Lannett Reports Record Full Year Net Income for Fiscal 2013

  Lannett Reports Record Full Year Net Income for Fiscal 2013

Business Wire

PHILADELPHIA -- September 10, 2013

Lannett Company, Inc. (NYSE MKT: LCI) today reported financial results for its
fiscal 2013 fourth quarter and full year ended June 30, 2013.

For the fiscal 2013 fourth quarter, net sales rose significantly to $40.2
million, up 13% from $35.7 million for last year’s fourth quarter. Gross
profit increased to $15.2 million from $12.0 million for the fiscal 2012
fourth quarter. As a percentage of net sales, gross margin increased to 38%
from 34% last year. Research and development (R&D) expenses decreased to $3.7
million, compared with $4.0 million for the fiscal 2012 fourth quarter.
Selling, general and administrative (SG&A) expenses increased to $5.8 million,
compared with $5.4 million in the same quarter of the prior year. Operating
income more than doubled to $5.7 million from $2.6 million for the fourth
quarter of fiscal 2012. Net income attributable to Lannett Company rose to
$3.6 million, or $0.12 per diluted share, from $1.4 million, or $0.05 per
diluted share, for the same period last year.

“Our full year net income for fiscal 2013 was our highest in the company’s
history,” said Arthur Bedrosian, president and chief executive officer of
Lannett. “In addition, we reported record net sales for the fourth quarter and
full year fiscal 2013. Our excellent financial performance was driven by sales
growth across all of our key product categories, as well as a higher gross
margin percentage due to favorable sales mix, price increases and enhanced
manufacturing efficiencies.”

For the fiscal 2013 full year, net sales increased to $151.1 million from
$123.0 million for the corresponding prior year. Gross profit rose to $57.4
million from $38.9 million last year. R&D expenses were $16.3 million,
compared with $11.8 million for fiscal 2012. SG&A expenses amounted to $22.4
million, versus $20.2 million for fiscal 2012. Operating income nearly tripled
to $18.8 million from $6.9 million a year ago. Net income attributable to
Lannett Company increased to $13.3 million, equal to $0.46 per diluted share,
which included a favorable litigation settlement of $1.3 million, equal to
$0.03 per diluted share. This compares with $3.9 million, or $0.14 per diluted
share, for fiscal 2012.

Bedrosian added, “In addition to our record financial performance, we recently
completed an important contract extension with Jerome Stevens Pharmaceuticals
(JSP). Under the amended agreement, Lannett will continue to be the exclusive
distributor of substantially all JSP products for an additional five years,
through March 2019. This, combined with 15 product applications currently
pending at the FDA and our increased investment in product development, will
fuel our positive momentum going forward.”

Guidance for Fiscal 2014

Based on Lannett’s current outlook, the company provided financial guidance
for the fiscal 2014 full year as follows:

  *Net sales in the range of $181 million to $186 million;
  *Gross margin as a percentage of net sales of approximately 43% to 44%;
  *R&D expense in the range of $24 million to $26 million;
  *SG&A expense ranging from $28 million to $30 million;
  *The full year effective tax rate in the range of 34% to 36%; and,
  *Capital expenditures are expected to be in the range of $28 million to $32
    million, which includes the purchase and partial fit-out of a new
    facility.

The company noted that its guidance for fiscal 2014 does not include the
impact of shares issued in connection with the JSP contract extension. The
Company intends to expense the value of the shares issued, which approximates
$20 million, in the fiscal 2014 first quarter. The impact of this transaction
would also reduce the effective tax rate by approximately two percentage
points.

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 fourth quarter and full year
ended June 30, 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 35551980. 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, 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 guidance for fiscal 2014, expected product approvals, the successful
commercialization of products in development and products included in the
contract extension with Jerome Stevens Pharmaceuticals, Inc., 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.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)
                                                                
                 Three months ended                  Fiscal Year ended
                 June 30,                            June 30,
                   2013             2012               2013             2012
                                                                      
Net sales        $ 40,174         $ 35,690           $ 151,054        $ 122,990
Cost of sales     24,971         23,677           93,634         84,043     
Gross profit      15,203         12,013           57,420         38,947     
Operating
expenses:
Research and       3,688            3,994              16,253           11,844
development
Selling,
general, and      5,839          5,413            22,410         20,193     
administrative
Total
operating         9,527          9,407            38,663         32,037     
expenses
Operating         5,676          2,606            18,757         6,910      
income
Other income
(expense):
Foreign
currency gain      -                (56        )       3                (62        )
(loss)
Gain on sale       60               -                  111              4
of assets
Gain (loss) on
investment         (144       )     (272       )       699              (103       )
securities
Litigation         -                -                  1,250            -
settlement
Interest and
dividend           32               25                 116              142
income
Interest          (57        )    (59        )      (251       )    (273       )
expense
Total other
income            (109       )    (362       )      1,928          (292       )
(expense)
Net income
before income      5,567            2,244              20,685           6,618
tax
Income tax        1,950          812              7,303          2,600      
expense
Net income         3,617            1,432              13,382           4,018
Less: Net
income
attributable      54             17               65             70         
to
noncontrolling
interest
Net income
attributable     $ 3,563         $ 1,415           $ 13,317        $ 3,948      
to Lannett
Company, Inc.
                                                                      
Earnings per
common share
attributable
to Lannett
Company, Inc.
Basic            $ 0.12           $ 0.05             $ 0.47           $ 0.14
Diluted          $ 0.12           $ 0.05             $ 0.46           $ 0.14
                                                                      
Weighted
average common
shares
outstanding:
Basic              28,757,885       28,276,573         28,467,598       28,263,335
Diluted            29,778,828       28,384,177         28,942,933       28,408,432


LANNETT COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
                                             
                                               (Unaudited)    
                                               June 30, 2013     June 30, 2012
                                                                 
ASSETS
Current assets:
Cash and cash equivalents                      $  42,689         $  22,562
Investment securities                             8,461             6,667
Accounts receivable, net                          26,413            26,586
Inventories, net                                  32,531            27,064
Income taxes receivable                           -                 2,120
Deferred tax assets                               4,874             4,833
Other current assets                             1,161           1,023    
Total current assets                              116,129           90,855
Property, plant and equipment, net                40,141            37,068
Intangible assets, net                            2,547             4,429
Deferred tax assets                               8,005             9,069
Other assets                                     930             1,171    
TOTAL ASSETS                                   $  167,752       $  142,592  
                                                                 
                                                                 
LIABILITIES
Current liabilities:
Accounts payable                               $  22,668         $  17,989
Accrued expenses                                  2,697             2,931
Accrued payroll and payroll related               6,910             3,198
Income taxes payable                              154               -
Current portion of long-term debt                670             648      
Total current liabilities                         33,099            24,766
Long-term debt, less current portion             5,844           6,513    
TOTAL LIABILITIES                                38,943          31,279   
Commitment and Contingencies
                                                                 
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 50,000,000
shares authorized; 29,284,592 and 28,594,437
shares issued; 28,848,679 and 28,252,192          29                29
shares outstanding at June 30, 2013 and
2012, respectively)
Additional paid-in capital                        104,075           99,515
Retained earnings                                 26,553            13,236
Accumulated other comprehensive loss              (47      )        (63      )
Treasury stock (435,913 and 342,245 shares       (2,034   )       (1,594   )
at June 30, 2013 and 2012, respectively)
Total Lannett Company, Inc. stockholders'         128,576           111,123
equity
Noncontrolling interest                          233             190      
Total stockholders' equity                       128,809         111,313  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $  167,752       $  142,592  

Contact:

Robert Jaffe Co., LLC
Robert Jaffe, 424-288-4098
 
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