Lannett Reports Record Fiscal 2013 Third Quarter Financial Results

Lannett Reports Record Fiscal 2013 Third Quarter Financial Results

--Net Sales Increase 27%; Net Income More than Doubles; Company Increases Guidance for Full Year--

PHILADELPHIA--(BUSINESS WIRE)-- Lannett Company, Inc. (NYSE MKT: LCI) today reported continued strong momentum, with sharply improved financial results for its fiscal 2013 third quarter ended March 31, 2013, compared with the prior year period.


For the fiscal 2013 third quarter, net sales rose significantly to $39.0 million, up 27% from $30.7 million for last year's third quarter. Gross profit increased to $15.2 million from $10.9 million for the fiscal 2012 third quarter. As a percentage of net sales, gross margin increased to 39% from 35% last year. Research and development (R&D) expenses were $5.2 million, compared with $2.9 million for the fiscal 2012 third quarter. Selling, general and administrative (SG&A) expenses decreased to $5.2 million, from $5.6 million in the same quarter of the prior year. Operating income nearly doubled to $4.7 million from $2.4 million for the third quarter of fiscal 2012. Net income attributable to Lannett Company rose to $3.9 million, or $0.14 per diluted share, from $1.7 million, or $0.06 per diluted share, for the same period last year.

"Our fiscal 2013 third quarter net sales and net income were the highest in the company's history," said Arthur Bedrosian, president and chief executive officer of Lannett. "Our performance reflected continued solid sales from our base products, combined with strong sales of recently approved products. Gross margin percentage increased due to favorable sales mix and price increases, as well as enhanced manufacturing efficiencies related to higher sales volume. With 15 product applications currently pending at the FDA and our ramped up investment in product development, we believe we are well-positioned for continued positive results."

For the first nine months of fiscal 2013, net sales increased to $110.9 million from $87.3 million for the corresponding prior year period. Gross profit rose to $42.2 million from $26.9 million last year. R&D expenses were $12.6 million, compared with $7.9 million for the first nine months of fiscal 2012. SG&A expenses amounted to $16.6 million, versus $14.8 million for the first nine months of fiscal 2012. Operating income more than tripled to $13.1 million from $4.3 million a year ago. Net income attributable to Lannett Company increased to $9.8 million, equal to $0.34 per diluted share, from $2.5 million, or $0.09 per diluted share, for the first nine months of fiscal 2012. Net income for the most recent year-to-date period included a favorable litigation settlement of $1.3 million, equal to $0.03 per diluted share.

Upward Revised Guidance for Fiscal 2013

Based on Lannett's current outlook, the company revised its financial guidance upward for the full 2013 fiscal year as follows:

  • Net sales of $147 million to $149 million, up from the previous guidance of $140 million to $142 million;

  • Gross margin as a percentage of net sales of approximately 38%, up from 36% to 37%;

  • R&D expense in the range of $16 million to $17 million, down from $17 million to $18 million;

  • SG&A expense ranging from $22 million to $23 million, versus $24 million to $25 million;

  • Other income of approximately $2.0 million, essentially equal to the litigation settlement the company reported in the first quarter, and year-to-date gains on investments;

  • The full year effective tax rate in the range of 35% to 37%; and

  • Capital expenditures in the range of $7 million to $9 million, versus $10 million to $12 million in the previous guidance.

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 the fiscal 2013 third quarter ended March 31, 2013. 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 34792521. The conference call will also be available through a live audio Internet broadcast at www.lannett.com. A playback of the call will be archived and accessible at this site 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 and 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.

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. 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, achieving the financial metrics stated in the company's upward revised guidance, expected product approvals, the successful commercialization of products in development, product applications pending at the FDA and recently approved products, 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, 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.

LANNETT COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

Three months ended

Nine months ended

March 31,

March 31,

2013

2012

2013

2012

Net sales

$

39,022

$

30,688

$

110,880

$

87,300

Cost of sales

23,321

19,276

67,105

58,789

Amortization of intangible assets

471

471

1,412

1,409

Product royalties

60

50

146

168

Gross profit

15,170

10,891

42,217

26,934

Research and development expenses

5,229

2,911

12,565

7,850

Selling, general, and administrative expenses

5,245

5,616

16,571

14,780

Operating income

4,696

2,364

13,081

4,304

Other income (expense):

Foreign currency gain (loss)

-

(3

)

3

(6

)

Gain on sale of assets

93

-

51

4

Realized gain on investments

353

361

449

215

Unrealized gain (loss) on investments

185

105

394

(46

)

Litigation settlement

-

-

1,250

-

Interest and dividend income

22

28

84

117

Interest expense

(59

)

(64

)

(194

)

(214

)

594

427

2,037

70

Income before income tax expense

5,290

2,791

15,118

4,374

Income tax expense

1,327

1,057

5,353

1,788

Net income

3,963

1,734

9,765

2,586

Less net income attributable to noncontrolling interest

(16

)

(16

)

(11

)

(53

)

Net income attributable to Lannett Company, Inc.

$

3,947

$

1,718

$

9,754

$

2,533

Earnings per common share - Lannett Company, Inc.:

Basic

0.14

0.06

0.34

0.09

Diluted

0.14

0.06

0.34

0.09

Weighted average number of shares outstanding:

Basic

28,490,175

28,571,062

28,371,189

28,509,595

Diluted

29,115,941

28,719,669

28,644,831

28,668,281

LANNETT COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands, except share and per share data)

(Unaudited)

March 31, 2013

June 30, 2012

ASSETS

Current Assets

Cash and cash equivalents

$

33,066

$

22,562

Investment securities

5,906

6,667

Trade accounts receivable (net of allowance of $84 and $124, respectively)

39,810

42,212

Inventories, net

32,847

27,064

Prepaid income taxes

213

2,120

Deferred tax assets

5,253

4,833

Other current assets

1,851

1,023

Total Current Assets

118,946

106,481

Property, plant and equipment, net

39,288

37,068

Intangible assets, net

3,017

4,429

Deferred tax assets

8,024

9,069

Other assets

956

1,171

TOTAL ASSETS

$

170,231

$

158,218

LIABILITIES

Current Liabilities

Accounts payable

$

15,709

$

17,989

Accrued expenses

2,053

1,518

Accrued payroll and payroll related

5,347

3,198

Current portion of long-term debt

657

648

Rebates, chargebacks and returns payable

16,550

17,039

Total Current Liabilities

40,316

40,392

Long-term debt, less current portion

6,125

6,513

TOTAL LIABILITIES

46,441

46,905

Commitment and Contingencies

SHAREHOLDERS' EQUITY

Common stock - authorized 50,000,000 shares, par value $0.001; issued, 29,103,931 and 28,594,437 shares, respectively; outstanding, 28,668,052 and 28,252,192 shares, respectively

29

29

Additional paid in capital

102,702

99,515

Retained earnings

22,990

13,236

Accumulated other comprehensive loss

(79

)

(63

)

Treasury stock at cost - 435,879 and 342,245 shares, respectively

(2,034

)

(1,594

)

Total Shareholders' Equity Attributable to Lannett Company, Inc.

123,608

111,123

Noncontrolling interest

182

190

TOTAL SHAREHOLDERS' EQUITY

123,790

111,313

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

170,231

$

158,218



PondelWilkinson Inc.
Roger Pondel
(310) 279-5980

KEYWORDS: United States North America Pennsylvania

INDUSTRY KEYWORDS:

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