267 $67,354
$ -
$ - $107,364 $(51,682) $55,682 $10,116 $45,566 $1.07
(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 associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
(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 asset impairment charges primarily associated with an agreement to distribute Methylphenidate AB and related to the abandonment of several pipeline products within the KUPI IPR&D and Silarx IPR&D
asset portfolios
(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 and the Company's cost reduction plan, as well as COVID-19 special recognition payments, legal
settlements and costs previously incurred as part of the Company's refinancing efforts, 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 twelve months ended June 30, 2020 is 38,592,618 for GAAP and 44,677,463 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, 2019
---
Net sales
Cost of
Amortization Gross Profit Gross
R&D
SG&A
Restructuring
Asset impairment
Operating
Other
Income
Income
Net
Diluted
sales of intangibles Margin % expense expense expenses charges income income (loss) before tax income earnings (loss)
(loss) income tax expense per share (n)
(benefit)
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 $2.35
(a)
To exclude depreciation of a fair value step-up in property, plant and equipment related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI")
(b)
To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.
(c)
To exclude the operating results of the ceased Cody API business
(d)
To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition
(e)
To exclude legal and financial advisory costs primarily related to exploring and evaluating debt and capital structure alternatives, including the December 2018 amendment to our Credit Agreement
(f)
To exclude the costs associated with the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
(g)
To exclude expenses associated with the 2016 Restructuring Plan, the Cody Restructuring Plan as well as the Cody API Restructuring Plan
(h)
To exclude asset impairment charges primarily related to goodwill and other long-lived assets
(i)
To exclude the write-off of indemnification assets related to the KUPI acquisition
(j)
To exclude non-cash interest expense associated with debt issuance costs
(k)
To exclude the loss on extinguishment of debt related to repurchases of Term Loans
(l)
To primarily exclude separation costs related to the Company's cost reduction plan, a special recognition incentive payment as well as a litigation settlement
(m)
To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates
(n)
The weighted average share number for the twelve months ended June 30, 2019 is 37,779,812 for GAAP and 39,135,719 for the non-GAAP earnings (loss) per share calculations
LANNETT COMPANY, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(UNAUDITED)
($ in thousands)
Three months ended
June 30, 2020
Net loss $(9,701)
Interest expense 14,682
Depreciation and amortization 14,923
Income tax benefit (10,077)
EBITDA 9,827
Share-based compensation 1,880
Inventory write-down 1,855
Asset impairment charges 18,841
Investment income (94)
Other non-operating loss 659
Restructuring payments (142)
Decommissioning of
Philadelphia sites (a) 419
Other(b) 1,966
Adjusted EBITDA (Non-GAAP) $35,211
(a) To exclude the
costs
associated with
the
decommissioning
and shutdown of
the
Philadelphia
manufacturing
and
distribution
sites
(b) To exclude costs
primarily
related to
separation
costs related
to the
Company's cost
reduction plan,
COVID-19
special
recognition
payments, costs
previously
incurred as
part of the
Company's
refinancing
efforts and the
operating
results of the
ceased Cody API
business
LANNETT COMPANY, INC.
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
($ in millions)
Fiscal Year 2021 Guidance
Non-GAAP
GAAP Adjustments
Adjusted
Net sales
$520 - $545
$520 - $545
Gross margin percentage approx. 23.0% to 25.0% 6%
(a) approx. 29% to 31%
R&D expense
$29 - $32
$29 - $32
SG&A expense
$59 - $62 ($4)
(b)
$55 - $58
Restructuring expense
$4 - $5
($4 - $5)
(c)
Interest and other
$53 - $54 ($12)
(d)
$41 - $42
Effective tax rate approx. 34% to 35% (13%)
(e) approx. 21% to 22%
Adjusted EBITDA N/A N/A
$100 - $110
Capital expenditures
$15 - $20
$15 - $20
(a) The adjustment primarily reflects
amortization of purchased intangible
assets related to the acquisition of
Kremers Urban Pharmaceuticals, Inc.
("KUPI")
(b) The adjustment excludes depreciation
on previously capitalized software
integration costs associated with the
KUPI acquisition
(c) To exclude expenses associated with
the 2020 Restructuring Plan
(d) The adjustment primarily reflects
non-cash interest expense associated
with debt issuance costs
(e) The adjustment reflects the impact of
the CARES Act, which allows the Company
to carryback the expected taxable loss
into a prior fiscal year, where the
statutory tax rate was 35%
LANNETT COMPANY, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
($ in millions)
Fiscal Year 2021
Guidance
Low High
---
Net loss $(16.5) $(11.0)
Interest expense 53.0 54.0
Depreciation and
amortization 55.0 55.0
Income taxes (8.5) (6.0)
EBITDA 83.0 92.0
Share-based
compensation 9.0 9.0
Inventory write-
down 8.0 9.0
Restructuring
expenses 4.0 5.0
Restructuring
payments (4.0) (5.0)
Adjusted EBITDA
(Non-GAAP) $100.0 $110.0
===
LANNETT COMPANY, INC.
NET SALES BY MEDICAL INDICATION
Three months ended Twelve months ended
($ in thousands)
June 30,
June 30,
---
Medical Indication 2020 2019 2020 2019
--- ---
Analgesic $1,874 $2,929 $8,680 $8,251
Anti-Psychosis 26,346 27,912 104,934 73,453
Cardiovascular 21,251 31,234 88,576 101,467
Central Nervous System 20,102 21,454 77,256 59,019
Endocrinology (43) 197,522
Gastrointestinal 17,457 16,005 73,477 63,043
Infectious Disease 21,515 3,692 73,237 16,950
Migraine 11,359 9,458 44,266 41,592
Respiratory/Allergy/Cough/Cold 2,829 2,958 11,576 12,479
Urinary 1,408 1,522 4,225 6,755
Other 7,166 13,859 35,013 51,517
Contract Manufacturing revenue 6,613 2,861 24,504 23,359
---
Net Sales $137,920 $133,841 $545,744 $655,407
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SOURCE Lannett Company, Inc.
