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Lannett Announces Fiscal 2019 Third-Quarter Financial Results; Raises Guidance For Fiscal 2019

- Net Sales, Excluding Levothyroxine, Continues Sequential Quarterly Growth

- 4 New Product Launches in the Quarter; More Launches Expected in Q4

- Cost Reduction Program Nearly Complete

- Cash Balance of $205 Million at March 31, After Purchases of $24 Million of Term Loans

PHILADELPHIA, May 6, 2019 /PRNewswire/ -- Lannett Company, Inc. (LCI) today reported financial results for its fiscal 2019 third quarter ended March 31, 2019. 

"Our solid third quarter financial results reflect continued growth of our core business," said Tim Crew, chief executive officer of Lannett.  "Excluding sales of Levothyroxine, net sales have progressed from $101 million to $105 million to $118 million in the first, second and third quarters, respectively, representing 17% growth from the first to the third quarter.  This growth has largely been fueled by the launch of new products, while maintaining our base business. 

"We remain quite positive about our progress and outlook.  During March, we purchased approximately $24 million of our Term Loans in open market transactions, and still had more than $200 million in cash at quarter end.  Our cost reduction program is nearly complete and we expect to enter fiscal 2020 positioned with a cost structure approximately $33 million lower than the recent past.  And, with our ongoing investment in product development, combined with our product acquisition efforts, we expect to continue to both augment our offering and replenish our pipeline.  Our ongoing goal is to add approximately $75 million of new product revenues annually."

For the fiscal 2019 third quarter, on a GAAP basis, net sales were $172.8 million compared with $174.4 million for the third quarter of fiscal 2018.  Gross profit was $65.3 million, or 38% of total net sales, compared with $67.1 million, or 38% of total net sales.  Research and development (R&D) expenses were $9.8 million compared with $2.7 million for the fiscal 2018 third quarter.  Selling, general and administrative (SG&A) expenses were $21.6 million compared with $14.1 million.  Restructuring expenses were $0.5 million compared with $1.4 million.  Operating income was $33.4 million compared with $33.3 million.  Interest expense decreased to $21.5 million from $22.8 million for the third quarter of fiscal 2018.  Net income was $10.6 million, or $0.27 per diluted share, compared with $12.8 million, or $0.33 per diluted share, for the fiscal 2018 third quarter.

For the fiscal 2019 third quarter reported on a Non-GAAP basis, net sales were $172.8 million compared with $174.4 million for the third quarter of fiscal 2018.  Adjusted gross profit was $77.0 million, or 45% of adjusted net sales, compared with $76.7 million, or 44% of adjusted net sales, for the prior-year third quarter.  Adjusted R&D expenses were $9.1 million compared with $2.7 million.  Adjusted SG&A expenses were $17.5 million compared with $14.1 million.  Adjusted operating income was $50.4 million compared with $59.8 million for the prior-year third quarter.  Adjusted interest expense was $17.0 million compared with $16.2 million for the third quarter of fiscal 2018.  Adjusted net income was $26.6 million, or $0.68 per diluted share, compared with $30.5 million, or $0.80 per diluted share, for the fiscal 2018 third quarter.

Guidance for Fiscal 2019
Based on its current outlook, the company has raised its estimates, as follows:


GAAP

Adjusted

Net sales

$640 million to $645 million, up from $615 million to $635 million

$640 million to $645 million, up from $615 million to $635 million

Gross margin %

Approximately 37%, changed from 37% to 38%

Approximately 44%, changed from 44% to 45%

R&D expense

$37 million to $38 million, up from $35 million to $37 million

$35 million to $36 million, up from $33 million to $35 million

SG&A expense

$82 million to $84 million, up from $78 million to $81 million

$70 million to $71 million, up from $66 million to $69 million

Restructuring expense

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

$ --

Asset impairment charges

$369 million, unchanged

$ --

Interest and other

$84 million to $85 million, down from $84 million to $86 million

$65 million to $66 million, down from $66 million to $68 million

Effective tax rate

Approximately 22%, changed from 22% to 23%

Approximately 23%, changed from 22% to 23%

Capital expenditures

$28 million to $31 million, down from $30 million to $35 million

$28 million to $31 million, down from $30 million to $35 million

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 third quarter ended March 31, 2019.  The conference call will be available to interested parties by dialing 877-261-8992 from the U.S. or Canada, or 847-619-6548 from international locations, passcode 48589492.  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, 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.  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. 

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, adding approximately $75 million of new revenues annually, 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 2019, 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)







March 31, 2019


June 30, 2018








ASSETS






Current assets:





Cash and cash equivalents

$            205,207


$         98,586

Accounts receivable, net

151,804


252,651

Inventories


136,352


141,635

Prepaid income taxes

101


15,159

Assets held for sale

14,644


13,976

Other current assets

7,246


4,863

Total current assets

515,354


526,870

Property, plant and equipment, net

193,121


233,247

Intangible assets, net

401,973


424,425

Goodwill



-


339,566

Deferred tax assets

102,541


22,063

Other assets


18,620


29,133

TOTAL ASSETS


$         1,231,609


$    1,575,304















LIABILITIES





Current liabilities:





Accounts payable


$              31,564


$         56,767

Accrued expenses


8,423


7,425

Accrued payroll and payroll-related expenses

18,677


7,819

Rebates payable


41,873


49,400

Royalties payable


10,423


5,955

Restructuring liability

270


6,706

Liabilities held for sale

847


-

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

66,845


66,845

Total current liabilities

178,922


200,917

Long-term debt, net

711,341


772,425

Other liabilities


2,046


3,047

TOTAL LIABILITIES

892,309


976,389








STOCKHOLDERS' EQUITY




Common stock ($0.001 par value, 100,000,000 shares authorized; 38,858,670

and 38,256,839 shares issued; 37,908,587 and 37,380,517 shares outstanding at March 31, 2019 and June 30, 2018, respectively)

39


38

Additional paid-in capital

314,591


306,817

Retained earnings


39,661


306,464

Accumulated other comprehensive loss

(571)


(515)

Treasury stock(950,083 and 876,322 shares at March 31, 2019 and June 30, 2018, respectively)

(14,420)


(13,889)

Total stockholders' equity

339,300


598,915

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$         1,231,609


$    1,575,304

 

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,



2019


2018


2019


2018










Net sales


$      172,794


$        174,386


$      521,566


$        513,652

Cost of sales 


99,571


99,036


303,012


267,503

Amortization of intangibles


7,906


8,293


24,286


23,971

Gross profit


65,317


67,057


194,268


222,178

Operating expenses:









Research and development expenses


9,838


2,730


29,371


20,861

Selling, general and administrative expenses


21,649


14,112


65,434


61,643

Acquisition and integration-related expenses


-


-


-


83

Restructuring expenses


452


1,421


1,687


2,983

Loss on sale of intangible asset


-


15,514


-


15,514

Asset impairment charges


-


-


369,499


-

Total operating expenses


31,939


33,777


465,991


101,084

Operating income (loss)


33,378


33,280


(271,723)


121,094

Other income (loss):









Investment income


925


719


1,860


4,208

Interest expense


(21,485)


(22,842)


(64,430)


(64,440)

Loss on extinguishment of debt


(413)


-


(413)


-

Other


(401)


(662)


(1,409)


2,473

Total other loss


(21,374)


(22,785)


(64,392)


(57,759)

Income (loss) before income tax


12,004


10,495


(336,115)


63,335

Income tax expense (benefit)


1,359


(2,275)


(71,594)


23,286

Net income (loss)


$        10,645


$          12,770


$    (264,521)


$          40,049










Earnings (loss) per common share:









     Basic


$             0.28


$              0.34


$           (7.01)


$              1.08

     Diluted


$             0.27


$              0.33


$           (7.01)


$              1.05










Weighted average common shares outstanding:









     Basic


37,842,224


37,136,945


37,729,099


37,064,781

     Diluted


39,330,847


38,287,005


37,729,099


38,112,193










 

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, 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 GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)

(In thousands, except percentages, share and per share data)


















Three months ended March 31, 2018


Net sales

Cost of sales

Amortization
of intangibles

Gross Profit

Gross Margin %

R&D expense

SG&A expense

Acquisition and
integration-
related
expenses

Restructuring expenses

Loss on sale of
intangible asset

Operating income

Other income (loss)

Income
before
income tax

Income tax
expense
(benefit)

Net income

Diluted
earnings
per share

(g)




GAAP Reported

$ 174,386

$99,036

$        8,293

$ 67,057

38%

$    2,730

$   14,112

$              -

$         1,421

15,514

$ 33,280

$ (22,785)

$ 10,495

$ (2,275)

$   12,770

$   0.33

Adjustments:

















Depreciation of Fixed Assets step-up (a)

-

(1,335)

-

1,335


-

-

-

-

-

1,335

-

1,335

-

1,335


Amortization of intangibles (b)

-

-

(8,293)

8,293


-

-

-

-

-

8,293

-

8,293

-

8,293


Restructuring expenses (c)

-

-

-

-


-

-

-

(1,421)

-

1,421

-

1,421

-

1,421


Loss on sale of intangible asset (d)

-

-

-

-


-

-

-

-

(15,514)

15,514


15,514

-

15,514


Non-cash interest (e)

-

-

-

-


-

-

-

-

-

-

6,642

6,642

-

6,642


Tax adjustments (f)

-

-

-

-


-

-

-

-

-

-

-

-

15,508

(15,508)



















Non-GAAP Adjusted

$   174,386

$  97,701

$              -

$   76,685

44%

$     2,730

$    14,112

$               -

$               -

$                     -

$   59,843

$   (16,143)

$  43,700

$   13,233

$     30,467

$    0.80



(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 2016 Restructuring Plan 

(d)

To exclude a loss realized on a sale of an intangible asset 

(e)

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

(f)

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

(g)

The weighted average share number for the three months ended March 31, 2018 is 38,287,005 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, 2018


Net sales

Cost of sales

Amortization
of intangibles

Gross Profit

Gross Margin %

R&D expense

SG&A expense

Acquisition and
integration-
related
expenses

Restructuring expenses

Loss on sale of
intangible asset

Operating income

Other income (loss)

Income
before
income tax

Income tax
expense

Net income

Diluted
earnings
per share
(j)




GAAP Reported

$ 513,652

$267,503

$      23,971

$222,178

43%

$  20,861

$   61,643

$              83

$         2,983

$             15,514

$121,094

$ (57,759)

$ 63,335

$ 23,286

$   40,049

$   1.05

Adjustments:

















Depreciation of Fixed Assets step-up (a)

-

(4,005)

-

4,005


-

-

-

-

-

4,005

-

4,005

-

4,005


Amortization of intangibles (b)

-

-

(23,971)

23,971


-

(582)

-

-

-

24,553

-

24,553

-

24,553


Acquisition and integration-related expenses (c)

-

-

-

-


-

-

(83)

-

-

83

-

83

-

83


Restructuring expenses (d)

-

-

-

-


-

-

-

(2,983)

-

2,983

-

2,983

-

2,983


Loss on sale of intangible asset (e)

-

-

-

-


-

-

-

-

(15,514)

15,514


15,514

-

15,514


Non-cash interest (f)

-

-

-

-


-

-

-

-

-

-

15,656

15,656

-

15,656


Litigation settlement gain (g)

-

-

-

-


-

-

-

-

-

-

(3,500)

(3,500)

-

(3,500)


Other (h)

-

-

-

-


-

(7,405)

-

-

-

7,405

-

7,405

-

7,405


Tax adjustments (i)

-

-

-

-


-

-

-

-

-

-

-

-

12,978

(12,978)



















Non-GAAP Adjusted

$   513,652

$263,498

$              -

$ 250,154

49%

$    20,861

$    53,656

$               -

$               -

$                     -

$ 175,637

$   (45,603)

$ 130,034

$   36,264

$     93,770

$    2.46



(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 

(e)

To exclude a loss realized on a sale of an intangible asset 

(f)

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

(g)

To exclude a settlement gain associated with patent litigation  

(h)

To exclude separation benefits associated with the former Chief Executive Officer as well as a reversal of indemnified unrecognized tax benefits due to expirations in the statute of limitations, related to the KUPI acquisition 

(i)

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

(j)

The weighted average share number for the nine months ended March 31, 2018 is 38,112,193 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 2019 Guidance








Non-GAAP




GAAP


Adjustments


Adjusted










Net sales


 $640 - $645 


-


 $640 - $645 


Gross margin percentage


approx. 37%


7%

 (a) 

approx. 44%


R&D expense


 $37 - $38 


($2)

 (b) 

 $35 - $36 


SG&A expense


 $82 - $84 


($12 - $13)

 (c) 

 $70 - $71 


Restructuring expense


 $2 - $3 


 ($2 - $3) 

 (d) 

-


Asset impairment charges


$369


($369)

 (e) 

-


Interest and other


 $84 - $85 


($19)

 (f) 

 $65 - $66 


Effective tax rate


approx. 22%


1%

 (g) 

approx. 23%


Capital expenditures


 $28 - $31 


-


 $28 - $31 











(a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") and, to a lesser extent, the cost of sales associated with the Cody API business which was classified as Held For Sale as of September 30, 2018

(b) To exclude R&D expense associated with the Cody API business


(c) To exclude various expenses associated with the Company's overall cost savings initiatives, which includes the Cody API business; legal and financial advisory costs; as well as nonrecurring compensation-related expenses.  In addition, it also excludes depreciation on previously capitalized software integration costs associated with the KUPI acquisition

(d) To exclude expenses associated with the 2016 Restructuring Plan and Cody Restructuring Plan

(e) To exclude asset impairment charges related to goodwill and other long-lived assets

(f) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs and the loss on extinguishment of debt related to open market repurchases of Term Loans

(g) The adjustment reflects the impact of tax credits and deductions relative to expected annual pre-tax income

 

LANNETT COMPANY, INC.

NET SALES BY MEDICAL INDICATION










Three months ended


Nine months ended

(in thousands)

March 31,


March 31,

Medical Indication

2019


2018


2019


2018

Antibiotic

$    3,789


$    3,801


$  12,066


$  10,701

Anti-Psychosis

20,616


9,336


45,540


47,127

Cardiovascular

22,783


18,514


70,233


39,955

Central Nervous System

9,424


8,395


22,808


24,137

Gallstone

3,041


3,828


7,744


15,674

Gastrointestinal

11,735


16,562


36,783


46,171

Glaucoma

659


875


1,719


5,706

Migraine

9,846


12,888


32,134


43,387

Muscle Relaxant

3,238


3,299


9,538


10,309

Pain Management

5,856


6,594


19,771


18,483

Respiratory

498


2,324


2,676


6,200

Thyroid Deficiency

55,210


69,975


197,564


185,983

Urinary

2,105


33


5,262


5,870

Other

16,062


12,376


37,230


38,178

Contract Manufacturing revenue

7,932


5,586


20,498


15,771

   Net Sales

$ 172,794


$ 174,386


$ 521,566


$ 513,652

 

Contact: 

   Robert Jaffe


    Robert Jaffe Co., LLC


    (424) 288-4098

 

NET SALES, EXCLUDING LEVOTHYROXINE

 

PROGRESSION OF DEBT PAYDOWN

 

Lannett Logo (PRNewsFoto/Lannett Company, Inc.)

 

Cision

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