Lannett Reports Fiscal 2012 Fourth-Quarter, Full-Year Financial Results

Lannett Company, Inc. (NYSE MKT: LCI) today reported financial results for the fiscal 2012 fourth quarter and full year ended June 30, 2012.

For the fourth quarter of fiscal 2012, net sales rose 40% to $35.7 million from $25.5 million for the same quarter last year. Gross profit more than tripled to $12.0 million from $3.8 million for the fiscal 2011 fourth quarter. As a percentage of net sales, gross margin was 34% compared with 15% for the fiscal fourth quarter of last year. Research and development (R&D) expenses were $4.0 million compared with $3.0 million in the fiscal 2011 fourth quarter. Selling, general and administrative (SG&A) expenses were $5.4 million, compared with $4.2 million in the same quarter of the prior year. Operating income was $2.6 million compared to an operating loss of $3.4 million for the fourth quarter of fiscal 2011. Net income attributable to Lannett Company was $1.4 million, or $0.05 per diluted share, versus a net loss attributable to Lannett Company of $1.9 million, or $0.07 per share, for the comparable quarter of fiscal 2011.

“Our solid operating results in the 2012 fourth quarter were in line with expectations and continue to demonstrate the positive momentum we have generated over the last few quarters,” said Arthur Bedrosian, president and chief executive officer of Lannett. “The key drivers for the quarter were strong sales of key higher margin products, including recently approved drugs and several of our pain management products, as well as improved manufacturing efficiencies. Looking ahead, we have a healthy pipeline, with a number of drug applications pending at the FDA. We expect to increase our development activities to add breadth and diversity to our product portfolio.”

For the fiscal 2012 full year, net sales increased to $123.0 million from $106.8 million for the prior year. Gross profit rose to $38.9 million from $23.3 million for fiscal 2011. As a percentage of net sales, gross margin was 32% compared with 22% for the prior year. R&D expenses were $11.8 million compared with $8.6 million for fiscal 2011. SG&A expenses were $20.2 million compared with $15.9 million for the prior year. Operating income was $6.9 million compared to an operating loss of $1.2 million for fiscal 2011. Net income attributable to Lannett Company was $3.9 million, or $0.14 per diluted share, compared to net loss attributable to Lannett Company of $277,000, or $0.01 per share, for the prior year.

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 2012 fourth quarter and full year ended June 30, 2012. 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 33207873. 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 and celebrating its 70 th anniversary, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of 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, the expected product approvals, the successful commercialization of recently approved products and product applications pending at the FDA, 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.

FINANCIAL TABLES FOLLOW
 
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except for share and per share data)
         

Three months ended
Fiscal Year ended
June 30, June 30,

2012

2011

2012

2011
 
Net sales $ 35,690 $ 25,507 $ 122,990 $ 106,835
Cost of sales 23,196 21,231 81,985 81,899
Amortization of intangible assets 470 489 1,879 1,875
Product royalties   11     32     179     (259 )
 
Gross profit 12,013 3,755 38,947 23,320
 
Research and development expenses 3,994 3,030 11,844 8,587
Selling, general, and administrative expenses   5,413     4,156     20,193     15,912  
 
Operating income (loss)   2,606     (3,431 )   6,910     (1,179 )
 
Other income (expense):
Foreign currency gain (loss) (56 ) 2 (62 ) 7
Gain (loss) on sale of assets - (6 ) 4 (22 )
Realized gain on investments 21 - 236 74
Unrealized gain (loss) on investments (293 ) 150 (339 ) 132
Grant Income - 410 - 410
Interest and dividend income 25 51 142 91
Interest expense   (59 )   (39 )   (273 )   (214 )
  (362 )   568     (292 )   478  
 
Income (loss) before income tax expense (benefit) 2,244 (2,863 ) 6,618 (701 )
Income tax expense (benefit)   812     (1,015 )   2,600     (461 )
Net income (loss) 1,432 (1,848 ) 4,018 (240 )
Less net income attributable to noncontrolling interest   (17 )   (16 )   (70 )   (37 )
 
Net income (loss) attributable to Lannett Company, Inc. $ 1,415   $ (1,864 ) $ 3,948   $ (277 )
 
Earnings (loss) per common share - Lannett Company, Inc.:
Basic $ 0.05 $ (0.07 ) $ 0.14 $ (0.01 )
Diluted $ 0.05 $ (0.07 ) $ 0.14 $ (0.01 )
 
Weighted average number of shares outstanding:
Basic 28,276,573 28,393,491 28,263,335 26,758,552
Diluted 28,384,177 28,393,491 28,408,432 26,758,552
 
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)
   
(Unaudited)
June 30, 2012 June 30, 2011
 

ASSETS
Current Assets
Cash and cash equivalents $ 22,562 $ 5,277
Investment securities 6,667 19,382
Trade accounts receivable (net of allowance of $124 and $124, respectively) 42,215 33,464
Inventories, net 27,064 26,903
Income taxes receivable 2,120 3,636
Deferred tax assets 4,833 4,538
Other current assets   1,020     942  
Total Current Assets 106,481 94,142
 
Property, plant and equipment, net 34,909 29,929
Construction in progress 2,159 5,761
Intangible assets (product rights), net 4,429 5,910
Deferred tax assets 9,069 10,446
Other assets   1,171     1,556  
Total Assets $ 158,218   $ 147,744  
 
 

LIABILITIES
Current Liabilities
Accounts payable $ 17,989 $ 18,378
Accrued expenses 1,572 1,354
Accrued payroll and payroll related 3,144 935
Current portion of long-term debt 648 629
Rebates, chargebacks and returns payable   17,039     13,564  
Total Current Liabilities 40,392 34,860
 
Long-term debt, less current portion 6,513 7,193
Other long-term liabilities   -     2  
Total Liabilities   46,905     42,055  
Commitment and Contingencies
 

SHAREHOLDERS' EQUITY

Common stock - authorized 50,000,000 shares, par value $0.001; issued, 28,594,437 and 28,403,946 shares, respectively; outstanding, 28,252,192 and 28,247,335 shares, respectively
29 28
Additional paid in capital 99,515 97,082
Retained earnings 13,236 9,288
Accumulated other comprehensive income (loss) (63 ) 24
Treasury stock at cost - 342,245 and 156,611 shares, respectively   (1,594 )   (872 )
Total Shareholders' Equity Attributable to Lannett Company, Inc. 111,123 105,550
Noncontrolling interest   190     139  
TOTAL SHAREHOLDERS' EQUITY   111,313     105,689  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 158,218   $ 147,744  

Copyright Business Wire 2010

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