Lannett Reports Strong Financial Results for Fiscal 2013 Second Quarter --Growth Momentum Continues with 32% Sales Increase; Company Increases Guidance for Full Year-- Business Wire PHILADELPHIA -- February 7, 2013 Lannett Company, Inc. (NYSE MKT: LCI) today reported continued strong momentum, with sharply improved financial results for its fiscal 2013 second quarter ended December 31, 2012, compared with the prior year period. Net sales for the fiscal 2013 second quarter rose significantly to $36.6 million, up 32% from $27.7 million last year. Gross profit nearly doubled to $13.4 million from $7.4 million for the fiscal 2012 second quarter. As a percentage of net sales, gross margin increased to 37% from 27% last year. Research and development (R&D) expenses were $3.6 million, compared with $2.5 million for the fiscal 2012 second quarter. Selling, general and administrative (SG&A) expenses were $5.2 million, compared with $4.4 million in the same quarter of the prior year. Operating income increased to $4.7 million from $495,000 for the second quarter of fiscal 2012. Net income attributable to Lannett Company rose to $2.9 million, or $0.10 per diluted share, from $609,000, or $0.02 per diluted share, for the same period last year. “The positive performance for our second quarter and the favorable outlook for the second half of our fiscal year reflect continued strong sales from our base products and market penetration from our recently approved products,” said Arthur Bedrosian, president and chief executive officer of Lannett. “Gross margin was positively impacted by favorable sales mix and price increases, along with enhanced manufacturing efficiencies that are partially attributable to recent product launches. We believe Lannett’s R&D investments, which are ratcheting up as the year proceeds, combined with the operating momentum we are now achieving, will pave the way for continued growth and progress in the future,” Bedrosian added. For the first half of fiscal 2013, net sales increased to $71.9 million from $56.6 million for the corresponding prior year period. Gross profit rose to $27.0 million from $16.0 million last year. As a percentage of net sales, gross margin increased to 38% from 28% last year. R&D expenses were $7.3 million, compared with $4.9 million for the first six months of fiscal 2012. SG&A expenses amounted to $11.3 million, versus $9.2 million for the first half of fiscal 2012. Operating income advanced to $8.4 million from $1.9 million a year ago. Net income attributable to Lannett Company increased to $5.8 million, equal to $0.20 per diluted share, from $815,000, or $0.03 per diluted share, for the first half of fiscal 2012. Net income for the most recent six-month period included a favorable litigation settlement of $1.3 million and other non-operating items, 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 fiscal 2013 full year as follows: *Net sales of $140 million to $142 million, up from the previous guidance of $132 million to $136 million; *Gross margin as a percentage of net sales of approximately 36% to 37%, up from 34% to 35%; *R&D expense in the range of $17 million to $18 million, down slightly from $18 million to $20 million; *SG&A expense ranging from $24 million to $25 million, versus $21 million to $23 million; *Other income of approximately $1.5 million, essentially equal to the litigation settlement the company reported in the first quarter; and *Capital expenditures in the range of $10 million to $12 million, unchanged from 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 second quarter ended December 31, 2012. The conference call will be available to interested parties by dialing 866-813-5647 from the U.S. or Canada, or 847-619-6249 from international locations, passcode 34177997. 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 for share and per share data) Three months ended Six months ended December 31, December 31, 2012 2011 2012 2011 Net sales $ 36,564 $ 27,734 $ 71,858 $ 56,612 Cost of sales 22,620 19,771 43,784 39,513 Amortization of intangible 470 470 941 938 assets Product 53 66 86 118 royalties Gross profit 13,421 7,427 27,047 16,043 Research and development 3,572 2,513 7,336 4,939 expenses Selling, general, and 5,155 4,419 11,326 9,164 administrative expenses Operating 4,694 495 8,385 1,940 income Other income (expense): Foreign currency gain - (8 ) 3 (3 ) (loss) Gain (loss) on (112 ) (3 ) (42 ) 4 sale of assets Realized gain (loss) on 132 27 96 (146 ) investments Unrealized gain (loss) on (61 ) 675 209 (151 ) investments Litigation - - 1,250 - settlement Interest and dividend 27 36 62 89 income Interest (72 ) (73 ) (135 ) (150 ) expense (86 ) 654 1,443 (357 ) Income before income tax 4,608 1,149 9,828 1,583 expense Income tax 1,749 519 4,026 731 expense Net income 2,859 630 5,802 852 Less net income (loss) attributable 22 (21 ) 5 (37 ) to noncontrolling interest Net income attributable $ 2,881 $ 609 $ 5,807 $ 815 to Lannett Company, Inc. Earnings per common share - Lannett Company, Inc.: Basic 0.10 0.02 0.21 0.03 Diluted 0.10 0.02 0.20 0.03 Weighted average number of shares outstanding: Basic 28,347,464 28,526,658 28,312,989 28,479,195 Diluted 28,450,597 28,773,477 28,424,027 28,733,435 LANNETT COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) December 31, 2012 June 30, 2012 ASSETS Current Assets Cash and cash equivalents $ 31,455 $ 22,562 Investment securities 6,638 6,667 Trade accounts receivable (net of allowance of $111 and $124, 41,370 42,212 respectively) Inventories, net 30,688 27,064 Prepaid income taxes 249 2,120 Deferred tax assets 4,955 4,833 Other current assets 1,309 1,023 Total Current Assets 116,664 106,481 Property, plant and equipment, net 38,876 37,068 Intangible assets, net 3,488 4,429 Deferred tax assets 8,540 9,069 Other assets 810 1,171 TOTAL ASSETS $ 168,378 $ 158,218 LIABILITIES Current Liabilities Accounts payable $ 18,625 $ 17,989 Accrued expenses 1,982 1,518 Accrued payroll and payroll related 3,810 3,198 Current portion of long-term debt 654 648 Rebates, chargebacks and returns 18,961 17,039 payable Total Current 44,032 40,392 Liabilities Long-term debt, less current portion 6,255 6,513 TOTAL LIABILITIES 50,287 46,905 Commitment and Contingencies SHAREHOLDERS' EQUITY Common stock - authorized 50,000,000 shares, par value $0.001; issued, 28,822,773 and 28,594,437 shares, 29 29 respectively; outstanding, 28,386,894 and 28,252,192 shares, respectively Additional paid in capital 100,913 99,515 Retained earnings 19,043 13,236 Accumulated other comprehensive loss (26 ) (63 ) Treasury stock at cost - 435,879 and (2,034 ) (1,594 ) 342,245 shares, respectively Total Shareholders' Equity Attributable to 117,925 111,123 Lannett Company, Inc. Noncontrolling interest 166 190 TOTAL SHAREHOLDERS' 118,091 111,313 EQUITY TOTAL LIABILITIES AND $ 168,378 $ 158,218 SHAREHOLDERS' EQUITY Contact: PondelWilkinson Inc. Roger Pondel, 310-279-5980
Lannett Reports Strong Financial Results for Fiscal 2013 Second Quarter
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